EXHIBIT 3.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
BIOJECT MEDICAL TECHNOLOGIES INC.
ARTICLE I
Name
The name of the corporation (the "Corporation") shall be Bioject Medical
Technologies Inc.
ARTICLE II
Duration
The Corporation's duration shall be perpetual.
ARTICLE III
Purposes
The purposes for which the Corporation is organized are:
Section 1. In general, to carry on any lawful business whatsoever which is
calculated, directly or indirectly, to promote the interests of the Corporation
or to enhance the value of its properties.
Section 2. To engage in and carry on any lawful business or trade and
exercise all powers granted to a corporation formed under the Oregon Business
Corporation Act, including any amendments thereto or successor statute that may
hereinafter be enacted.
ARTICLE IV
Authorized Capital Stock
Section 1. Classes. After giving effect to the reverse stock split set
forth in Section 1.1, the Corporation shall be authorized to issue two classes
of stock to be designated, respectively, "Common Stock" and "Preferred Stock";
the total number of shares which the Corporation shall have authority to issue
is One Hundred Ten Million (110,000,000); the authorized number of shares of
Common Stock shall be One Hundred Million (100,000,000), without par value; the
authorized number of shares of Preferred Stock shall be Ten Million
(10,000,000), without par value.
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Section 1.1. Each five shares of issued and outstanding Common Stock of
this Corporation are, on the effective date hereof, automatically reclassified
into one share of Common Stock of this Corporation, thereby giving effect to a
one-for-five reverse stock split (the "Reverse Stock Split"). All outstanding
rights and obligations (including option plans, stock options and the exercise
price thereof, stock purchase warrants and the exercise prices thereof and the
conversion terms of the Corporation's shares of Series A Convertible Preferred
Stock, Series B Convertible Preferred Stock and Series C Convertible Preferred
Stock) relating to this Corporation's Common Stock shall be mathematically
adjusted to reflect the Reverse Stock Split so that the proportionate ratio of
such rights and obligations to the reclassified shares will be equal to the
proportionate ratio of such rights and obligations to the shares outstanding
immediately prior to such reclassification. In lieu of the issuance of any
fractional shares that would otherwise result from the Reverse Stock Split, the
Corporation shall issue to any shareholder that would otherwise receive
fractional shares one whole share, the additional shares hereby issued being
taken from authorized but theretofore unissued shares of Common Stock.
Section 2. Preferred Stock. Shares of Preferred Stock may be issued from
time to time in one or more series. Shares of Preferred Stock which may be
redeemed, purchased or acquired by the Corporation may be reissued except as
otherwise provided by law. The board of directors of the Corporation 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.
Designation of Rights and Preferences of Series A Convertible Preferred
Stock, Series B Convertible Preferred Stock and Series C Convertible
Preferred Stock
Section 2.1. Definitions. The following terms shall have the respective
meanings ascribed to them below.
"Board" shall mean the Board of Directors of the Corporation.
"Business Day" shall mean any day other than Saturday, Sunday or a day on
which federally-chartered banks located in New York, New York or Portland,
Oregon are permitted by law to be closed.
"Closing Date" shall mean October 15, 1997.
"Closing Price" at any date shall mean the last reported sale price of the
Common Stock on the NASDAQ Stock Market or other principal market of the Common
Stock on such date.
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"Common Stock" shall mean, collectively, the Corporation's Common Stock and
any capital stock of any class of the Corporation (other than any Preferred
Stock) hereafter authorized that is not limited to a fixed amount of percentage
of par or stated value in respect of the rights of the holders thereof to
participate in dividends or in the distribution of assets upon any liquidation,
dissolution or winding up of the Corporation.
"Conversion Stock" shall mean shares of the Corporation's Common Stock
issuable upon the conversion of any shares of Preferred Stock.
"Excluded Stock" shall mean (i) shares of Common Stock issued or reserved
for issuance by the Corporation as a stock dividend payable in shares of Common
Stock, or upon any subdivision or split-up of the outstanding shares of Common
Stock, or upon conversion of shares of the Preferred Stock, (ii) up to 3,650,000
shares of Common Stock (or Rights (as defined below)) therefor issued to
directors, officers or employees of the Corporation or its affiliates (or in the
case of options, granted at an exercise price) at less than Fair Value under a
duly-enacted stock option or compensation plan, or (iii) any shares of Common
Stock issuable upon exercise of any warrants currently outstanding or warrants
which the Corporation has committed, as of October 15, 1997, to issue in the
future.
"Fair Value" shall mean the fair market value of any securities or assets
as reasonably and in good faith determined by the Board.
"Junior Securities" shall mean any of the Corporation's equity securities
(whether or not currently authorized) that are junior in liquidation preference
to the Preferred Stock.
"Liquidation Value" of any share of Series A Preferred Stock or Series B
Preferred Stock as of any particular date shall be equal to $15.00 per share.
Liquidation Value of Series C Preferred Stock is the Series C Issuance Price.
"Market Price" of any security shall mean the average of the closing prices
of such security's sales on all securities exchanges on which such security may
at the time be listed, or, if there have been no sales on any such exchange on
any day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day, or, if on any day such security is not so
listed, the average of the representative bid and asked prices quoted in the
NASDAQ Stock Market as of 4:00 p.m., New York time, or, if on any day such
security is not quoted in the NASDAQ Stock Market, the average of the highest
bid and lowest asked prices on such day in the domestic over-the-counter market
as reported by the National Quotation Bureau, Incorporated, or any similar
successor organization, in each such case averaged over a period of the 10
trading days preceding the determination date. If at any time such security is
not listed on any securities exchange or quoted in the NASDAQ Stock Market or
the over-the-counter market, the "Market Price" shall be the Fair Value thereof.
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"Person" shall mean an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political
subdivision thereof.
"Preferred Stock" shall mean the Series A Preferred Stock, the Series B
Preferred Stock and the Series C Preferred Stock, or, as the context requires,
all such series of preferred stock of the Corporation.
"Preferred Issuance Price" shall mean the purchase price per share for the
Series A Preferred Stock, which is $15.00, and the purchase price per share for
the Series B Preferred Stock, which is $15.00.
"Series C Issuance Price" means the original price per share at which
Series C Preferred Stock is issued.
"Subsidiary" shall mean any Person of which the shares of outstanding
capital stock or other equity interests, as the case may be, possessing the
voting power under ordinary circumstances in electing the board of directors
are, at the time as of which any determination is being made, owned by the
Corporation either directly or indirectly through subsidiaries.
Section 2.2. Preferred Stock. (a) Series A Preferred Stock. 1,235,000
shares of the preferred stock, without par value, of the Corporation are hereby
constituted as a series of preferred stock of the Corporation designated as
Series A Convertible Preferred Stock (the "Series A Preferred Stock"). Such
amount shall be adjusted by the Corporation in the event that any adjustments to
the Series A Preferred Stock are required as set forth herein, including Section
2.7 hereof, and, in connection therewith, the Corporation shall promptly take
all necessary or appropriate actions and make all necessary or appropriate
filings in connection therewith.
(b) Series B Preferred Stock. 200,000 shares of the preferred stock,
without par value, of the Corporation are hereby constituted as a series of
preferred stock of the Corporation designated as Series B Convertible Preferred
Stock (the "Series B Preferred Stock"). Such amount shall be adjusted by the
Corporation in the event that any adjustments to the Series B Preferred Stock
are required as set forth herein, including Section 2.7 hereof, and, in
connection therewith, the Corporation shall promptly take all necessary or
appropriate action and make all necessary or appropriate filings in connection
therewith.
(c) Series C Preferred Stock. 500,000 shares of the preferred stock,
without par value, of the Corporation are hereby constituted as a series of
preferred stock of the Corporation designated as Series C Convertible Preferred
Stock (the "Series C Preferred Stock"). Such amount shall be adjusted by the
Corporation in the event that any adjustments to the Series C Preferred Stock
are required as set forth herein, including Section 2.7 hereof, and, in
connection therewith, the Corporation shall promptly take all necessary or
appropriate action and make all necessary or appropriate filings in connection
therewith.
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Section 2.3. Dividends. (a) General. (1) Series A Preferred Stock. Each
outstanding share of Series A Preferred Stock shall accrue a dividend equal to
9% per annum of the Preferred Issuance Price of Series A Preferred Stock,
compounded semi-annually beginning six months from the date of first issuance of
Series A Preferred Stock; such dividend shall be paid by issuance of additional
shares of Series A Preferred Stock, based upon a value equal to the Preferred
Issuance Price.
(2) Series B Preferred Stock. The holder of each share of Series B
Preferred Stock shall be entitled to receive, pro rata among such holders and on
a pari passu basis with the holders of the Series C Preferred Stock and the
holders of Common Stock, as if the Series B Preferred Stock had been converted
into Common Stock immediately prior to the record date in respect thereof, when
and as declared by the Board out of funds legally available for the declaration
and payment of dividends, cash dividends at the same rate and in the same amount
per share as any and all dividends declared and paid in respect of the Common
Stock. Except as set forth above, such holders shall not be entitled to receive
any dividends.
(3) Series C Preferred Stock. The holder of each share of Series C
Preferred Stock shall be entitled to receive, pro rata among such holders and on
a pari passu basis with the holders of the Series B Preferred Stock and the
holders of Common Stock, as if the Series C Preferred Stock had been converted
into Common Stock immediately prior to the record date in respect thereof, when
and as declared by the Board out of funds legally available for the declaration
and payment of dividends, cash dividends at the same rate and in the same amount
per share as any and all dividends declared and paid in respect of the Common
Stock. Except as set forth above, such holders shall not be entitled to receive
any dividends.
(b) Payment of Dividends. (1) Series A Preferred Stock. Dividends accrued
and unpaid on shares of Series A Preferred Stock as of the Mandatory Conversion
Date (as defined in Section 2.6(a)(1) below) shall be payable in accordance with
Section 2.6 below.
(2) Series B Preferred Stock. Dividends payable in respect of the Series B
Preferred Stock shall be paid as and when dividends are paid in respect of the
Common Stock.
(3) Series C Preferred Stock. Dividends payable in respect of the Series C
Preferred Stock shall be paid as and when dividends are paid in respect of the
Common Stock.
(4) Change in Dividend Rate. If the Corporation shall fail to declare or
pay a dividend on a date on which dividends are to be compounded pursuant to
Section 2.3(a)(1) hereof, dividends on each share of Series A Preferred Stock
shall thereupon begin to accrue at the rate of 9% of the sum of (a) the
Preferred Issuance Price and (b) accrued and unpaid dividends on such date. If a
dividend that was accrued and unpaid on a date dividends are to be compounded is
subsequently paid, the rate at which dividends accrue shall thereupon be lowered
to reflect such payment.
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Section 2.4. Liquidation. Upon any liquidation, dissolution or winding up
of the Corporation, each holder of Preferred Stock shall be entitled to receive
from amounts remaining after satisfaction of creditors and holders of securities
(if any) with liquidation preferences senior to the Preferred Stock, and pro
rata based on the respective outstanding liquidation preferences with holders of
securities with a liquidation preference pari passu to the Preferred Stock, an
amount equal to the Liquidation Value, plus accrued and unpaid dividends
thereon, per share multiplied by the number of shares of Preferred Stock, held
by such holder, until paid in full, in preference and priority to any
distribution to any holder of Junior Securities. The Corporation shall provide
written notice of such liquidation, dissolution or winding up, not less than 30
days prior to the payment date stated therein, to each record holder of any
shares of Preferred Stock.
Section 2.5. Voting Rights. (a) No Voting. Except as provided in Section
2.5(b) below or as required by the Oregon Business Corporation Act, the
outstanding shares of Preferred Stock shall not be entitled to vote on any
matter as to which stockholders of the Corporation shall be entitled to vote.
(b) Special Voting Rights. The Corporation shall not, without first
obtaining the affirmative vote or written consent of a majority in interest of
the Series A Preferred Stock, voting as a class:
(1) amend or repeal any provision of, or add any provision to, the
Corporation's Articles of Incorporation or By-laws if such action would
adversely alter preferences, rights, privileges or powers of, or the
restrictions provided herein for the benefit of, the Series A Preferred Stock;
(2) create a series of Preferred Stock with a liquidation preference senior
to the Series A Preferred Stock;
(3) effect any merger, consolidation or similar transaction; or
(4) increase or decrease the number of authorized shares of Series A
Preferred Stock, except as required by Section 2.2 hereof.
Section 2.6. Conversion. (a) Series A Preferred Stock. (1) Mandatory
Conversion. All holders of Series A Preferred Stock shall be required to convert
all of the outstanding shares of Series A Preferred Stock as of the seventh
anniversary of the Closing Date (the "Mandatory Conversion Date"), in which case
the aggregate Preferred Issuance Price of all shares of the Series A Preferred
Stock plus accrued and unpaid dividends thereon held by each holder shall be
converted into a number of shares of Common Stock determined by dividing such
sum by a price per share of Common Stock equal to $1.50 per share (the "Fixed
Mandatory Conversion Rate"). In the event that any holder shall provide notice
to the Corporation of its intention to convert such holder's shares of Series A
Preferred Stock, as provided above, the Corporation shall have the right, within
90 days of receipt of such notice and upon five business days' notice to the
holders, to cause to be redeemed for cash the shares of Series A Preferred Stock
subject to such notice, at a price equal to aggregate purchase price for such
shares of Series A
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Preferred Stock plus mandatory dividends thereon at a rate equal to 9% per
annum, from the date of issuance until the date redeemed in full. In the event
that such cash amount is not paid within such 90-day period, such redemption
right shall lapse and be of no further force and effect, and the holders shall
thereupon have the right once again to convert such shares of Series A Preferred
Stock into shares of the Corporation's Common Stock. During such 90-day (or
shorter, if redeemed, as set forth above) period, the holders of Series A
Preferred Stock shall not convert such stock into the Corporation's Common
Stock, whether or not the Corporation exercises its right of redemption.
(2) Conversion Prior to Mandatory Conversion Date. Prior to the Mandatory
Conversion Date, all holders of Series A Preferred Stock shall have the right to
convert each share of Series A Preferred Stock into ten shares of Common Stock,
without giving effect to accrued and unpaid dividends, but subject to Section
2.6(e) below (the "Anti-dilution Adjustments").
(b) Series B Preferred Stock. Series B Preferred Stock is convertible in
the same manner and subject to the same terms and conditions as provided for in
Section 2.6(a) above with respect to the holders of Series A Preferred Stock.
(c) Series C Preferred Stock. (1) Mandatory Conversion. All holders of
Series C Preferred Stock shall be required to convert all of the outstanding
shares of Series C Preferred Stock as of the Mandatory Conversion Date, in which
case the aggregate Preferred Issuance Price of all shares of the Series C
Preferred Stock plus accrued and unpaid dividends thereon held by each holder
shall be converted into a number of shares of Common Stock determined by
dividing such sum by one-tenth of the Series C Issuance Price.
(2) Conversion Prior to Mandatory Conversion Date. Prior to the Mandatory
Conversion Date, all holders of Series C Preferred Stock shall have the right to
convert each share of Series C Preferred Stock into ten shares of Common Stock,
without giving effect to accrued and unpaid dividends, but subject to the
Anti-dilution Adjustments.
(c) Conversion Procedure. (1) Before any holder of shares of Preferred
Stock shall be entitled to convert any of such shares into shares of Common
Stock, such holder shall surrender the certificate or certificates, duly
endorsed, at the office of the Corporation or of any transfer agent for the
Preferred Stock, and shall give written notice to the Corporation at its
principal corporate office of the election to convert such shares and shall
state therein the name or names in which the certificate or certificates for
shares of Common Stock are to be issued.
(2) Each conversion of any shares of Preferred Stock shall be deemed to
have been effected on the close of business on the date on which the certificate
or certificates representing such Preferred Stock to be converted have been
surrendered at the principal corporate office of the Corporation or the office
of any transfer agent for the Preferred Stock. At such time as such conversion
has been effected, the rights of the holder of such Preferred Stock as a holder
shall cease, the Person or Persons in whose name or names any certificate or
certificates for shares of Conversion Stock are to be issued upon such
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conversion shall be deemed to have become the holder or holders of record of the
shares of Conversion Stock represented thereby.
(3) As soon as possible after a conversion has been effected (but in any
event within five business days in the case of clause (6) below), the
Corporation or its transfer agent 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; and
(ii) payment in an amount equal to the amount payable under clause (6)
below with respect to such conversion.
(4) The issuance of certificates for shares of Conversion Stock upon
conversion of the Preferred Stock shall be made without charge to the holders of
such Preferred Stock for any 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 Preferred Stock, the Corporation shall take all such
actions as are necessary in order to ensure that the Conversion Stock issuable
with respect to such conversion shall be validly issued, fully paid and
nonassessable.
(5) The Corporation shall not close its books against the transfer of the
Preferred Stock or of Conversion Stock issued or issuable upon conversion of the
Preferred Stock in any manner which interferes with the timely conversion of the
Preferred Stock. The Corporation shall assist and cooperate with any holder of
the Preferred Stock or Conversion Stock required to make any governmental
filings or obtain any governmental approval prior to or in connection with any
conversion of shares hereunder (including, without limitations, making any
filings required to be made by the Corporation).
(6) If any fractional interest in a share of Conversion Stock would, except
for the provisions of this clause (6), be deliverable upon any conversion of the
Preferred Stock, 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.
(7) The Corporation shall at all times reserve and keep available out of
its authorized but unissued shares of Conversion Stock, solely for the purpose
of issuance upon the conversion of the Preferred Stock, such number of shares of
Conversion Stock issuable upon the conversion of all outstanding shares of
Preferred Stock. All shares of Conversion Stock which are so issuable shall,
when issued, be duly and validly issued, fully paid and nonassessable and free
from all taxes, liens and charges. The Corporation shall take all such actions
as may be necessary to ensure that all such shares of Conversion Stock may be so
issued without violation of any applicable law or governmental regulation or any
requirements of any domestic securities exchange or market upon which shares of
Conversion Stock may be listed (except for official notice of issuance which
shall be immediately delivered by the Corporation upon each such
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issuance and except for filings, notices of applicability and permissions solely
within the control of, or laws and regulations solely applicable to, the holders
of the Preferred Stock).
(e) Anti-dilution Adjustments. (1) Changes in Common Stock. In case the
Corporation shall at any time or from time to time after the date of filing
these Articles of Amendment (i) pay a dividend or make any other distribution
with respect to its Common Stock in shares of Common Stock, (ii) subdivide its
outstanding shares of Common Stock into a greater number of shares of Common
Stock, (iii) combine its outstanding shares of Common Stock or (iv) issue any
shares of its capital stock or other assets in a reclassification or
reorganization of the Common Stock (including any such reclassification in
connection with a consolidation or merger in which the Corporation is the
continuing entity), then the number and kind of shares of capital stock of the
Corporation or other assets that may be received upon the conversion of the
Preferred Stock shall be adjusted to the number of shares of Conversion Stock
and amount of any such securities, cash or other property of the Corporation
which the holders would have owned or have been entitled to receive after the
happening of any of the events described above had the Preferred Stock been
converted immediately prior to the record date (or, if there is no record date,
the effective date) for such event. An adjustment made pursuant to this clause
(1) shall become effective upon the effective date of such payment,
sub-division, combination or issuance as described above. Any Conversion Stock
or other assets to be acquired as a result of such adjustment shall not be
issued prior to the effective date of such event. For the purposes of this
clause (1), the number of shares of Common Stock at any time outstanding shall
not include shares held in the treasury of the Corporation. Notwithstanding any
other provision of this Section 2.6(e)(1), an action described in Section
2.6(e)(1)(i), (ii) or (iii) hereof shall not affect the number of shares of
Conversion Stock issued upon mandatory conversion of the Preferred Stock except
by operation of Section 2.6(e)(5) hereof.
(2) Issuance of Rights. In case the Corporation shall issue to all holders
of its Common Stock rights, options or warrants to subscribe for or purchase, or
other securities exchangeable for or convertible into, shares of Common Stock
that are not distributed to holders of Preferred Stock (any such rights,
options, warrants or other securities, collectively, "Rights") (excluding rights
to purchase Common Stock pursuant to a Corporation plan for reinvestment of
dividends or interest and excluding any Excluded Stock) at a subscription
offering, exercise or conversion price per share (as defined below, the
"offering price per share") which, before deduction of customary discounts and
commissions, is lower than the current Market Price per share of Common Stock on
the record date of such issuance or grant, whether or not, in the case of
Rights, such Rights are immediately exercisable or convertible, then the number
of shares of Conversion Stock issuable upon conversion of the Preferred Stock
shall be adjusted by multiplying the number of shares of Conversion Stock
issuable upon conversion of the Preferred Stock immediately prior to any
adjustment in connection with such issuance or grant by a fraction, the
denominator of which shall be the number of shares of Common Stock outstanding
(exclusive of any treasury shares) on the record date of issuance or grant of
such Rights plus the number of shares which the aggregate offering price (as
defined below) of the total number of shares of Common Stock so offered would
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purchase at the current Market Price per share of Common Stock on the record
date, and the numerator of which is the number of shares of Common Stock
outstanding plus the aggregate number of shares of Common Stock issuable upon
exercise of the rights. Such adjustment shall be made immediately after the
record date for the issuance or granting of such Rights. For purposes of this
clause, the "offering price per share" of Common Stock shall, in the case of
Rights, be determined by dividing (x) the total amount received or receivable by
the Corporation in consideration of the issuance of such Rights plus the total
consideration payable to the Corporation upon exercise thereof (the "aggregate
offering price"), by (y) the total number of shares of Common Stock covered by
such Rights.
(3) Dividends and Distributions. In case the Corporation shall distribute
to all holders of Common Stock any dividend or other distribution of evidences
of its indebtedness or other assets (in each case other than cash dividends and
other than as provided in clause (1) above in which the holders of the Preferred
Stock are otherwise entitled to share, as provided herein) or Rights, then, in
each case, all holders of the Preferred Stock shall be entitled to receive all
of the same dividends, distributions or Rights, as the case may be, as the
holders of Common Stock, on an as-converted basis, as and when distributed to
the holders of Common Stock, at such time, if any, that the holders of the
Preferred Stock shall have elected to convert such stock to Common Stock, as
provided herein.
(4) Computations. For the purpose of any computation under clauses (1) and
(2) above, the current Market Price per share of Common Stock at any date shall
be as set forth in (i) the definition of Market Price for the 10 consecutive
trading days commencing 20 trading days prior to the earlier to occur of (A) the
date as of which the Market Price is to be computed or (B) the last full trading
day before the commencement of "ex-dividend" trading in the Common Stock
relating to the event giving rise to the adjustment required by clause (1) or
(2) or (ii) any other arm's-length adjustment formula that the Board may use in
good faith. In the event the Common Stock is not then publicly traded or if for
any other reason the current market price per share cannot be determined
pursuant to the foregoing provisions of this clause (4) the current market price
per share shall be the Fair Value thereof.
(5) Adjustment. Whenever the number of shares of Conversion Stock issuable
upon voluntary conversion of the Series A Preferred Stock and Series B Preferred
Stock is adjusted as provided under clause (1) or (2), the Fixed Mandatory
Conversion Rate shall be adjusted by multiplying such prices immediately prior
to such adjustment by a fraction, the numerator of which shall be the number of
shares of Conversion Stock issuable upon voluntary conversion of any shares of
Series A Preferred Stock or Series B Preferred Stock immediately prior to such
adjustment, and the denominator of which shall be the number of shares of
Conversion Stock issuable upon voluntary conversion of any shares of Series A
Preferred Stock or Series B Preferred Stock immediately thereafter. Whenever the
number of shares of Conversion Stock issuable upon voluntary conversion of the
Series C Preferred Stock is adjusted as provided under clause (1) or (2), the
Series C Issuance Price shall be adjusted by multiplying such prices immediately
prior to such adjustment by a fraction, the numerator of which shall be the
number of
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shares of Conversion Stock issuable upon voluntary conversion of any shares of
Series C Preferred Stock immediately prior to such adjustment, and the
denominator of which shall be the number of shares of Conversion Stock issuable
upon voluntary conversion of any shares of Series C Preferred Stock immediately
thereafter.
(6) Securities. For the purpose of this Section 2.6, the term "shares of
Common Stock" shall mean (i) the class of stock designated as Common Stock,
without par value, of the Corporation on the date of filing this Certificate or
(ii) any other class of stock resulting from successive changes or
reclassifications of such shares consisting solely of changes in par value, or
from par value to no par value, or from no par value to par value.
(7) Re-Adjustment. If, at any time after any adjustment to the number of
Shares of Conversion Stock issuable upon conversion of the Preferred Stock and
the Conversion Price shall have been made pursuant to clause (2) of this Section
2.6, any rights, options, warrants or other securities convertible into or
exchangeable for shares of Common Stock shall have expired, or any thereof shall
not have been exercised, the Conversion Price and the number of shares of
Conversion Stock issuable upon conversion of the Preferred Stock shall, upon
such expiration, be readjusted and shall thereafter be such as it would have
been had it been originally adjusted (or had the original adjustment not been
required, as the case may be) as if (A) the only shares of Common Stock offered
were the shares of Common Stock, if any, actually issued or sold upon the
exercise of such rights, options or warrants and (B) such shares of Common
Stock, if any, were issued or sold for the consideration actually received by
the Corporation for the issuance, sale or grant of all such rights, options or
warrants whether or not exercised; provided, further that no such readjustment
shall have the effect of increasing the Conversion Price or decreasing the
number of shares of Conversion Stock issuable upon conversion of the Preferred
Stock by an amount (calculated by adjusting such increase or decrease as
appropriate to account for all other adjustments pursuant to this Section 2.6
following the date of the original adjustment referred to above) in excess of
the amount of the adjustment initially made in respect of the issuance, sale or
grant of such rights, options or warrants.
(e) Reorganization, Reclassification Consolidation, Merger or Sale. Any
recapitalization, reorganization, reclassification, consolidation, merger, sale
of all or substantially all of the Corporation's assets to another Person or
other transaction which is effected in such a manner that holders of Common
Stock are entitled to receive (either directly or upon subsequent liquidation)
stock, securities or assets with respect to or in exchange for Common Stock is
referred to herein as an "Organic Change". Prior to the consummation of any
Organic Change, the Corporation shall make appropriate provisions to ensure that
each of the holders of each share of the Preferred Stock shall thereafter have
the right to acquire and receive, in lieu of or in addition to (as the case may
be) the shares of Conversion Stock immediately theretofore acquirable and
receivable upon the conversion of such holder's Preferred Stock, such shares of
stock, securities or assets as such holder would have received in connection
with such Organic Change if such holder had converted its Preferred Stock
immediately prior to such Organic Change. In each such case, the Corporation
shall also make appropriate provisions to ensure that the provisions of this
Section 2.6 hereof shall thereafter be applicable to the Preferred Stock. The
Corporation shall not effect any such
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consolidation, merger or sale, unless prior to the consummation thereof, the
successor corporation (if other than the Corporation) resulting from
consolidation or merger or the corporation purchasing such assets assumes by
written instrument the obligation to deliver to each such holder such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
such holder may be entitled to acquire.
(f) Notices. (1) Immediately upon any adjustment of the number of shares
issuable upon conversion of the Preferred Stock, the Corporation shall give
written notice thereof to all holders of the Preferred Stock, setting forth in
reasonable detail and certifying the calculation of such adjustment.
(2) The Corporation shall give written notice to all holders of the
Preferred Stock at least 10 days prior to the date on which the Corporation
closes its books or takes a record of determining rights to receive any
dividends or distributions. The Corporation shall also give written notice to
the holders of the Preferred Stock at least 30 days prior to the date on which
Organic Change shall occur.
Section 2.7. Redemption. (a) Series A Preferred Stock. (i) General. Subject
to the provisions of Section 2.6 above, shares of Series A Preferred Stock may
be redeemed by the Corporation, as follows, upon at least 45 days' and no more
than 90 days' prior written notice, at a price equal to the sum of the aggregate
Preferred Issuance Price of the Series A Preferred Stock plus accrued and unpaid
dividends. From and after the third anniversary of the Closing Date, if the
Closing Price shall be equal to or greater than $2.25 (subject to the
anti-dilution adjustments described in Section 2.6(e)(1) above) for 20 out of
any 30 consecutive trading days on or prior to any such applicable date (or, if
thereafter, prior to any date for such a redemption if not effected prior
thereto) (the "Redemption Price Condition"), the Corporation shall have the
right to redeem one-third of the Series A Preferred Stock (as to the Preferred
Issuance Price thereof), together with one-third of the then-accrued and unpaid
dividends through such date. From and after the fourth anniversary of the
Closing Date, if the Redemption Price Condition is met, the Corporation shall
have the right to redeem an additional one-third of the Series A Preferred Stock
(as to the Preferred Issuance Price thereof), together with one-half of the
then-accrued and unpaid dividends at such date (or two-thirds of then-accrued
and unpaid dividend at the second date if no Series A Preferred Stock was
previously redeemed at or after the first such date). From and after the fifth
anniversary of the Closing Date, if the Redemption Price Condition is met, the
Corporation shall have the right to redeem the balance of the Series A Preferred
Stock, together with the remaining accrued and unpaid dividends at such date.
Prior to redemption, the Corporation must provide the applicable redemption
notice within 60 days of the achievement of the Redemption Price Condition.
(ii) Early Redemption. The Series A Preferred Stock (or any portion
thereof) may be redeemed by the Corporation prior to such three, four or
five-year period, as applicable, only in the event the Corporation shall have
reasonably determined, in good faith, after consultation with the original
holder of shares of Series A Preferred Stock to abandon the development of the
Technology (as defined in the Securities Purchase Agreement dated as of the
Closing Date among the Corporation and Elan International Services, Ltd., a
Bermuda corporation) or products based on the Technology.
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(iii) Notice of Redemption. Not less than 45 days but not more than 90 days
prior to the date of any redemption (each, a "Redemption Date"), as permitted by
this Section 2.7(a), the Corporation shall send a written notice of redemption
(the "Notice") to each holder of Series A Preferred Stock to be redeemed in the
manner provided herein. The notice shall identify:
(1) the Redemption Date;
(2) the redemption price to be paid to such holder, as provided above (the
"Redemption Price"), and applicable to such Series A Preferred Stock;
(3) the number of shares of Common Stock into which a share of Series A
Preferred Stock, Series B Preferred Stock or Series C Preferred Stock, as the
case may be, is convertible;
(4) the name and address of the transfer agent, if any, in respect of the
Series A Preferred Stock;
(5) that Series A Preferred Stock called for redemption may be converted by
the holder, as otherwise provided herein, at any time before the close of
business on the Redemption Date; and
(6) that Series A Preferred Stock called for redemption must be surrendered
to the transfer agent at the office of the Corporation or its transfer agent to
collect the Redemption Price.
(iv) Effect of Notice of Redemption. Upon the Notice, Series A Preferred
Stock called for redemption shall become due and payable on the Redemption Date,
unless converted prior to such date, and at the Redemption Price stated in the
Notice. Upon surrender to the Corporation or transfer agent shares shall be
redeemed and the Redemption Price stated in the Notice shall be paid in cash in
full.
(b) Series B Preferred Stock. Shares of Series B Preferred Stock shall be
redeemable by the Corporation in the same manner and subject to the same terms
and conditions as set forth for redemption of shares of Series A Preferred Stock
in Section 2.7(a) above.
(c) Series C Preferred Stock. Shares of Series C Preferred Stock shall be
redeemable by the Corporation in the same manner and subject to the same terms
and conditions as set forth for redemption of shares of Series A Preferred Stock
in Section 2.7(a) above, except that shares of Series C Preferred Stock shall be
redeemed at a price equal to the sum of the aggregate Series C Issuance Price
plus accrued and unpaid dividends.
Section 2.8. Registration of Transfer. The Corporation shall keep a
register for the registration of the record holders of the Preferred Stock. Upon
the surrender of any certificate representing any shares of Preferred Stock, the
Corporation shall, at the request of the record holder of such certificate,
execute and deliver (at the Corporation's expense,
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provided that the holder will be responsible for any transfer taxes if the
certificate is register in a new name) a new certificate or certificates in
exchange therefore representing in the aggregate the number of shares of the
Preferred Stock, as applicable, represented by the surrendered certificate. Each
such new certificate shall be registered in such name and shall represent such
number of shares of the Preferred Stock, as applicable, as is requested by the
holder of the surrendered certificate and shall be substantially identical in
form to the surrendered certificate, and dividends shall accrue on the Preferred
Stock represented by such new certificate from the date to which dividends have
been fully paid on such Preferred Stock represented by the surrendered
certificate.
Section 2.9. Replacement. Upon receipt of evidence reasonably satisfactory
to the Corporation (an affidavit of the registered holder and an undertaking of
indemnity from a creditworthy indemnitor shall be satisfactory) of the ownership
and the loss, theft, destruction or mutilation of any certificate evidencing
shares of the Preferred Stock, and in the case of any such loss, theft or
destruction, upon receipt of indemnity reasonably satisfactory to the
Corporation, or, in the case of any such mutilation upon surrender of such
certificate, the Corporation shall (at its expense) execute and deliver in lieu
of such certificate a new certificate of like kind representing the number of
shares of such series represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate, and dividends shall accrue on the Preferred Stock represented by
such new certificate from the date to which dividends have been fully paid on
such lost, stolen, destroyed or mutilated certificate.
Section 2.10. Amendment and Waiver. No amendment, modification or waiver
shall be binding or effective with respect to any provision of Section 2.1
through Section 2.11 of these Articles of Incorporation without the prior
written consent of a Majority in Interest of each of the Series A Preferred
Stock, Series B Preferred Stock or Series C Preferred Stock outstanding at the
time such action is taken.
Section 2.11. Notices. Except as otherwise expressly provided hereunder,
all notices referred to herein shall be in writing and shall be delivered by
registered or certified mail, return receipt requested and postage prepaid, or
by reputable overnight courier or telecopy service, charges prepaid, and shall
be deemed to have been given when so mailed or sent (a) to the Corporation, at
its principal executive offices and (b) to any stockholder, at such holder's
address as it appears in the stock records of the Corporation (unless otherwise
indicated by any such holder).
ARTICLE V
Preemptive Rights
The owners of shares of stock of the Corporation shall not have preemptive
rights to subscribe for or purchase any part of new or additional issues of
stock, or securities convertible into stock, of any class whatsoever, whether
now or hereafter authorized, and whether issued for cash, property, services, by
way of dividends, or otherwise.
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ARTICLE VI
Cumulative Voting
Each shareholder entitled to vote at any election for directors shall have
the right to vote, in person or by proxy, the number of shares owned by him for
as many persons as there are directors to be elected and for those election he
has a right to vote, and no shareholder shall be entitled to cumulate his votes.
ARTICLE VII
Limitation of Directors' Liability
A director shall have no liability to the Corporation or its shareholders
for monetary damages for conduct as a director, except for (a) any breach of the
director's duty of loyalty to the Corporation or its shareholders; (b) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law by the director; (c) conduct violating ORS 60.367; or (d) any
transaction from which the director derives an improper personal benefit. If the
Oregon Business Corporation Act is hereafter amended to authorize corporate
action further eliminating or limiting the personal liability of directors, then
the liability of a director shall be eliminated or limited to the full extent
permitted by the Oregon Business Corporation Act as so amended. Any repeal or
modification of this Article shall not adversely affect any right or protection
of a director that exists at the time of such repeal or modification and that
extends to an act or omission of such director occurring prior to such repeal or
modification.
ARTICLE VIII
Bylaws; Amendment of Articles
Section 1. Bylaws. The board of directors shall have full power to adopt,
alter, amend or repeal the Bylaws or adopt new Bylaws. Nothing herein shall deny
the concurrent power of the shareholders to adopt, alter, amend or repeal the
Bylaws.
Section 2. Amendment of Articles. The Corporation reserves the right to
amend, alter, change or repeal any provisions contained in its Articles of
Incorporation in any manner now or hereafter prescribed or permitted by statute.
All rights of shareholders of the Corporation are granted subject to this
reservation.
ARTICLE IX
Registered Office and Agent
The address of the registered office of the Corporation is 601 SW Second
Avenue, Suite 2050, Portland, Oregon 97204, and the name of the registered agent
at such address is CT Corporation System. The registered office and registered
agent of the Corporation
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may be changed from time to time by the Board of Directors but may not be
located outside of the State of Oregon.
ARTICLE X
Directors
Section 1. Number of Directors. The Board of Directors shall consist of not
less than six nor more than eleven, the exact number to be set as provided
herein. Until increased or decreased as provided herein, the Board of Directors
shall consist of eight members. The Board of Directors is authorized to increase
or decrease the size of the Board of Directors (within the range specified
above) at any time by the affirmative vote of two-thirds of the directors then
in office. Without the unanimous consent of the directors then in office, no
more than two additional directors shall be added to the Board of Directors in
any 12-month period. Without the unanimous approval of the directors then in
office, no person who is affiliated as an owner, director, officer, employee or
consultant of a company or business deemed by the Board of Directors to be
competitive with that of the Corporation shall be eligible to serve of the Board
of Directors of the Corporation.
Section 2. Classified Board.
The Board shall be divided into three classes: Class I Directors, Class II
Directors and Class III Directors. Each such class of directors shall be nearly
equal in number of directors as possible. Each director shall serve for a term
ending at the third annual shareholders' meeting following the annual meeting at
which such director was elected; provided, however, that the directors first
elected as Class I Directors shall serve for a term ending at the annual meeting
to be held in the year following the first election of directors by classes, the
directors first elected as Class II Directors shall serve for a term ending at
the annual meeting to be held in the second year following the first election of
directors by classes and the directors first elected as Class III directors
shall serve for a term ending at the annual meeting to be held in the third year
following the first election of directors by classes. Notwithstanding the
foregoing, each director shall serve until his or her successor shall have been
elected and qualified or until his or her earlier death, resignation or removal.
At each annual election, the directors chosen to succeed those whose terms
then expire shall be identified as being of the same class as the directors they
succeed, unless, by reason of any intervening changes in the authorized number
of directors, the Board shall designate one or more directorships whose term
then expire as directorships of another class in order more nearly to achieve
equality in the number of directors among the classes. When the Board fills a
vacancy resulting from the death, resignation or removal of a director, the
director chosen to fill that vacancy shall be of the same class as the director
he or she succeeds, unless, by reason of any previous changes in the authorized
number of directors, the Board shall designate the vacant directorship as a
directorship of another class in order more nearly to achieve equality in the
number of
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directors among the classes. The terms of any director elected by the Board to
fill a vacancy will expire at the next shareholders meeting at which directors
are elected, despite the class such director has been elected to fill.
Notwithstanding the rule that the three classes shall be as nearly equal in
number of directors as possible, upon any change in the authorized number of
directors, each director then continuing to serve as such will nevertheless
continue as a director of the class of which he or she is a member, until the
expiration of his or her current term or his or her earlier death, resignation
or removal.
Newly created directorships resulting from any increase in the number of
directors and any vacancies on the Board of Directors resulting from death,
resignation, removal or other cause shall be filled by the affirmative vote of a
majority of the remaining directors then in office, even though less than a
quorum of the Board of Directors. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
Section 3. Initial Directors as Classified.
The directors of the Corporation first elected to classes are eight (8) in
number and their names and class are:
Name Class
- ---- -----
James C. O'Shea III
John Ruedy, MD III
William A. Gouveia I
Grace Keeney Fey II
Eric T. Herfindal II
Richard Plestina II
David H. DeWeese I
Michael T. Sember III
Section 4. Removal of Directors.
Directors may be removed only for cause. For purposes of this Amendment,
"cause" shall mean that the director has: (i) committed an act of fraud or
embezzlement against the Corporation; (ii) been convicted of, or plead nolo
contendre to a crime involving moral turpitude; (iii) failed to perform the
director's duties as a director and such failure constitutes a breach of the
director's duty of loyalty to the Corporation or provides an improper personal
benefit to the director.
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ARTICLE XI
Incorporator
The name and address of the incorporator are:
Name Address
---- -------
Benjamin F. Stephens c/o Bogle & Gates
Two Union Square
601 Union Street
Seattle, Washington 98101-2346
ARTICLE XII
Shareholder Approval Of Certain Events
Notwithstanding any provision of Articles of Incorporation, as amended, or
Bylaws of the Corporation, and notwithstanding the fact that some lesser
percentage may be allowed by law, any amendment, change or repeal of Articles X
or XII, or any other amendment of the Articles of Incorporation, as amended,
which would have the effect of modifying or permitting circumvention of the
provisions of Articles X or XII, shall require the following shareholder votes:
(i) the affirmative votes of 75 percent of all outstanding shares of the
Corporation entitled to vote on the matter, voting together as a single class;
and (ii) if any shares of the Corporation are entitled to vote on the matter as
a separate group, the affirmative vote of 75 percent of such shares, voting
separately.
DATED: October 11, 1999.
/s/ James C. O'Shea
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