Exhibit 3.1
FOURTH RESTATED ARTICLES OF INCORPORATION
OF
WTD INDUSTRIES, INC.
These Fourth Restated Articles of Incorporation of WTD Industries, Inc.
are adopted pursuant to the Oregon Business Corporation Act and supersede any
previous Articles of Incorporation or amendments thereto.
ARTICLE 1. NAME
The name of the corporation is WTD Industries, Inc.
ARTICLE 2. DURATION
The period of the corporation's duration shall be perpetual.
ARTICLE 3. PURPOSES AND POWERS
The purpose for which the corporation is organized is to engage in any
business, trade or activity which may lawfully be conducted by corporation
organized under the Oregon Business Corporation Act.
The corporation shall have the authority to engage in any and all such
activities as are incidental or conducive to the attainment of the purposes of
the corporation and to exercise any and all powers authorized or permitted under
any laws that may be now or hereafter applicable or available to the
corporation.
ARTICLE 4. SHARES
4.1 Authorized Capital.
The corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total number
of shares of stock which the corporation shall have authority to issue shall be
fifty million (50,000,000), consisting of forty million (40,000,000) shares of
Common Stock, having no par value, and ten million (10,000,000) shares of
Preferred Stock, having no par value.
4.2 Common Stock.
Subject to any preferential or other rights granted to any series of
Preferred Stock, the holders of shares of the Common Stock shall be entitled to
receive dividends out of funds of the corporation legally available therefor, at
the rate and at the time or times as may be provided by the Board of Directors
and shall be entitled to receive distributions legally payable to shareholders
on the liquidation of the corporation. Unless otherwise provided by the
corporation's articles of incorporation or by the corporation's Plan of
Reorganization (together with the documents attached as Exhibits thereto, the
"Plan"), as approved by order of the United States Bankruptcy
19
Court for the Western District of Washington, the holders of shares of Common
Stock, on the basis of one vote per share, shall have the right to vote for the
election of members of the Board of Directors of the corporation and the right
to vote on all other matters, except where a separate class or series of the
corporation's shareholders vote by class or series.
4.3 Preferred Stock.
4.3.1 Issuance of Preferred Stock in Series.
The Preferred Stock authorized by these Fourth Restated Articles of
Incorporation shall be issued from time to time in series. The initial two
series of Preferred Stock shall be designated "Series A Preferred Stock" and
"Series B Preferred Stock." The rights, preferences, privileges, restrictions
granted to and imposed on the Series A Preferred Stock, which series shall
consist of five hundred thousand (500,000) shares, and the Series B Preferred
Stock, which series shall consist of five hundred thousand (500,000) shares, are
as set forth below in this Article 4 and in the Plan. Except as to the Series A
and Series B Preferred Stock and except as otherwise provided in the
corporation's articles of incorporation, the Board of Directors of this
corporation is hereby authorized to fix the number of shares, and determine the
designation of each series of Preferred Stock and may determine or alter the
rights, preferences, privileges and restrictions granted to or imposed on any
wholly unissued series of Preferred Stock. The Series A and Series B Preferred
Stock are sometimes hereinafter referred to collectively as the "Series
Preferred Stock."
4.3.2 Dividends.
The holders of shares of Series Preferred Stock shall be entitled to
receive dividends, out of any assets legally available therefor, prior and in
preference to any declaration or payment of any dividend (payable other than in
Common Stock of this corporation) on the Common Stock of this corporation. The
holders of shares of Series A Preferred Stock shall be entitled to receive
dividends, out of any assets legally available therefor, prior and in preference
to any declaration or payment of any dividend on shares of any other series of
Preferred Stock, including, without limitation, shares of the Series B Preferred
Stock of this corporation. Holders of shares of Series A Preferred Stock shall
be entitled to receive dividends at a rate equal to the Dividend Rate (as
hereinafter defined) multiplied by the Series A Original Issue Price (as
hereinafter defined) per share of the Series A Preferred Stock then outstanding,
payable in cash out of the assets of the corporation legally available therefor,
quarterly in advance beginning on November 30, 1992 (each such quarterly date
being a "Dividend Date"). "Dividend Rate" shall mean a rate of interest per
annum equal to the "base" or "prime" rate of Bank (as hereinafter defined) which
rate is in effect on the date that is five business days prior to the Dividend
Date and which serves as the basis upon which effective rates of interest are
calculated for those loans making reference thereto; provided that,
notwithstanding the foregoing, in no event shall the Dividend Rate be less than
6% per annum, nor more than 9% per annum. "Bank" shall mean Bank of America,
N.A., or in the event that such bank shall no longer publicly announce a "base"
or "Prime" rate, Wells Fargo Bank, N.A. Notwithstanding the foregoing, from the
date the corporation receives any payment blockage notice described in Section
3.2(g) of the Plan (a "Blockage Notice"), which Blockage Notice remains in
effect (such effective period being the "Blockage Period"), the corporation
shall cease to pay dividends to the holders of shares of Series A Preferred
Stock.
20
During the Blockage Period, the corporation shall deposit the dividends
that would otherwise be payable to the holders of Series A Preferred Stock (the
"Escrowed Dividends") with any bank, trust company or other financial
institution that provides trust services in the regular course of its business,
in any case having aggregate capital and surplus in excess of $100,000,000, as
escrow agent (the "Escrow Agent"), upon the terms described in the Plan. Subject
to the provisions of the Plan, and provided that the Escrowed Dividends have not
previously been applied to the corporation's obligations to any other party
pursuant to the Plan, the Escrow Agent shall be required, under the terms of the
escrow, to pay the Escrowed Dividends to the record holders of Series A Stock to
which the dividends would have been paid if timely, upon the expiration or
termination of all Blockage Periods then in effect.
4.3.3 Liquidation Preference
(a) In the event of any liquidation, dissolution or winding up of the
corporation, either voluntary or involuntary, the assets of the corporation
available for distribution shall be distributed in the following order and
amount:
(i) First, the holders of the Series A Preferred Stock then
outstanding shall be entitled to receive an amount equal to $100 for
each outstanding share of such Series A Preferred Stock, appropriately
adjusted for any stock dividend, split, combination or similar
recapitalization of such Series A Preferred Stock (the "Series A
Original Issue Price") and, in addition, an amount equal to any
dividends accrued but not paid on each such share, subject to
subsection 4.3.3(b) hereof.
(ii) Second, the holders of the Series B Preferred Stock then
outstanding shall be entitled to receive an amount equal to $100 for
each outstanding share of such Series B Preferred Stock, appropriately
adjusted for any stock dividend, split, combination or similar
recapitalization of such Series B Preferred Stock (the "Series B
Original Issue Price") and, in addition, an amount equal to any
dividends accrued but not paid on each such share, subject to
subsection 4.3.3(c) hereof.
(iii) After setting apart or paying in full the preferential
amounts due the holders of the Series A Preferred Stock and the Series
B Preferred Stock, as provided above, if assets available for
distribution remain in the corporation, the holders of the
corporation's Common Stock shall be entitled to share ratably in the
remaining assets of the corporation.
(b) If, upon the occurrence of any liquidation, dissolution or winding
up of the corporation and the distribution of the corporation's assets pursuant
to subsection 4.3.3(a)(i), such assets available for distribution shall be
insufficient to permit the payment to the holders of the Series A Preferred
Stock of the full preferential amounts to which they may be entitled, then the
entire assets of the corporation legally available for distribution shall be
distributed ratably among the holders of shares of the Series A Preferred Stock.
21
(c) If, upon the occurrence of any liquidation, dissolution or winding
up of the corporation and the distribution of the corporation's assets pursuant
to subsection 4.3.3(a)(ii), such assets available for distribution shall be
insufficient to permit the payment to the holders of the Series B Preferred
Stock of the full preferential amounts to which they may be entitled, then the
entire assets of the corporation legally available for distribution to the
holders of the Series B Preferred Stock shall be distributed ratably among the
holders of shares of the Series B Preferred Stock.
(d) Whenever a distribution of assets provided for in this Section
4.3.3 shall be payable in property other then cash, the value of such
distribution shall be the fair market value of such property as determined in
good faith by the Board of Directors of the corporation.
4.3.4 Redemption.
(a) The corporation may, at any time it may lawfully do so, at the
option of the Board of Directors, redeem in whole or in part the shares of
Series A Preferred Stock by paying therefor a sum equal to the Series A Original
Issue Price for each such share to be redeemed plus the sum of all unpaid
dividends accrued with respect thereto, as adjusted for stock splits, stock
dividends or similar recapitalizations (the "Series A Redemption Price"). The
corporation may, at the option of the Board of Directors, pay the Series A
Redemption Price in cash or in the form of senior unsecured indebtedness, on the
terms described in Section 4.3.5. Unless otherwise provided by the Plan, if less
than all shares of the Series A Preferred Stock are to be redeemed, the shares
of Series A Preferred Stock shall be redeemed pro rata from the holders of the
Series A Preferred Stock. The corporation may at any time it may lawfully do so,
(i) after all shares of Series A Preferred Stock have been redeemed pursuant to
this subsection 4.3.4(a), and (ii) if any shares of Series A Preferred Stock
have been redeemed pursuant to this subsection 4.3.4(a) in exchange for senior
unsecured indebtedness on the terms described in Section 4.3.5, after such
senior unsecured indebtedness has been paid in full, at the option of the Board
of Directors, redeem in whole or in part the shares of Series B Preferred Stock
by paying therefor a cash sum equal to the Series B Original Issue Price for
each such share to be redeemed plus the sum of all unpaid dividends accrued with
respect thereto, as adjusted for stock splits, stock dividends or similar
recapitalizations (the "Series B Redemption Price"). If less than all shares of
the Series B Preferred Stock are to be redeemed, the shares of Series B
Preferred Stock shall be redeemed pro rata from the holders of the Series B
Preferred Stock.
(b) (i) At least 30 but no more than 60 days prior to the date fixed
for any redemption of Series Preferred Stock (the "Series Redemption
Date"), written notice shall be mailed, postage prepaid, to each holder
of record (at the close of business on the business day next preceding
the day on which notice is given) of the Series Preferred Stock to be
redeemed, at the address last shown on the records of this corporation
for such holder or given by the holder to this corporation for the
purpose of notice, notifying such holder of the redemption to be
effected, specifying the series Redemption Date, the Series Redemption
Price, the form of payment, the place at which payment may be obtained
and the date on which such holder's conversion rights (as set forth in
Section 4.3.6) as to such shares terminate and calling upon such holder
to surrender to this corporation, in the manner and at the place
designated, such holder's certificate or certificates representing the
shares to be redeemed (the "Series Redemption Notice"). Except as
provided in subparagraph 4.3.4(b)(ii), on or after the Series
Redemption Date, each holder of Series
22
Preferred Stock to be redeemed shall surrender to this corporation the
certificate or certificates representing such shares, in the manner and
at the place designated in the Series Redemption Notice, and thereupon
the Series Redemption Price of such shares shall be payable in the form
determined by the Board of Directors pursuant to subsection 4.3.4(a),
to the person whose name appears on such certificate or certificates as
the owner thereof and each surrendered certificate shall be cancelled.
In the event less than all the shares represented by any such
certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares.
(ii) From and after the Series Redemption Date, all dividends
on the Series Preferred Stock designated for redemption in the Series
Redemption Notice shall cease to accrue, all rights of the holders of
such shares as holders of Series Preferred Stock (except the right to
receive the series Redemption Price in the form determined by the Board
of Directors pursuant to subsection 4.3.4(a), upon surrender of their
certificate or certificates) shall cease with respect to such shares,
and such shares shall not thereafter be transferred on the books of
this corporation or be deemed to be outstanding for any purpose
whatsoever.
(iii) In the event that the Series Redemption Price is
determined by the Board of Directors pursuant to subsection 4.3.4(a) to
be paid in cash, the following provisions of this subsection
4.3.4(b)(iii) shall apply: Three days prior to the Series Redemption
Date, this corporation shall deposit the Series Redemption Price of all
outstanding shares of Series Preferred Stock designated for redemption
in the Series Redemption Notice, and not yet redeemed or converted,
with a bank or trust company having aggregate capital and surplus in
excess of $50,000,000 as a trust fund for the benefit of the respective
holders of the shares designated for redemption and not yet redeemed.
Simultaneously, this corporation shall deposit irrevocable instructions
and authority to such bank or trust company to publish the notice of
redemption thereof (or to complete such publication if theretofore
commenced) and to pay, on and after the date fixed for redemption or
prior thereto, the Series Redemption Price of each share to the holders
thereof upon surrender of their certificates. Any monies deposited by
this corporation pursuant hereto for the redemption of shares which are
thereafter converted into shares of Common Stock pursuant to Section
4.3.6 hereof no later than the Series Redemption Date shall be returned
to this corporation forthwith upon such conversion. The balance of any
monies deposited by this corporation pursuant hereto remaining
unclaimed at the expiration of one year following the Series Redemption
Date shall thereafter be returned to this corporation upon its request
expressed in a resolution of its Board of Directors, provided that the
shareholder to which such monies would be payable hereunder shall be
entitled, upon proof of its ownership of the Series Preferred Stock and
payment of any bond requested by the corporation, to receive such
monies but without interest from the Series Redemption Date.
(iv) The rights contained in this Section 4.3.4 are in
addition to any other rights of this corporation under law to
repurchase part or all of the Series Preferred Stock.
23
4.3.5 Exchange.
The terms of the senior unsecured indebtedness shall be as set forth in
a Senior Indebtedness Agreement which shall include, but not be limited to, the
following terms: Such indebtedness will bear interest at 12 percent per annum,
be payable quarterly in arrears in cash, and will mature on the date that is 10
years after the exchange was effected. The indebtedness shall be required to be
repaid prior to maturity in installments of 20 percent of the original principal
amount per year, beginning at the end of the sixth year after the exchange has
been effected. Such Senior Indebtedness Agreement shall be the obligation of the
corporation and each of its subsidiaries (as defined in the Plan) and contain
affirmative and negative covenants (excluding financial covenants) and such
terms of default and default remedies as are customary in commercial lending
transactions involving borrowers of financial position and condition comparable
to that of the corporation at the time of such redemption. Unless and until
agreement is reached on all terms of the Senior Indebtedness Agreement, the
corporation shall not redeem the Series A Preferred Stock other than for cash,
and if such agreement is not reached prior to a Series Redemption Date, the
corporation will withdraw any Series A Redemption Notice immediately prior to
the Series A Redemption Date specified therein to the extent the redemption is
to be made other than for cash.
4.3.6 Conversion.
The holders of the Series Preferred Stock shall have conversion rights
as follows (the "Conversion Rights"):
(a) (i) Each share of Series A Preferred Stock shall be convertible at
the option of the holder thereof at any time after April 30, 1999, and
prior to the close of business on any Series Redemption Date as may
have been fixed in any series Redemption Notice with respect to such
share, into such number of fully paid and nonassessable shares of
Common Stock as are equal to the product obtained by multiplying the
number of shares of Series A Preferred Stock being converted by the
Series A Conversion Rate (determined under subsection 4.3.6(c)). Each
share of Series B Preferred Stock shall be convertible at the option of
the holder thereof at any time prior to the close of business on any
Series Redemption Date as may have been fixed in any Series Redemption
Notice with respect to such share, into such number of fully paid and
nonassessable shares of Common Stock as are equal to the product
obtained by multiplying the number of shares of Series B Preferred
Stock being converted by the Series B Conversion Rate (determined under
subsection 4.3.6(c)).
(ii) In the event of a call for redemption of any shares of
Series Preferred Stock pursuant to Section 4.3.4 hereof, the Conversion
Rights shall terminate as to the shares designated for redemption at
the close of business on the Series Redemption Date, unless default is
made in payment of the Series Redemption Price.
(iii) Each share of Series A Preferred Stock may, at the option
of the corporation's Board of Directors, automatically be converted
into the number of shares of Common Stock (determined pursuant to
subsection 4.3.6(a)(i)) into which such Series A Preferred Stock is
then convertible if, at any time, the Common Stock is then listed or
admitted to unlisted trading privileges on a national securities
exchange or is admitted for
24
quotation under the National Association of Securities Dealers
Automated Quotations System ("NASDAQ") or similar automated quotation
system and the average market price (as hereinafter defined) over a
period of 20 consecutive trading days is 120 percent of the Series A
Conversion Price (determined under subsection 4.3.6(c)); provided, that
all accrued but unpaid dividends with respect to each share of Series A
Preferred Stock, as adjusted for stock splits, stock dividends or
similar recapitalizations, shall be paid upon the effective date of the
conversion of such shares, to the persons entitled to receive shares of
Common Stock upon such conversion. Each share of Series B Preferred
Stock may, at the option of the corporation's Board of Directors,
automatically be converted into the number of shares of Common Stock
(determined pursuant to subsection 4.3.6(a)(i)) into which such Series
B Preferred Stock is then convertible if, at any time, the Common Stock
is then listed or admitted to unlisted trading privileges on a national
securities exchange or is admitted for quotation under the NASDAQ or
similar automated quotation system and the average market price (as
hereinafter defined) over a period of 20 consecutive trading days is
120 percent of the Series B Conversion Price (determined under
subsection 4.3.6(c)). The "market price" for each trading day shall be
(A) if the Common Stock shall at the time be listed or admitted to
unlisted trading privileges on the New York Stock Exchange, the last
reported sale price regular way of the Common Stock on the composite
tape (or if the Common Stock at the time be not so listed or admitted
to unlisted trading privileges on the New York Stock Exchange but be
listed or admitted to unlisted trading privileges on another national
securities exchange, on the basis of the last reported sale price
regular way on the securities exchange on which the Common Stock is at
the time listed or admitted to unlisted trading privileges) on each
such trading day upon which such a sale shall have been effected (or if
no sale takes place on any such day on such exchange, the mean between
the closing bid and asked prices on such day as officially quoted on
such exchange), or (B) if the Common Stock is not at the time so listed
or admitted to unlisted trading privileges on a national securities
exchange, the last quoted sales price or, if not so quoted, the mean
between the highest reported bid and lowest reported asked prices of
the Common Stock in the over-the-counter market on each such business
day, each as reported by NASDAQ or similar organization if NASDAQ is no
longer reporting such information.
(b) Before any holder of Series Preferred Stock shall be entitled to
convert the same into shares of Common Stock, such holder shall surrender the
certificate or certificates therefor, duly endorsed, at the office of this
corporation or of any transfer agent for such stock, and shall give written
notice by mail, postage prepaid, to this corporation at its principal corporate
office, of the election to convert the same and shall state therein the name or
names in which the certificate or certificates for shares of Common Stock are to
be issued; provided, however, that in the event of an automatic conversion
pursuant to subsection 4.3.6(a)(iii), the outstanding shares of Series A
Preferred Stock or Series B Preferred Stock, as applicable, 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, and provided further that the corporation
shall not be obligated to issue certificates evidencing the shares of Common
Stock issuable upon such automatic conversion unless the certificate evidencing
such shares of Series A Preferred Stock or Series B Preferred Stock, as
applicable, are either delivered to the corporation or its transfer agent, or
the holder notifies the corporation or
25
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.
In the case of any conversion provided herein, (i) the corporation shall, as
soon as practicable thereafter, issue and deliver at such office to such holder,
or to the nominee or nominees of such holder, a certificate or certificates for
the number of shares of Common Stock to which such holder shall be entitled as
aforesaid, and (ii) such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of the
shares to be converted, and the person or persons entitled to receive the shares
of Common Stock issuable upon such conversion shall be treated for all purposes
as the record holder or holders of such shares of Common Stock as of such date.
(c) The conversion rate for the Series A Preferred Stock in effect at
any time (the "Series A Conversion Rate") shall equal the Series A original
Issue Price divided by the Series A Conversion Price, as defined herein. The
conversion rate for the Series B Preferred Stock in effect at any time (the
"Series B Conversion Rate") shall equal the Series B original issue Price
divided by the Series B Conversion Price, as defined herein. The conversion
price for the Series A Preferred Stock in effect from time to time, except as
adjusted in accordance with subsection 4.3.6(d), shall be $7.50 (the "Series A
Conversion Price"). The conversion price for the Series B Preferred Stock in
effect from time to time, except as adjusted in accordance with subsection
4.3.6(d), shall be $2.873 (the "Series B Conversion Price").
(d) The Series A Conversion Price and the Series B conversion Price
shall be subject to adjustment from time to time as follows:
(i) In the event the corporation should at any time or from
time to time after the earliest date on which shares of Series
Preferred Stock are issued (the "Purchase Date") fix a record date for
the effectuation of a split or subdivision of the outstanding shares of
Common Stock or the determination of holders of Common Stock entitled
to receive a dividend or other distribution payable in additional
shares of Common Stock or other securities or rights convertible into,
or entitling the holder thereof to receive directly or indirectly,
additional shares of Common Stock (hereinafter referred to as "Common
Stock Rights") without payment of any consideration by such holder for
the additional shares of Common Stock or the Common Stock Rights
(including the additional shares of Common Stock issuable upon
conversion or exercise thereof), then, as of such record date (or the
date of such dividend, distribution, split or subdivision if no record
date is fixed), the Series A Conversion Price and the Series B
Conversion Price shall be appropriately decreased so that the number of
shares of Common Stock issuable on conversion of each share of such
series shall be increased in proportion to such increase of outstanding
shares.
(ii) If the number of shares of Common Stock outstanding at
any time after the Purchase Date is decreased by a combination of the
outstanding shares of Common Stock, then, following the record date of
such combination, the Series A Conversion Price and the Series B
Conversion Price shall be appropriately increased so that the number of
shares of Common Stock issuable on conversion of each share of such
series shall be decreased in proportion to such decrease in outstanding
shares.
26
(e) In the event this corporation shall declare a distribution payable
in securities of other persons, evidences of indebtedness issued by this
corporation or other persons, assets (excluding cash dividends) or options or
rights not referred to in Section 4.3.2 or subsection 4.3.6(d)(i) hereof, then,
in each such case for the purpose of this subsection 4.3.6(e), the holders of
the Series A Preferred Stock and the Series B Preferred Stock shall be entitled
to a proportionate share of any such distribution as though they were the
holders of the number of shares of Common Stock of the corporation into which
their shares of such Series A Preferred Stock or Series B Preferred Stock,
respectively, are convertible as of the record date fixed for the determination
of the holders of Common Stock of the corporation entitled to receive such
distribution.
(f) If at any time or from time to time there shall be a
recapitalization of the Common Stock (other than a subdivision, combination or
merger or sale of assets transaction provided for elsewhere in Sections 4.3.3 or
4.3.6), provision shall be made so that the holders of the Series A Preferred
Stock and the Series B Preferred Stock shall thereafter be entitled to receive
upon conversion of the Series A Preferred Stock and the Series B Preferred
Stock, respectively, the number of shares of stock or other securities or
property of the Company or otherwise, to which a holder of Common Stock
deliverable upon conversion would have been entitled on such recapitalization.
In any such case, appropriate adjustment shall be made in the application of the
provisions of this Section 4.3.6 with respect to the rights of the holders of
the Series A Preferred Stock and the Series B Preferred Stock after the
recapitalization to the end that the provisions of this Section 4.3.6 (including
adjustment of the Series A Conversion Price and the Series B Conversion Price
then in effect and the number of shares purchasable upon conversion of the
Series A Preferred Stock and the Series B Preferred Stock) shall be applicable
after that event as nearly equivalent as may be practicable.
(g) This corporation will not, by amendment of these Articles of
Incorporation or through any reorganization, recapitalization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by this corporation, but
will at all times in good faith assist in the carrying out of all the provisions
of this Section 4.3.6 and in the taking of all such action as may be necessary
or appropriate in order to protect the conversion rights as provided herein of
the holders of the Series Preferred Stock against impairment.
(h) (i) No fractional shares shall be issued upon conversion of the
Series A Preferred Stock and the Series B Preferred Stock and the
number of shares of Common Stock to be issued shall be rounded to the
nearest whole share, determined on the basis of the total number of
shares of the Series A Preferred Stock and the Series B Preferred
Stock, respectively, the holder is at the time converting into Common
Stock and the number of shares of Common Stock issuable upon such
aggregate conversion.
(ii) Upon the occurrence of each adjustment or readjustment of
the Series A Conversion Price or the Series B Conversion Price pursuant
to this
27
Section 4.3.6, this corporation, at its expense, shall promptly compute
such adjustment or readjustment in accordance with the terms hereof and
prepare and furnish to each holder of Series A Preferred Stock and
Series B Preferred Stock, as appropriate, a certificate setting forth
such adjustment or readjustment and showing in detail the facts upon
which such adjustment or readjustment is based. This corporation shall,
upon the written request at any time of any holder of Series A
Preferred Stock or Series B Preferred Stock, furnish or cause to be
furnished to such holder a like certificate setting forth (A) such
adjustment and readjustment, and (B) the Series A Conversion Price or
the Series B Conversion Price at the time in effect for such series of
Series Preferred Stock.
(i) In the event of any taking by this corporation of a record of the
holders of any class of securities for the purpose of determining the holders
thereof who are entitled to receive any dividend (other than a cash dividend) or
other distribution, any right to subscribe for, purchase or otherwise acquire
any shares of stock of any class or any other securities or property, or to
receive any other right, this corporation shall mail to each holder of Series
Preferred Stock, at least 20 days prior to the date specified therein, a notice
specifying the date on which any such record is to be taken for the purpose of
such dividend, distribution or right, and the amount and character of such
dividend, distribution or right.
(j) This 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 shares of Series Preferred Stock, 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 Series Preferred Stock; and 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 Series
Preferred Stock, this 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
purposes.
(k) Any notice required by the provisions of this Section 4.3.6 to be
given to the holders of shares of Series Preferred Stock shall be deemed given
if deposited in the United States mail, postage prepaid, return receipt
requested and addressed to each holder of record at his address appearing on the
books of this corporation.
(1) At any time, in the event of any consolidation or merger of the
corporation with or into another corporation or other entity or person, or any
other corporate reorganization or other transaction or series of related
transactions by the corporation, in any such case, in which more than 50 percent
of the voting power of the corporation is transferred, then holders of the
Series Preferred Stock shall receive the number of shares of stock or other
securities or property (including cash) which a holder of the number of shares
of Common Stock deliverable upon conversion of such Series Preferred Stock would
have been entitled on such consolidation, merger, reorganization or other
transaction.
28
4.3.7 Voting Rights.
(a) The holders of outstanding shares of each series of Series
Preferred Stock shall have the right to vote as a separate voting group, on the
basis of one vote for each share of Common Stock into which such holders' shares
of such series of Series Preferred Stock could then be converted (with any
fractional share determined on an aggregate conversion basis being rounded up to
the next highest whole share), on any amendment to these Articles of
Incorporation which (A) increases or decreases the aggregate number of
authorized shares of such series of Series Preferred Stock, (B) effects an
exchange or reclassification of all or part of the shares of such series of
Series Preferred Stock into shares of another class, (C) effects an exchange or
reclassification, or creates the right of exchange, of all or part of the shares
of another class into shares of such series of Series Preferred Stock, (D)
changes the designation, rights, preferences or limitations of all or part of
the shares of such series of Series Preferred Stock, (E) changes the shares of
all or part of such series of Series Preferred Stock into a different number of
shares of the same class, (F) creates a new class of shares having rights or
preferences with respect to distributions or to dissolution that are prior,
superior or substantially equal to the shares of such series of Series Preferred
Stock, (G) increases the rights, preferences or number of authorized shares of
any class that, after giving effect to the amendment, have rights or preferences
with respect to distributions or to dissolution that are prior, superior, or
substantially equal to the shares of such series of Series Preferred Stock, (H)
limits or denies an existing preemptive right of all or part of the shares of
such series of Series Preferred Stock, or (I) cancels or otherwise affects
rights to distributions or dividends that have accumulated but not yet been
declared on all or part of the shares of such series of Series Preferred Stock,
and with respect to such vote, shall be entitled, notwithstanding any provision
hereof, to notice of any shareholders' meeting in accordance with the bylaws of
this corporation.
(b) If a Covenant Violation (as hereinafter defined) shall have
occurred and be continuing or if dividends payable on the Series A Preferred
Stock shall have been in arrears and not paid, or deemed to have been paid
pursuant to the next sentence, in full for (i) three consecutive quarters, (ii)
any four quarters during any consecutive twenty-four month period, or (iii) any
eight quarters (any such series of arrearages described in clauses (i) through
(iii) being an "Arrearage Event"), the holders of the Series A Preferred Stock
shall have the exclusive right to elect that number of persons to the Board of
Directors of the corporation such that such number of persons shall constitute a
majority of the Board of Directors of the corporation, by replacing the
incumbent Directors, by adding new members to the Board of Directors, or through
any combination of the above. Notwithstanding the foregoing, if a dividend has
not been paid in full (a) for a particular quarter and the corporation makes
such payment on or before the next scheduled dividend payment date, and timely
pays the next dividend on its scheduled dividend payment date or (b) during any
Blockage Period and the corporation (x) deposits the amount payable with respect
to such dividend into escrow in accordance with Section 4.3.2 when due or within
the time provided in clause (a) above of this subsection 4.3.7(b), and (y) makes
such payment through the release of Escrowed Dividends within five days after
the expiration or termination of all Blockage Periods then in effect or as
otherwise provided by the Plan, then, in either such case, such nonpayment shall
be deemed to be timely paid and shall not be counted for purposes of clauses (i)
through (iii) above. The rights of the holders of the Series A Preferred Stock
pursuant to this Subsection 4.3.7(b) shall terminate on the date that (i) less
than 25 percent
29
of the originally issued Series A Preferred Stock remains outstanding or (ii)
the Covenant Violation or Arrearage Event is no longer continuing or has been
cured. On any such date (the "Board Recovery Date"), the term of any Director
then in office elected by the holders of Series A Preferred Stock pursuant to
this Section 4.3.7 shall terminate and each such Director shall be replaced by a
Director that is appointed by the corporation's management. As soon as
practicable, but in any event not more than 90 days following the Board Recovery
Date, the Board of Directors shall call a meeting of the corporation's
shareholders for the purposes of electing all members of the Board of Directors.
The Directors elected at such shareholders' meeting shall then remain in place
until the next annual meeting of the corporation's shareholders or as otherwise
provided by the corporation's bylaws or articles of incorporation. A "Covenant
Violation" shall be deemed to have occurred on the date that the corporation
creates or incurs any liabilities resulting from borrowings, loans or advances,
whether secured or unsecured, other than those permitted by Section 6.02 B. of
the Secured Loan Agreement (as such term is defined in the Plan) if on such date
or after giving effect to such creation or incurrence, the corporation's long
term debt (less current maturities and deferred taxes) exceeds 40 percent of the
aggregate of the corporation's long term debt (less current maturities and
deferred taxes) and stockholder's equity.
(c) Except as otherwise provided in this Section 4.3.7 or as required
by the Oregon Business Corporation Act, the holders of the Series Preferred
Stock shall have no right to vote on any matter coming before any meeting of the
shareholders of the corporation.
ARTICLE 5. REGISTERED OFFICE AND AGENT
The name of the initial registered agent of the corporation and the
address of its registered office are as follows:
Lawco of Oregon, Inc.
111 S.W. Fifth Avenue, Suite 2500
Portland, Oregon 97204
The agent has consented to the appointment.
ARTICLE 6. DIRECTORS
From the effective date of the corporation's Plan, the number of
directors constituting the Board of Directors of the corporation shall be seven,
with three directors (as designated in the Plan) to stand for election at the
annual meeting of shareholders held in calendar year 1995 and with four
directors (as designated in the Plan) to stand for election at the annual
meeting of shareholders held in calendar year 1996. Thereafter, the number of
directors constituting the Board of Directors of the corporation, and the method
of electing such directors, shall be determined pursuant to the Bylaws of the
Corporation; provided however, in the event the Board sets the number of
Directors to be six (6) or more, the Board shall be divided into three classes,
with each class to be as nearly equal in number as possible, with the members of
each class to be determined by the Board of Directors and with the terms of such
classes to be as follows: at least two directors shall be elected for a term of
one year, at least two directors shall be elected for a term of two years and at
least two directors shall be elected for a term of three years and at each
annual shareholders' meeting thereafter the term of directors whose terms expire
on that date shall
30
be elected for a term of three years. Unless otherwise provided for in these
Fourth Restated Articles of Incorporation, any vacancy of the Board of Directors
to be filled by reason of an increase in the number of directors or otherwise
may be filled only by the affirmative vote of a majority of the directors then
in office, though less than a quorum, or by a sole remaining director, and the
directors so chosen shall hold office until the next annual election, or until
their successors are duly elected and qualified, or until their earlier
resignation or removal.
ARTICLE 7. LIMITATION OF DIRECTOR LIABILITY
To the fullest extent that the Oregon Business Corporation Act, as it
exists on the date hereof or may hereafter be amended, permits the limitation or
elimination of the liability of directors, a director of the corporation shall
not be liable to the corporation or its shareholders for any monetary damages
for conduct as a director. Any amendment to or repeal of this Article 7 or
amendment to the Oregon Business Corporation Act shall not adversely effect 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.
ARTICLE 8. INDEMNIFICATION
To the fullest extent not prohibited by law, the corporation: (i) shall
indemnify any person who is made, or threatened to be made, a party to an
action, suit or proceeding, whether civil, criminal, administrative,
investigative, or otherwise (including an action, suit or proceeding by or in
the right of the corporation), by reason of the fact that the person is or was a
director or officer of the corporation, and (ii) may indemnify any person who is
made, or threatened to be made, a party to an action, suit or proceeding,
whether civil, criminal, administrative, investigative, or otherwise (including
an action, suit or proceeding by or in the right of the corporation), by reason
of the fact that the person is or was an employee or agent of the corporation,
or a fiduciary (within the meaning of the Employee Retirement Income Security
Act of 1974), with respect to any employee benefit plan of the corporation, or
serves or served at the request of the corporation as a director or officer of,
or as a fiduciary (as defined above) of an employee benefit plan of, another
corporation, partnership, joint venture, trust or other enterprise. This Article
8 shall not be deemed exclusive of any other provisions for the indemnification
of directors, officers, employees, or agents that may be included in any
statute, bylaw, agreement, resolution of shareholders or directors or otherwise,
both as to action in any official capacity and action in any other capacity
while holding office, or while an employee or agent of the corporation. For
purposes of this Article 8, "corporation" shall mean the corporation
incorporated hereunder and any successor corporation thereof.
ARTICLE 9. NO PREEMPTIVE RIGHTS
No shareholder shall have preemptive rights to acquire additional
shares of stock which may be issued by the corporation, pursuant to the Oregon
Business Corporation Act.
The name and telephone number of the person to contact about this
filing are:
Robert J. Riecke
10260 SW Greenburg Road, Suite 900
Portland, OR 97223
(503) 246-3440
31
ARTICLES OF AMENDMENT
OF
WTD INDUSTRIES, INC.
Pursuant to the provisions of ORS 57.370, the undersigned corporation
executes the following Articles of Amendment to its Fourth Restated Articles of
Incorporation:
1. The name of the corporation is WTD Industries, Inc. (the
"Company").
2. Effective upon filing these Articles of Amendment with the
Secretary of State of the State of Oregon, Article 4 of the Fourth Restated
Articles of Incorporation of the Company is amended to add a new Subsection 4.4
as set forth on the amendment attached hereto.
3. The amendment was duly adopted by the Board of Directors of
the corporation on March 4, 1998 and shareholder approval was not required.
4. The amendment does not provide for the exchange,
reclassification or cancellation of issued shares.
These Articles of Amendment are executed by the Company by its duly
authorized officer.
DATED: March 4, 1998.
WTD INDUSTRIES, INC.
By:
------------------------------------------------
Robert J. Riecke
Vice President - Administration
and Secretary
32
4.4 Designation of Rights and Preferences of Series C Junior
Participating Preferred Stock
The following series of Preferred Stock is hereby designated, which
series shall have the rights, preferences, privileges and limitations as set
forth below:
4.4.1. Designation of Series C Junior Participating Preferred Stock and
Amount. The shares of such series shall be designated as "Series C Junior
Participating Preferred Stock" (the "Series C Preferred Stock") and the number
of shares constituting the Series C Preferred Stock shall be 400,000. Such
number of shares may be increased or decreased by resolution of the Board of
Directors; provided, however, that no decrease shall reduce the number of shares
of Series C Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the corporation convertible into Series C
Preferred Stock.
4.4.2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior and superior to
the Series C Preferred Stock with respect to dividends, the holders of shares of
Series C Preferred Stock, in preference to the holders of Common Stock, no par
value per share (the "Common Stock"), of the corporation, and of any other
junior stock, shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the first day of March, June, September and
December in each year (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a share or fraction of a share of Series C Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to 100 times
the aggregate per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions, subject to the provision for adjustment hereinafter set forth,
other than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared
on the Common Stock since the immediately preceding Quarterly Dividend Payment
Date or, with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series C Preferred Stock.
In the event the corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount to which holders of shares of Series C Preferred Stock were
entitled immediately prior to such event under clause (ii) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) The corporation shall declare a dividend or distribution
on the Series C Preferred Stock as provided in paragraph (A) of this Section
4.4.2 immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock).
33
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series C Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares, unless the date of
issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series C Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series C Preferred Stock in
an amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series C Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days prior to the date
fixed for the payment thereof.
4.4.3. Voting Rights. The holders of shares of Series C Preferred Stock
shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series C Preferred Stock shall entitle the holder thereof
to 100 votes on all matters submitted to a vote of the shareholders of the
corporation. In the event the corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the number of votes per share to which holders of shares of
Series C Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any other Articles
of Amendment creating a series of Preferred Stock or any similar stock, or by
law, the holders of shares of Series C Preferred Stock and the holders of shares
of Common Stock and any other capital stock of the corporation having general
voting rights shall vote together as one class on all matters submitted to a
vote of shareholders of the corporation.
(C) Except as set forth herein, or as otherwise provided by
law, holders of Series C Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for taking any corporate
action.
4.4.4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series C Preferred Stock as provided in Section
4.4.2 are in arrears, thereafter and until all
34
accrued and unpaid dividends and distributions, whether or not declared, on
shares of Series C Preferred Stock outstanding shall have been paid in full, the
corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series
C Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series C Preferred Stock, except dividends paid ratably on the Series C
Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series C Preferred
Stock, provided that the corporation may at any time redeem, purchase
or otherwise acquire shares of any such junior stock in exchange for
shares of any stock of the corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the Series
C Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series C Preferred Stock, or any shares of stock ranking
on a parity with the Series C Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as determined
by the Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
(B) The corporation shall not permit any subsidiary of the
corporation to purchase or otherwise acquire for consideration any shares of
stock of the corporation unless the corporation could, under paragraph (A) of
this Section 4.4.4, purchase or otherwise acquire such shares at such time and
in such manner.
4.4.5. Reacquired Shares. Any shares of Series C Preferred
Stock purchased or otherwise acquired by the corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock subject to the conditions and restrictions on issuance set
forth herein, in the Fourth Restated Articles of Incorporation, or in any other
Articles of Amendment creating a series of Preferred Stock or any similar stock
or as otherwise required by law.
4.4.6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the corporation, no distribution shall
be made (a) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series C
Preferred Stock unless, prior thereto, the holders of shares of Series C
Preferred Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of Series C
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be
35
distributed per share to holders of shares of Common Stock, or (b) to the
holders of shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series C Preferred Stock,
except distributions made ratably on the Series C Preferred Stock and all such
parity stock in proportion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or winding up. In the
event the corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the aggregate amount to which holders of shares of Series C Preferred
Stock were entitled immediately prior to such event under the proviso in clause
(a) of the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
4.4.7. Consolidation, Merger, etc. In case the corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Series C Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series C Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
4.4.8. No Redemption. The shares of Series C Preferred Stock shall not
be redeemable.
4.4.9. Rank. The Series C Preferred Stock shall rank, with respect to
the payment of dividends and the distribution of assets, junior to all series of
any other class of the corporation's Preferred Stock.
4.4.10. Amendment. The Fourth Restated Articles of Incorporation of the
corporation shall not be amended in any manner that would materially alter or
change the powers, preferences or special rights of the Series C Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of at
least two-thirds of the outstanding shares of Series C Preferred Stock, voting
together as a single class.
36
Articles of Amendment of WTD Industries, Inc.
1. NAME OF CORPORATION PRIOR TO AMENDMENT: WTD Industries, Inc.
2. STATE THE ARTICLE NUMBER AND SET FORTH THE ARTICLE AS IT IS AMENDED TO READ.
"FOURTH RESTATED ARTICLES OF INCORPORATION OF TREESOURCE
INDUSTRIES, INC."
"ARTICLE 1. NAME The name of the corporation is TreeSource Industries,
Inc."
3. THE AMENDMENT WAS ADOPTED ON: October 26, 1998
4. Shareholder action was required to adopt the amendment. The vote was as
follows:
Class or Number of Number of Number of Number of
series of shares votes entitled to votes cast votes cast
shares outstanding be cast FOR AGAINST
------ ----------- ----------- ----------- -----------
COMMON 11,162,874 11,162,874 6,037,255 3,564,916
5. EXECUTION
Printed Name Signature Title
Robert J. Riecke /s/ Robert J. Riecke Secretary
FILED OCTOBER 27, 1998 OREGON SECRETARY OF STATE
37