ARTICLES OF AMENDMENT
OF ARTICLES OF INCORPORATION
CONTAINING THE
STATEMENT OF RIGHTS AND PREFERENCES OF THE
SERIES B CONVERTIBLE PREFERRED STOCK OF
MICROVISION, INC.
These Articles of Amendment containing the Statement of Rights and
Preferences of the Series B Convertible Preferred Stock of Microvision, Inc., a
Washington corporation (the "Corporation") are herein executed by the
Corporation, pursuant to the provisions of RCW 23B.06.020 and RCW 23B.10.060 as
follows:
1. The name of the Corporation is Microvision, Inc.
2. A copy of the resolution of the Board of Directors of the Corporation
amending the Articles of Incorporation of the Corporation to establish and
designate the rights and preferences of the Series B Convertible Preferred Stock
of the Corporation is attached hereto as Attachment A and is incorporated herein
by this reference.
3. The date of the adoption of the amendments by the Board of Directors of
the Corporation was January 13, 1999.
4. The amendments to the Articles of Incorporation were duly approved by
the Board of Directors of the Corporation.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Amendment in an official and authorized capacity under penalty of perjury this
13th day of January, 1999.
MICROVISION, INC.
By: /s/ CASEY TEGREENE
-------------------------------------
Casey Tegreene, Attorney-in-fact
for Richard F. Rutkowski,
President and Chief Executive Officer
ATTACHMENT A
RESOLVED, that, pursuant to Article II of the Corporation's Articles
of Incorporation, the Board of Directors hereby establishes a series
of the Corporation's preferred stock to be designated as the "Series B
Convertible Preferred Stock," no par value, consisting of 8,520
shares, of which 5,000 shares shall be Series B Convertible Preferred
Stock, Class 1, 1,600 shares shall be Series B Convertible Preferred
Stock, Class 2, and 1,920 shares shall be Series B Convertible
Preferred Stock, Class 3, and that the preferences, limitations and
relative rights of the shares of the Series B Stock shall be as set
forth in the Statement of Rights and Preferences of Series B Preferred
Stock, attached hereto as Exhibit A;
Exhibit A
MICROVISION, INC.
8,520 Shares
Series B Convertible Preferred Stock, No Par Value
Stated Value $1,000.00 Per Share
Statement of Rights and Preferences
1. Designation and Amount. The rights, preferences, privileges, and limitations
granted to and imposed on the Series B Convertible Preferred Stock, no par value
("Series B Stock") of Microvision, Inc. (the "Corporation"), which series shall
consist of 8,520 shares of which 5,000 shares shall be designated Series B
Convertible Preferred Stock, Class 1 ("Series B-1 Stock"), 1,600 shares shall be
designated Series B Convertible Preferred Stock, Class 2 ("Series B-2 Stock"),
and 1,920 shares shall be designated Series B Convertible Preferred Stock, Class
3 ("Series B-3 Stock"), are as set forth below.
2. Dividends. The holders of the Series B Stock shall be entitled to receive,
when, as, and if declared by the Board of Directors, cumulative dividends at the
rate of $40.00 per share (as adjusted for any stock dividends, combinations or
splits) per annum payable out of funds legally available therefor or in duly
authorized shares of Common Stock.
3. Voting Rights. Except as otherwise required by law, the Series B Stock shall
not be entitled to vote on any matter submitted to a vote of the shareholders of
the Corporation.
4. Liquidation.
-----------
4.1 Liquidation Value. Upon any liquidation, dissolution or winding up of
the Corporation, the holders of the Series B Stock shall be entitled before any
distribution or payment is made upon any Common Stock, to be paid an amount
equal to $1000.00 per share, plus any accrued but unpaid dividends to the date
of such payment (the "Liquidation Value"). If upon such liquidation, dissolution
or winding up of the Corporation, the assets to be distributed among the holders
of Series B Stock shall be insufficient to permit payment to the holders of
Series B Stock of the amount distributable to them as provided herein, then
-1-
the entire assets of the Corporation legally permitted to be distributed shall
be distributed ratably among the holders of Series B Stock. Upon any such
liquidation, dissolution or winding up of the Corporation, after the holders of
the Series B Stock shall have been paid in full the amounts to which they shall
be entitled, the remaining net assets of the Corporation may be distributed to
the holders of Common Stock.
4.2 Liquidation Events. The sale of all or substantially all of the assets
of the Corporation, or the acquisition of the Corporation by another entity by
means of merger, consolidation, share exchange, reorganization or otherwise
pursuant to which shares of capital stock of the Corporation are converted into
cash, securities or other property of the acquiring entity or any of its
affiliates (other than any merger, share exchange, or similar transaction
effected exclusively for the purpose of changing the domicile of the
Corporation) shall be regarded as a liquidation within the meaning of this
Section 4; provided, however, that each holder of Series B Stock shall have the
right to elect to convert such holder's Series B Stock pursuant to Section 6 in
lieu of receiving payment in liquidation, dissolution or winding up of the
Corporation; provided, further, that this provision shall not apply if the
holders of voting securities of the Corporation immediately prior to such
merger, consolidation, share exchange, reorganization or sale of assets
beneficially own, directly or indirectly, a majority of the combined voting
power of the surviving entity resulting from such merger, consolidation, share
exchange, reorganization or sale of assets.
4.3 Notice of Liquidation. The Corporation shall provide written notice of
such liquidation to each record holder of Series B Stock not less than 20 days
prior to the payment date stated therein.
5. Redemption.
----------
5.1 Mandatory Redemption.
--------------------
5.1.1 The Corporation shall redeem all shares of Series B Stock at any
time after January 14, 2004 (the "Redemption Date") into a number of shares of
Conversion Stock (as defined in Section 6.3 below) computed by (i) multiplying
the number of shares of Series B Stock to be redeemed by the Liquidation Value
thereof and (i) dividing the result by the applicable Conversion Price (as
defined in Section 6.4 below) then in effect (the "Redemption Shares").
-2-
5.1.2 If the Market Price of the Common Stock (as defined in Section
5.3 below) has been not less than 150% of the Series B-1 Conversion Price (as
defined in Section 6.4.1 below) for a period of ten or more consecutive trading
days, then the Corporation may, at its option, redeem all or any portion of the
outstanding shares of Series B-1 Stock into the applicable number of Redemption
Shares.
5.1.3 If the Market Price of the Common Stock has been not less than
150% of the Series B-2 Conversion Price (as defined in Section 6.4.2 below) for
a period of ten or more consecutive trading days, then the Corporation may, at
its option, redeem all or any portion of the outstanding shares of Series B-2
Stock into the applicable number of Redemption Shares.
5.1.4 If the Market Price of the Common Stock has been not less than
150% of the Series B-3 Conversion Price (as defined in Section 6.4.3 below) for
a period of ten or more consecutive trading days, then the Corporation may, at
its option, redeem all or any portion of the outstanding shares of Series B-3
Stock into the applicable number of Redemption Shares.
5.2 Status of Series B Stock After Redemption Date. No share of Series B
Stock is entitled to any dividends accruing after the Redemption Date, and all
rights of the holder of such share shall cease, and such share shall not be
deemed to be outstanding, as of the Redemption Date. Any shares of Series B
Stock that are redeemed or otherwise acquired by the Corporation shall be
canceled and shall not be reissued, sold or transferred.
5.3 Market Price. "Market Price" means the closing price of the Common
Stock on the Nasdaq National Market or on any securities exchange on which the
Common Stock may at the time be listed, or, if there have been no sales on any
such market or exchange on any day, the average of the highest bid and lowest
asked prices on such market or exchange at the end of such day, or, if on any
day the Common Stock is not so listed, the average of the highest bid and lowest
asked prices on such day on the OTC Bulletin Board market.
-3-
6. Conversion.
----------
6.1 Voluntary Conversion. At any time and from time to time, any holder of
Series B Stock may convert all or any portion thereof (including any fraction of
a share) held by such holder into a number of shares of Conversion Stock
computed by (i) multiplying (x) the number of shares to be converted by (y) the
sum of $1000.00 plus any accrued but unpaid dividends on such shares, and (ii)
dividing the result by the Conversion Price then in effect.
6.2 Conversion Procedure.
--------------------
6.2.1 Each conversion of Series B Stock shall be deemed to have been
effected as of the close of business on the date on which the certificate or
certificates representing the Series B Stock to be converted shall have been
surrendered at the principal office of the Corporation. At such time as such
conversion has been effected, the rights of the holder of such Series B Stock as
such holder shall cease and the person or persons in whose name or names any
certificate or certificates for shares of Conversion Stock are to be issued upon
such conversion shall be deemed to have become the holder or holders of record
of the shares of Conversion Stock represented thereby.
(a) The conversion rights of the Series B Stock shall terminate
three days prior to the Redemption Date.
(b) As soon as possible after a conversion has been effected (but
in any event within ten business days in the case of subparagraph (i)
below), the Corporation shall deliver to the converting holder:
(i) a certificate or certificates representing the number of
shares of Conversion Stock issuable by reason of such conversion in such
name or names and such denomination or denominations as the converting
holder has specified;
(ii) a certificate representing any shares of Series B Stock that
were represented by the certificate or certificates delivered to the
Corporation in connection with such conversion but which were not
converted;
-4-
(iii) The issuance of certificates for shares of Conversion Stock
upon conversion of Series B Stock shall be made without charge to the
holders of such Series B Stock for any issuance tax in respect thereof or
other cost incurred by the Corporation in connection with such conversion
and the related issuance of shares of Conversion Stock. Upon conversion of
each share of Series B Stock, the Corporation shall take all such actions
as are necessary in order to insure that the Conversion Stock issuable with
respect to such conversion shall be validly issued, fully paid, and
nonassessable.
(iv) The Corporation shall assist and cooperate with any holder
of shares required to make any governmental filings or obtain any
governmental approval prior to or in connection with any conversion of
shares hereunder (including, without limitation, making any filings
required to be made by the Corporation).
(v) If any fractional interest in a share of Conversion Stock
would, except for the provisions of this subparagraph, be deliverable upon
any conversion of the Series B Preferred, the Corporation, in lieu of
delivering the fractional share therefor, shall pay an amount to the holder
thereof equal to the Market Price of such fractional interest as of the
date of conversion.
(vi) If the shares of Conversion Stock issuable by reason of such
conversion of Series B Stock are convertible into or exchangeable for any
other stock or securities of the Corporation, the Corporation shall, at the
converting holder's option, upon surrender of the shares to be converted by
such holder as provided above together with any notice, statement or
payment required to effect such conversion or exchange of Conversion Stock,
deliver to such holder or as otherwise specified by such holder a
certificate or certificates representing the stock or securities into which
the shares of Conversion Stock issuable by reason of such conversion are so
convertible or exchangeable, registered in such name or names and in such
denomination or denominations as such holder has specified.
6.3 Conversion Stock. As used herein, the term "Conversion Stock" means the
Common Stock of the Corporation; provided that if there is a change such that
the securities issuable upon conversion of the Series B Stock are issued by an
entity other than the
-5-
Corporation or there is a change in the class of securities so issuable, then
the term "Conversion Stock" shall mean the security issuable upon conversion of
such Series B Stock.
6.4 Conversion Price.
----------------
6.4.1 Subject to adjustment as set forth in Section 6.5, the initial
conversion price for the Series B-1 Stock (the "Series B-1 Conversion Price")
shall be $12.50.
6.4.2 Subject to adjustment as set forth in Section 6.5, the initial
conversion price for the Series B-2 Stock (the "Series B-2 Conversion Price")
shall be $16.00.
6.4.3 Subject to adjustment as set forth in Section 6.5, the initial
conversion price for the Series B-3 Stock (the "Series B-3 Conversion Price")
shall be $19.20.
6.5 Adjustments to Conversion Price. In order to prevent dilution of the
conversion rights granted hereunder, the applicable Conversion Price of the
Series B Stock shall be subject to adjustment from time to time as set forth
below:
6.5.1 In the event the Company at any time or from time to time
declares or pays any dividend on the Common Stock payable in shares of Common
Stock, or shall effect a subdivision or combination or consolidation of the
outstanding Common Stock (by stock split, reclassification or otherwise than by
payment of a share dividend) into a greater or lesser number of shares of Common
Stock, as the case may be, then the Conversion Price in effect immediately prior
to such event shall, concurrently with the effectiveness of such event, be
proportionately decreased or increased, as appropriate, based on the ratio of
(i) the number of shares of Common Stock outstanding immediately after such
event to (ii) the number of shares of Common Stock outstanding immediately prior
to such event.
6.5.2 If at any time or from time to time the shares of Common Stock
issuable upon conversion of the Series B Stock shall be changed into the same or
a different number of shares of any other class or classes of stock, whether by
recapitalization, reorganization, reclassification or otherwise (other than a
subdivision, combination or consolidation of shares, as provided above), the
Conversion Price then in effect shall, concurrently with the effectiveness of
such event, be proportionately adjusted such that the Series B Stock shall be
convertible into, in lieu of the number of shares of Common Stock to
-6-
which the holders otherwise would have been entitled to receive, a number of
shares of such other class or classes of shares equivalent to the number of
shares of Common Stock to which the holders would have been entitled to receive
upon conversion of the Series B Stock immediately before the event. In addition,
to the extent applicable in any recapitalization, reorganization or
reclassification, provision shall be made so that the holders of the Series B
Stock shall thereafter be entitled to receive upon conversion of the Series B
Stock the number of shares or property of the Company or otherwise, to which a
holder of Common Stock deliverable upon conversion would have been entitled on
such recapitalization, reorganization or reclassification.
6.5.3 Promptly after any adjustment of the Conversion Price, the
Corporation shall give written notice thereof to all holders of Series B Stock,
setting forth in reasonable detail and certifying the calculation of such
adjustment.
7. Amendment and Waiver. No amendment, modification or waiver shall be binding
or effective with respect to any provision of this Statement of Rights and
Preferences without the written consent of the holders of at least a majority of
the Series B Stock outstanding at the time such action is taken.
8. Amendment Upon Conversion or Redemption of Outstanding Shares.
-------------------------------------------------------------
When, as a result of the conversion or redemption of the Series B Stock no
shares thereof remain outstanding, the Board of Directors may, at its discretion
and without a vote of the shareholders of the Corporation, withdraw this
designation in its entirety by providing for the filing of an applicable
amendment or restatement of the Corporation's Restated Articles of
Incorporation, and the Series B Stock designated hereby shall thereby return to
the status of authorized but unissued and undesignated shares of Preferred Stock
of the Corporation.
-7-