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Exhibit 3.4
ARTICLE II
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2.1 Authorized Capital
The total authorized capital stock of the corporation shall consist of
1,000,000 shares of Common Stock, one-cent par value and 25,000 shares of
Preferred Stock, one-cent par value.
2.2 Issuance of Common and Preferred Stock in Series
The Common Stock and Preferred Stock may be issued from time to time in one
or more series, the shares of each series to have such voting powers, full or
limited, and such designations, preferences and relative, participating,
optional or other special rights and qualifications, limitations or restrictions
thereof as are stated and expressed herein or in the resolution or resolutions
providing for the issue of such series adopted by the board of directors.
2.2.1 Authority of the Board of Directors
Authority is hereby expressly granted to the board of directors to the
limitations prescribed by law, to authorize the issue of one or more series of
Common Stock and Preferred Stock, and with respect to each such series to fix by
resolution or resolutions providing for the issue of each series the number of
shares of such series, the voting powers, full or limited, preferences and
relative, participating, optional or other special rights and the
qualifications, limitations of restrictions thereof. The authority of the board
of directors with respect to each series of Preferred Stock shall include, but
not be limited to, the determination or fixing of the following:
a. The number of shares of such series;
b. The designation of such series;
c. The dividends of such series, the conditions and dates upon
which such dividends shall bear to the dividends payable on any other class or
classes of stock and whether such dividends shall be cumulative or
noncumulative;
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d. Whether the shares of such series shall be subject to
redemption, the times, prices, rates, adjustments, and other terms and
conditions of such redemption;
e. The terms and amounts of any sinking fund provided for the
purchase or redemption of the shares of such series;
f. Whether or not the shares of such series shall be convertible
into or exchangeable for shares of any other class or classes or of any other
series of any class or classes of stock of the corporation and, if provisions be
made for conversion or exchange, the times, prices, rates, adjustments, and
other terms and conditions of such conversion or exchange;
g. The extent, if any, to which the holders of the shares of such
series shall be entitled to vote with respect to the election of directors or
otherwise, including the right to elect a specified number or class of
directors, the number or percentage of votes required for certain actions, and
the extent to which a vote by class or series shall be required for certain
actions;
h. The restrictions, if any, on the issue or reissue of any
Preferred Stock;
i. The rights of the holders of the shares of such series upon the
dissolution of, or upon the distribution of the assets of, the corporation; and
j. The extent, if any, to which any committee of the board of
directors may fix the designations and any of the preferences or rights of the
shares of such series relating to dividends, redemption, dissolution, and
distribution of assets of the corporation or the conversion into or exchange of
such shares for shares of any other class or classes of stock of the corporation
or any other series of the same, or fix the number of shares of any such series
or authorize the increase or decrease in the shares of such series.
2.2.2 Dividends
Subject to any preferential rights granted for any series of Preferred
Stock, the holders of shares of the Common Stock shall be entitled to receive
dividends out of the funds of the corporation legally available therefor at the
rate and at the time or times, whether cumulative or noncumulative, as may be
provided by the board of directors. The holders of shares of the Preferred Stock
shall be entitled to receive dividends to the extent provided herein or by the
board of directors in designating the particular series of Preferred Stock. The
holders of shares of the Common Stock shall not be entitled to receive any
dividends thereon other than the dividends referred to in this section.
2.2.3 Voting
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To the extent provided herein or by resolution or resolutions of the
board of directors providing for the issue of a class or series of Common Stock
or Preferred Stock, the holders of each such class or series 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 those matters as
to which Oregon law or these Articles provide for a separate vote.
2.2.4 Issuance of Shares
The corporation may from time to time issue any authorized and
unissued shares of Common Stock or Preferred Stock for such consideration as may
be fixed from time to time by the board of directors, without action by the
shareholders. The board of directors may provide for payment therefor to be
received by the corporation in cash, property, services or such other
consideration as is approved by the board of directors. Any and all such share
consideration fixed by the board of directors has been paid or delivered, shall
be deemed fully paid stock and shall not be liable for any further call or
assessment thereon.
2.3 Designation of Series A Convertible Preferred Stock
2.3.1 Designation
The series of Series A Convertible Preferred Stock, consisting of
25,000 shares, authorized herein, shall be designated herein as the "Series A
Stock." The powers, preferences and rights and the qualifications, limitations
and restrictions of the Series A Stock are as follows:
2.3.2 Dividends
The holders of Series A Stock shall be entitled to receive dividends
at the rate of $0.84 per share per annum ( as adjusted for any stock dividends,
combinations or splits with respect to such shares) payable out of funds legally
available therefor. Such dividends shall be cumulative. No dividends ( other
than dividends payable solely in the Common Stock of the corporation) shall be
paid on any Common Stock of the corporation until dividends in the total amount
of $0.84 per share (as adjusted) on the Series A Stock shall have been paid or
declared and set apart during that fiscal year, and any prior year in which
dividends accumulated but remain unpaid. After the payment of dividends on the
Series A Stock, in the event that any additional dividends are declared and
payable such additional dividends shall be paid on the Common Stock and to the
holders of the Series A Stock prorata according to the total shares of Common
Stock and Series A Stock issued and outstanding at the time of the declaration
of such additional dividend.
Upon the voluntary or involuntary dissolution, liquidation or winding
up of the corporation, the assets of the corporation available for distribution
to its shareholders shall be distributed in the order and amounts described in
Section 2.3.8.
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2.3.4 Voting Power
Each holder of Series A Stock shall be entitled to vote on all matters
and shall be entitled to sixteen (16) votes per share of Series A Stock. Except
as otherwise expressly provided by the Oregon Business Corporation Act, the
holders of shares of Series A Stock and the holders of the Common Stock shall
vote together as a single class on all matters.
2.3.5 Conversion Rights
The holders of the Series A Stock shall have the following rights with
respect to the conversion of Series A Stock into shares of Common Stock:
a. General.
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(i) Voluntary Conversion. Shares of the Series A Stock may, at
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the option of the holder, be converted at any time into such number of fully
paid and nonassessable shares of Common Stock as are equal to the product
obtained by multiplying the Series A Conversion Rate (determined under Section
2.3.5b) by the number of shares of Series A Stock being converted.
(ii) Mandatory Conversion. Each share of Series A Stock shall be
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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 for the Common Stock, into
the number of shares of Common Stock into which such Series A Stock is
convertible pursuant to Section 2.3.5a(i) upon the earlier of, (A) immediately
prior to the closing of a firmly underwritten, public offering by the
corporation of its Common Stock, registered under the Securities Act of 1933, as
amended, at an offering price of $10.00 or more per share with gross offering
proceeds of no less than $ 7,500,000 or (B) upon the merger or acquisition of
the corporation.
b. Conversion Rate. The conversion rate for Series A Stock in effect
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at any time (the "Series A Conversion Rate") shall equal $28.00 divided by the
Series A Conversion Price, calculated as provided in Section 2.3.5c.
c. Conversion Price. The conversion price for Series A Stock shall
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initially be $28.00 (the "Series A Conversion Price"). The Series A Conversion
Price shall be adjusted from time to time in accordance with Section 2.3.5d.
d. Adjustments to Applicable Conversion Price.
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(i) Extraordinary Common Stock Event. Upon the happening of an
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Extraordinary Common Stock Event (as defined below) after the date of the
initial issuance of
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any shares of Series A Stock, the Series A Conversion Price shall,
simultaneously with the happening of such Extraordinary Common Stock Event, be
adjusted by multiplying the then effective Series A Conversion Price by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such Extraordinary Common Stock Event and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately after such Extraordinary Common Stock Event, and the product so
obtained shall thereafter be the Series A Conversion Price. The Series A
Conversion Price, as so adjusted, shall be readjusted in the same manner upon
the happening of any successive Extraordinary Common Stock Event or Events.
"Extraordinary Common Stock Event" shall mean (i) the issuance of
additional shares of Common Stock as a dividend or other distribution on
outstanding Common Stock of the corporation, (ii) a subdivision of outstanding
shares of Common Stock into a greater number of shares of Common Stock, or (iii)
a combination of outstanding shares of Common Stock into a smaller number of
shares of Common Stock.
(ii) Sale of Shares Below Applicable Conversion Price.
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(A) If the corporation shall issue any Additional Stock (as
defined below) without consideration or for a consideration per share less than
the Series A Conversion Price in effect immediately prior to the issuance of
such Additional Stock, the Series A Conversion Price in effect upon such
issuance (except as otherwise provided in this Section 2.3.5d(ii) shall be
adjusted to a price equal to the quotient obtained by dividing the total
computed under clause (x) below by the total computed under clause (y) below as
follows:
(x) an amount equal to the sum of (1) the result
obtained by multiplying the number of shares of Common Stock deemed outstanding
immediately prior to such issuance (which shall include the actual number of
shares outstanding plus all shares issuable upon the conversion or exercise of
all outstanding convertible securities, warrants and options) by the Series A
Conversion Price then in effect, and (2) the aggregate consideration, if any,
received by the corporation upon the issuance of such Additional Stock;
(y) the number of shares of Common Stock of the
corporation outstanding immediately after such issuance (including the shares
deemed outstanding as provided above).
(B) No adjustment of the Series A Conversion Price shall be
made in an amount less than $.0001 share, provided, that any adjustments which
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are not required to be made by reason of this sentence shall be carried forward
and shall be taken into account in any subsequent adjustment made to the Series
A Conversion Price. Except as provided in Sections 2.3.5d(ii)(E)(3) and (4)
below, no adjustment of the Series A Conversion
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Price shall have the effect of increasing the Series A Conversion Price above
the Series A Conversion Price in effect immediately prior to such adjustment.
(C) In the case of the issuance of Common Stock for cash,
the consideration shall be deemed to be the amount of cash paid therefor before
deducting any discounts, commissions or other expenses allowed, paid or incurred
by the corporation for any underwriting or otherwise in connection with the
issuance and sale thereof.
(D) In the case of the issuance of Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair value thereof as determined in good faith by
the board of directors irrespective of any accounting treatment.
(E) In the case of the issuance of options to purchase or
rights to subscribed for Common Stock, securities by their terms convertible
into or exchangeable for Common Stock, or options to purchase or rights to
subscribed for such convertible or exchangeable securities (which options,
rights, convertible or exchangeable securities are not excluded from the
definition of Additional Stock except as provided in Section 2.3.5d(iii)(B) or
(D) the following provisions shall apply:
(1) the aggregate maximum number of shares of Common Stock
deliverable upon exercise of such options to purchase or rights to subscribe for
Common Stock shall be deemed to have been issued at the time such options or
rights were issued for a consideration equal to the consideration (determined in
the manner provided in Sections 2.3.5d(iii)(C) and (D) above) received by the
corporation upon the issuance of such options or rights plus the purchase price
provided in such options or rights for the Common Stock covered thereby, but no
further adjustment to the Series A Conversion Price shall be made for the actual
issuance of Common Stock upon the exercise of such options or rights in
accordance with their terms;
(2) the aggregate maximum number of shares of Common Stock
deliverable upon conversion of or in exchange for any such convertible or
exchangeable securities or upon the exercise of options to purchase or rights to
subscribe for such convertible or exchangeable securities and subsequent
conversion or exchange thereof shall be deemed to have been issued at the time
such securities were issued or such options or rights were issued for a
consideration equal to the consideration received by the corporation for any
such securities and related options or rights, plus the additional
consideration, if any, to be received by the corporation upon the conversion or
exchange of such securities or the exercise of any related options or rights
(the consideration in each case to be determined in the manner provided in
Sections 2.3.5d(iii)(C) and (D) above), but no further adjustment to the Series
A Conversion Price shall be made for the actual issuance of Common Stock upon
the conversion or exchange of such securities in accordance with their terms;
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(3) if such options, rights or convertible or exchangeable
securities by their terms provide, with the passage of time or otherwise, for
any increase in the consideration payable to the corporation or any decrease in
the number of shares of Common Stock issuable upon the exercise, conversion or
exchange thereof, the Series A Conversion Price computed upon the original issue
thereof, and any subsequent adjustments based thereon, shall, upon such increase
or decrease becoming effective, be recomputed to reflect such increase or
decrease with respect to such options, rights and securities not already
exercised, converted or exchanged prior to such increase or decrease becoming
effective, but no further adjustment to the Series A Conversion Price shall be
made for the actual issuance of Common Stock upon the exercise of any such
options or rights or the conversion or exchange of such securities in accordance
with their terms;
(4) upon the expiration of any such options or rights, the
termination of any such rights to convert or exchange or the expiration of any
options or rights related to such convertible or exchangeable securities, the
Series A Conversion Price shall forthwith be readjusted to such Series A
Conversion Price as would have been obtained had the adjustment which was made
upon the issuance of such options, rights or securities or options or rights
related to such securities been made upon the basis of the issuance of only the
number of shares of Common Stock actually issued upon the exercise of such
options or rights, upon the conversion or exchange of such securities or upon
the exercise of the options or rights related to such securities; and
(5) if any such options or rights shall be issued in
connection with the issue and sale of other securities of the corporation,
together compromising one integral transaction in which no specific
consideration is allocated to such options or rights by the parties thereto,
such options or rights shall be deemed to have been issued for such
consideration as determined in good faith by the board of directors.
(iii) "Additional Stock" shall mean any shares of Common Stock or
securities convertible into or exchangeable or exercisable for shares of Common
Stock issued, or deemed to have been issued pursuant to Section 2.3.5d(iii)(E),
by the corporation after the date of initial issuance of any Series A Stock
other than:
(A) Common Stock issued pursuant to a transaction
described in Section 2.3.5d(i);
(B) Shares of Common Stock issued or issuable to
employees, consultants or directors of the corporation directly or pursuant to
the corporation's Stock Incentive Plan, as amended from time to time, or other
restricted stock plan to the extent such issuances are approved by the board of
directors of the corporation;
(C) Common Stock issued or issuable upon conversion of
Series A Stock; and
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(D) Common Stock issued or issuable upon conversion or
exercise of any securities convertible into or exchangeable or exercisable for
shares of Common Stock, other than Common Stock issued or issuable upon
conversion of Series A stock, provided, that such securities are designated as
excluded from the definition of Additional Stock by the vote or written consent
of holders of a majority of the Series A Stock.
e. Capital Reorganization or Reclassification. If the Common Stock
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issuable upon the conversion of the Series A Stock shall be changed into the
same or different number of shares of any class or classes of stock of the
corporation, whether by capital reorganization, reclassification or otherwise
(other than an Extraordinary Common Stock Event provided for in Section
2.3.5d(i), then and in each such event the holders of each share of Series A
Stock shall have the right thereafter to convert such shares into the kind and
amount of shares of stock and other securities and property receivable upon such
reorganization, reclassification or other change by holders of the number of
shares of Common Stock into which such shares of Series A Stock have been
converted immediately prior to such reorganization, reclassification or change,
all subject to adjustment as provided herein.
f. Accountant's Certificate as to Adjustments; Notice by The
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Corporation. In each case of an adjustment or readjustment of the Series A
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Conversion Rate, the corporation at its expense will furnish each holder of
Series A Stock with a certificate, prepared by independent public accountants of
recognized standing if so required by such holder, showing such adjustment or
readjustment and stating in detail the facts upon which such adjustment or
readjustment is based.
g. Exercise of Conversion Privilege. To exercise its conversion
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privilege, each holder of Series A Stock shall surrender the certificate or
certificates representing the shares being converted to the corporation at its
principal office, and shall give written notice to the corporation at that
office that such holder elects to convert such shares. Such notice shall also
state the name or names (with address or addresses) in which the certificate or
certificates for shares of Common Stock issuable upon such conversion shall be
issued. The certificate or certificates for shares of Series A Stock
surrendered for conversion shall be accompanied by proper assignment thereof to
the corporation or in blank. The date when such written notice is received by
the corporation, together with the certificate or certificates representing the
shares of Series A Stock being converted, shall be the "Series A Conversion
Date." As promptly as practicable after the Series A Conversion Date, the
corporation shall issue and shall deliver to the holder of the shares of Series
A Stock being converted, or on its written order such certificate or
certificates as it may request for the number of whole shares of Common Stock
issuable upon the conversion of such shares of Series A Stock in accordance with
the provisions of this Section 2.3.5, cash in the amount of all declared and
unpaid dividends on such shares of Series A Stock up to and including the Series
A Conversion Date, and cash, as provided in Section 2.3.5h, in respect of any
fraction of a share of Common Stock issuable upon such conversion. Such
conversion shall be deemed to have been effected immediately prior to the close
of business on the Series A Conversion
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Date, and at such time the rights of the holder as holder of the converted
shares of Series A Stock shall cease and the person or persons in whose name or
names any certificate or certificates for shares of Common Stock shall be
issuable upon such conversion shall be deemed to have become the holder or
holders of record of the shares of Common Stock represented thereby.
h. Cash in Lieu of Fractional Shares. No fractional shares of Common
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Stock or scrip representing fractional shares shall be issued upon the
conversion of shares of Series A Stock, but the corporation shall pay to the
holder of such shares a cash adjustment in respect of such fractional shares in
an amount equal to the same fraction of the market price per share of the Common
Stock (as determined in a reasonable manner prescribed by the board of
directors) at the close of business on the Series A Conversion Date. The
determination as to whether or not any fractional shares are issuable shall be
based upon the total number of shares of Series A Stock being converted at any
one time by any holder thereof, not upon each share of Series A Stock being
converted.
i. Partial Conversion. In the event some but not all of the shares
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of Series A Stock represented by a certificate or certificates surrendered by a
holder are converted, the corporation shall execute and deliver to or on the
order of the holder, at the expense of the corporation, a new certificate
representing the shares of Series A Stock that were not converted.
j. Reservation of Common Stock. The corporation shall at all times
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reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the conversion of the shares of the
Series A 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 the
Series A 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 the Series A Stock, the corporation shall take such
corporate action as may be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purpose.
k. No Impairment. The corporation will not, by amendment of its
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certificate of incorporation or through any reorganization, 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 the corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
Section 4.4 and in the taking of all such action as may be necessary or
appropriate in order to protect the conversion rights of the holders of the
Series A Stock against impairment.
2.3.6 Reissuance of Stock
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No share or shares of Series A Stock redeemed, converted, purchased or
otherwise acquired by the corporation shall be reissued, and all such shares
shall be cancelled, retired and eliminated from the shares which the corporation
shall be authorized to issue. The corporation may from time to time take such
appropriate corporate action as may be necessary to reduce the authorized number
of shares of the Series A Stock accordingly.
2.3.7 Redemption
The corporation shall not have the right to call for redemption of all
or any part of the Series A Stock. However, the corporation shall have the
right to purchase shares of Series A Stock pursuant to agreements within the
holders thereof when such purchases are approved by the board of directors.
2.3.8 Liquidation Rights
Upon the voluntary or involuntary dissolution, liquidation or winding
up of the corporation, the assets of the corporation available for distribution
to its shareholders shall be distributed in the following order and amounts:
a. General.
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(i) Series A. First, the holders of shares of Series A Stock
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shall be entitled to receive $28.00 (appropriately adjusted for any stock
dividend, split or combination of such Series A Stock) for each outstanding
share of Series A Stock held by them plus any accrued but unpaid dividends per
share on such outstanding shares of Series A Stock (the "Preferred Liquidation
Amount"). If upon the occurrence of such event the assets of the corporation
shall be insufficient to permit the payment of the full Preferred Liquidation
Amount, then the assets of the corporation available for distribution shall be
distributed ratably among the holders of the Series A Stock in the same
proportions as the aggregate of the Preferred Liquidation Amount each such
holder would otherwise be entitled to receive bears to the total Preferred
Liquidation Amount that would otherwise be payable to all such holders, and no
distribution to other shareholders of the corporation shall be made. Upon the
completion of the distribution of the full Preferred Liquidation Amount, if
assets remain in the corporation, such remaining assets shall be distributed as
set forth in Sections 2.3.8 a(ii) and 2.3.8a(iii).
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(ii) Common Stock. Second, subject to payment in full of the
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Preferred Liquidation Amount, the holders of shares of Common Stock shall be
entitled to receive $31.86 appropriately adjusted for any stock dividend, split
or combination of such Common Stock) for each outstanding share of Common Stock
held by them (the "Common Stock Liquidation Amount"). If upon the occurrence of
such event, the assets of the corporation shall be insufficient to permit the
payment of the full Common Stock Liquidation Amount, then the assets of the
corporation available for distribution shall be distributed ratably among the
holders of the Common Stock in the same proportions as the aggregate of the
Common Stock Liquidation Amount each such holder would otherwise be entitled to
receive bears to the total Common Stock Liquidation Amount that would otherwise
be payable to all such holders, and no further distribution to other
shareholders of the corporation shall be made. Upon the completion of the
preferential rights granted for any subsequent series of Preferred Stock and the
full Common Stock Liquidation Amount, if assets remain in the corporation, such
remaining assets shall be distributed as set forth in Section 2.3.8a(iii).
(iii) Participation. Finally, subject to payment in full of the
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Preferred Liquidation Amount, any other preferred rights granted for any
subsequent series of Preferred Stock, and the payment in full or the Common
Stock Liquidation Amount as provided in Section 2.3.8a(ii), if assets remain in
the corporation, such remaining assets shall be distributed to the holders of
shares of Series A Stock and to the holders of shares of Common Stock together,
who shall each be entitled to receive their Pro Rata Amount; provided, that the
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rights of the holders of shares of Common Stock are subject to any preferential
rights granted for any subsequent series of Preferred Stock. "Pro Rata Amount"
means that portion of remaining assets to which a group would be entitled based
on its percentage of the number of shares of Common Stock outstanding and the
number of shares of Common Stock into which the outstanding shares of Series A
Stock could then be converted.
b. Treatment of Sales of Assets or Acquisitions. The sale of all or
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substantially all of the assets of the corporation or the acquisition of the
corporation by another entity by means of merger, consolidation or otherwise,
resulting in the exchange of the outstanding shares of the corporation for
securities of or consideration issued, or caused to be issued, by the acquiring
entity or any of its affiliates, shall be regarded as a liquidation within the
meaning of this Section 2.3 8; provided, however, that each holder of Series A
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shall have the right to elect the benefits of the provisions of Section 2.3.8 or
other applicable conversion provisions; and provided, further, that this
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provision shall not apply if (i) the shareholders of the corporation immediately
prior to such consolidation, merger or sale of assets will own a majority of the
outstanding share of the surviving corporation, or (ii) the holders of the
Series A Stock then outstanding consent or vote that such consolidation, merger
or sale shall not be regarded as a liquidation within the meaning of this
Section 2.3.8.
c. Distributions Other Than Cash. Whenever the distribution provided
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for in this Section 2.3.8 shall be payable in property other than 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.
