<PAGE>
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
FORM 10-Q
--------------------------
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______ to _______.
Commission File Number: 0-11371
BIOSONICS, INC.
--------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2161932
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
260 New York Drive
Fort Washington, Pennsylvania 19034
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
(215) 646-7100
---------------------------------------------------
(Registrant's telephone number including area code)
N/A
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuers shares of
common stock, as of the latest practicable date: As of September 30th 1996,
there were outstanding 287,588,936 shares of the Registrant's Common Stock,
$.0001 par value.
- --------------------------------------------------------------------------------
Page 1 of 13 pages
Exhibit Index is on Page 12
<PAGE>
BIOSONICS, INC.
---------------
INDEX
-----
Page
Number
------
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets:
September 30, 1996 and December 31, 1995 2
Statements of Loss:
Three and Nine Months Ended September 30, 1996 and 1995 3
Statements of Deficit Accumulated:
Nine Months Ended September 30, 1996 and 1995 4
Statements of Cash Flows:
Nine Months Ended September 30, 1996 and 1995 5
Statements of Shareholders' Equity - Paid-In-Capital:
November 30, 1980 (inception) to September 30, 1996 7
Note to Financial Statements 10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
PART II OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures
<PAGE>
BIOSONICS, INC.
---------------
(A DEVELOPMENT STAGE ENTERPRISE)
--------------------------------
BALANCE SHEETS
--------------
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
------
<CAPTION>
Unaudited
SEPTEMBER 30 DECEMBER 31,
1996 1995
-------- --------
<S> <C> <C>
Current assets
Cash (including interest bearing deposits
of $10 in 1996 and 1995) $ 260 $ 260
Accounts receivable (net of allowance for doubtful
accounts of $6,000 in 1996 and 1995) 5,682 21,013
Inventory 65,080 70,084
Prepaid expenses and other current assets 4,853 8,851
----------- -------------
Total current assets 75,875 100,208
Equipment, furniture and leaseholds, net
of accumulated depreciation 21,006 25,011
Deposits 8,431 8,431
----------- -----------
Total assets $ 105,312 $ 133,650
============ ===========
Liabilities and Shareholders' Deficit
-------------------------------------
Current liabilities
Notes payable $ 243,000 $ 660,444
Accounts payable and accrued expenses 1,626,947 1,691,647
Bonds unissued 187,000 187,000
Proceeds for common stock unissued 0 271,000
------------- -----------
Total current liabilities 2,056,947 2,810,091
------------- -----------
Shareholders' deficit
Preferred stock - Series A, authorized 10,000,000 shares at $1 par value;
issued and outstanding - 1,000 shares at December 31, 1995 0 1,000
Preferred stock - Series B, authorized 10,000 shares at $1 par value;
issued and outstanding - 3,250 shares at December 31, 1995 0 3,250
Preferred stock - Series D, authorized 10,000 shares at $1 par value;
issued and outstanding - 3,000 shares at December 31, 1995 0 3,000
Common stock - authorized 750,000,000 shares at .0001 par value; issued and
outstanding 306,507,756 and 243,333,936 shares at
September 30, 1996 and December 31, 1995 respectively 30,650 24,333
Capital in excess of par value 11,796,046 10,345,207
Treasury Stock (18,918,820 shares at September 30, 1996) ( 126,188) -
Deficit accumulated during development stage ( 13,652,143) (13,053,231)
------------- -----------
Total shareholders' deficit ( 1,951,635) ( 2,676,441)
------------- ----------
Total liabilities and shareholders' deficit $ 105,312 $ 133,650
=========== ===========
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying note is an integral part of these financial statements.
3
<PAGE>
BIOSONICS, INC.
---------------
(A DEVELOPMENT STAGE ENTERPRISE)
--------------------------------
STATEMENTS OF LOSS
------------------
(UNAUDITED)
-----------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED THREE MONTHS ENDED
----------------- ------------------
SEPTEMBER 30, 1996 SEPTEMBER 30
------------------ --------------
1996 1995 1996 1995
---------- -------- ----------- -----------
<S> <C> <C> <C> <C>
Development stage expenses
Research and development costs $ 0 $ 13,267 $ 0 $ 5,943
Professional fees 109,691 62,004 72,691 8,480
Other development stage expenses 501,091 371,989 280,853 104,786
--------- ---------- ------------ -----------
Total development stage expenses 610,782 447,260 353,544 119,209
Less: Revenues from cost recovery
program - - - -
------------ -------------- ----------- -----------
Net development stage expenses 610,782 447,260 353,543 119,209
------------ ----------- ------------ ------------
Sales 34,911 45,716 5,786 23,190
Cost of sales 23,116 33,097 6,950 18,022
---------- ----------- ----------- ---------
Gross profit 11,795 12,619 ( 1,164) 5,168
--------- --------- ------------- ----------
Other income
Investment income - - - -
Gain on sale of fixed assets - - - -
Other income 75 5,279 - 14
--------- --------- ----------- ----------
Total other income 75 5,279 - 14
--------- --------- ----------- ---------
Net loss ($ 598,912) ($ 429,362) ($ 354,708) ($ 114,027)
=========== =========== ========== ===========
Loss per common share ($.002) ($.002) ($.001) ($ .001)
======= ======= ======= ========
<CAPTION>
11/13/80 (INCEPTION)
TO SEPTEMBER 30
---------------
1996 1995
----------- -------------
<S> <C> <C>
Development stage expenses
Research and development costs $ 4,144,553 $ 4,137,703
Professional fees 2,732,128 2,629,744
Other development stage expenses 7,942,411 7,340,583
----------- ----------
Total development stage expenses 14,819,092 14,108,030
Less: Revenues from cost recovery
program 118,082 118,082
----------- -----------
Net development stage expenses 14,701,010 13,989,948
------------- -----------
Sales 831,514 779,813
Cost of sales 537,893 505,894
----------- ----------
Gross profit 293,621 273,919
------------ ----------
Other income
Investment income 727,551 722,272
Gain on sale of fixed assets 7,620 7,620
Other income 20,075 25,279
------------ -----------
Total other income 755,246 755,171
------------ -----------
Net loss ($ 13,652,143) ($12,960,858)
============= =============
Loss per common share ($.055) ($.053)
===== =====
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying note is an integral part of these financial statements.
4
<PAGE>
BIOSONICS, INC.
---------------
(A DEVELOPMENT STAGE ENTERPRISE)
--------------------------------
STATEMENTS OF DEFICIT ACCUMULATED DURING DEVELOPMENT STAGE
----------------------------------------------------------
(UNAUDITED)
-----------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NINE MONTHS ENDED 11/13/80 (INCEPTION)
SEPTEMBER 30 , TO SEPTEMBER 30 ,
------------------------------ ------------------------
1996 1995 1996 1995
----------- ---------- ----------- -------
<S> <C> <C> <C> <C>
BEGINNING BALANCE (13,053,231) ($12,531,496) $ - $ -
- -----------------
NET LOSS ( 598,912) ( 429,362) ( 13,652,143) ( 12,960,858)
-------- ----------- ----------- ----------- -----------
ENDING BALANCE (13,652,143) ($12,960,858) ($13,652,143) ($12,960,858)
- -------------- ========== =========== =========== ===========
</TABLE>
- --------------------------------------------------------------------------------
The accompanying note is an integral part of these financial statements.
5
<PAGE>
BIOSONICS, INC.
---------------
(A DEVELOPMENT STAGE ENTERPRISE)
--------------------------------
STATEMENTS OF CASH FLOWS (CONTINUED)
------------------------------------
(UNAUDITED)
-----------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NINE MONTHS ENDED
-----------------
SEPTEMBER 30,
-------------
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from financing activities
Proceeds for bonds unissued - -
Repayments for bonds unissued - -
Proceeds for common stock unissued - -
Principal payments of note payable (235,000) ( 25,000)
Proceeds from issuance of note payable - 35,000
Decrease in capitalized organization costs -
Proceeds from issuance of preferred stock 505,000 200,000
Proceeds from issuance of common stock - -
----------- -----------
Net cash provided by financing activities 270,000 210,000
----------- -----------
Net increase (decrease) in cash and cash equivalents - -
Cash and cash equivalents, beginning 260 260
----------- -----------
Cash and cash equivalents, ending $ 260 $ 260
=========== ===========
Schedule of noncash financing transactions:
Issuance of common stock from various items:
Common stock unissued 271,000 -
Notes payable 182,444 -
Accounts payable and accrued expenses 197,524 -
Preferred stock 1,230,000 -
Less common stock issued (1,880,968) -
-----------
Proceeds from common stock issued 0 -
===========
<CAPTION>
11/13/80 (INCEPTION)
--------------------
TO SEPTEMBER 30
---------------
1996 1995
----------- --------
<S> <C> <C>
Cash flows from financing activities
Proceeds for bonds unissued 190,000 190,000
Repayments for bonds unissued (3,000) (3,000)
Proceeds for common stock unissued 271,000 271,000
Principal payments of note payable (307,000) (97,000)
Proceeds from issuance of note payable 789,444 814,444
Decrease in capitalized organization costs (7,453) (7,453)
Proceeds from issuance of preferred stock 1,105,000 500,000
Proceeds from issuance of common stock 9,181,079 9,181,079
----------- -----------
Net cash provided by financing activities 11,219,070 10,849,070
----------- -----------
Net increase (decrease) in cash and cash equivalents 260 260
Cash and cash equivalents, beginning - -
----------- -----------
Cash and cash equivalents, ending $ 260 $ 260
=========== ===========
Schedule of noncash financing transactions:
Issuance of common stock from various items:
Common stock unissued 271,000 -
Notes payable 182,444 -
Accounts payable and accrued expenses 197,524 -
Preferred stock 1,230,000 -
Less common stock issued (1,880,968) -
-----------
Proceeds from common stock issued 0 -
===========
</TABLE>
- --------------------------------------------------------------------------------
The accompanying note is an integral part of these financial statements.
6
<PAGE>
BIOSONICS, INC.
---------------
(A DEVELOPMENT STAGE ENTERPRISE)
--------------------------------
STATEMENT OF SHAREHOLDERS' EQUITY - PAID-IN CAPITAL
---------------------------------------------------
NOVEMBER 13, 1980 (INCEPTION) TO SEPTEMBER 30, 1996
---------------------------------------------------
(UNAUDITED)
-----------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DATE STOCK PRICE
ISSUED NUMBER OF SHARES PER SHARE AMOUNT RECEIVED NOTES
---------- ---------------- --------- --------------- -----
<S> <C> <C> <C> <C>
1/13/81 150,000,000 $.0001 $ 15,001 (A)
1/31/81 4,400,000 .025 110,000 (B)
1981 400,000 .025 10,000 (C)
1981 20,000,000 .05 1,000,000 (B)
1982 20,000 .40 8,000 (C)
1982 97,500 .20 19,500 (C)
1982 1,000,000 .06 60,100 (D)
1983 52,500 .20 10,500 (C)
1983 75,000 .305 22,875 (E)
1983 25,000 .235 5,875 (E)
1983 20,000 .50 10,000 (C)
12/29/83 7,300,000 .50 3,650,000 (F)
1984 390 1.00 390 (G)
1984 5,948 .50 2,975 (G)
1984 1,000 .375 375 (C)
1984 72,500 .25 18,125 (C)
1984 2,000 .375 750 (H)
1984 4,000 .25 1,000 (C)
1984 350,000 .20 70,000 (C)
1985 26,500 .281 7,453 (C)
1985 20,000 .25 5,000 (H)
1985 500 .50 250 (G)
1985 5,000 .344 1,719 (C)
1985 50 1.00 50 (G)
1985 2,000 .375 750 (H)
1985 7,500 .156 1,172 (C)
1986 6,882 .50 3,472 (G)
1986 85,000 .1875 15,938 (H)
1986 11,650 .281 3,276 (H)
1986 100,000 .219 21,875 (H)
1986 10,665,000 .181 1,929,737 (I)
1986 202,000 .156 31,562 (H)
1986 70,000 .313 21,875 (H)
1986 134,855 .20 26,939 (H)
1987 7,613,551 .20 1,522,710 (G)
1987 476,110 .295 140,478 (H)
1987 7,000 .159 1,113 (B)
1987 15,000 .312 4,687 (C)
1987 240,000 .20 48,000 (B)
1987 100,000 .218 21,875 (C)
1988 125,000 .25 31,250 (C)
1988 2,500 .218 547 (H)
1988 10,000 .20 2,000 (G)
</TABLE>
- --------------------------------------------------------------------------------
The accompanying note is an integral part of these financial statements.
7
<PAGE>
BIOSONICS, INC.
---------------
(A DEVELOPMENT STAGE ENTERPRISE)
--------------------------------
STATEMENT OF SHAREHOLDERS' EQUITY - PAID-IN CAPITAL (CONTINUED)
---------------------------------------------------------------
NOVEMBER 13, 1980 (INCEPTION) TO SEPTEMBER 30 , 1996
----------------------------------------------------
(UNAUDITED)
-----------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DATE STOCK PRICE
ISSUED NUMBER OF SHARES PER SHARE AMOUNT RECEIVED NOTES
---------- ---------------- --------- --------------- -----
<S> <C> <C> <C> <C>
1988 100,000 .25 25,000 (B)
1988 4,227,000 .20 845,400 (B)
1988 25,000 .156 3,906 (C)
1988 11,000 .013 143 (H)
1989 400,000 .080 32,000 (B)
1989 3,000 .0938 282 (H)
1989 100,000 .080 8,000 (B)
1990 25,000 .010 250 (H)
1990 20,311,000 .010 203,110 (B)
1990 10,500,000 .010 105,000 (B)
1991 1,100,000 .010 11,000 (B)
1991 100,000 .010 1,000 (H)
1991 48,000 .0625 3,000 (L)
1991 32,000 .0625 2,000 (L)
1991 1,100,000 .010 11,000 (L)
1991 1,100,000 .010 11,000 (B)
1991 400,000 .010 4,000 (C)
1996 1,250,000 .08 100,000 (M)
1996 11,375,000 .0286 325,000 (M)
1996 16,100,000 .05 805,000 (M)
1996 1,300,000 .01 13,000 (N)
1996 12,900,000 .02 258,000 (N)
1996 300,000 .03 9,000 (O)
1996 280,000 .05 14,000 (O)
1996 400,000 .08 32,000 (O)
1996 100,000 .065 6,500 (O)
1996 250,000 .085 21,250 (O)
1996 - 126,188
1996 3,000,000 .01 30,000 (O)
1996 550,000 .10 55,000 (O)
1996 420,000 .0238 10,000 (N)
1996 11,150,000 .02 223,000 (N)
1996 428,600 .035 15,000 (N)
1996 250,000 .04 10,000 (N)
1996 1,075,220 .05 53,761 (N)
1996 350,000 .0258 9,032 (L)
1996 1,695,000 .0345 59,175 (L)
TOTAL SHARES - COMMON STOCK 306,507,756
- --------------------------- ===========
TOTAL PAID-IN CAPITAL 12,300,191
LESS: Offering Expenses 473,495
==== ----------
NET PAID-IN CAPITAL - COMMON STOCK 11,826,696
- ---------------------------------- -----------
</TABLE>
- --------------------------------------------------------------------------------
The accompanying note is an integral part of these financial statements.
8
<PAGE>
BIOSONICS, INC.
---------------
(A DEVELOPMENT STAGE ENTERPRISE)
--------------------------------
STATEMENT OF SHAREHOLDERS' EQUITY-PAID-IN CAPITAL (CONTINUED)
-------------------------------------------------------------
NOVEMBER 13, 1980 (INCEPTION) TO SEPTEMBER 30, 1996
---------------------------------------------------
(UNAUDITED)
-----------
- --------------------------------------------------------------------------------
NOTES
(A) $1 additional was paid on stock certificate #3.
(B) Cash purchases.
(C) Represents stock issued in consideration for services rendered. The value
assigned was based on the fair market value of the stock on the date the
transaction was authorized.
(D) 1,000,000 common stock warrants were issued to the underwriter, Monarch
Funding Corporation, at par value ($.0001). On November 15, 1982, these
warrants were exercised at $.06 per share.
(E) Represents stock issued in consideration for services rendered and $7,500
cash. The value assigned was based on the fair market value of the stock
on the date the transaction was authorized.
(F) Stock issued as part of unit offering. Each unit consisted of 2 shares
common stock, 2 Series "A" warrants and 1 Series "B" warrant. No separate
value was assigned to the warrants.
(G) Issued pursuant to the exercise of warrants described in (F).
(H) Issued pursuant to the employee incentive stock bonus plan.
(I) Issued as part of an offering completed March 26, 1986 for cash and
redemption of warrants described in (F).
(J) Preferred stock cash purchases.
(K) Preferred stock-Series "B" (1,250 shares) to Jack and Sarah Paller in
satisfaction of $125,000 of their loan.
(L) Liabilities converted to common stock.
(M) Preferred Stock transfered to Common Stock as per agreement.
(N) Issued stock for monies received during time when common stock was not
able to be issued.
(O) Issued stock as payment for services rendered.
- --------------------------------------------------------------------------------
The accompanying note is an integral part of these financial statements.
9
<PAGE>
BIOSONICS, INC.
---------------
(A DEVELOPMENT STAGE ENTERPRISE)
--------------------------------
NOTE TO FINANCIAL STATEMENTS
----------------------------
SEPTEMBER 30, 1996
------------------
- --------------------------------------------------------------------------------
Note 1 - The unaudited financial statements presented herein have been
prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and note disclosures required by
generally accepted accounting principles. These statements should be
read in conjunction with the financial statements and notes thereto
included in the Company's Form 10-K annual report for the year ended
December 31, 1995. In the opinion of management, these financial
statements include all adjustments, consisting only of normal
recurring adjustments, necessary to summarize fairly the Company's
financial position and results of operations. The results of
operations for the nine-month period ended September 30, 1996 may
not be indicative of the results that may be expected for the year
ending December 31, 1996.
- --------------------------------------------------------------------------------
10
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Liquidity and Capital Resources
- -------------------------------
The Company's primary source of funds to date has been proceeds
from the sale of its securities, investment income on such proceeds and loans.
The Company will require additional funds in the immediate future to continue
its operations, pay accrued expenses, including salary, rent and lease payments,
to develop further its products and to market its products. The Company may
receive a portion of such funds from sales of the SALITRON System. The Company
is considering obtaining funds through venture capital or other private or
public financing, joint venture or merger transactions, the sale of certain
assets and research and development partnership financing. The Company has
engaged a consultant to assist in obtaining additional funding. There is no
assurance that any such funding or other financing will be completed, or that
funding to carry out these activities will be on terms acceptable to Biosonics.
The Company does not have any material commitments for capital
expenditures, although the Company may make capital expenditures during 1996 or
in connection with the manufacture of the SALITRON and CYSTOTRON Systems, if
funds are available. The extent of the development or testing, if any, of the
Company's other devices will depend on the availability of funds.
Results of Operations
- ---------------------
Net development stage expenses for the nine and three months
ended September 30, 1996 ($501,091 and $280,853 respectively) were higher than
those for the comparable periods of the prior year ($371,989 and $104,786
respectively) due to funds spent on the Special Shareholders meeting and the
hiring of a Public Relations company. Other development stage expenses include
primarily salaries, rent, supplies, transfer agent fees, manufacturing,
marketing, public relations and travel expenses. The Company's professional fees
for the nine and three months ended September 30, 1996 ($109,691 and $72,691
respectively) were higher than those for the comparable period of the prior year
($62,004 and $8,480 respectively) due to legal and accounting expenses incurred
for the Special Shareholders meeting and a retainer paid to the new attorneys
hired as counsel to the Company on securities related issues. The Company's
sales for the nine and three months ended September 30,1996 were $34,911 and
$5,786 respectivly as compared to $45,716 and $23,190 respectively for the same
periods of the prior year. The decrease in sales resulted primarily from not
having available funds to continue the marketing program for its SALITRON
System.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Reference is made to Part II Item 1 of the Company's Form 10-Q
quarterly report for the period ending March 31, 1996.
Item 2. Changes in Securities.
In July 1996, The Company amended its Articles of Corporation
pursuant to which the company increased the authorized number of shares of
Common Stock from 250,000,000 shares to 750,000,000 shares. On July 30, 1996,
all stock that had been previously purchased but unissued due to the
unavailability of shares of authorized Common Stock of the Company were issued.
The total number of shares issued was 12,900,000 shares. In addition, all
holders of Preferred Stock, A Series, B Series and D Series, converted their
Preferred
11
<PAGE>
Shares into Common Stock of the Company, pursuant to the formula set forth in
their respective Preferred Stock Agreements. The total number of Common Shares
issued as a result of the conversion of all the Preferred Stock was 28,725,000
shares, including 7,000,000 shares to IMRC and 4,375,000 shares to Jack Paller
pursuant to the conversion of their Preferred Stock Series B.
In addition to the above shares, the Company issued an aggregate
of 300,000 Common Stock shares to the Salitron Advisory Board, an aggregate of
650,000 shares of Common Stock were issued to three outside consultants in
connection with financial planning and consulting services to be provided to the
Company. Also IMRC Holdings, Inc. issued 550,000 shares of the Company's Common
Stock held by it to two outside consultants for certain advertising and public
relation services. Further, the Company issued an aggregate of 280,000 shares to
three doctors for medical consulting services rendered. An aggregate of
14,200,000 shares of Common Stock were issued to eighteen persons who wished to
acquire stock but at the time, the company was restricted from issuance since
this issuance would have been more than the total authorized.
The Company also issued 18,368,820 shares of Common Stock to
approximately 25 individuals in conversion of loans. The loans were originally
to IMRC Holdings, Inc. which then loaned the money to the Company to use for
working capital. None of the individuals making the loans were officers,
directors or affiliates of the Company. The terms of the loans allowed the loans
to be converted into Common Stock of Biosonics, Inc. held by IMRC Holdings. In
consideration of the Company assuming the obligations under the loans, including
the obligation to issue stock upon conversion of the loans, IMRC Holdings,
transferred to the Company 18,368,820 shares of Biosonics Common Stock owned by
IMRC Holdings and canceled the indebtedness from the Company to IMRC Holdings.
Item 4. Submission of matters to a vote of security holders.
The Company held a Special Meeting of Shareholders on July 16,
1996. At the meeting, two proposals were submitted to the shareholders. The
first proposal was to amend the Articles of Incorporation of the Company to
increase the authorized number of shares of Common Stock from 250,000,000 shares
to 750,000,000 shares. The second proposal was to amend the Articles of
Incorporation to give the Board of Directors the authority to effect a reverse
split, the ratio to be determined by the Board of Directors, but the ratio would
be no less than 1 for 10 shares or more than 1 for 150 shares. The Proposal
would give the Board of Directors one year to decide and effectuate the stock
split, if it decides such stock split is in the best interest of the Company.
Both proposals were approved by the shareholders. The first
proposal, the increase in the authorized number of shares, was approved by a
vote of 172,133,873 for 1,271,596 against, 223,233 abstaining and 0 broker
non-votes. The second proposal, amending the Articles of Incorporation to give
the Board of Directors the power to effect a reverse stock split, was approved
by a vote of 172,133,873 for 1,661,647 against, 196,197 abstaining and 0 broker
non-votes.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
3.1 Articles of Incorporation, as amended
(b) Reports on Form 8-K:
None
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunder duly authorized.
BIOSONICS, INC.
Date: November ________, 1996 By:
---------------------------------
Jack Paller, President, Chairman and
Executive Officer, Principal Financial
Officer and Principal Accounting Officer
and Sole Director.
13
<PAGE>
Filed this 13th day of November, 1980. Commonwealth of Pennsylvania Department
of State.
ARTICLES OF INCORPORATION--DOMESTIC BUSINESS CORPORATION
----------------------------------------------------------
In compliance with the requirements of section 204 of the Business
Corporation Law, act of May 5, 1933 (P.L. 364) (15 P.S. (S)1204) the
undersigned, desiring to be incorporated as a business corporation, hereby
certifies (certify) that:
1. The name of the corporation is:
Biosonics, Inc.
2. The location and post office address of the initial registered office of the
corporation in this Commonwealth is:
810 Lombard Street
Philadelphia, Pennsylvania 19147
3. The corporation is incorporated under the Business Corporation Law of the
Commonwealth of Pennsylvania for the following purpose or purposes:
To have unlimited power to engage in and to do any lawful act
concerning any or all lawful business for which corporations may
be incorporated under the Business Corporation Law.
4. The term for which the corporation is to exist is: perpetual
5. The aggregate number of shares which the corporation shall have authority
to issue is:
250,000,000 shares of Common Stock, par value .0001 per share.
The Shareholders shall not cumulate their shares in voting for the election
of Directors.
6. The name(s) and post office address(es) of each incorporator(s) and the
number and class of shares subscribed by such incorporation(s) is (are):
NAME ADDRESS NUMBER AND CLASS OF SHARES
Dorothy J. Cutter 12th Fl. Packard Bldg. -1- Common
15th & Chestnut Sts.
Phila., Pa. 19102
IN TESTIMONY WHEREOF, the incorporator(s) has (have) signed and sealed these
Articles of Incorporation this 12th day of November, 1980.
/s/ Dorothy J. Cutter
<PAGE>
Filed this 11th day of June, 1981. Commonwealth of Pennsylvania Department of
State.
Articles of
Amendment -
Domestic Business Corporation
In compliance with the requirements of Section 806 of the Business
Corporation Law, act of May 5, 1933 (P.L. 364) (15 P.S. (S)1806), the
undersigned corporation, desiring to amend its Articles, does hereby certify
that:
1. The name of the corporation is:
Biosonics, Inc.
2. The location of its registered office in this Commonwealth is (the
Department of State is hereby authorized to correct the following statement
to conform to the records of the Department): 810 Lombard Street,
Philadelphia, Pennsylvania 19107
3. The statute by or under which it was incorporated is: Business Corporation
Law approved May 5, 1933, P.L. 364, as amended.
4. The date of its incorporation is: November 13, 1980.
5. (Check, and if appropriate, complete one of the following):
[X] The meeting of the shareholders of the corporation at which the
amendment was adopted was held at the time and place and pursuant to the kind
and period of notice herein stated.
Time: The 1st day of June, 1981.
Place: Twelfth Floor Packard Building, Philadelphia, PA 19102
Kind and period of notice: Written notice mailed May 7, 1981.
[ ] The amendment was adopted by a consent in writing, setting forth
the action so taken, signed by all of the shareholders entitled to vote thereon
and filed with the Secretary of the corporation.
6. At the time of the action of shareholders:
a. The total number of shares outstanding was: 154,800,000
b. The number of shares entitled to vote was: 154,800,000
7. In the action taken by the shareholders:
a. The number of shares voted in favor of the amendment was: 142,700,000
b. The number of shares voted against the amendment was: None
<PAGE>
8. The amendment adopted by the shareholders, set forth in full, is as
follows:
Paragraph 5 of the Articles of Incorporation is hereby amended and restated
in its entirety as follows:
5(a). The aggregate number of shares which the corporation shall have
authority to issue is: 250,000,000 shares of Common Stock (without cumulative
voting rights), par value $.0001 per share, and 10,000,000 shares of Preferred
Stock par value $1.00 per share.
5(b). The Board of Directors may issue in one or more series, up to
10,000,000 shares of Preferred Stock, $1.00 par value per share, with full,
limited, multiple or fractional, or no voting rights, and such designations,
preferences, qualifications, privileges, limitations, options, conversion rights
and other special rights, as shall be fixed from time to time by resolution of
the Board of Directors.
IN TESTIMONY WHEREOF, the undersigned corporation has caused these Articles
of Amendment to be signed by a duly authorized officer and its corporate seal,
duly attested by another such officer, to be hereunto affixed this 1st day of
June, 1981.
BIOSONICS, INC.
----------------------------------
(Name of Corporation)
Attest:
/s/ DONALD WHITNEY, SECRETARY /s/ Jack Paller, President
- ---------------------------------
<PAGE>
Filed March 21, 1989. Commonwealth of Pennsylvania Department of State.
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE
CORPORATION BUREAU
Statement Affecting Class of Series of Shares -- Domestic Business Corporation
In compliance with the requirements of section 602 of the Business
Corporation Law, act of May 5, 1933 (P.L. 364) (15 P.S. (S)1602), the
undersigned corporation, desiring to state the voting rights, designations,
preferences, qualifications, privileges, limitations, options, conversion
rights, and other special rights, if any, of a class or series of a class of its
shares, hereby certifies that:
9. The name of the corporation is: Biosonics, Inc.
10. (Check and complete one of the following):
[ ] The resolution establishing and designating the class or series
of shares and fixing and determining the relative rights and preferences thereof
set forth in full, is as follows:
[X] The resolution establishing and designating the class or series
of shares and fixing and determining the relative rights and preferences thereof
is set forth in full in Exhibit A attached hereto and made a part hereof.
11. The aggregate number of shares of such class or series established and
designated by (a) such resolution, (b) all prior statements, if any, filed under
the Business Corporation Law with respect thereto, and (c) any other provision
of the Articles is 1,000 shares.
12. (Check and complete one of the following):
[ ] The resolution was adopted by the Board of Directors of the
corporation at a duly called meeting held on the _________________ day of
___________________, 19__.
[X] The resolution was adopted by a consent or consents in writing
dated as of the 16th day of December, 1988, signed by all of the Directors of
the corporation and filed with the Secretary of the corporation.
IN TESTIMONY WHEREOF, the undersigned corporation has caused this statement
to be signed by a duly authorized officer and its corporate seal, duly attested
by another such officer, to be hereunto affixed this 20th day of March, 1989.
BIOSONICS, INC.
------------------------------
(Name of Corporation)
Attest:
/s/Sarah Paller, Assistant Secretary By: /s/Jack Paller, Chairman
<PAGE>
EXHIBIT A
RESOLUTION ESTABLISHING AND DESIGNATING THE
PREFERRED STOCK - SERIES A AND FIXING AND DETERMINING
THE RELATIVE RIGHTS AND PREFERENCES THEREOF
RESOLVED, that pursuant to the authority expressly vested in the Board of
Directors by the Corporation's Articles of Incorporation, there is hereby
established a series of One Thousand (1,000) shares of preferred stock of the
Corporation, par value One Dollar ($1.00) per share, to be known as "Preferred
Stock - Series A." The rights, designations, preferences, qualifications,
privileges, limitations and conversion rights thereof are as follows:
13. Designation and Amount. There shall be an initial series of the
----------------------
Corporation's class of Preferred Stock, par value One Dollar ($1.00) per share,
which shall consist of One Thousand (1,000) shares and shall be designated as
"Preferred Stock - Series A" (hereinafter the "Preferred Stock").
14. Terms Applicable to Preferred Stock.
-----------------------------------
i. Voting Rights. Except as otherwise expressly provided herein or
-------------
as required by law, holders of Preferred Stock shall have the right to
vote on all matters as to which holders of Common Stock have a right
to vote, and such voting rights shall be exercised on an as-converted
basis (i.e., as though the Preferred Stock had been converted and such
----
holders held the Common Stock issuable upon such conversion). Holders
of Preferred Stock shall have no right to vote as a class except as
required by law.
ii. Conversion Rights.
-----------------
2.1 Description and Conversion Procedure. Each share of the
------------------------------------
Preferred Stock shall be convertible into One Thousand Two Hundred Fifty (1,250)
shares of the Common Stock ("Conversion Shares") of the Corporation as
hereinafter set forth (an aggregate of One Million Two Hundred Fifty Thousand
(1,250,000) shares), subject to the provisions of Section 3 by which the
Preferred Stock may be converted into a larger or smaller number of Conversion
Shares upon the occurrence of certain events described therein.
2.2 Conversion Procedure. Each certificate representing Preferred
--------------------
Stock may be converted in whole or in part. The certificate representing the
Preferred Stock to be converted shall be endorsed to reflect the conversion of
all or such portion thereof as the holder determines to convert and surrender to
the Corporation at its principal offices. If the Conversion Shares are not to be
issued in the name of the holder to whom the Preferred Stock is registered, such
holder shall also state the name of the person to whom the certificate for the
Conversion Shares is to be issued, and if the Conversion Shares to be issued
shall not be all the Conversion Shares into which the Preferred Stock may be
converted, the name of the person to whom shall be issued a new certificate
evidencing the balance of the Preferred Stock.
<PAGE>
2.3 Conversion Period. Except as herein expressly provided
-----------------
otherwise, any holder of Preferred Stock may exercise the conversion rights of
all or any portion of the Preferred Stock held by such holder at any time or
from time tot time after the date of issuance and prior to the redemption of
such shares of Preferred Stock.
2.4 Authorization and Issuance. The Corporation covenants and agrees
--------------------------
that:
(a) The Conversion Shares shall be deemed to have been issued to
the person exercising such conversion privilege upon the date of surrender (the
"Conversation Date") of the certificates representing the Preferred Stock to be
converted in accordance with this Section 2, and the person exercising such
conversion privilege shall be deemed for all purposes to have become the record
holder of such Conversion Shares at the Conversion Date, unless pursuant to
Section 2.2 a different person is specified.
(b) All Conversion Shares will, upon issuance, be fully paid and
non-assessable.
3. Anti-Dilution.
-------------
3.1 Subdivision or Combination of Stock. In case the Corporation
-----------------------------------
shall at any time subdivide its outstanding shares of Common Stock into a
greater number of shares, the number of Conversion Shares into which the
Preferred Stock is converted immediately prior to such subdivision shall be
proportionately increased, and, in case the outstanding shares of Common Stock
of the Corporation shall be combined into a smaller number of shares, the number
of Conversion Shares into which the Preferred Stock is converted immediately
prior to such combination shall be proportionately reduced.
3.2 Reorganization, Reclassification, Consolidation or Merger. If
---------------------------------------------------------
there should occur any capital reorganization or reclassification of the capital
stock of the Corporation, or consolidation or merger of the Corporation with
another corporation, then, as a condition of such reorganization,
reclassification, consolidation or merger, lawful and adequate provision shall
be made whereby the holders of the Preferred Stock shall thereafter have the
right to acquire and receive, upon conversion of the Preferred Stock such shares
of stock, securities or assets as would have been issuable or payable (as part
of the reorganization, reclassification, consolidation or merger) with respect
to or in exchange for such number of outstanding shares of the Corporation's
Common Stock as would have been received upon conversion of the Preferred Stock
immediately before such reorganization, reclassification, consolidation or
merger. In any such case appropriate provision shall be made with respect to
the rights and interests of the holders of the Preferred Stock to the end that
the provisions hereof (including without limitation provisions for adjustments
of the number of Conversion Shares acquirable and receivable upon the conversion
of the Preferred Stock) shall thereafter be applicable as nearly as possible in
relation to any shares of stock, securities or assets thereafter deliverable
upon the conversion of the Preferred Stock.
<PAGE>
4. Redemption.
----------
4.1 Redemptions. At any time on or after January 1, 1991, the
-----------
Corporation, by resolution of its Board of Directors, may redeem ("Redemption")
at a price per share equal to One Hundred Thirty Dollars ($130) per share (the
"Redemption Price") the whole or any part of the Preferred Stock which holders
of Preferred Stock and/or their predecessors in interest theretofore had the
right to convert in accordance with Section 2 but which such holders and/or
their predecessors in interest have not converted.
4.2 Redemption Notice. At least fifteen (15) days prior to the date
-----------------
of Redemption (the "Redemption Date"), the Corporation shall mail, by certified
or registered mail, return receipt requested, to each record holder of any
Preferred stock at the address shown on the corporation's records, a written
notice ("Redemption Notice"), stating: (i) the number of shares of Preferred
Stock held of record by such holder which the Corporation proposes to redeem;
(ii) the Redemption Date; and (iii) the place at which the shares to be redeemed
may be surrendered in exchange for the Redemption Price for such shares if other
than the Corporations' principal office. Upon the mailing of a Redemption
Notice with respect to any Redemption which the Corporation may choose to make,
the Corporation shall become obligated to redeem the Preferred Stock specified
in the Redemption Notice on the date specified as the Redemption Date. Except
as set forth in the preceding sentence, the holders of the Preferred Stock shall
not be entitled to compel the redemption of the Preferred Stock.
4.3 Right to Convert Upon Notice of Redemption. Upon receiving a
------------------------------------------
Redemption Notice with respect to any shares of Preferred Stock, the holder of
such shares shall be entitled to exercise the conversion rights of such shares
provided for in Section 2 prior to the Redemption Date.
4.4 Surrender of Certificates. Each holder of Preferred Stock shall
-------------------------
be entitled to receive on or at any time after any Redemption Date the full
Redemption Price for each share of Preferred Stock held by such holder which the
Corporation shall be obligated to redeem on such Redemption Date upon surrender
by such holder at the Corporation's principal office of the certificate
representing such shares duly endorsed in blank or accompanied by an appropriate
for of assignment duly endorsed in blank. After the payment of the full
Redemption Price, as applicable, by the Corporation, all rights of the holder of
such Preferred Stock shall (whether or not the certificate representing such
Preferred Stock shall have been surrendered for cancellation) cease and
terminate with respect to such Preferred Stock.
4.5 Redeemed Preferred Stock to be Canceled. The Corporation shall
---------------------------------------
cancel each share of Preferred Stock which it shall redeem or for any other
reason acquire, and no share of Preferred Stock which shall have been redeemed
or otherwise acquired by the Corporation shallthereafter be reissued, sold or
transferred by the Corporation to any person.
5. Liquidation.
-----------
5.1 Rights of Holders of Preferred Stock. In the event of any
------------------------------------
voluntary or involuntary liquidation (whether complete or partial), dissolution
or winding up of the operation, the holders of the Preferred Stock shall be
entitled to be paid out of the assets of the Corporation available for
distribution to its stockholders an amount in cash equal to One Hundred Dollars
<PAGE>
($100.00) per share. No distribution shall be made on the Common Stock by
reason of any voluntary or involuntary liquidation (whether complete or
partial), dissolution or winding up of the Corporation unless each holder of any
Preferred Stock shall have received all amounts to which such holder shall be
entitled under this Section 5.1.
5.2 Payments After Initial Distribution. Should any amounts be
-----------------------------------
available for distribution after the payment to the holders of the Preferred
Stock required by Section 5.1, none of such additional amounts shall be paid to
the holders of the Preferred Stock.
5.3 Allocation of Liquidation Payments Among Holders of Preferred
-------------------------------------------------------------
Stock. If upon any dissolution, liquidation (whether complete or partial), or
- -----
winding up of the Corporation, the assets of the Corporation available for
distribution to holders of Preferred Stock (the "Total Amount Available") shall
be insufficient to pay the holders of outstanding Preferred Stock the full
amounts to which they shall he entitled under Section 5.1, each holder of
Preferred Stock shall be entitled to receive an amount equal to the product
derived by multiplying the Total Amount Available by a fraction the numerator of
which shall be the number of such holder's shares of Preferred Stock and the
denominator of which shall be the total number of shares of Preferred Stock then
outstanding.
6. Dividends on Preferred Stock. The holders of the Preferred Stock
----------------------------
shall not be entitled to receive any dividends.
7. General Provisions.
------------------
7.1 Amendment and Waiver. No change in the terms of the Preferred
--------------------
Stock shall be binding or effective unless such change shall have been approved
in writing by the holders of at least two-thirds (2/3) of the shares of
Preferred Stock then outstanding.
7.2 Replacement of Lost Certificates. Upon receipt by the Corporation
--------------------------------
in a form reasonably satisfactory to it of (i) an indemnification by the holder
and (ii) evidence of the ownership of and the loss, theft, destruction or
mutilation of any certificate evidencing one or more shares of Preferred Stock,
the Corporation at its expense will execute and deliver in lieu of such
certificate, a new certificate of like kind, representing the number of shares
of Preferred Stock which shall have been represented by such lost, stolen,
destroyed, or mutilated certificate.
7.3 Replacement Certificates in Case of Redemption or Conversion. If
------------------------------------------------------------
any certificates representing Preferred Stock surrendered pursuant to a
Redemption or for the purpose of exercising conversion rights represent more
shares than actually redeemed or converted, then within 30 days to surrender,
the Corporation will, at its expense execute and deliver a new certificate or
certificates of like kind for those shares of Preferred Stock represented by the
surrendered certificate but not intended to be converted or redeemed, provided,
however, that the Corporation may pay cash based on the Redemption or Conversion
Price, as applicable in lieu of any fractional shares of Preferred Stock
represented by such surrendered certificates but not intended to be converted or
redeemed.
<PAGE>
Filed September 7, 1989. Commonwealth of Pennsylvania Department of State.
STATEMENT AFFECTING CLASS OR SERIES OF SHARES --
DOMESTIC BUSINESS CORPORATION
- -----------------------------
In compliance with the requirements of section 602 of the Business
Corporation Law, act of May 5, 1933 (P. L. 364) (15 P.S. (S) 1602), the
undersigned corporation, desiring to state the voting rights, designations,
preferences, qualifications, privileges, limitations, options, conversion
rights, and other special rights, if any, of a class or series of a class of its
shares, hereby certifies that:
1. The name of the corporation is:
Biosonics, Inc.
2. (Check and complete one of the following):
[ ] The resolution establishing and designating the class or series of
shares and fixing and determining the relative rights and preferences thereof
set forth in full, is as follows:
[X] The resolution establishing and designating the class or series of
shares and fixing and determining the relative rights and preferences thereof is
set forth in full in Exhibit A attached hereto and made a part hereof.
3. The aggregate number of shares of such class or series established and
designated by (a) such resolution, (b) all prior statements, if any, filed under
the Business Corporation Law with respect thereto, and (c) any other provision
of the Articles is 10,000 shares.
4. (Check and complete one of the following):
[X] The resolution was adopted by the Board of Directors of the
corporation at a duly called meeting held on the 6th day of September, 1989.
[ ] The resolution was adopted by a consent or consents in writing dated
the day of , 19 , signed by all of the Directors of the
corporation and filed with the Secretary of the corporation.
<PAGE>
IN TESTIMONY WHEREOF, the undersigned corporation has caused this statement
to be signed by a duly authorized officer and its corporate seal, duly attested
by another such officer, to be hereunto affixed this 6th day of September, 1989.
BIOSONICS, INC.
By: /s/Jack Paller,
Chairman
Attest:
/s/Sarah Paller
Assistant Secretary
- --------------------------------
<PAGE>
EXHIBIT A
RESOLVED, that the Series of Preferred Stock of the Corporation known
as "Preferred Stock-Series B," established by resolution of the Board of
Directors adopted June 27, 1989 is hereby increased from Two Thousand (2,000) to
Ten Thousand (10,000) shares.
<PAGE>
Resolution of the Board of Directors of
Biosonics, Inc. adopted June 27, 1989
RESOLUTION ESTABLISHING AND DESIGNATING THE
PREFERRED STOCK - SERIES B AND FIXING AND DETERMINING
THE RELATIVE RIGHTS AND PREFERENCES THEREOF
RESOLVED, that pursuant to the authority expressly vested in the Board of
Directors by the Corporation's Articles of Incorporation, there is hereby
established a series of Two Thousand (2,000) shares of preferred stock of the
Corporation, par value One Dollar ($1.00) per share, to be known as "Preferred
Stock - Series B." The rights, designations, preferences, qualifications,
privileges, limitations and conversion rights thereof are as follows:
I. Designation and Amount. There shall be a series of the Corporation's
----------------------
class of Preferred Stock par value One Dollar ($1.00) per share, which shall
consist of Two Thousand (2,000) shares and shall be designated as "Preferred
Stock - Series B" (hereinafter the "B Preferred Stock").
II. Terms Applicable to B Preferred Stock.
-------------------------------------
1. Voting Rights. Except as required by law, holders of B Preferred
-------------
Stock shall have no right to vote.
2. Redemption.
----------
2.1 Redemptions. At any time on or after October 1, 1989, the
-----------
Corporation, by resolution of its Board of Directions, may redeem ("Redemption")
at a price per share equal to One Hundred Five Dollars ($105) per share (the
"Redemption Price") the whole or any part of the B Preferred Stock.
2.2 Redemption Notice. At least five (5) days prior to the date
-----------------
of Redemption (the "Redemption Date"), the Corporation shall mail, by certified
or registered mail, return receipt requested, to each record holder of any B
Preferred Stock at the address shown on the Corporation's records, a written
notice ("Redemption Notice"), stating: (i) the number of shares of B Preferred
Stock held of record by such holder which the Corporation proposes to redeem;
(ii) the Redemption Date; and (iii) the place at which the shares to be redeemed
may be surrendered in exchange for the Redemption Price for such shares if other
than the Corporation's principal office. Upon the mailing of a Redemption Notice
with respect to any Redemption which the Corporation may choose to make, the
Corporation shall become obligated to redeem the B Preferred Stock specified in
the Redemption Notice on the date specified as the Redemption Date. Except as
set forth in the preceding sentence, the holders of the B Preferred Stock shall
not be entitled to compel the redemption of the B Preferred Stock.
2.4 Surrender of Certificates. Each holder of B Preferred Stock
-------------------------
shall be entitled to receive on or at any time after any Redemption Date the
full Redemption Price for
<PAGE>
each share of B Preferred Stock held by such holder which the Corporation shall
be obligated to redeem on such Redemption Date upon surrender by such holder at
the Corporation's principal office of the certificate representing such shares
duly endorsed in blank or accompanied by an appropriate form of assignment duly
endorsed in blank. After the payment of the full Redemption Price, as
applicable, by the Corporation, all rights of the holder of such B Preferred
Stock shall (whether or not the certificate representing such B Preferred Stock
shall have been surrendered for cancellation) cease and terminate with respect
to such B Preferred Stock.
2.5 Redeemed B Preferred Stock to be Canceled. The Corporation
-----------------------------------------
shall cancel each share of Preferred Stock which it shall redeem or for any
other reason acquire, and no share of B Preferred Stock which shall have been
redeemed or otherwise acquired by the Corporation shall thereafter be reissued,
sold or transferred by the Corporation to any person.
3. Liquidation.
-----------
3.1 Rights of Holders of B Preferred Stock. In the event of
--------------------------------------
any voluntary or involuntary liquidation (whether complete or partial),
dissolution or winding up of the operation, the holders of the B Preferred Stock
shall be entitled to be paid out of the assets of the Corporation available for
distribution to its stockholders an amount in cash equal to One Hundred Dollars
($100.00) per share. No distribution shall be made on the Common Stock by
reason of any voluntary or involuntary liquidation (whether complete or
partial), dissolution or winding up of the Corporation unless each holder of any
B Preferred Stock shall have received all amounts to which such holder shall be
entitled under this Section 3.1.
3.2 Payments After Initial Distribution. Should any amounts be
-----------------------------------
available for distribution after the payment to the holders of the B Preferred
Stock required by Section 3.1, none of such additional amounts shall be paid to
the holders of the B Preferred Stock.
3.3 Allocation of Liquidation Payments Among Holders of B
-----------------------------------------------------
Preferred Stock. If upon any dissolution, liquidation (wether complete or
- ---------------
partial), or winding up of the Corporation available for distribution to holders
of B Preferred Stock (the "Total Amount Available") shall be insufficient to pay
the holders of outstanding B Preferred Stock the full amounts to which they
shall be entitled under Section 3.1, each holder of B Preferred Stock shall be
entitled to receive an amount equal to the product derived by multiplying the
Total Amount Available by a fraction the numerator of which shall be the number
of such holder's shares of B Preferred Stock and the denominator of which shall
be the total number of shares of B Preferred Stock then outstanding.
4. Dividends on B Preferred Stock. The holders of the B Preferred
------------------------------
Stock shall not be entitled to receive any dividends.
5. General Provisions.
------------------
5.1 Amendment and Waiver. No change in the terms of the B
----------------------
Preferred Stock shall be binding or effective unless such change have been
approved in writing by the holders of at least two-thirds (2/3) of the shares of
B Preferred Stock then outstanding.
<PAGE>
5.2 Replacement of Lost Certificates. Upon receipt by the
---------------------------------
Corporation in a form reasonably satisfactory to it of (i) an indemnification by
the holder and (ii) evidence of the ownership of and the loss, theft,
destruction or mutilation of any certificate evidencing one or more shares of B
Preferred Stock, the Corporation at its expense will execute and deliver in lieu
of such certificate, a new certificate of like kind, representing the number of
shares of B Preferred Stock which shall have been represented by such lost,
stolen, destroyed, or mutilated certificate.
5.3 Replacement Certificates in Case of Redemption. If any
----------------------------------------------
certificates representing B Preferred Stock surrendered pursuant to a Redemption
represent more shares than actually redeemed, then within 30 days surrender,
the Corporation will, at its expense execute and deliver a new certificate or
certificates of like kind for those shares of B Preferred Stock represented by
the surrendered certificate but not intended to be redeemed, provided, however,
that the Corporation may pay cash based on the Redemption Price, as applicable
in lieu of any fractional shares of B Preferred Stock represented by such
surrendered certificates but not intended to be redeemed.
<PAGE>
Microfilm Number
---------------
Filed with the Department of State on September 1, 1992
--------------------------
Entity Number 719663
------------------------
Secretary of the Commonwealth
STATEMENT WITH RESPECT TO SHARES-DOMESTIC BUSINESS CORPORATION
DSCB:15-1522 (Rev 89)
In compliance with the requirements of 15 Pa.C.S. (S) 1522(b) (relating to
statement with respect to shares), the undersigned corporation, desiring to
state the designation and voting rights, preferences, limitations, and special
rights, if any, of a class or series of its shares, hereby states that:
1. The name of the corporation is: Biosonics, Inc.
-----------------------
2. (Check and complete one of the following):
The resolution amending the Articles under 15 Pa.C.S. (S)
------
1522(b) (relating to divisions and determinations by the board), set forth in
full, is as follows:
X The resolution amending the Articles under 15 Pa.C.S. (S)
-------
1522(b) is set forth in fully in Exhibit A attached hereto and made a part
hereof.
3. The aggregate number of shares of such class or series established and
designated by (a) such resolution, (b) all prior statements, if any, filed under
15 Pa.C.S. (S) 1522 or corresponding provisions of prior law with respect
thereto, and (c) any other provision of the Articles is One Thousand shares.
----------------
<PAGE>
4. The resolution was adopted by the Board of Directors or an authorized
committee there on August 28, 1992 .
-----------------------
5. (Check, and if appropriate complete, one of the following):
X The resolution shall be effective upon the filing this
-------------
statement with respect to shares in the Department of State.
The resolution shall be effective on .
------------- -----------
IN TESTIMONY WHEREOF, the undersigned corporation has caused this statement
to be signed by a duly authorized officer thereof this 28th day of
--------
August ,1992.
- --------------- --
BIOSONICS, INC.
-------------------------------------
(Name of Corporation)
BY:/s/ Jack Paller
---------------
(Signature)
TITLE: Chairman of the Board
-------------------------------
<PAGE>
EXHIBIT A
RESOLUTION ESTABLISHING AND DESIGNATING THE
PREFERRED STOCK - SERIES C AND FIXING AND DETERMINING
THE RELATIVE RIGHTS AND PREFERENCES THEREOF
RESOLVED, that pursuant to the authority expressly vested in the Board of
Directors by the Corporation's Articles of Incorporation, there is hereby
established a series of one Thousand (1,000) shares of preferred stock of the
Corporation, par value one Dollar ($1.00) per share, to be known as "Preferred
Stock - Series C". The rights, designations, preferences, qualifications,
privileges, limitations and conversion rights thereof are as follows:
I. Designation and Amount. There shall be a series of the Corporation's
----------------------
class of Preferred Stock, par value one Dollar ($1.00) per share, which shall
consist of One thousand (1,000) shares and shall be designated as "Preferred
Stock Series C" (hereinafter the "Preferred Stock").
II. Terms Applicable To Preferred Stock.
-----------------------------------
1. Voting Rights. Except as otherwise expressly provided herein or
-------------
as required by law, holders of Preferred Stock shall have the right to vote on
all matters as to which holders of Common Stock have a right to vote, and such
voting rights shall be exercised on an as-converted basis (i.e., as though the
Preferred Stock had been converted and such holders held the Common Stock
issuable upon such conversion). Holders of Preferred Stock shall have no right
to vote as a class except as required by law.
2. Conversion.
----------
2.1 Conversion Rights. Each share of the Preferred Stock
-----------------
shall be convertible into Ten Thousand (10,000) shares of the Common Stock
("Conversion Shares") of the Corporation as hereinafter set forth, subject to
the provisions of Section 3 by which the Preferred Stock may be converted into a
larger or smaller number of Conversion Shares upon the occurrence of certain
events described therein.
2.2 Conversion Procedure. Each certificate representing
--------------------
Preferred Stock may be converted in whole or in part (but not as to any
fractional part of any share of Preferred Stock). The certificate representing
the Preferred Stock to be converted shall be endorsed to reflect the conversion
of all or such portion thereof as the holder determines to convert and shall be
delivered to the Corporation at its principal office. Each request for
conversion shall be accompanied by the holder's acknowledgment in form and
substance satisfactory to the Corporation that (i) the Conversion Shares are
being purchased for investment and not for distribution or resale (other than a
distribution or resale which, in the opinion of counsel satisfactory to the
Corporation, may be made without violating the registration provisions of the
Securities Act of 1933, as amended, or any applicable state securities law
(collectively, the "Acts"), (ii) the holder has been advised and understands
that (A) the
<PAGE>
Conversion Shares have not been registered under the Acts and are "restricted
securities" within the meaning of Rule 144 under the Securities Act of 1933, as
amended, and are subject to restrictions on transfer, and (B) the Corporation is
under no obligation to register the Conversion Shares under the Acts or to take
any action which would make available to the Optionee any exemption from such
registrations, (iii) such Conversion Shares may not be transferred without
compliance with all applicable federal and state securities laws, and (iv) an
appropriate legend referring to the foregoing restrictions on transfer may be
endorsed on the certificates. Notwithstanding the foregoing, if the Corporation
determines that issuance of Conversion Shares should be delayed pending (a)
registration under federal or state securities laws, (b) the receipt of an
acceptable legal opinion that an appropriate exemption from such registration is
available, (c) the listing or inclusion of the Conversion Shares on any
securities exchange or in an automated quotation system, or (d) the consent or
approval of any governmental regulatory body whose consent or approval is
necessary in connection with the issuance of the Conversion Shares, the
Corporation may defer issuance of the Conversion Shares until the applicable
event or events have occurred.
2.3 Conversion Period. Except as herein expressly provided
-----------------
otherwise, any holder of Preferred Stock may exercise the conversion rights of
all or any portion of the Preferred Stock held by such holder at any time or
from time to time after the date of issuance.
2.4 Authorization and Issuance. The Corporation covenants and
--------------------------
agrees that:
(a) The Conversion Shares shall be deemed to have been
issued to the person exercising such conversion privilege upon the date of
surrender (the "Conversion Date") of the certificates representing the Preferred
Stock to be converted in accordance with this Section 2, and the person
exercising such conversion privilege shall be deemed for all purposes to have
become the record holder of such Conversion Shares at the Conversion Date.
(b) All Conversion Shares will, upon issuance, be fully
paid and non-assessable.
3. Anti-Dilution.
-------------
3.1 Subdivision Combination of Stock. In the event that the
--------------------------------
Corporation shall at any time subdivide its outstanding shares of Common Stock
into a greater number of shares, the number of Conversion Shares into which the
Preferred Stock is convertible shall be proportionately increased, and, in the
event that the outstanding shares of Common Stock of the Corporation shall at
any time be combined into a smaller number of shares, the number of Conversion
Shares into which the Preferred Stock is convertible shall be proportionately
reduced.
<PAGE>
3.2 Reorganization, Reclassification, Consolidation or
--------------------------------------------------
Merger. If there should occur any capital reorganization or reclassification of
- ------
the capital stock of the Corporation, or consolidation or merger of the
Corporation with another corporation, then, as a condition of such
reorganization, reclassification, consolidation or merger, lawful and adequate
provision shall be made whereby the holders of the Preferred Stock shall
thereafter have the right to acquire and receive, upon conversion of the
Preferred Stock, such shares of stock, securities or assets as would have been
issuable or payable (as part of the reorganization, reclassification,
consolidation or merger) with respect to or in exchange for such number of
outstanding shares of the Corporation's Common Stock as would have been received
upon conversion of the Preferred Stock immediately before such reorganization,
reclassification, consolidation or merger. In any such case appropriate
provisions shall be made with respect to the rights and interests of the holders
of the Preferred Stock to the end that the provisions hereof (including without
limitation provisions for adjustments of the number of Conversion shares
acquirable and receivable upon the conversion of the Preferred Stock) shall
thereafter be applicable as nearly as possible in relation to any shares of
stock, securities or assets thereafter deliverable upon the conversion of the
Preferred Stock.
4. Liquidation.
-----------
4.1 Rights of Holders of Preferred Stock. In the event of any
------------------------------------
voluntary or involuntary liquidation (whether complete or partial), dissolution
or winding up of the Corporation, the holders of the Preferred Stock shall be
entitled to be paid out of the assets of the Corporation available for
distribution to its stockholders an amount in cash equal to One Dollar ($1.00)
per share. No distribution shall be made on the Common Stock by reason of any
voluntary or involuntary liquidation (whether complete or partial), dissolution
or winding up of the Corporation unless each holder of Preferred Stock shall
have received all amounts to which such holder shall be entitled under this
Section 4.1.
4.2 Payments After Initial Distribution. Should any amounts
-----------------------------------
be available for distribution after the payment to the holders of the Preferred
Stock required by Section 4.1, none of such additional amounts shall be paid to
the holders of the Preferred Stock.
4.3 Allocation of Liquidation Payments Among Holders of
---------------------------------------------------
Preferred Stock. If upon any voluntary or involuntary liquidation (whether
- ---------------
complete or partial), dissolution or winding up of the Corporation, the assets
of the Corporation available for distribution to holders of Preferred Stock (the
"Total Amount Available") shall be insufficient to pay the holders of
outstanding Preferred Stock the full amounts to which they shall be entitled
under Section 4.1, each holder of Preferred Stock shall be entitled to receive
an amount equal to the product derived by multiplying the Total Amount Available
by a fraction the numerator of which shall be the number of such holder's shares
of Preferred Stock and the denominator of which shall be the total number of
shares of Preferred Stock then outstanding.
5. Dividends on Preferred Stock. The holders of the Preferred
----------------------------
Stock shall not be entitled to receive any dividends.
<PAGE>
6. General Provisions.
------------------
6.1 Amendment and Waiver. No change in the terms of the
--------------------
Preferred Stock shall be binding or effective unless such change shall have been
approved in writing by the holders of at least two-thirds (2/3) of the shares of
Preferred Stock then outstanding.
6.2 Replacement of Lost Certificates. Upon receipt by the
--------------------------------
Corporation in a form reasonably satisfactory to it of (i) an indemnification by
the holder and (ii) evidence of the ownership of and the loss, theft,
destruction or mutilation of any certificate evidencing one or more shares of
Preferred Stock, the Corporation at its expense will execute and deliver in lieu
of such certificate, a new certificate of like kind, representing the number of
shares of Preferred Stock which shall have been represented by such lost,
stolen, destroyed, or mutilated certificate.
6.3 Rep1acement Certificates in Case of Conversion. If any
----------------------------------------------
certificates representing Preferred Stock surrendered for the purpose of
exercising conversion rights represent more shares than actually converted, then
within thirty (30) days of surrender, the Corporation will, at its expense,
execute and deliver a new certificate or certificates of like kind for those
shares of Preferred Stock represented by the surrendered certificate but not
intended to be converted, provided, however, that the Corporation shall not be
required to issue any fractional shares of Preferred Stock.
<PAGE>
Microfilm Number
-------------------
Filed with the Department of State on June 8, 1995
--------------------
Entity Number 719663
------------------
Secretary of the Commonwealth
STATEMENT WITH RESPECT TO SHARES-DOMESTIC BUSINESS CORPORATION
DSCB:15-1522 (Rev 89)
In compliance with the requirements of 15 Pa.C.S. S 1522(b) (relating
to statement with respect to shares), the undersigned corporation, desiring to
state the designation and voting rights, preferences, limitations, and special
rights, if any, of a class or series of its shares, hereby states that:
1. The name of the corporation is: Biosonics, Inc.
---------------
2. (Check and complete one of the following):
The resolution amending the Articles under 15 Pa.C.S. (S) 1522(b)
---
(relating to divisions and determinations by the board), set forth in full, is
as follows:
X The resolution amending the Articles under 15 Pa.C.S. (S) 1522(b)
---
is set forth in full in Exhibit A attached hereto and made a part hereof.
3. The aggregate number of shares of such class or series established and
designated by (a) such resolution, (b) all prior statements, if any, filed under
15 Pa.C.S. S 1522 or corresponding provisions of prior law with respect thereto,
and (c) any other provision of the Articles is 500,000.
-------
4. The resolution was adopted by the Board of Directors or an authorized
committee thereof on April 26, 1995.
--------------
5. (Check, and if appropriate complete, one of the following):
X The resolution shall be effective upon the filing this statement
---
with respect to shares in the Department of State.
The resolution shall be effective on
--- --------------.
IN TESTIMONY WHEREOF, the undersigned corporation has caused this
statement to be signed by a duly authorized officer thereof this 26th day of
April, 1995.
<PAGE>
BIOSONICS, INC.
(Name of Corporation)
BY:/s/ Jack Paller
(Signature)
TITLE: Chairman of the Board
---------------------
<PAGE>
EXHIBIT "A"
RESOLUTION ESTABLISHING AND DESIGNATING THE
PREFERRED STOCK - SERIES D AND FIXING AND
DETERMINING THE RELATIVE RIGHTS AND PREFERENCES THEREOF
RESOLVED, that pursuant to the authority expressly vested in the Board
of Directors by the Corporation's Articles of Incorporation, there is hereby
established a series of Five Thousand (5,000) shares of preferred stock of the
Corporation, par value one Dollar ($1.00) per share, to be known as "Preferred
Stock - Series D". The rights, designations, preferences, qualifications,
privileges, limitations and conversion rights thereof are as follows:
I. DESIGNATION AND AMOUNT.
----------------------
There shall be a series of the Corporation's class of Preferred Stock, par
value one Dollar ($1.00) per share, which shall consist of Five Thousand (5,000)
shares and shall be designated as "Preferred Stock Series D" (hereinafter the
"Preferred Stock").
II. TERMS APPLICABLE TO PREFERRED STOCK.
-----------------------------------
1. Voting Rights. Except as otherwise expressly provided herein or as
-------------
required by law, holders of Preferred Stock shall have the right to vote on all
matters as to which holders of Common Stock have a right to vote, and such
voting rights shall be exercised on an as-converted basis (i.e., as though the
Preferred Stock had been converted and such holders held the Common Stock
issuable upon such conversion). Holders of Preferred Stock shall have no right
to vote as a class except as required by law.
2. Conversion Rights.
-----------------
2.1 Description and Conversion Procedure. Each share of the Preferred
------------------------------------
Stock shall be convertible into Two Thousand (2,000) shares of the Common Stock
("Conversion Shares") of the Corporation as hereinafter set forth, (an aggregate
of Ten Million (10,000,000) shares), only after the Corporation has amended its
Articles of Incorporation to increase the number of authorized shares of Common
Stock so as to permit such conversion, and subject to the provisions of Section
3 by which the Preferred Stock may be converted into a larger or smaller number
of Conversion Shares upon the occurrence of certain events described therein.
2.2 Conversion Procedure. Each certificate representing Preferred
--------------------
Stock may be converted in whole or in part. The certificate representing the
Preferred Stock to be converted shall be endorsed to reflect the conversion of
all or such portion thereof as the holder determines to convert and surrender to
the Corporation at its principal offices. If the Conversion Shares are not to be
issued in the name of the holder to whom the Preferred Stock is registered, such
holder shall state the name of the person to whom the certificate for the
Conversion Shares is to be issued, and if the Conversion Shares to be issued
shall not be all the Conversion Shares
<PAGE>
into which the Preferred Stock may be converted, the name of the person to whom
shall be issued a new certificate evidencing the balance of the Preferred Stock.
2.3 Conversion Period. Except as herein expressly provided otherwise,
-----------------
any holder of Preferred Stock may exercise the conversion rights of all or any
portion of the Preferred Stock held by such holder at any time or from time to
time after the date of issuance and prior to the redemption of such shares of
Preferred Stock.
2.4 Authorization and Issuance. The Corporation covenants and agrees
--------------------------
that:
(a) The Conversion Shares shall be deemed to have been issued to
the person exercising such conversion privilege upon the date of surrender (the
"Conversion Date") of the certificates representing the Preferred Stock to be
converted in accordance with this Section 2, and the person exercising such
conversion privilege shall be deemed for all purposes to have become the record
holder of such Conversion Shares at the Conversion Date, unless pursuant to
Section 2.2 a different person is specified.
(b) All Conversion Shares will, upon issuance, be fully paid and
non-assessable.
3. Anti-Dilution.
-------------
3.1 Subdivision or Combination of Stock. In case the Corporation
-----------------------------------
shall at any time subdivide its outstanding shares of Common Stock into a
greater number of shares, the number of Conversion Shares into which the
Preferred Stock is converted immediately prior to such subdivision shall be
proportionately increased, and, in case the outstanding shares of Common Stock
of the Corporation shall be combined into a smaller number of shares, the number
of Conversion Shares into which the Preferred Stock is converted immediately
prior to such combination shall be proportionately reduced.
3.2 Reorganization, Reclassification, Consolidation or Merger. If
---------------------------------------------------------
there should occur any capital reorganization or reclassification of the capital
stock of the Corporation, or consolidation or merger of the Corporation with
another corporation, then, as a condition of such reorganization,
reclassification, consolidation or merger, lawful and adequate provision shall
be made whereby the holders of the Preferred Stock shall thereafter have the
right to acquire and receive, upon conversion of the Preferred Stock such shares
of stock, securities or assets as would have been issuable or payable (as part
of the reorganization, reclassification consolidation or merger) with respect to
or in exchange for such number of outstanding shares of the Corporation's Common
Stock as would have been received upon the conversion of the Preferred Stock
immediately before such reorganization, reclassification, consolidation or
merger. In any such case appropriate provisions shall be made with respect to
the rights and interests of the holders of the Preferred Stock to the end that
the provisions hereof (including without limitation provisions for adjustments
of the number of Conversion Shares acquirable and receivable upon the conversion
of the Preferred Stock) shall thereafter be applicable as nearly as possible in
relation to any shares of stock, securities or assets thereafter deliverable
upon the conversion of the Preferred Stock.
<PAGE>
4. Redemption.
----------
4.1 Redemptions. At any time on or after May 1, 1997, the
-----------
Corporation, by resolution of its Board of Directors, may redeem ('Redemption")
at a price per share equal to One Hundred Twenty Dollars ($120.00) per share
(the "Redemption Price") the whole or any part of the Preferred Stock which
holders of Preferred Stock and/or their predecessors in interest theretofore had
the right to convert in accordance with Section 2 but which such holders and/or
their predecessors in interest have not converted.
4.2 Redemption Notice. At least fifteen (15) days prior to the date
------------------
of Redemption (the "Redemption Date), the Corporation shall mail, by certified
or registered mail, return receipt requested, to each record holder of any
Preferred Stock at the address shown on the Corporation's records, a written
notice ("Redemption Notice"), stating: (i) the number of shares of Preferred
Stock held of record by such holder which the Corporation proposes to redeem;
(ii) the Redemption Date; and (iii) the place at which the shares to be redeemed
may be surrendered in exchange for the Redemption Price for such shares if other
than the Corporation's principal office. Upon the mailing of a Redemption Notice
with respect to any Redemption which the Corporation may choose to make, the
Corporation shall become obligated to redeem the Preferred Stock specified in
the Redemption Notice on the date specified as the Redemption Date. Except as
set forth in the preceding sentence, the holders of the Preferred Stock shall
not be entitled to compel the redemption of the Preferred Stock.
4.3 Right to Convert Upon Notice of Redemption. Upon receiving a
------------------------------------------
Redemption Notice with respect to any shares of Preferred Stock, the holder of
such shares shall be entitled to exercise the conversion rights to such shares
provided for in Section 2 prior to the Redemption Date,
4.4 Surrender of Certificates. Each holder of Preferred Stock shall
-------------------------
be entitled to receive on or at any time after any Redemption Date the full
Redemption Price for each share of Preferred Stock held by such holder which the
Corporation shall be obligated to redeem on such Redemption Date upon surrender
by such holder at the Corporation's principal office of the certificate
representing such share, duly endorsed in blank or accompanied by an appropriate
form of assignment duly endorsed in blank. After the payment of the full
Redemption Price, as applicable, by the Corporation, an rights of the holder of
such Preferred Stock shall (whether or not the certificate representing such
Preferred Stock shall have been surrendered for cancellation) cease and
terminate with respect to such Preferred Stock.
4.5 Redeemed Preferred Stock to be Canceled. The Corporation shall
---------------------------------------
cancel each share of Preferred Stock which it shall redeem or for any other
reason acquire, and no share of Preferred Stock which shall have been redeemed
or otherwise acquired by the Corporation shall thereafter be reissued, sold or
transferred by the Corporation to any person.
5. Liquidation.
-----------
5.1 Rights of Holder of Preferred Stock. In the event of any
-----------------------------------
voluntary or involuntary liquidation (whether complete or partial), dissolution
are winding up of the
<PAGE>
operation, the holders of the Preferred Stock shall be entitled to be paid out
of the assets of the Corporation available for distribution to its stockholders
an amount in cash equal to One Hundred Dollar ($100.00) per share. No
distribution shall be made on the Common Stock by reason of any voluntary or
involuntary liquidation (whether complete or partial), dissolution or winding up
of the Corporation unless each holder of any Preferred Stock shall have received
all amounts to which such holder shall be entitled under this Section 5.1.
5.2 Payments After Initial Distribution. Should any amounts be
-----------------------------------
available for distribution after the payment to the holders of the Preferred
Stock required by Section 51., none of such additional amounts shall be paid to
the holders of the Preferred Stock.
5.3 Allocation of Liquidation Payments Among Holders of Preferred
-------------------------------------------------------------
Stock. If upon any dissolution, liquidation (whether complete or partial)l or
- -----
winding up at the Corporation, the assets of the Corporation available for
distribution to holders of Preferred Stock (the 'Total Amount Available") shall
be insufficient to pay the holders of outstanding Preferred Stock the full
amounts to which they shall be entitled under Section 5.1, each holder of
Preferred Stock shall be entitled to receive an amount equal to the product
derived by multiplying the Total Amount Available by a fraction the numerator of
which shall be the number of such holder's shares of Preferred Stock and the
denominator of which shall be the total number of shares of Preferred Stock then
outstanding.
6. Dividends on Preferred Stock. The holders of the Preferred Stock
----------------------------
shall not be entitled to receive any dividends.
7. General Provisions.
------------------
7.1 Amendment and Waiver. No change in the terms of the Preferred
--------------------
Stock shall be binding or effective unless such changes hall have been approved
in writing by the holders of at least two-thirds (2/3) of the shares of
Preferred Stock then outstanding.
7.2 Replacement of Lost Certificates. Upon receipt by the
---------------------------------
Corporation in a form reasonably satisfactory to it of (i) an indemnification by
the holder and (ii) evidence of the ownership of and the loss, theft,
destruction or mutilation of any certificate evidencing one or more shares of
Preferred Stock, the Corporation at its expense will execute and deliver in lieu
of such certificate, a new certificate of like kind, representing the number of
shares of Preferred Stock which shall have been represented by such lost,
stolen, destroyed, or mutilated certificate.
7.3. Replacement Certificates in Case of Redemption or Conversion.
------------------------------------------------------------
If any certificates representing Preferred Stock surrendered pursuant to a
Redemption or for the purpose of exercising conversion rights represent more
shares than actually redeemed or converted, then within thirty (30) days of
surrender, the Corporation will, at its expense execute and deliver a new
certificate or certificates of like kind for those shares of Preferred Stock
represented by the surrendered certificate but not intended to be converted or
redeemed, provide, however, that the Corporation may pay cash based on the
Redemption or Conversion Price, as applicable in lieu of any fractional shares
of Preferred Stock represented by such surrendered certificates but not intended
to be converted or redeemed.
<PAGE>
BIOSONICS, INC.
-------------------------------------------
Action by Unanimous Consent in Writing
of the
Board of Directors
Dated: April 26, 1995
-------------------------------------------
The undersigned, being the Sole Director of Biosonics, Inc., a Pennsylvania
corporation, without the formality of convening a meeting does hereby consent to
the following action of this corporation:
RESOLVED, that pursuant to the authority expressly vested in the Board
of Directors by the Corporation's Articles of Incorporation, there is
hereby established a series of Five Thousand (5,000) shares of
preferred stock of the Corporation, par value One Dollar ($1.00) per
share, to be known as Preferred Stock - Series D." The rights,
designations, preferences, qualification privileges, limitations and
conversion rights thereof are as follows:
I. DESIGNATION AND AMOUNT.
----------------------
There shall be an initial series of the Corporation's class of
Preferred Stock, par value One Dollar ($1.00) per share, which shall
consist of Five Thousand (5,000) shares and shall be designated as
Preferred Stock - Series D" (hereinafter the "Preferred Stock").
II. TERMS APPLICABLE TO PREFERRED STOCK.
-----------------------------------
1. Voting Rights. Except as otherwise expressly provided herein
--------------
or as required by law, holders of Preferred Stock shall have the right
to vote on all matters as to such holders of Common Stock have a right
to vote, and such voting rights shall be exercised on an as-converted
basis (i.e., as though the Preferred Stock had been converted and such
----
holders held the Common Stock issuable upon such conversion). Holders
of Preferred Stock shall have no right to vote as a class except as
required by law.
<PAGE>
2. Conversion Rights.
-----------------
2.1 Description and Conversion Procedure. Each share of the
------------------------------------
Preferred Stock shall be convertible into Two Thousand (2,000) shares
of the Common Stock ("Conversion Shares") of the Corporation as
hereinafter set forth (an aggregate of Ten Million (10,000,000)
shares), only after the Corporation has amended its Articles of
Incorporation to increase the number of authorized shares of Common
Stock so as to permit such conversion, and subject to the provisions
of Section 3 by which the Preferred Stock may be converted into a
larger or smaller number of Conversion Shares upon the occurrence of
certain events described therein.
2.2 Conversion Procedure. Each certificate representing
--------------------
Preferred Stock may be converted in whole or in part. The certificate
representing the Preferred Stock to be converted shall be endorsed to
reflect the conversion of all or such portion thereof as the holder
determines to convert and surrender to the Corporation at its
principal offices. If the Conversion Shares are not to be issued in
the name of the holder to whom the Preferred Stock is registered, such
holder shall also state the name of the person to whom the certificate
for the Conversion Shares is to be issued, and if the Conversion
Shares to be issued shall not be all the Conversion Shares into which
the Preferred Stock may be converted, the name of the person to whom
shall be issued a new certificate evidencing the balance of the
Preferred Stock.
2.3 Conversion Period. Except as herein expressly provided
-----------------
otherwise, any holder of Preferred Stock may exercise the conversion
rights of all or any portion of the Preferred Stock held by such
holder at any time or from time to time after the date of issuance and
prior to the redemption of such shares of Preferred Stock.
2.4 Authorization and Issuance. The Corporation covenants
--------------------------
and agrees that:
(a) The Conversion Shares shall be deemed to have been
issued to the person exercising such conversion privilege upon the
date of surrender (the "Conversion Date") of the certificates
representing the Preferred Stock to be converted in accordance with
this Section 2, and the person exercising such conversion privilege
shall be deemed for all purposes to have become the record holder of
such Conversion Shares at the Conversion Date, pursuant to Section 2.2
a different person is specified.
<PAGE>
(b) All Conversion Shares will, upon issuance, be fully paid
and non-assessable.
3. Anti-Dilution.
-------------
3.1 Subdivision or Combination of Stock. In case the Corporation
-----------------------------------
shall at any time subdivide its outstanding shares of Common Stock into a
greater number of shares, the number of Conversion Shares into which the
Preferred Stock is converted immediately prior to such subdivision shall be
proportionately increased, and, in case the outstanding shares of Common
Stock of the Corporation shall be combined into a smaller number of the
number of Conversion Shares into which the Preferred Stock is converted
immediately prior to such combination shall be proportionately reduced.
3.2 Reorganization, Reclassification, Consolidation or Merger.
---------------------------------------------------------
If there should occur any capital reorganization or reclassification of the
capital stock of the Corporation, or consolidation or merger of the
Corporation with another corporation, then, as a condition of such
reorganization, reclassification, consolidation or merger, lawful and
adequate provision shall be made whereby the holders of the Preferred Stock
shall thereafter have the right to acquire and receive, upon: conversion of
the Preferred Stock such shares of stock, securities or assets as would have
been issuable or payable (as part of the reorganization, reclassification,
consolidation or merger) with respect to or in exchange for such number of
outstanding shares of the Corporation's Common Stock as would have been
received upon the conversion of the Preferred Stock immediately before such
reorganization, reclassification, consolidation, or merger. In any such case
appropriate provisions shall be made with respect to the rights and
interests of the holders of the Preferred Stock to the end that the
provisions hereof (including without limitation provisions for adjustments
of the number of Conversion Shares acquirable and receivable upon the
conversion of the Preferred Stock) shall thereafter be applicable as nearly
as possible in relation to any shares of stock, securities or assets
thereafter deliverable upon the conversion of the Preferred Stock.
4. Redemption.
----------
4.1 Redemptions. At any time on or after May 1, 1997, the
-----------
Corporation, by resolution of its Board of Directors, may redeem
("Redemption) at a price per share equal to One Hundred Twenty Dollars
($l20.00) per share (the "Redemption Price") the whole or any part of the
Preferred Stock which holders of Preferred Stock and/or their predecessors
in interest theretofore had the right to convert in accordance with Section
2 but which such holders and/or their predecessors in interest have not
converted.
<PAGE>
4.2 Redemption Notice. At least fifteen (15) days prior to the
-----------------
date of Redemption (the "Redemption Date"), the Corporation shall mail by
certified or registered mail return receipt requested, to each record holder
of any Preferred Stock at the address shown on the Corporation's records, a
written notice ("Redemption Notice), stating. (i) the number of shares of
Preferred Stock held of record by such holder which the Corporation proposes
to redeem; (ii) the Redemption Date; and (iii) the place at which the shares
to be redeemed may be surrendered in exchange for the Redemption Price for
such shares if other than the Corporation's principal office. Upon the
mailing of a Redemption Notice with respect to any Redemption which the
Corporation may choose to make, the Corporation shall become obligated to
redeem the Preferred Stock specified in the Redemption Notice on the date
specified as the Redemption Date. Except as set forth in the preceding
sentence, the holders of the Preferred Stock shall not be entitled to compel
the redemption of the Preferred Stock.
4.3 Right to Convert Upon Notice of Redemption. Upon receiving a
------------------------------------------
Redemption Notice with respect to any shares of Preferred Stock, the holder
of such shares shall be entitled to exercise the conversion rights to such
shares provided for in Section 2 prior to the Redemption Date,
4.4 Surrender of Certificates. Each holder of Preferred Stock
-------------------------
shall be entitled to receive on or at any time after any Redemption Date the
full Redemption Price for each share of Preferred Stock held by such holder
which the Corporation shall be obligated to redeem on such Redemption Date
upon surrender by such holder at the Corporation's principal office of the
certificate representing such share, duly endorsed in blank or accompanied by
an appropriate form of assignment duly endorsed in blank. After the payment
of the full Redemption Price, as applicable, by the Corporation, an rights of
the holder of such Preferred Stock shall (whether or not the certificate
representing such Preferred Stock shall have been surrendered for
cancellation) cease and terminate with respect to such Preferred Stock.
4.5 Redeemed Preferred Stock to be Canceled. The Corporation
---------------------------------------
shall cancel each share of Preferred Stock which it shall redeem or for any
other reason acquire, and no share of Preferred Stock which shall have been
redeemed or otherwise acquired by the Corporation shall thereafter be
reissued, sold or transferred by the Corporation to any person.
<PAGE>
5. Liquidation.
-----------
5.1 Rights of Holder of Preferred Stock. In the event of
-----------------------------------
any voluntary or involuntary liquidation (whether complete or
partial), dissolution are winding up of the operation, the holders of
the Preferred Stock shall be entitled to be paid out of the assets of
the Corporation available for distribution to its stockholders an
amount in cash equal to One Hundred Dollar ($100.00) per share. No
distribution shall be made on the Common Stock by reason of any
voluntary or involuntary liquidation (whether complete or partial),
dissolution or winding up of the Corporation unless each holder of any
Preferred Stock shall have received all amounts to which such holder
shall be entitled under this Section 5.1.
5.2 Payments After Initial Distribution. Should any amounts
-----------------------------------
be available for distribution after the payment to the holders of the
Preferred Stock required by Section 51., none of such additional
amounts shall be paid to the holders of the Preferred Stock.
5.3 Allocation of Liquidation Payments Among Holders of
---------------------------------------------------
Preferred Stock. If upon any dissolution, liquidation (whether
---------------
complete or partial)l or winding up at the Corporation, the assets of
the Corporation available for distribution to holders of Preferred
Stock (the "Total Amount Available") shall be insufficient to pay the
holders of outstanding Preferred Stock the full amounts to which they
shall be entitled under Section 5.1, each holder of Preferred Stock
shall be entitled to receive an amount equal to the product derived by
multiplying the Total Amount Available by a fraction the numerator of
which shall be the number of such holder's shares of Preferred Stock
and the denominator of which shall be the total number of shares of
Preferred Stock then outstanding.
6. Dividends on Preferred Stock. The holders of the
----------------------------
Preferred Stock shall not be entitled to receive any dividends.
7. General Provisions.
------------------
7.1 Amendment and Waiver. No change in the terms of the
--------------------
Preferred Stock shall be or effective unless such changes hall have
been approved in writing by the holders of at least two-thirds (2/3)
of the shares of Preferred Stock then outstanding.
7.2 Replacement of Lost Certificates. Upon receipt by the
--------------------------------
Corporation in a form reasonably satisfactory to it of (i) an
<PAGE>
indemnification by the holder and (ii) evidence of the ownership of
and the loss, theft, destruction or mutilation of any certificate
evidencing one or more shares of Preferred Stock, the Corporation at
its expense will execute and deliver in lieu of such certificate, a
new certificate of like kind, representing the number of shares of
Preferred Stock which shall have been represented by such lost,
stolen, destroyed, or mutilated certificate.
7.3 Replacement Certificates in Case of Redemption or
-------------------------------------------------
Conversion. If any certificates representing Preferred Stock
----------
surrendered pursuant to a Redemption or for the purpose of exercising
conversion rights represent more shares than actually redeemed or
converted, then within thirty (30) days of surrender, the Corporation
will, at its expense execute and deliver a new certificate or
certificates of like kind for those shares of Preferred Stock
represented by the surrendered certificate but not intended to be
converted or redeemed, provided, however, that the Corporation may pay
cash based on the Redemption or Conversion Price, as applicable in
lieu of any fractional shares of Preferred Stock represented by such
surrendered certificates but not intended to be converted or redeemed.
FURTHER RESOLVED that any officer, alone or together with any other
officer, is hereby authorized and directed to execute and deliver to
the Department of State, Commonwealth of Pennsylvania a Statement
Affecting Class or Series of Shares, setting forth the rights,
designations, preferences, qualifications, privileges, limitations and
conversion rights of Preferred Stock Series D.
/s/ Jack Paller
--------------------------------
JACK PALLER
Constituting the Sole Director.
<PAGE>
Microfilm Number
--------------------
Filed with the Department of State on June 28, 1996
-----------------------
Entity Number 719663
--------------------------
Secretary of the Commonwealth
STATEMENT WITH RESPECT TO SHARES-DOMESTIC BUSINESS CORPORATION
DSCB:15-1522 (Rev 89)
In compliance with the requirements of 15 Pa.C.S. (S) 1522(b) (relating to
statement with respect to shares), the undersigned corporation, desiring to
state the designation and voting rights, preferences, limitations, and special
rights, if any, of a class or series of its shares, hereby states that:
1. The name of the corporation is: Biosonics, Inc.
----------------------------------------
2. (Check and complete one of the following):
The resolution amending the Articles under 15 Pa.C.S. (S) 1522
-----
(b) (relating to divisions and determinations by the board) , set forth in full,
is as follows:
x The resolution amending the Articles under 15 Pa.C.S. (S) 1522 (b)
-----
is set forth in full in Exhibit A attached hereto and made a part hereof.
3. The aggregate number of shares of such class or series established and
designated by (a) such resolution, (b) all prior statements, if any, filed under
15 Pa.C.S. (S) 1522 or corresponding provisions of prior law with respect
thereto, and (c) any other provision of the Articles is 100,000 shares.
-----------------
4. The resolution was adopted by the Board of Directors or an authorized
committee thereof on April 16, 1996 .
-----------------------
<PAGE>
5. (Check, and if appropriate complete, one of the following):
x The resolution shall be effective upon the filing this statement
----
with respect to shares in the Department of State.
The resolution shall be effective on
------ -------------
IN TESTIMONY WHEREOF, the undersigned corporation has caused this statement
to be signed by a duly authorized officer thereof this 28th day
--------------
May , 1996.
- -------- --
BIOSONICS, INC.
----------------------------------
(Name of Corporation)
BY:/s/ Jack Paller
-------------------------------
(Signature)
TITLE: Chairman of the Board
--------------------------
<PAGE>
Resolution of the Board of Directors of
Biosonics, Inc. adopted April 16, 1996
EXHIBIT A
RESOLUTION ESTABLISHING AND DESIGNATING THE
PREFERRED STOCK - SERIES B AND FIXING AND DETERMINING
THE RELATIVE RIGHTS AND PREFERENCES THEREOF
RESOLVED, that the series of Preferred Stock of the Company known as
the "Preferred Stock-Series B," established by resolution of the Board
of Directors adopted June 27, 1989, as amended by Resolution adopted
September 6, 1989, is hereby further amended to add the following
provision allowing holders thereof conversion rights ("Conversion
Rights") at $.03 a share based on the Redemption Price of $105.00 per
share, as follows:
6. Conversion Rights.
-----------------
6.1 Description and Conversion Procedure. Each share of the
------------------------------------
Preferred Stock shall be convertible into Three Thousand Five Hundred
(3,500) shares of the Common Stock ("Conversion Shares") of the
Corporation as hereinafter set forth, only after the Corporation has
amended its Articles of Incorporation to increase the number of
authorized shares of Common Stock so as to permit such conversion, and
subject to the provisions of Section 7 by which the Preferred Stock
may be converted into a larger or smaller number of Conversion Shares
upon the occurrence of certain events described therein.
6.2 Conversion Procedure. Each certificate representing
--------------------
Preferred Stock may be converted in whole or in part. The certificate
representing the Preferred Stock to be converted shall be endorsed to
reflect the conversion of all or such portion thereof as the holder
determines to convert and surrender to the Corporation at its
principal offices. If the Conversion Shares are not to be issued in
the name of the holder to whom the Preferred Stock is registered, such
holder shall also state the name of the person to whom the certificate
for the Conversion Shares is to be issued, and if the Conversion
Shares to be issued shall not be all the Conversion Shares into which
the Preferred Stock may be converted, the name of the person to whom
shall be issued a new certificate evidencing the balance of the
Preferred Stock.
6.3 Conversion Period. Except as herein expressly provided
-----------------
otherwise, any holder of Preferred Stock may exercise the conversion
rights of all or any portion of the Preferred
<PAGE>
Stock held by such holder at any time or from time to time after the
date of issuance and prior to the redemption of such shares of
Preferred Stock.
6.4 Authorization and Issuance. The Corporation covenants
--------------------------
and agrees that:
(a) The Conversion Shares shall be deemed to have been
issued to the person exercising such conversion privilege upon the
date of surrender (the "Conversion Date") of the certificates
representing the Preferred Stock to be converted in accordance with
this Section 6, and the person exercising such conversion privilege
shall be deemed for all purposes to have become the record holder of
such Conversion Shares at the Conversion Date, unless pursuant to
Section 6.2 a different person is specified.
(b) All Conversion Shares will, upon issuance, be fully paid
and non-assessable.
7. Anti-Dilution.
-------------
7.1 Subdivision or Combination of Stock. In case the
-----------------------------------
Corporation shall at any time subdivide its outstanding shares of
Common Stock into a greater number of shares, the number of Conversion
Shares into which the Preferred Stock is converted immediately prior
to such subdivision shall be proportionately increased, and, in case
the outstanding shares of Common Stock of the Corporation shall be
combined into a smaller number of shares, the number of Conversion
Shares into which the Preferred Stock is converted immediately prior
to such combination shall be proportionately reduced.
7.2 Reorganization, Reclassification, Consolidated or
-------------------------------------------------
Merger. If there should occur any capital reorganization or
------
reclassification of the capital stock of the Corporation, or
consolidation or merger of the Corporation with another corporation,
then, as a condition of such reorganization, reclassification,
consolidation or merger, lawful and adequate provision shall be made
whereby the holders of the Preferred Stock shall thereafter have the
right to acquire and receive, upon conversion of the Preferred Stock
such shares of stock, securities or assets as would have been issuable
or payable (as part of the reorganization, reclassification,
consolidation or merger) with respect to or in exchange for such
number of outstanding shares of the Corporation's Common Stock as
would have been received upon the conversion of the Preferred Stock
immediately before such reorganization, reclassification,
consolidation or merger. In any such case appropriate provisions
shall be made with respect to the rights and interests of the holders
of the Preferred Stock to the end that the provisions hereof
(including without limitation
<PAGE>
provisions for adjustments of the number of Conversion Shares
acquirable and receivable upon the conversion of the Preferred Stock)
shall thereafter be applicable as nearly as possible in relation to
any shares of stock, securities or assets thereafter deliverable upon
the conversion of the Preferred Stock.
FURTHER RESOLVED, that any officer of this Company along or together
with any other officer, is hereby authorized and directed to execute
and deliver to the Department of State, Commonwealth Pennsylvania, a
Statement Affecting Class or Series of Shares, indicating the
Amendment to provide for the Conversion Rights.
<PAGE>
Resolution of the Board of Directors of
Biosonics, Inc. adopted September 6, 1989
RESOLVED, that the Series of Preferred Stock of the Corporation known
as "Preferred Stock-Series B," established by resolution of the Board of
Directors adopted June 27,1989 is hereby increased from Two Thousand (2,000) to
Ten Thousand (10,000) shares.
<PAGE>
Resolution of the Board of Directors of
Biosonics, Inc. Adopted June 27, 1989
RESOLUTION ESTABLISHING AND DESIGNATING THE
PREFERRED STOCK - SERIES B AND FIXING AND DETERMINING
THE RELATIVE RIGHTS AND PREFERENCES THEREOF
RESOLVED, that pursuant to the authority expressly vested in the board of
Directors by the Corporation's Articles of Incorporation, there is hereby
established a series of Two Thousand (2,000) shares of preferred stock of the
Corporation, par value One Dollar ($1.00) per share, to be known as "Preferred
Stock - Series B." The rights, designations, preferences, qualifications,
privileges, limitations and conversion rights thereof are as follows:
I. Designation and Amount. There shall be a series of the Corporation's
----------------------
class of Preferred Stock, par value One Dollar ($1.00) per share, which shall
consist of Two Thousand $2,000) shares and shall be designated as "Preferred
Stock- Series B" (hereinafter the "B Preferred Stock").
II. Terms Applicable to B Preferred Stock.
-------------------------------------
1. Voting Rights. Except as required by law, holders of B Preferred
-------------
Stock shall have no right to vote.
2. Redemption.
----------
2.1 Redemptions. At any time on or after October 1, 1989, the
-----------
Corporation, by resolution of its Board of Directors, may redeem ("Redemption")
at a price per share equal to One Hundred Five Dollars ($105) per share (the
"Redemption Price") the whole or any part of the B Preferred Stock.
2.2 Redemption Notice. At least five (5) days prior to the date
-----------------
of Redemption (the "Redemption Date"), the Corporation shall mail, by certified
or registered mail, return receipt requested, to each record holder of any B
Preferred Stock at the address shown on the Corporation's records, a written
notice ("Redemption Notice"), stating: (i) the number of shares of B Preferred
Stock held of record by such holder which the Corporation proposes to redeem;
(ii) the Redemption Date; and (iii) the place at which the shares to be redeemed
may be surrendered in exchange for the Redemption Price for such shares if other
than the Corporation's principal office. Upon the mailing of a Redemption Notice
with respect to any Redemption which the Corporation may choose to make, the
Corporation shall become obligated to redeem the B Preferred Stock specified in
the Redemption Notice on the date specified in the Redemption Date. Except as
set forth in the preceding sentence, the holders of the B Preferred Stock shall
not be entitled to compel the redemption of the B Preferred Stock.
2.4 Surrender of Certificates. Each holder of B Preferred
-------------------------
Stock shall be entitled to receive on or at any time after any Redemption Date
the full Redemption Price for each share of B Preferred Stock held by such
holder which the Corporation shall be obligated to redeem
<PAGE>
on such Redemption Date upon surrender by such holder at the Corporation's
principal office of the certificate representing such shares duly endorsed in
blank or accompanied by an appropriate form of assignment duly endorsed in
blank. After the payment of the full Redemption Price, as applicable, by the
Corporation, all rights of the holder of such B Preferred Stock shall (whether
or not the certificate representing such B Preferred Stock shall have been
surrendered for cancellation) cease and terminate with respect to such B
Preferred Stock.
2.5 Redeemed B Preferred Stock to be Canceled. The
-----------------------------------------
Corporation shall cancel each share of B Preferred Stock which it shall redeem
or for any other reason acquire, and no share of B Preferred Stock which shall
have been redeemed or otherwise acquired by the Corporation shall thereafter be
reissued, sold or transferred by the Corporation to any person.
3. Liquidation.
-----------
3.1 Rights of Holders of B Preferred Stock. In the event
--------------------------------------
of any voluntary or involuntary liquidation (whether complete or partial),
dissolution or winding up of the operation, the holders of the B Preferred Stock
shall be entitled to be paid out of the assets of the Corporation available for
distribution to its stockholders an amount in cash equal to One Hundred Dollars
($100.00) per share. No distribution shall be made on the Common Stock by reason
of any voluntary or involuntary liquidation (whether complete or partial),
dissolution or winding up of the Corporation unless each holder of any B
Preferred Stock shall have received all amounts to which such holder shall be
entitled under this Section 3.1.
3.2 Payments After Initial Distribution. Should any
-----------------------------------
amounts be available for distribution after the payment to the holders of the B
Preferred Stock required by Section 3.1, none of such additional amounts shall
be paid to the holders of the B Preferred Stock.
3.3 Allocation of Liquidation Payments Among Holders of B
-----------------------------------------------------
Preferred Stock. If upon any dissolution, liquidation (whether complete or
- ---------------
partial), or winding up of the Corporation, the assets of the Corporation
available for distribution to holders of B Preferred Stock (the "Total Amount
Available") shall be insufficient to pay the holders of outstanding B Preferred
Stock the full amounts to which they shall be entitled under Section 3.1, each
holder of B Preferred Stock shall be entitled to receive an amount equal to the
product derived by multiplying the Total Amount Available by a fraction the
numerator of which shall be the number of such holder's shares of B Preferred
Stock and the denominator of which shall be the total number of shares of B
Preferred Stock then outstanding.
4. Dividends on B Preferred Stock. The holders of the B Preferred
------------------------------
Stock shall not be entitled to receive any dividends.
5. General Provisions.
------------------
5.1 Amendment and Waiver. No change in the terms of the B
--------------------
Preferred Stock shall be binding or effective unless such change shall have been
approved in writing by the holders of at least two-thirds (2/3) of the shares of
the Preferred Stock then outstanding.
5.2 Replacement of Lost Certificates. Upon receipt by the
--------------------------------
Corporation in a form reasonably satisfactory to it of (i) an indemnification by
the holder and (ii) evidence of the
<PAGE>
ownership of and the loss, theft, destruction or mutilation of any certificate
evidencing one or more shares of B Preferred Stock, the Corporation at its
expense will execute and deliver in lieu of such certificate, a new certificate
of like kind, representing the number of shares of B Preferred Stock which shall
have been represented by such lost, stolen, destroyed, or mutilated certificate.
5.3 Replacement Certificate in Case of Redemption. If any
---------------------------------------------
certificates representing B Preferred Stock surrendered pursuant to a Redemption
represent more shares than actually redeemed, then within 30 days of surrender,
the Corporation will, at its expense execute and deliver a new certificate or
certificates of like kind for those shares of B Preferred Stock represented by
the surrendered certificate but not intended to be redeemed, provided, however,
that the Corporation may pay cash based on the Redemption Price, as applicable
in lieu of any fractional shares of B Preferred Stock represented by such
surrendered certificates but not intended to be redeemed.
<PAGE>
Microfilm Number
--------------------
Filed with the Department of State on July 12, 1996
-------------------------
Entity Number 719663
-----------------------
Secretary of the Commonwealth
STATEMENT WITH RESPECT TO SHARES-DOMESTIC BUSINESS CORPORATION
DSCB:15-1522 (Rev 89)
In compliance with the requirements of 15 Pa.C.S.(S) 1522(b) (relating to
statement with respect to shares), the undersigned corporation, desiring to
state the designation and voting rights, preferences, limitations, and special
rights, if any, of a class or series of its shares, hereby states that:
1. The name of the corporation is: Biosonics, Inc.
2. (Check and complete one of the following):
The resolution amending the Articles under 15 Pa.C.S. (S) 1522(b)
-------
(relating to divisions and determinations by the board), set forth in
full, is as follows:
X The resolution amending the Articles under 15 Pa.C.S. (S) 1522(b)
-------
is set forth in full in Exhibit A attached hereto and made a part
hereof.
3. The aggregate number of shares of such class or series established and
designated by (a) such resolution, (b) all prior statements, if any, filed under
15 Pa.C.S. (S) 1522 or corresponding provisions of prior law with respect
thereto, and (c) any other provision of the Articles is 1,000,000 shares.
---------
4. The resolution was adopted by the Board of Directors or an authorized
committee thereof on May 1, 1996.
-----------
<PAGE>
5. (Check, and if appropriate complete, one of the following):
X The resolution shall be effective upon the filing of this statement
-------
with respect to shares in the Department of State.
The resolution shall be effective on .
------- --------------------
IN TESTIMONY WHEREOF, the undersigned corporation has caused this statement
to be signed by a duly authorized officer thereof this 1st day of May, 1996.
BIOSONICS, INC.
--------------------------------
By:/s/ Jack Paller
(Signature)
Title: Chairman of the Board
-------------------------
<PAGE>
Resolution of the Board of Directors of
Biosonics, Inc. adopted April 26, 1995
RESOLUTION ESTABLISHING AND DESIGNATING THE
PREFERRED STOCK - SERIES D AND FIXING AND
THE RELATIVE RIGHTS AND PREFERENCES THEREOF
-------------------------------------------
RESOLVED, that pursuant to the authority expressly vested in the Board of
Directors by the Corporation's Articles of Incorporation, there is hereby
established a series of Five Thousand (5,000) shares of preferred stock of the
Corporation, par value One Dollar ($1.00) per share, to be known as "Preferred
Stock - Series D." The rights, designations, preferences, qualifications,
privileges, limitations and conversion rights thereof are as follows:
I. DESIGNATION AND AMOUNT.
----------------------
There shall be an initial series of the Corporation's class of Preferred
Stock, par value One Dollar ($1.00) per share, which shall consist of Five
Thousand (5,000) shares and shall be designated as "Preferred Stock - Series D"
(hereinafter the "Preferred Stock").
II. TERMS APPLICABLE TO PREFERRED.
-----------------------------
1. Voting Rights. Except as otherwise expressly provided herein or as
-------------
required by law, holders of Preferred Stock shall have the right to vote on an
matters as to which holders of Common Stock have a right to vote, and such
voting rights shall be exercised on an as-converted basis (i.e., as though the
----
Preferred Stock had been converted and such holders held the Common Stock
issuable upon such conversion). Holders of Preferred Stock shall have no right
to vote as a class except as required by law.
2. Conversion Rights.
-----------------
2.1 Description and Conversion. Each share of the Preferred Stock
--------------------------
shall be convertible into Two Thousand (2,000) shares of the Common Stock
("Conversion Shares") of the Corporation as hereinafter set forth (an aggregate
of Ten Million (10,000,000) shares), only after the Corporation has amended its
Articles of Incorporation to increase the number of authorized shares of Common
Stock so as to permit such conversion, and subject to the provisions of Section
3 by which the Preferred Stock may be converted into a larger or smaller number
of Conversion Shares upon the occurrence of certain events described therein.
2.2 Conversion Procedure. Each certificate representing Preferred
--------------------
Stock may be converted in whole or in part. The certificate representing the
Preferred Stock to be converted shall be endorsed to reflect the conversion of
all or such portion thereof as the holder determines to convert and surrender to
the Corporation at its principal offices. If the Conversion Shares are not to
be issued in the name of the holder to whom the Preferred Stock is registered,
such holder shall also state the name of the person to whom the certificate for
the Conversion Shares is to be issued, and if the Conversion Shares to be issued
shall not be all the Conversion Shares into which the Preferred Stock may be
converted, the name of the person to whom shall be issued a new certificate
evidencing the balance of the Preferred Stock.
<PAGE>
2.3 Conversion Period. Except as herein expressly provided
-----------------
otherwise, any holder of Preferred Stock may exercise the conversion rights of
all or any portion of the Preferred Stock held by such holder at any time or
from time to time after the date of issuance and prior to the redemption of such
shares of Preferred Stock.
2.4 Authorization and Issuance. The Corporation covenants and agrees
--------------------------
that:
(a) The Conversion Shares shall be deemed to have been issued to
the person exercising such conversion privilege upon the date of surrender (the
"Conversion Date") of the certificates representing the Preferred Stock to be
converted in accordance with this Section 2, and the person exercising such
conversion privilege shall be deemed for all purposes to have become the record
holder of such Conversion Shares at the Conversion Date, unless pursuant to
Section 2.2 a different person is specified.
(b) All Conversion Shares will, upon issuance, be fully paid and
nonassessable.
3. Anti-Dilution.
-------------
3.1 Subdivision or Combination of Stock. In case the Corporation
-----------------------------------
shall at any time subdivide its outstanding shares of Common Stock into a
greater number of shares, the number of Conversion Shares into which the
Preferred Stock is converted immediately prior to such subdivision shall be
proportionately increased, and, in case the outstanding shares of Common Stock
of the Corporation shall be combined into a smaller number of shares, the number
of Conversion Shares into which the Preferred Stock is converted immediately
prior to such combination shall be proportionately reduced.
3.2 Reorganization, Reclassification, Consolidated or Merger. If
--------------------------------------------------------
there should occur any capital reorganization or reclassification of the capital
stock of the Corporation, or consolidation or merger of the Corporation with
another corporation, then, as a condition of such reorganization,
reclassification, consolidation or merger, lawful and adequate provision shall
be made whereby the holders of the Preferred Stock shall thereafter have the
right to acquire and receive, upon conversion of the Preferred Stock such shares
of stock, securities or assets as would have been issuable or payable (as part
of the reorganization, reclassification consolidation or merger) with respect to
or in exchange for such number of outstanding shares of the Corporation's Common
Stock as would have been received upon the conversion of the Preferred Stock
immediately before such reorganization, reclassification, consolidation or
merger. In any such case appropriate provisions shall be made with respect to
the rights and interests of the holders of the Preferred Stock to the end that
the provisions hereof (including without limitation provisions for adjustments
of the number of Conversion Shares acquirable and receivable upon the conversion
of the Preferred Stock) shall thereafter be applicable as nearly as possible in
relation to any shares of stock, securities or assets thereafter deliverable
upon the conversion of the Preferred Stock.
4. Redemption.
----------
4.1 Redemptions. At any time on or after May 1, 1997, the
-----------
Corporation, by resolution of its Board of Directors, may redeem ("Redemption")
at a price per share equal to One Hundred Twenty Dollars ($120.00) per share
(the "Redemption Price") the whole or any part of the
<PAGE>
Preferred Stock which holders of Preferred Stock and/or their predecessors in
interest theretofore had the right to convert in accordance with Section 2 but
which such holders and/or their predecessors in interest have not converted.
4.2 Redemption Notice. At least fifteen (15) days prior to the date
-----------------
of Redemption (the "Redemption Date), the Corporation shall mail, by certified
or registered mail, return receipt requested, to each record holder of any
Preferred Stock at the address shown on the Corporation's records, a written
notice ("Redemption Notice"), stating: (i) the number of shares of Preferred
Stock held of record by such holder which the Corporation proposes to redeem;
(ii) the Redemption Date; and (iii) the place at which the shares to be redeemed
may be surrendered in exchange for the Redemption Price for such shares, if
other than the Corporation's principal office. Upon the mailing of a Redemption
Notice with respect to any Redemption which the Corporation may choose to make,
the Corporation shall become obligated to redeem the Preferred Stock specified
in the Redemption Notice on the date specified as the Redemption Date. Except
as set forth in the preceding sentence, the holders of the Preferred Stock shall
not be entitled to compel the redemption of the Preferred Stock.
4.3 Right to Convert Upon Notice of Redemption. Upon receiving a
------------------------------------------
Redemption Notice with respect to any shares of Preferred Stock, the holder of
such shares shall be entitled to exercise the conversion rights to such shares
provided for in Section 2 prior to the Redemption Date.
4.4 Surrender of Certificates. Each holder of Preferred Stock shall
-------------------------
be entitled to receive on or at any time after any Redemption Date the full
Redemption Price for each share of Preferred Stock held by such holder which the
Corporation shall be obligated to redeem on such Redemption Date upon surrender
by such holder at the Corporation's principal office of the certificate
representing such share, duly endorsed in blank or accompanied by an appropriate
for of assignment duly endorsed in blank. After the payment of the full
Redemption Price, as applicable, by the Corporation, an rights of the holder of
such Preferred Stock shall (whether or not the certificate representing such
Preferred Stock shall have been surrendered for cancellation) cease and
terminate with respect to such Preferred Stock.
4.5 Redeemed Preferred Stock to be Canceled. The Corporation shall
---------------------------------------
cancel each share of Preferred Stock which it shall redeem or for any other
reason acquire, and no share of Preferred Stock which shall have been redeemed
or otherwise acquired by the Corporation shall thereafter be reissued, sold or
transferred by the Corporation to any person.
5. Liquidation.
-----------
5.1 Rights of Holders of Preferred Stock. In the event of any
------------------------------------
voluntary or involuntary liquidation (whether complete or partial), dissolution
are winding up of the operation, the holders of the Preferred Stock shall be
entitled to be paid out of the assets of the Corporation available for
distribution to its stockholders an amount in cash equal to One Hundred Dollar
($100.00) per share. No distribution shall be made on the Common Stock by
reason of any voluntary or involuntary liquidation (whether complete or
partial), dissolution or winding up of the Corporation unless each holder of any
Preferred Stock shall have received all amounts to which such holder shall be
entitled under this Section 5.1.
<PAGE>
5.2 Payments After Initial Distribution. Should any amounts be
-----------------------------------
available for distribution after the payment to the holders of the Preferred
Stock required by Section 51., none of such additional amounts shall be paid to
the holders of the Preferred Stock.
5.3 Allocation of Liquidation Payments Among Holders of Preferred
-------------------------------------------------------------
Stock. If upon any dissolution, liquidation (whether complete or partial) or
- -----
winding up at the Corporation, the assets of the Corporation available for
distribution to holders of Preferred Stock (the "Total Amount Available") shall
be insufficient to pay the holders of outstanding Preferred Stock the full
amounts to which they shall be entitled under Section 5.1, each holder of
Preferred Stock shall be entitled to receive an amount equal to the product
derived by multiplying the Total Amount Available by a fraction the numerator of
which shall be the number of such holder's shares of Preferred Stock and the
denominator of which shall be the total number of shares of Preferred Stock then
outstanding.
6. Dividends on Preferred Stock. The holders of the Preferred Stock
----------------------------
shall not be entitled to receive any dividends.
7. General Provisions.
------------------
7.1 Amendment and Waiver. No change in the terms of the Preferred
--------------------
Stock shall be binding or effective unless such changes hall have been approved
in writing by the holders of at least two thirds (2/3) of the shares of
Preferred Stock then outstanding.
7.2 Replacement of Lost Certificates. Upon receipt by the
--------------------------------
Corporation in a form reasonably satisfactory to it of (i) an indemnification by
the holder and (ii) evidence of the ownership of and the loss, theft,
destruction or mutilation of any certificate evidencing one or more shares of
Preferred Stock, the Corporation at its expense will execute and deliver in lieu
of such certificate, a new certificate of like kind, representing the number of
shares of Preferred Stock which shall have been represented by such lost,
stolen, destroyed, or mutilated certificate.
7.3 Replacement Certificates in Case of Redemption or Conversion. If
------------------------------------------------------------
any certificates representing Preferred Stock surrendered pursuant to a
Redemption or for the purpose of exercising conversion rights represent more
shares than actually redeemed or converted, then within thirty (30) days of
surrender, the Corporation will, at its expense execute and deliver a new
certificate or certificates of like kind for those shares of Preferred Stock
represented by the surrendered certificate but not intended to be converted or
redeemed, provide, however, that the Corporation may pay cash based on the
Redemption or Conversion Price, as applicable in lieu of any fractional shares
of Preferred Stock represented by such surrendered certificates but not intended
to be converted or redeemed.
<PAGE>
EXHIBIT "A"
RESOLVED, that the series of Preferred Stock of the Company known as the
"Preferred Stock Series D," established by resolution of the Board of Directors
adopted April 26, 1995, is hereby increased from Five Hundred Thousand (500,000)
to One Million (1,000,000) Shares.
<PAGE>
Filed with the Department of State on July 24, 1996. Secretary of the
Commonwealth
Entity Number 719663
ARTICLES OF AMENDMENT-DOMESTIC BUSINESS CORPORATION
In compliance with the requirements of 15 Pa.C.S. (S) 1915 (relating to
articles of amendment), the undersigned business corporation, desiring to amend
its Articles, hereby states that:
15. The name of the corporation is: Bisonics, Inc.
16. The (a) address of this corporation's current registered office in this
Commonwealth or (b) name of its commercial registered office provider and
the county of venue is (the Department is hereby authorized to correct the
following information to conform to the records of the Department):
a. 260 New York Drive, Suite A, Fort Washington, PA 19034-2504 Montgomery
Number and Street City State Zip County
b. c/o
---------------------------------------------------------------
Name of Commercial Registered Office Provider County
For a corporation represented by a commercial registered office provider,
the county in (b) shall be deemed the county in which the corporation is
located for venue and official publication purposes.
17. The statute by or under which it was incorporated is: Business Corporation
--------------------
Law approved May 5, 1933, as amended.
-------------------------------------
18. The date of its incorporation is: November 13, 1980
-------------------------------------
19. (Check, and if appropriate, complete one of the following):
X The amendment shall be effective upon filing these Articles of
-----
Amendment in the Department of State.
The amendment shall be effective on: at
----- -------------- ---------------
Date Hour
20. (Check one of the following):
The amendment was adopted by the shareholders (or members) pursuant
-----
to 15 Pa.C.S. (S) 1914(a) and (b).
The amendment was adopted by the board of directors pursuant to
-----
15 Pa.C.S. (S) 1914(c).
<PAGE>
21. (Check, and if appropriate complete, one of the following):
X The amendment adopted by the corporation, set forth in full, is
------
as follows:
Paragraph 5(a) of the Articles of Incorporation is hereby amended and
restated in its entirety as follows:
5(a). The aggregate number of shares which the corporation shall have
authority to issue is: 750,000,000 shares of Common Stock (without cumulative
voting rights), par value $.0001 per share, and 10,000,000 shares of Preferred
Stock par value $1.00 per share.
The amendment adopted by the corporation as set forth in full in
-----
Exhibit A attached hereto and made a part hereof.
22. (Check if the amendment restates the Articles):
The restated Articles of Incorporation supersede the original
-----
Articles and all amendments thereto.
IN TESTIMONY WHEREOF, the undersigned corporation has caused these Articles
of Amendment to be signed by a duly authorized officer thereof this 23rd day of
July, 1996.
Bisonics, Inc.
-------------------------------------
(Name of Corporation)
BY: /s/ Jack Paller, CEO
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000352715
<NAME> BIOSONICS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 260
<SECURITIES> 0
<RECEIVABLES> 11,682
<ALLOWANCES> 6,000
<INVENTORY> 65,080
<CURRENT-ASSETS> 75,875
<PP&E> 254,806
<DEPRECIATION> 233,800
<TOTAL-ASSETS> 105,312
<CURRENT-LIABILITIES> 2,056,947
<BONDS> 243,000
0
0
<COMMON> 30,650
<OTHER-SE> (1,951,635)
<TOTAL-LIABILITY-AND-EQUITY> 105,312
<SALES> 34,911
<TOTAL-REVENUES> 34,986
<CGS> 23,116
<TOTAL-COSTS> 501,091
<OTHER-EXPENSES> 109,691
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 73,000
<INCOME-PRETAX> (598,912)
<INCOME-TAX> 0
<INCOME-CONTINUING> (598,912)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (598,912)
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
