Exhibit 3.1
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
LIGHT SCIENCES ONCOLOGY, INC.
ARTICLE I
NAME
The name of this Corporation is Light Sciences Oncology, Inc. (the
"CORPORATION").
ARTICLE II
CAPITAL STOCK
A. After the initial date and time of the effectiveness (the "EFFECTIVE
TIME") of these Amended and Restated Articles of Incorporation (the "AMENDED AND
RESTATED ARTICLES OF INCORPORATION"), this Corporation is authorized to issue
two classes of stock to be designated, respectively, "Common Stock" and
"Preferred Stock." The total number of shares which the Corporation is
authorized to issue is Sixty Million (60,000,000) shares, Forty Five Million
(45,000,000) shares of which shall be Common Stock (the "COMMON Stock") and
Fifteen Million (15,000,000) shares of which shall be Preferred Stock (the
"PREFERRED STOCK"). The Preferred Stock shall have a par value of $0.001 per
share and the Common Stock shall have a par value of $0.001 per share.
B. Shares of Preferred Stock may be issued from time to time in one or more
series. Ten Million (10,000,000) shares of the authorized shares of Preferred
Stock are hereby designated "Series A Preferred Stock" (the "Series A
Preferred"). The Board of Directors of the Corporation, subject to any approval
requirements included in the rights and preferences of any series of Preferred
Stock under these Amended and Restated Articles of Incorporation, is hereby
authorized to fix the designations and powers, preferences and relative
participating, optional or other rights, if any, and qualifications, limitations
or other restrictions thereof, including, without limitation, the dividend rate
(and whether or not dividends are cumulative), conversion rights, if any, voting
rights, rights and terms of redemption (including sinking fund provisions, if
any), redemption price and liquidation preferences of any wholly unissued series
of Preferred Stock and the number of shares constituting any such series and the
designation thereof, or any of them; and to increase or decrease the number of
shares of any series subsequent to the issue of shares of that series, but not
below the number of shares of such series then outstanding.
C. The rights, preferences, privileges, restrictions and other matters
relating to the Common Stock and Series A Preferred are as follows (Note:
section references within this Article II are to other sections within the
Article II unless otherwise expressly provided):
1. DIVIDEND RIGHTS.
(A) The holders of Series A Preferred shall be entitled to
receive prior and in preference to the holders of Common Stock, out of funds
legally available therefor, dividends at a rate equal to $0.40 per annum on each
outstanding share of Series A Preferred (as
adjusted for any stock dividends, combinations, splits, recapitalizations and
the like with respect to such shares) (the "SERIES A DIVIDENDS"), payable if, as
and when declared by the Board of Directors of the Corporation (the "BOARD" or
"BOARD OF DIRECTORS") and shall not accrue or otherwise be deemed to compound.
Upon any conversion of shares of the Series A Preferred Stock, all rights to
such dividends on such shares shall terminate. Unless all Series A Dividends
shall have been paid or set apart, no dividend shall be paid or declared, and no
distribution or redemption shall be made, on any shares of Common Stock (other
than dividends payable solely in capital stock on the capital stock of the
Corporation, repurchases of Common Stock from employees of the Corporation
pursuant to agreements and arrangements provided for in an equity incentive plan
approved by the Board or pursuant to the Corporation's exercise of a right of
first refusal contained in agreements approved by the Board).
(B) No dividend or distribution (other than dividends payable
solely in capital stock on the capital stock of the Corporation) shall be paid
on any share of Common Stock unless a dividend or distribution is paid or
declared and set apart, in addition to the Series A Dividends, with respect to
each share of Series A Preferred then outstanding in amounts for each such share
of Series A Preferred which are equal to or greater than the aggregate amounts
of such dividends or distributions as would otherwise be paid on the shares of
Common Stock into which each such share of Series A Preferred could then be
converted pursuant to the provisions of Section 4 below. In the event of a
conversion of any of the shares of Series A Preferred pursuant to Section 4
below, any declared and unpaid dividends on such shares shall be paid, at the
election of the holder(s) thereof, in cash or shares of Common Stock (at the
then current fair market value for such shares as determined in good faith by
the Board).
(C) Notwithstanding this Section 1 and Section 3 below, the
Corporation may at any time, out of funds legally available for such purpose,
(i) repurchase shares of Common Stock issued to or held by officers, directors,
employees or other service providers upon termination of their employment or
services pursuant to agreements providing the Corporation such a right of
repurchase approved by the Board of Directors, and (ii) repurchase shares of
Common Stock pursuant to the Corporation's exercise of a right of first refusal
contained in agreements approved by the Board of Directors, in either case
whether or not all declared dividends have been paid or set aside for payment.
For the purpose of determining the legality of distributions pursuant to Section
23B.06.400(2)(b) of the Revised Code of Washington, or any successor statute,
redemptions of the Common Stock as provided in clauses (i) and (ii) of this
subsection (c) may be made without reference to the amount required to satisfy
the liquidation preference set forth in Section 3(a) below.
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2. VOTING RIGHTS.
Except as otherwise expressly provided in these Amended and Restated
Articles of Incorporation or as otherwise required by law, (a) each holder of
Series A Preferred shall be entitled, with respect to such shares, to a number
of votes equal to the number of whole shares of Common Stock into which the
shares of Series A Preferred then held by such holder are then convertible (as
adjusted from time to time pursuant to Section 4 below), and (b) holders of
Preferred Stock shall vote together with the Common Stock as a single voting
group on all matters to be voted on by shareholders, whether at a meeting or by
written consent.
3. LIQUIDATION RIGHTS.
(A) Upon any liquidation, dissolution, or winding up of the
Corporation, whether voluntary or involuntary, before any distribution or
payment shall be made to the holders of any Common Stock, the holders of Series
A Preferred shall be entitled to be paid out of the assets of the Corporation an
amount per share of Series A Preferred equal to lesser of (i) the sum of (A)
$5.00 (as adjusted for any stock dividends, combinations, splits,
recapitalizations and the like with respect to such shares, the "ORIGINAL SERIES
A ISSUE PRICE"), as increased by 20% per year compounded annually (provided that
for a period of less than one full year, the growth rate for that period will be
20% multiplied by the number of days in the period divided by 365), plus (B) any
dividends declared but unpaid thereon, and (ii) 200% of the Original Series A
Issue Price. If, upon any such liquidation, distribution, or winding up, the
assets of the Corporation shall be insufficient to make payment in full to all
holders of Series A Preferred of the liquidation preference set forth in this
Section 3(a), then such assets shall be distributed among the holders of Series
A Preferred at the time outstanding, ratably in proportion to the full amounts
to which they would otherwise be respectively entitled.
(B) After the payment of the full liquidation preference of the
Series A Preferred as set forth in Section 3(a) above, the assets of the
Corporation legally available for distribution, if any, shall be distributed
ratably to the holders of the Common Stock (including any shares of Common Stock
issued upon conversion of shares of Series A Preferred).
(C) Unless the holders of a majority of the Series A Preferred
specifically and explicitly elect otherwise (given in writing or by vote at a
meeting), the following events shall be considered a liquidation under this
Section 3:
(I) (x) any consolidation, sale of stock, share exchange or
merger of the Corporation with or into any other corporation or other entity, or
any other corporate reorganization, in which the shareholders of the Corporation
immediately prior to such consolidation, sale of stock, share exchange, merger
or reorganization, own less than 50% of the Corporation's voting power
immediately after such consolidation, sale of stock, share exchange, merger or
reorganization, or (y) any transaction or series of related transactions to
which the Corporation is a party in which in excess of fifty percent (50%) of
the Corporation's voting power is transferred to a party or parties who were not
shareholders prior to such transfer (each an "ACQUISITION"); provided an equity
financing exclusively for capital raising purposes in which the Corporation is
the surviving corporation, including a transaction in which holders prior to
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such transaction own less than 50% of the total voting power of the Corporation
immediately after the closing of the financing, shall not be considered an
Acquisition; or
(II) a sale, lease, transfer or other disposition
(including, without limitation, by an exclusive license of all or substantially
all of the Corporation's rights in the material intellectual property of the
Corporation for a term of at least all or substantially all of the effective
period of the material patents included therein) of all or substantially all of
the assets of the Corporation (an "ASSET TRANSFER").
(III) In any of such events, if the consideration received
by this corporation is other than cash, its value will be deemed its fair market
value as determined in good faith by the Board. Any securities shall be valued
as follows:
(A) The value of such securities shall be the value, if
any, ascribed to such securities in the Acquisition documents;
(B) Securities not covered by (A) above and securities
subject to investment letter or other similar restrictions on free
marketability covered by (C) below:
(1) If traded on a securities exchange or through the
NASDAQ National Market, the value shall be deemed to be the average of the
closing prices of the securities on such quotation system over the thirty (30)
day period ending three (3) days prior to the closing;
(2) If actively traded over-the-counter, the value
shall be deemed to be the average of the closing bid or sale prices (whichever
is applicable) over the thirty (30) day period ending three (3) days prior to
the closing; and
(3) If there is no active public market, the value
shall be the fair market value thereof, as determined in good faith by the Board
of Directors.
(C) The method of valuation of securities subject to
investment letter or other restrictions on free marketability (other than
restrictions arising solely by virtue of a shareholder's status as an
affiliate or former affiliate) shall be to make an appropriate discount
from the market value determined as above in (B)(1), (2) or (3) to reflect
the approximate fair market value thereof, as determined by the Board of
Directors.
(IV) Except as otherwise agreed in writing by the holders of
at least a majority of the Series A Preferred, (x) all consideration payable to
the shareholders of the Corporation in connection with an Acquisition, or (y)
all consideration payable to the Corporation and distributable to its
shareholders, together with all other assets of the Corporation legally
available for distribution to shareholders, in connection with an Asset
Transfer, shall be, as applicable, paid by the purchaser to the holders of, or
distributed by the Corporation in redemption (out of funds legally available
therefor) of, the Series A Preferred and any Common Stock (and any other capital
stock junior in preference to the Series A Preferred) in accordance with the
preferences and priorities set forth in Section 3(a) and Section 3(b) above,
with such
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preferences and priorities specifically intended to be applicable in any such
Acquisition or Asset Transfer as if such transaction were a liquidation of the
Corporation for purposes of this Section 3. In furtherance of the foregoing, the
Corporation shall take such actions as are necessary to give effect to the
provisions of this Section 3(c), including without limitation, (i) in the case
of an Acquisition, causing the definitive agreement relating to such Acquisition
to provide for a rate at which the shares of Series A Preferred are converted
into or exchanged for the consideration to be received by shareholders of the
Company (whether cash, new securities or other property) pursuant to such
transaction which gives effect to the preferences and priorities set forth in
Section 3(a) and Section 3(b) above, or (ii) in the case of an Asset Transfer,
redeeming the Series A Preferred or distributing assets of the Corporation
legally available for distribution, in either case in a manner that gives effect
to the preferences and priorities set forth in Section 3(a) and Section 3(b)
above. The Corporation shall promptly provide to the holders of shares of Series
A Preferred summary information concerning the terms of such Acquisition or
Asset Transfer as may reasonably be requested by the holders of Series A
Preferred. The amount deemed distributed to the holders of Series A Preferred
upon any such transaction shall be the cash or the value (as determined pursuant
to Section 3(c)(iii) above) of the property, rights or securities distributed to
such holders by the Corporation or the acquiring person, firm or other entity,
as applicable.
(V) Any election by the holders of at least a majority of
the Series A Preferred pursuant to this Section 3(c) shall be made by written
notice to the Corporation and the other holders of Series A Preferred at least
five (5) days prior to the closing of the relevant transaction. Upon the
election of such majority in interest of the Series A Preferred hereunder, all
holders of Series A Preferred shall be deemed to have made such election and
such election shall bind all holders of the Series A Preferred.
4. CONVERSION RIGHTS.
The holders of the Series A Preferred shall have the following rights with
respect to the conversion of the Series A Preferred into shares of Common Stock
(the "CONVERSION RIGHTS"):
(A) OPTIONAL CONVERSION. Subject to and in compliance with the
provisions of this Section 4, any shares of Series A Preferred may, at the
option of the holder, be converted at any time into fully-paid and nonassessable
shares of Common Stock. The number of shares of Common Stock to which a holder
of Series A Preferred shall be entitled upon conversion shall be the product
obtained by multiplying the "Series A Preferred Conversion Rate" then in effect
(determined as provided in Section 4(b)) by the number of shares of Series A
Preferred being converted.
(B) CONVERSION RATE. The conversion rate in effect at any time
for conversion of the Series A Preferred (the "SERIES A PREFERRED CONVERSION
RATE") shall be the quotient obtained by dividing the Original Series A Issue
Price by the "Series A Preferred Conversion Price," calculated as provided in
Section 4(c).
(C) CONVERSION PRICE. The conversion price for the Series A
Preferred shall initially be $5.00 (the "SERIES A PREFERRED CONVERSION PRICE").
Such initial Series A Preferred Conversion Price shall be adjusted from time to
time in accordance with this
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Section 4. All references to the Series A Preferred Conversion Price herein
shall mean the Series A Preferred Conversion Price as so adjusted.
(D) MECHANICS OF CONVERSION. Each holder of Series A Preferred
who desires to convert the same into shares of Common Stock pursuant to this
Section 4 shall surrender the certificate or certificates therefor, duly
endorsed, at the office of the Corporation or any transfer agent for the Series
A Preferred, and shall give written notice to the Corporation at such office
that such holder elects to convert the same. Such notice shall state the number
of shares of Series A Preferred being converted. Thereupon, the Corporation
shall promptly issue and deliver at such office to such holder a certificate or
certificates for the number of shares of Common Stock to which such holder is
entitled and shall promptly pay (i) at the election of the holder, in cash or
shares of Common Stock (at the Common Stock's fair market value determined by
the Board of Directors as of the date of such conversion), any declared and
unpaid dividends on the shares of Series A Preferred being converted and (ii) in
cash (at the Common Stock's fair market value determined by the Board of
Directors as of the date of conversion) the value of any fractional share of
Common Stock otherwise issuable to any holder of Series A Preferred. Such
conversion shall be deemed to have been made at the close of business on the
date of such surrender of the certificates representing the shares of Series A
Preferred to be converted, and the person entitled to receive the shares of
Common Stock issuable upon such conversion shall be treated for all purposes as
the record holder of such shares of Common Stock on such date.
(E) ADJUSTMENTS TO SERIES A CONVERSION PRICE FOR CERTAIN DILUTING
ISSUES.
(I) SPECIAL DEFINITIONS. For purposes of this Section 4(e),
the following definitions apply:
(A) "OPTIONS" shall mean rights, options, or warrants
to subscribe for, purchase or otherwise acquire Common Stock, Series A
Preferred or Convertible Securities (defined below).
(B) "ORIGINAL ISSUE DATE" shall mean the date on which
a share of Series A Preferred was first issued.
(C) "CONVERTIBLE SECURITIES" shall mean any evidences
of indebtedness, shares (other than Common Stock and Series A Preferred) or
other securities convertible into or exchangeable for Common Stock.
(D) "ADDITIONAL SHARES OF COMMON STOCK" shall mean all
shares of Common Stock issued (or, pursuant to Section 4(e)(ii), deemed to
be issued) by the Corporation after the Original Issue Date, other than:
(1) shares of Common Stock issued or issuable upon
conversion of shares of Series A Preferred;
(2) up to 1,786,519 shares (plus a number of shares
equal to the product of 0.10 multiplied by the number of shares of Series A
Preferred
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issued by the Corporation during the 45 days after Original Issuance Date) (as
adjusted for any stock dividends, combinations, splits, recapitalizations and
the like) of Common Stock issued or issuable to officers, directors or employees
of, or consultants to, the Corporation pursuant to stock option or stock
purchase plans or agreements or other employee stock incentive programs or
arrangements on terms approved by the Board of Directors;
(3) shares of Common Stock issued or issuable as a
dividend or distribution on Series A Preferred;
(4) shares of Common Stock issued or issuable for which
adjustment of the Series A Preferred Conversion Price is made pursuant to
Section 4(g);
(5) shares of Common Stock issued or issuable in
connection with an acquisition of another entity by the Corporation (by merger,
consolidation, sale of assets, share exchange, sale or exchange of securities or
otherwise);
(6) up to 1,786,519 shares (plus a number of shares
equal to the product of 0.10 multiplied by the number of shares of Series A
Preferred issued by the Corporation during the 45 days after Original Issuance
Date) (as adjusted for any stock dividends, combinations, splits,
recapitalizations and the like) of Common Stock issued or issuable, in each case
as approved by the Board of Directors, in connection with a lease line,
equipment financing, bank financing, strategic partnership, collaboration or
similar transaction, or in consideration of the acquisition or licensing of
technology by the Corporation; or
(7) shares with respect to which the holders of at
least 50% of the outstanding shares of Series A Preferred, voting as a separate
class (including by written consent), have specifically and explicitly waived
the application of this Section 4(e).
(II) DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON STOCK. In
the event the Corporation at any time or from time to time after the Original
Issue Date shall issue any Options or Convertible Securities or shall fix a
record date for the determination of holders of any class of securities then
entitled to receive any such Options or Convertible Securities, then the maximum
number of shares (as set forth in the instrument relating thereto without regard
to any provisions contained therein designed to protect against dilution) of
Common Stock issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options for Convertible Securities or for Series A
Preferred, the conversion or exchange of such Convertible Securities or Series A
Preferred, shall be deemed to be Additional Shares of Common Stock issued as of
the time of such issue or, in case such a record date shall have been fixed, as
of the close of business on such record date, provided that in any such case in
which Additional Shares of Common Stock are deemed to be issued:
(A) no further adjustments in the Series A Conversion
Price shall be made upon the subsequent issue of such Convertible
Securities, or Series A Preferred or shares of Common Stock upon the
exercise of such Options or conversion or exchange of such Convertible
Securities or Series A Preferred;
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(B) if such Options or Convertible Securities by their
terms provide, with the passage of time or otherwise, for any increase or
decrease in the consideration payable to the Corporation, or decrease or
increase in the number of shares of Common Stock issuable, upon the
exercise, conversion or exchange thereof, the Series A Conversion Price
computed upon the original issue thereof (or upon the occurrence of a
record date with respect thereto), and any subsequent adjustments based
thereon, shall, upon any such increase or decrease becoming effective, be
recomputed to reflect such increase or decrease insofar as it affects such
Options or the rights of conversion or exchange under such Convertible
Securities (provided, however, that no such adjustment of the Series A
Conversion Price shall affect Common Stock previously issued upon
conversion of the Series A Preferred);
(C) upon the expiration of any such Options or any
rights of conversion or exchange under such Convertible Securities which
shall not have been exercised, the Series A Conversion Price computed upon
the original issue thereof (or upon the occurrence of a record date with
respect thereto), and any subsequent adjustments based thereon, shall, upon
such expiration, be recomputed as if:
(1) in the case of Convertible Securities or Options
for Common Stock, the only Additional Shares of Common Stock issued were the
shares of Common Stock, if any, actually issued upon the exercise of such
Options or the conversion or exchange of such Convertible Securities and the
consideration received therefor was the consideration actually received by the
Corporation for the issue of all such Options, whether or not exercised, plus
the consideration actually received by the Corporation upon such exercise, or
for the issue of all such Convertible Securities which were actually converted
or exchanged, plus the additional consideration, if any, actually receive by the
Corporation upon such conversion or exchange and
(2) in the case of Options for Convertible Securities
or Series A Preferred, only the Convertible Securities or Series A Preferred, if
any, actually issued upon the exercise thereof were issued at the time of issue
of such Options, and the consideration received by the Corporation for the
Additional Shares of Common Stock deemed to have been then issued was the
consideration actually received by the Corporation for the issue of all such
Options, whether or not exercised, plus the consideration deemed to have been
received by the Corporation (determined pursuant to Section 4(e)(iv)) upon the
issue of the Convertible Securities or Series A Preferred with respect to which
such Options were actually exercised;
(D) no readjustment pursuant to clause (B) or (C) above
shall have the effect of increasing the Series A Conversion Price to an
amount which exceeds the lower of (a) the Series A Conversion Price on the
original adjustment date, or (b) the Series A Conversion Price that would
have resulted from any issuance of Additional Shares of Common Stock
between the original adjustment date and such readjustment date;
(E) in the case of any Options which expire by their
terms not more than 30 days after the date of issue thereof, no adjustment
of the
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Series A Conversion Price shall be made until the expiration or exercise of
all such Options, whereupon such adjustment shall be made in the same
manner provided in clause (C) above.
(III) ADJUSTMENT OF SERIES A CONVERSION PRICE UPON ISSUANCE
OF ADDITIONAL SHARES OF COMMON STOCK. In the event this Corporation, at any time
after the Original Issue Date, shall issue Additional Shares of Common Stock
(including Additional Shares of Common Stock deemed to be issued pursuant to
Section 4(e)(ii)) without consideration or for a consideration per share less
than the Series A Conversion Price in effect on the date of and immediately
prior to such issue, then and in such event, the Series A Conversion Price shall
be reduced, concurrently with such issue, to a price (calculated to the nearest
cent) determined by multiplying the Series A Conversion Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such issue plus the number of shares of Common Stock which
the aggregate consideration received by the Corporation for the total number of
Additional Shares of Common Stock so issued would purchase at the Series A
Conversion Price in effect immediately prior to such issuance, and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately prior to such issue plus the number of such Additional Shares of
Common Stock so issued. For the purpose of the above calculation, the number of
shares of Common Stock outstanding immediately prior to such issue shall be
calculated on a fully diluted basis, as if all shares of Series A Preferred and
all Convertible Securities had been fully converted into shares of Common Stock
immediately prior to such issuance and any outstanding warrants, options or
other rights for the purchase of shares of stock or convertible securities had
been fully exercised immediately prior to such issuance (and the resulting
securities fully converted into shares of Common Stock, if so convertible) as of
such date. Notwithstanding anything to the contrary herein, the application of
this Section 4(e)(iii) with respect to a particular issuance of Additional
Shares of Common Stock may be waived (in writing or by vote at a meeting) by the
holders of at least a majority of the then outstanding shares of Series A
Preferred.
(IV) DETERMINATION OF CONSIDERATION. For purposes of Section
4(e), the consideration received by the Corporation for the issue of any
Additional Shares of Common Stock shall be computed as follows:
(A) CASH AND PROPERTY. Such consideration shall
(1) insofar as it consists of cash, be computed at the
aggregate amount of cash received by the Corporation excluding amounts paid or
payable for accrued interest or accrued dividends;
(2) insofar as it consists of property other than cash,
be computed at the fair value thereof at the time of such issue, as determined
in good faith by the Board of Directors; and
(3) in the event Additional Shares of Common Stock are
issued together with other shares or securities or other assets of the
Corporation for
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consideration which covers both, be the proportion of such consideration so
received, computed as provided in clauses (1) and (2) above, as determined in
good faith by the Board of Directors.
(B) OPTIONS AND CONVERTIBLE SECURITIES. The
consideration per share received by the Corporation for Additional Shares
of Common Stock deemed to have been issued pursuant to Section 4(e)(ii),
relating to Options and Convertible Securities shall be determined by
dividing:
(1) the total amount, if any, received or receivable by
the Corporation as consideration for the issue of such Options or Convertible
Securities, plus the minimum aggregate amount of additional consideration (as
set forth in the instruments relating thereto, without regard to any provision
contained therein designed to protect against dilution) payable to the
Corporation upon the exercise of such Options or the conversion or exchange of
such Convertible Securities, or in the case of Options for Convertible
Securities or Series A Preferred, the exercise of such Options for Convertible
Securities or Series A Preferred and the conversion or exchange of such
Convertible Securities or Series A Preferred; by
(2) the maximum number of shares of Common Stock (as
set forth in the instruments relating thereto, without regard to any provision
contained therein designed to protect against the dilution) issuable upon the
exercise of such Options or conversion or exchange of such Convertible
Securities.
(F) ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If the
Corporation shall at any time or from time to time after the Original Issue Date
effect a subdivision of the outstanding Common Stock without a corresponding
subdivision of the Series A Preferred, the Series A Preferred Conversion Price
in effect immediately before that subdivision shall be proportionately
decreased. Conversely, if the Corporation shall at any time or from time to time
after the Original Issue Date combine the outstanding shares of Common Stock
into a smaller number of shares without a corresponding combination of the
Series A Preferred, the Series A Preferred Conversion Price in effect
immediately before the combination shall be proportionately increased. Any
adjustment under this Section 4(f) shall become effective at the close of
business on the date the subdivision or combination becomes effective.
(G) ADJUSTMENT FOR COMMON STOCK DIVIDENDS AND DISTRIBUTIONS. If
the Corporation at any time or from time to time after the Original Issue Date
makes, or fixes a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in additional
shares of Common Stock, in each such event the Series A Preferred Conversion
Price that is then in effect shall be decreased as of the time of such issuance
or, in the event such record date is fixed, as of the close of business on such
record date, by multiplying the applicable Conversion Price then in effect by a
fraction (i) the numerator of which is the total number of shares of Common
Stock issued and outstanding immediately prior to the time of such issuance or
the close of business on such record date, and (ii) the denominator of which is
the total number of shares of Common Stock issued and outstanding immediately
prior to the time of such issuance or the close of business on such record date
plus the number of shares of Common Stock issuable in payment of such dividend
or distribution; provided, however, that if such record date is fixed and such
dividend is not fully paid or if such
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distribution is not fully made on the date fixed therefor, the Series A
Preferred Conversion Price shall be recomputed accordingly as of the close of
business on such record date and thereafter the Series A Preferred Conversion
Price shall be adjusted pursuant to this Section 4(g) to reflect the actual
payment of such dividend or distribution.
(H) ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE AND SUBSTITUTION.
If at any time or from time to time after the Original Issue Date, the Common
Stock issuable upon the conversion of the Series A Preferred is changed into the
same or a different number of shares of any class or classes of stock, whether
by recapitalization, reclassification or otherwise (other than an Acquisition or
Asset Transfer or a subdivision or combination of shares or stock dividend or a
reorganization, merger, consolidation or sale of assets provided for elsewhere
in this Section 4), in any such event each holder of Series A Preferred shall
have the right thereafter to convert such stock into the kind and amount of
stock and other securities and property receivable upon such recapitalization,
reclassification or other change by holders of the maximum number of shares of
Common Stock into which such shares of Series A Preferred could have been
converted immediately prior to such recapitalization, reclassification or
change, all subject to further adjustment as provided herein or with respect to
such other securities or property by the terms thereof.
(I) REORGANIZATIONS, MERGERS OR CONSOLIDATIONS. If at any time or
from time to time after the Original Issue Date, there is a capital
reorganization of the Common Stock or the merger or consolidation of the
Corporation with or into another corporation or another entity or person (other
than an Acquisition or Asset Transfer or a recapitalization, subdivision,
combination, reclassification, exchange or substitution of shares provided for
elsewhere in this Section 4), as a part of such capital reorganization,
provision shall be made so that the holders of the Series A Preferred shall
thereafter be entitled to receive upon conversion of the Series A Preferred the
number of shares of stock or other securities or property of the Corporation to
which a holder of the number of shares of Common Stock deliverable upon
conversion would have been entitled on such capital reorganization, subject to
adjustment in respect of such stock or securities by the terms thereof. In any
such case, appropriate adjustment shall be made in the application of the
provisions of this Section 4 with respect to the rights of the holders of Series
A Preferred after the capital reorganization to the end that the provisions of
this Section 4 (including adjustment of the Series A Conversion Price then in
effect and the number of shares issuable upon conversion of the Series A
Preferred) shall be applicable after that event and be as nearly equivalent as
practicable.
(J) AUTOMATIC CONVERSION.
(I) Each share of Series A Preferred shall automatically be
converted into shares of Common Stock, based on the then-effective Series A
Preferred Conversion Price immediately upon the closing of a firmly underwritten
public offering pursuant to an effective registration statement under the
Securities Act of 1933, as amended, covering the offer and sale of Common Stock
for the account of the Corporation at a price per share of at least $15.00 (as
adjusted for any stock dividends, combinations, splits, recapitalizations and
the like with respect to the Common Stock after the date hereof) and resulting
in at least $40,000,000 of gross proceeds to the Corporation, and pursuant to
which the Corporation obtains a listing for its shares on the New York Stock
Exchange or the NASDAQ National Market System.
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Furthermore, each share of Series A Preferred shall automatically be converted
into shares of Common Stock, based on the then-effective Series A Preferred
Conversion Price at any time upon the affirmative election of the holders of at
least a majority of the outstanding shares of the Series A Preferred.
(II) Upon the occurrence of any of the events specified in
Section 4(j)(i) above, the outstanding shares of Series A Preferred shall be
converted automatically without any further action by the holders of such shares
and whether or not the certificates representing such shares are surrendered to
the Corporation or its transfer agent; provided, however, that the Corporation
shall not be obligated to issue certificates evidencing the shares of Common
Stock issuable upon such conversion unless the certificates evidencing such
shares of Series A Preferred are either delivered to the Corporation or its
transfer agent as provided below, or the holder notifies the Corporation or its
transfer agent that such certificates have been lost, stolen or destroyed and
executes an agreement satisfactory to the Corporation to indemnify the
Corporation from any loss incurred by it in connection with such certificates
(without requirement of posting any bond). Upon the occurrence of such automatic
conversion of the Series A Preferred, the holders of Series A Preferred shall
surrender the certificates representing such shares at the office of the
Corporation or any transfer agent for such stock. Thereupon, there shall be
issued and delivered to such holder promptly at such office and in its name as
shown on such surrendered certificate or certificates, a certificate or
certificates for the number of shares of Common Stock into which the shares of
Series A Preferred surrendered were convertible on the date on which such
automatic conversion occurred, and any declared and unpaid dividends shall be
paid in accordance with the provisions of Section 4(d).
(K) FRACTIONAL SHARES. No fractional shares of Common Stock shall
be issued upon conversion of Series A Preferred. All shares of Common Stock
(including fractions thereof) issuable upon conversion of more than one share of
Series A Preferred by a holder thereof shall be aggregated for purposes of
determining whether the conversion would result in the issuance of any
fractional share. If, after the aforementioned aggregation, the conversion would
result in the issuance of any fractional share, the Corporation shall, in lieu
of issuing any fractional share, pay cash equal to the product of such fraction
multiplied by the Common Stock's fair market value (as determined by the Board
of Directors) on the date of conversion.
(L) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of the Series A Preferred, such number of its shares of
Common Stock as shall from time to time be sufficient to effect the conversion
of all outstanding shares of the Series A Preferred. If at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of all then outstanding shares of the Series A Preferred,
the Corporation will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purpose.
(M) PAYMENT OF TAXES. The Corporation will pay all taxes (other
than taxes based upon income) and other governmental charges that may be imposed
with respect to
12
the issue or delivery of shares of Common Stock upon conversion of shares of
Series A Preferred, excluding any tax or other charge imposed in connection with
any transfer involved in the issue and delivery of shares of Common Stock in a
name other than that in which the shares of Series A Preferred so converted were
registered.
5. COMMON STOCK
The voting, dividend, liquidation and all other rights of the holders of
the Common Stock are subject to and qualified by the rights of the holders of
Preferred Stock.
ARTICLE III
BOARD OF DIRECTORS
The number of Directors of the Corporation shall be determined in the
manner provided in the Bylaws and may be increased or decreased from time to
time in the manner provided therein.
ARTICLE IV
NO PREEMPTIVE RIGHTS
Shareholders of the Corporation have no statutory preemptive rights to
acquire additional shares, or securities convertible into or exercisable for
shares, issued by the Corporation.
ARTICLE V
VOTING RIGHTS
A. Subject to the provisions of Article II above, holders of Common Stock
and Preferred Stock shall have voting rights of one vote per share on each
matter to be voted on and shall vote together as a single voting group, except
to the extent otherwise required by law. Except to the extent otherwise
expressly provided in these Amended and Restated Articles of Incorporation with
respect to voting or approval rights of the Preferred Stock or particular series
of Preferred Stock or unless the Board conditions its submission of the proposed
shareholder action on a separate vote by one or more smaller voting groups,
classes or series, the holders of each outstanding class or series of shares of
this Corporation shall not be entitled to vote as a separate voting group (a) on
any amendment to these Amended and Restated Articles of Incorporation with
respect to which such class or series would otherwise be entitled under RCW
23B.10.040(1)(a), (e) or (f) to vote as a separate voting group, (b) on any plan
of merger or share exchange with respect to which such class or series would
otherwise be entitled under RCW 23B.11.035 to vote as a separate voting group,
or (c) on any other matter required or permitted to be submitted a vote of this
Corporation's shareholders. To the extent holders of a class or series of shares
would otherwise be entitled to vote as a separate voting group with respect to
any of the foregoing, such rights are hereby expressly eliminated.
B. Any action required or which may be taken at a meeting of shareholders
of the Corporation may be taken without a meeting or a vote if, pursuant to the
bylaws, either (a) the
13
action is taken with the prior written consent of all shareholders entitled to
vote; or (b) the action is taken with the written consent of shareholders
holding of record, or otherwise entitled to vote in the aggregate, not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote on the action were
present and voted, and at the time the action is taken the Corporation does not
have capital stock registered with the Securities and Exchange Commission
pursuant to Section 12 of the Securities Exchange Act of 1934, as amended.
Notice of any such action shall be given to nonconsenting or nonvoting
shareholders in accordance with applicable law.
C. With respect to proposals presented to the shareholders for approval
under RCW 23B.10.030, 23B.11.030 and 23B.12.020 in accordance with RCW
23B.07.270, this Corporation's shareholders may take action by the affirmative
vote of holders of a majority of all votes entitled to be cast on the proposal
within each applicable voting group.
ARTICLE VI
LIMITATION ON LIABILITY OF DIRECTORS
No director of the Corporation shall be personally liable to the
Corporation or its shareholders for monetary damages for his or her conduct as a
director, which conduct takes place on or after the Effective Time, except for
(i) acts or omissions that involve intentional misconduct or a knowing violation
of law by the director, (ii) conduct violating RCW 23B.08.310, or (iii) any
transaction from which the director will personally receive a benefit in money,
property or services to which the director is not legally entitled. If, after
the Effective Time, the Washington Business Corporation Act is amended to
authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the Corporation
shall be deemed eliminated or limited to the fullest extent permitted by the
Washington Business Corporation Act, as so amended. Any amendment to or repeal
of this Article VI shall not adversely affect any right or protection of a
director of the Corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment or repeal. This provision shall not
eliminate or limit the liability of a director for any act or omission occurring
prior to the Effective Time.
ARTICLE VII
INDEMNIFICATION OF DIRECTORS
This Corporation shall indemnify its directors to the full extent permitted
by the Washington Business Corporation Act now or hereafter in force. However,
such indemnity shall not apply on account of:
(a) Acts or omissions of the director finally adjudged to be
intentional misconduct or a knowing violation of law;
(b) Conduct of the director finally adjudged to be in violation of RCW
23B.08.310; or
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(c) Any transaction with respect to which it was finally adjudged that
such director personally received a benefit in money, property, or services to
which the director was not legally entitled.
This Corporation shall advance reasonable expenses for such persons
pursuant to the terms set forth in the bylaws, or in a separate directors'
resolution or contract. The Board of Directors may take such action as is
necessary to carry out these indemnification and expense advancement provisions.
The Corporation is expressly empowered to adopt, approve, and amend from time to
time such bylaws, resolutions, contracts, or further indemnification and expense
advancement arrangements as may be permitted by law, implementing these
provisions.
Such bylaws, resolutions, contracts or further arrangements shall include
but not be limited to implementing the manner in which determinations as to any
indemnity or advancement of expenses shall be made. No amendment or repeal of
this Article VII shall apply to or have any effect on any right to
indemnification provided hereunder with respect to acts or omissions occurring
prior to such amendment or repeal.
ARTICLE VIII
AUTHORITY TO AMEND ARTICLES OF INCORPORATION
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in these Amended and Restated Articles in any manner now or
hereafter permitted or prescribed by law, and all rights of shareholders set
forth herein are subject to this reserved power.
ARTICLE IX
NO CUMULATIVE VOTING
The right to cumulate votes in the election of directors shall not exist
with respect to shares of capital stock of the Corporation.
ARTICLE X
CORPORATE OPPORTUNITY
To the maximum extent permitted from time to time under the law of the
State of Washington, the Corporation renounces any interest or expectancy of the
Corporation in, or in being offered an opportunity to participate in, business
opportunities that are from time to time being presented to its directors or
shareholders, other than (i) those directors or shareholders who are employees
of the Corporation, and (ii) those opportunities demonstrated by the Corporation
to have been presented to such directors or shareholders expressly as a result
of their activities as a director or shareholder of the Corporation. No
amendment or repeal of this Article shall apply to or have any effect on the
liability or alleged liability of any director or shareholder of the Corporation
for or with respect to any opportunities which such director or shareholder
becomes aware prior to such amendment or repeal.
[Signature page follows]
15
Dated: September 30, 2005 /s/ Llew Keltner
----------------------------------------
Llew Keltner, President
[SIGNATURE PAGE TO
AMENDED AND RESTATED ARTICLES OF INCORPORATION]
ARTICLES OF AMENDMENT
OF
LIGHT SCIENCES ONCOLOGY, INC.
The following Articles of Amendment are executed by the undersigned, a
Washington corporation:
1. The name of the corporation is Light Sciences Oncology, Inc.
2. Article II.A of the Amended and Restated Articles of Incorporation of
the corporation is amended and restated in its entirety to read as follows:
"A. After the initial date and time of the effectiveness (the
"EFFECTIVE TIME") of these Amended and Restated Articles of Incorporation
(the "AMENDED AND RESTATED ARTICLES OF INCORPORATION"), this Corporation is
authorized to issue two classes of stock to be designated, respectively,
"Common Stock" and "Preferred Stock." The total number of shares which the
Corporation is authorized to issue is Sixty Four Million (64,000,000)
shares, Forty Five Million (45,000,000) shares of which shall be Common
Stock (the "COMMON STOCK") and Nineteen Million (19,000,000) shares of
which shall be Preferred Stock (the "PREFERRED STOCK"). The Preferred Stock
shall have a par value of $0.001 per share and the Common Stock shall have
a par value of $0.001 per share."
3. Article II.B of the Amended and Restated Articles of Incorporation of
the corporation is amended and restated in its entirety to read as follows:
"B. Shares of Preferred Stock may be issued from time to time in one
or more series. Fourteen Million (14,000,000) shares of the authorized
shares of Preferred Stock are hereby designated "Series A Preferred Stock"
(the "SERIES A PREFERRED"). The Board of Directors of the Corporation,
subject to any approval requirements included in the rights and preferences
of any series of Preferred Stock under these Amended and Restated Articles
of Incorporation, is hereby authorized to fix the designations and powers,
preferences and relative participating, optional or other rights, if any,
and qualifications, limitations or other restrictions thereof, including,
without limitation, the dividend rate (and whether or not dividends are
cumulative), conversion rights, if any, voting rights, rights and terms of
redemption (including sinking fund provisions, if any), redemption price
and liquidation preferences of any wholly unissued series of Preferred
Stock and the number of shares constituting any such series and the
designation thereof, or any of them; and to increase or decrease the number
of shares of any series subsequent to the issue of shares of that series,
but not below the number of shares of such series then outstanding."
4. Article II.C.4(e)(i)(D)(2) of the Amended and Restated Articles of
Incorporation of the corporation is amended and restated in its entirety to read
as follows:
"(2) up to 1,786,519 shares (plus a number of shares equal to the
product of 0.10 multiplied by the number of shares of Series A Preferred
issued by the Corporation from October 7, 2005 through December 31, 2005)
(as adjusted for any stock dividends,
combinations, splits, recapitalizations and the like) of Common Stock
issued or issuable to officers, directors or employees of, or consultants
to, the Corporation pursuant to stock option or stock purchase plans or
agreements or other employee stock incentive programs or arrangements on
terms approved by the Board of Directors;"
5. Article II.C.4(e)(i)(D)(6) of the Amended and Restated Articles of
Incorporation of the corporation is amended and restated in its entirety to read
as follows:
"(6) up to 1,786,519 shares (plus a number of shares equal to the
product of 0.10 multiplied by the number of shares of Series A Preferred
issued by the Corporation from October 7, 2005 through December 31, 2005)
(as adjusted for any stock dividends, combinations, splits,
recapitalizations and the like) of Common Stock issued or issuable, in each
case as approved by the Board of Directors, in connection with a lease
line, equipment financing, bank financing, strategic partnership,
collaboration or similar transaction, or in consideration of the
acquisition or licensing of technology by the Corporation; or"
6. The date the amendment was adopted is December 8, 2005.
7. The amendment was duly approved by the shareholders in accordance with
the provisions of RCW 23B.10.030 and 23B.10.040. Such approval was obtained by
written consent in accordance with RCW 23B.07.040 and written notice to any
nonconsenting shareholders has been given as provided in RCW 23B.07.040.
Dated: December 8, 2005
LIGHT SCIENCES ONCOLOGY, INC.
By /s/ Jay Winship
-------------------------------------
Jay Winship
Secretary
18
ARTICLES OF AMENDMENT
OF
LIGHT SCIENCES ONCOLOGY, INC.
Pursuant to RCW 23B.10.060, the following Articles of Amendment are
executed by the undersigned, a Washington corporation:
1. The name of the corporation is Light Sciences Oncology, Inc.
2. Article II of the Amended and Restated Articles of Incorporation of
the corporation is hereby amended to add the following Section D at the end
thereof:
"D. At the initial date and time of the effectiveness of these
Articles of Amendment (the "TIME OF EFFECTIVENESS"), each eight
shares of Common Stock issued and outstanding immediately prior to
the Time of Effectiveness shall be changed and reclassified into
five shares of Common Stock, par value $0.001 per share (the
"REVERSE STOCK SPLIT"). The Reverse Stock Split shall occur
automatically without any further action by the holders of the
shares affected thereby and whether or not the certificates
representing such shares are surrendered to the Corporation or its
transfer agent. The Reverse Stock Split shall be effected on a
record holder-by-record holder basis, such that all fractional
shares resulting from the Reverse Stock Split of a given record
holder's Common Stock shall be aggregated. After aggregating all
fractional shares in accordance with the previous sentence, no
remaining fractional share of Common Stock shall be issued as a
result of the Reverse Stock Split. In lieu of any fractional share
to which a record holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the
fair market value of one share of Common Stock as determined in good
faith by the Corporation's Board of Directors. The total authorized
capital stock of the Corporation after giving effect to the Reverse
Stock Split shall be Sixty Million (60,000,000) shares, consisting
of Forty Five Million (45,000,000) shares of Common Stock having a
par value of $0.001 per share and Fifteen Million (15,000,000)
shares of Preferred Stock having a par value of $0.001 per share.
Ten Million (10,000,000) shares of Preferred Stock shall be
designated as Series A Preferred Stock."
3. Article II, Section C(4)(j)(i) is hereby amended and restated in
its entirety to read as follows:
"(i) Each share of Series A Preferred shall
automatically be converted into shares of Common Stock, based on the
then-effective Series A Preferred Conversion Price immediately upon
the closing of a firm commitment underwritten public offering
pursuant to an effective registration statement under the Securities
Act of 1933, as amended, covering the offer and sale of Common Stock
for the account of the Corporation resulting in at
least $40,000,000 of proceeds (calculated before underwriting
discounts, commissions and expenses) to the Corporation, and
pursuant to which the Corporation obtains a listing for its shares
on the New York Stock Exchange or NASDAQ. Furthermore, each share of
Series A Preferred shall automatically be converted into shares of
Common Stock, based on the then-effective Series A Preferred
Conversion Price at any time upon the affirmative election of the
holders of at least a majority of the outstanding shares of the
Series A Preferred."
4. The date of the adoption of the amendment by the shareholders of
the corporation is September 7, 2006.
5. The amendment was duly approved by the shareholders of the
corporation in accordance with the provisions of RCW 23B.10.030 and RCW
23B.10.040.
6. These Articles of Amendment shall be effective at 5:00 P.M.,
Pacific time, on September 8, 2006.
These Articles of Amendment are executed by said corporation by its duly
authorized officer.
DATED: September 8, 2006
LIGHT SCIENCES ONCOLOGY, INC.
By: /s/ Robert M. Littauer
---------------------------------------
Name: Robert M. Littauer
Its: Vice President, Chief Financial Officer
and Treasurer
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