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                                                                     EXHIBIT 3.1

                           EDEN BIOSCIENCE CORPORATION

                                    RESTATED
                            ARTICLES OF INCORPORATION

                                 ARTICLE 1. NAME

        The name of this corporation is Eden Bioscience Corporation.

                            ARTICLE 2. CAPITAL STOCK

2.1     AUTHORIZED CAPITAL

        The total number of shares that this corporation is authorized to issue
is 110,000,000, consisting of 100,000,000 shares of Common Stock, par value
$.0025 per share, and 10,000,000 shares of Preferred Stock, par value $.01 per
share. The Common Stock is subject to the rights and performances of Preferred
Stock as set forth below.

2.2     ISSUANCE OF PREFERRED STOCK IN SERIES

        The Preferred Stock may be issued from time to time in one or more
series in any manner permitted by law and the provisions of these Restated
Articles of Incorporation, as determined from time to time by the Board of
Directors and stated in the resolution or resolutions providing for its
issuance, prior to the issuance of any shares. The Board of Directors shall have
the authority to fix and determine and to amend, subject to these provisions,
the designation, preferences, limitations and relative rights of the shares of
any series that is wholly unissued or to be established. Unless otherwise
specifically provided in the resolution establishing any series, the Board of
Directors shall further have the authority, after the issuance of shares of a
series whose number it has designated, to amend the resolution establishing such
series to decrease the number of shares of that series, but not below the number
of shares of such series then outstanding.

2.3     DESIGNATION OF RIGHTS AND PREFERENCES OF SERIES A PREFERRED STOCK AND
        SERIES B PREFERRED STOCK

        This corporation is authorized to issue two Series of its Preferred
Stock, the first of which shall be known as its Series A Convertible Preferred
Stock (the "Series A Stock") consisting of 1,500,000 shares, and the second of
which shall be

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known as its Series B Convertible Preferred Stock (the "Series B Stock")
consisting of 2,400,000 shares.

               2.3.1     DIVIDENDS

        Dividends shall be declared and set aside for any shares of Preferred
Stock only upon resolution of the Board of Directors; provided that no cash
dividends shall be declared on the Common Stock or the Series A Stock unless and
until a cash dividend in an amount equal to or greater than the dividend
declared on the Common Stock or the Series A Stock (dividends shall be compared
on an as-converted-to-Common-Stock basis) shall have been paid to, or declared
and a sum sufficient for the payment hereof set apart for, the Series B Stock.

               2.3.2     LIQUIDATION RIGHTS

        Upon the voluntary or involuntary dissolution, liquidation or winding up
of this corporation, the assets of this corporation available for distribution
to its shareholders shall be distributed in the following order and amounts:

               (a) General. First, the holders of shares of Series A Stock shall
be entitled to receive, before any amount shall be paid to holders of Common
Stock or Series B Stock, an amount per share equal to Twenty Cents ($.20), plus
any declared but unpaid dividend per share on outstanding shares of Series A
Stock (the "Series A Liquidation Amount"). After the Series A Liquidation Amount
has been paid in full, the holders of shares of Series B Stock shall be entitled
to receive, before any amount shall be paid to the holders of Common Stock, an
amount per share equal to Fifty Cents ($.50) plus any declared but unpaid
dividend per share on outstanding shares of Series B Stock (the "Series B
Liquidation Amount"). After the Series A Liquidation Amount and the Series B
Liquidation Amount have been paid in full, the holders of shares of Common Stock
shall be entitled to receive an amount per share equal to Fifty Cents ($.50)
plus any declared but unpaid dividend per share on outstanding shares of Common
Stock (the "Common Liquidation Amount"). If upon the occurrence of such event,
the assets of this corporation shall be insufficient to permit the payment of
the full Series A Liquidation Amount, Series B Liquidation Amount and Common
Liquidation Amount, then the assets of this corporation available for
distribution shall: (i) first be distributed ratably among the holders of the
Series A Stock in the same proportions as the aggregate of the Series A
Liquidation Amount each such holder would otherwise be entitled to receive bears
to the total Series A Liquidation Amount that would otherwise be payable to all
such holders; (ii) after payment in full to the holders of the Series A Stock of
the full amount of the Series A Liquidation Amount, next be distributed ratably
among the holders of the Series B Stock in the same proportions as the aggregate
of the Series B Liquidation Amount


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each such holder would otherwise be entitled to receive bears to the total
Series B Liquidation Amount that would otherwise be payable to all such holders,
and (iii) after payment in full to the holders of the Series A Stock of the full
amount of the Series A Liquidation Amount and the Series B Stock of the full
amount of the Series B Liquidation Amount, next be distributed ratably among the
holders of the Common Stock in the same proportions as the aggregate of the
Common Liquidation Amount each such holder would otherwise be entitled to
receive bears to the total Common Liquidation Amount that would otherwise be
payable to all such holders.

               (b) Limitation. Upon the completion of the distributions
contemplated pursuant to Section 2.32(a), if assets remain in this corporation,
such remaining assets shall be distributed ratably to the holders of Common
Stock and Preferred Stock.

               (c) Sale of Assets or Merger. A sale of all or substantially all
of the corporation's assets or the acquisition of the corporation by another
entity by reason of merger or consolidation shall be deemed to be a dissolution,
liquidation or winding up of this corporation.

               2.3.3     VOTING

               (a) General. Except as otherwise expressly provided in paragraph
(b) or as required by law, the holders of Preferred Stock and the holders of
Common Stock shall be entitled to notice of any shareholders' meeting and to
vote on all matters submitted to shareholders for a vote as follows: (i) the
holders of Preferred Stock shall be entitled to that number of votes equal to
the number of shares of Common Stock into which the number of shares of
Preferred Stock held is then convertible, and (ii) the holders of Common Stock
shall be entitled to that number of votes equal to the number of shares of
Common Stock held, in each case at the record date for the determination of
shareholders entitled to vote on such matter, or, if no such record date is
established, at the date on which notice of the meeting of shareholders at which
the vote is to be taken is mailed, or the date any written consent of
shareholders is solicited if the vote is not to be taken at a meeting. Except as
otherwise expressly provided in paragraph (b) or as required by law, the holders
of shares of Preferred Stock and Common Stock shall vote together as a single
class on all matters.

               (b) Election of Directors. At each annual or special meeting
called for the purpose of electing directors, (i) the holders of the Common
Stock voting together as a class shall have the right to elect one director,
(ii) the holders of the Series A Stock voting together as a class shall have the
right to elect one director and (iii) the holders of the Series B Stock voting
together as a class shall have the right to elect two directors. The provisions
of this Section 2.3.3(b) shall expire and be of no


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further force or effect (i) upon the conversion of all of the outstanding shares
of Series A Stock and Series B Stock pursuant to the provisions of Section 2.3.4
hereof and (ii) as to any Series of Preferred Stock upon conversion of all of
the outstanding shares of that Series of Preferred Stock pursuant to the
provisions of Section 2.3.4 hereof. In the case of any vacancy in the office of
a director elected by a specified group of shareholders, a successor shall be
elected to hold office for the unexpired term of such director by the
affirmative vote of a majority of the shares of such specified group given at a
special meeting of such shareholders duly called for or by action by written
consent for that purpose. Any director who shall have been elected by a
specified group of shareholders may be removed during the aforesaid term of
office, either for or without cause, by, and only by, the affirmative vote of
the holders of a majority of the shares of such specified group, given at a
special meeting of such shareholders duly called or by any action by written
consent for that purpose, and any such vacancy thereby created, may be filled by
the vote of the holders of a majority of the shares of such specified group
represented at such meeting or in such consent.

               2.3.4     CONVERSION TO COMMON STOCK

        The Preferred Stock shall be convertible into Common Stock of the
corporation as follows:

               (a)  Definitions. For purposes of this Section 2.3.4 the
following definitions shall apply:

                    (i)       "Issuance Date" for each Series of Preferred Stock
shall mean the first date on which the Corporation issues any shares of such
series of Preferred Stock.

                    (ii)      "Conversion Price" shall mean the price,
determined pursuant to this Section 2.3, at which shares of Common Stock shall
be deliverable upon conversion of each Series of Preferred Stock.

                    (iii)     "Current Conversion Price" shall mean the
Conversion Price immediately before the occurrence of any event, which, pursuant
to Section 2.3.4(c), causes an adjustment to the Conversion Price.

                    (iv)      "Convertible Securities" shall mean any
indebtedness or shares of stock convertible into or exchangeable for Common
Stock, including Preferred Stock.

                    (v)       "Options" shall mean any rights, warrants or
options to subscribe for or purchase Common Stock or Convertible Securities.


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                    (vi)      "Common Stock Outstanding" shall mean the
aggregate of all Common Stock outstanding and all Common Stock issuable upon
exercise of all outstanding Options and conversion of all outstanding
Convertible Securities.

                    (vii)     "Distribution" shall have the meaning of the term
"distribution to its shareholders" set forth in RCW 23B.0l.400(6) as in effect
on the date of filing of these Restated Articles of Incorporation.

                    (viii)    "Common Stock Equivalents" shall mean Convertible
Securities and rights entitling the holder thereof to receive directly, or
indirectly, additional shares of Common Stock without the payment of any
consideration by such holder for such additional shares of Common Stock or
Common Stock Equivalents.

                    (ix)      "Original Issue Price" shall mean the per share
price of the first offering of the shares.

               (b)  Right to Convert; Initial Conversion Price. Each holder of
the Preferred Stock may, at any time, convert any or all of such Preferred Stock
into fully-paid and non-assessable shares of Common Stock at the Conversion
Price. Each share of Preferred Stock shall be convertible into the number of
shares of Common Stock that results from dividing the Conversion Price in effect
at the time of conversion into $0.20 for each share of Series A Stock being
converted and $0.50 for each share of Series B Stock being converted; the
Conversion Price shall initially be $0.20 per share for the Series A Stock and
$0.50 for the Series B Stock. Each initial Conversion Price shall be subject to
adjustment from time to time in certain instances as hereinafter provided. No
adjustments with respect to conversion shall be made on account of any dividends
that may be declared but unpaid on the Preferred Stock surrendered for
conversion, but no dividends shall thereafter be paid on the Common Stock unless
such unpaid dividends have first been paid to the holders entitled to payment at
the time of conversion of the Preferred Stock.

        Before any holder of Preferred Stock shall be entitled to convert the
same into Common Stock, he shall surrender the certificate or certificates
therefor, duly endorsed, to the office of the corporation or any transfer agent
for such Preferred Stock and shall give written notice to the corporation at
such office that he elects to convert the same. The corporation shall, as soon
as practicable thereafter, issue and deliver at such office to such holder of
Preferred Stock, or to his nominee or nominees, certificates for the number of
full shares of Common Stock to which he shall be entitled, together with cash in
lieu of any fraction of a share as hereinafter provided, and, if less than all
of the shares of Preferred Stock represented by such certificate are converted,
a certificate representing the shares of Preferred Stock not converted. Such
conversion shall be deemed to have been made as of the date of such


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surrender of the certificate for the Preferred Stock to be converted, and the
person or persons entitled to receive the Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such Common Stock on such date. If the conversion is in connection with an offer
of securities registered pursuant to the Securities Act of 1933, as amended, the
conversion may, at the option of any holder tendering Preferred Stock for
conversion, be conditioned upon the closing of the sale of securities pursuant
to such offering, in which event the person(s) entitled to receive the Common
Stock issuable upon such conversion of the Preferred Stock shall not be deemed
to have converted such Preferred Stock until immediately prior to the closing of
such sale of securities.

               (c)  Adjustments to Conversion Price. The Conversion Price in
effect from time to time for each series of Preferred Stock shall be subject to
adjustment in certain cases as follows:

                    (i)       Stock Splits, Dividends Distributions and
Combinations. In the event the corporation should at any time or from time to
time after the Issuance Date fix a record date for the effectuation of a split
or subdivision of the outstanding shares of Common Stock or the determination of
holders of Common Stock entitled to receive a dividend payable in additional
shares of Common Stock or Common Stock Equivalents, then, following such record
date (or the date of such dividend, split or subdivision if no record date is
fixed), the Conversion Price of each series of Preferred Stock shall be
appropriately decreased so that the number of shares of Common Stock issuable on
conversion of each share of Preferred Stock shall be increased in proportion to
such increase in the number of outstanding shares of Common Stock (including for
this purpose, Common Stock Equivalents). If the number of shares of Common Stock
outstanding at any time after the Issuance Date is decreased by a combination of
the outstanding shares of Common Stock, then, following the record date of such
combination, the Conversion Price for each series of Preferred Stock shall be
appropriately increased so that the number of shares of Common Stock issuable on
conversion of each share of Preferred stock shall be decreased in proportion to
such decrease in the number of outstanding shares of Common Stock.

                    (ii)      Other Dividends. In the event this corporation
shall declare a Distribution payable in securities of other persons, evidences
of indebtedness issued by this corporation or other persons, assets (excluding
cash dividends) or options or rights not referred to in Section
2.3.4(c)(viii)(iii) then, in each such case for the purpose of this Section
2.3.4(c)(ii), the holders of Preferred stock shall be entitled to a
proportionate share of any such Distribution as though they were the holders of
the number of shares of Common Stock of the corporation into which their shares
of Preferred Stock are convertible as of the record date fixed for the
determination of the holders of Common Stock of the corporation entitled to
receive such Distribution.


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                    (iii)     Recapitalizations. If at any time or from time to
time there shall be a recapitalization of the Common Stock (other than a
subdivision, combination or merger or a sale of assets transaction provided for
elsewhere in this Section 2.3.4) provision shall be made so that the holders of
Preferred Stock shall thereafter be entitled to receive upon conversion of
shares of Preferred Stock the number of shares of stock or other securities or
property of the corporation or otherwise, to which a holder of Common stock
deliverable upon conversion would have been entitled on such recapitalization.
In any such case, appropriate adjustment shall be made in the application of the
provisions of this Section 2.3.4 with respect to the rights of the holders of
Preferred Stock after the recapitalization to the end that the provisions of
this Section 2.3.4 (including adjustment of the Conversion Price then in effect
and the number of shares purchasable upon conversion of shares of Preferred
Stock) shall be applicable after that event as nearly equivalent as may be
practicable.

                    (iv)      Successive Chances. The above provisions of this
Section 2.3.4 shall similarly apply to successive issuances, sales, dividends or
other Distributions, subdivisions and combinations on or of the Common Stock
after the Issuance Date.

                    (v)       Other Events Altering Conversion Price. Upon the
occurrence of any event not specifically denominated in this Section 2.3.4 as
reducing the Conversion Price that, in the reasonable exercise of the business
judgment of the Board of Directors of the corporation requires, on equitable
principles, the reduction of the Conversion Price, the Conversion Price will be
equitably reduced.

                    (vi)      No Impairment. This corporation will not, by
amendment of these Restated Articles of Incorporation or through any
reorganization, recapitalization, transfer or assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this Section 2.3.4 and in
the taking of all such action as may be necessary or appropriate in order to
protect the conversion rights of the holders of Preferred Stock against
impairment.

                    (vii)     Miscellaneous Conversion Price Matters. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued Common Stock the full number of shares of Common Stock deliverable
upon conversion of all the then outstanding Preferred Stock and shall, at its
own expense, take all such actions and obtain all such permits and orders as may
be necessary to enable the Corporation lawfully to issue such Common Stock upon
the conversion of such Preferred Stock.


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                    (viii)    Excluded Events. Notwithstanding anything in this
Section 2.3.4 to the contrary, the Conversion Price shall not be adjusted by
virtue of (i) the conversion of shares of Preferred Stock into shares of Common
Stock, (ii) the repurchase of shares from the corporation's employees,
consultants, officers or directors at such person's cost, or (iii) the issuance
and sale of, or the grant of options to purchase or acquire through the receipt
of Convertible Securities, shares of Common Stock, and none of such shares shall
be included in any manner in the computation from time to time of the Conversion
Price under paragraph (c) or in Common Stock Outstanding for purposes of such
computation.

                    (ix)      No Fractional Shares. No fractional shares shall
be issued upon conversion of shares of Preferred Stock and the number of shares
of Common Stock to be issued shall be rounded to the nearest whole share.
Whether or not fractional shares are issuable upon such conversion shall be
determined on the basis of the total number of shares of Preferred Stock the
holder is at the time converting into Common Stock and the number of shares of
Common Stock issuable upon such aggregate conversion.

                    (x)       Certificate as to Adjustments. Upon the occurrence
of each adjustment or readjustment of the Conversion Price of Preferred Stock
pursuant to this Section 2.3.4, the corporation, at its expense upon request by
any holder of Preferred Stock, shall compute such adjustment or readjustment in
accordance with the terms hereof and prepare and furnish to each holder of
Preferred Stock a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
This corporation shall, upon the written request at any time of any holder of
Preferred Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (A) such adjustment and readjustment, (B) the Current
Conversion Price at the time in effect, and (C) the number of shares of Common
Stock and the amount, if any, of other property which at the time would be
received upon the conversion of a share of Preferred Stock.

               (d)  Automatic Conversion. Immediately upon the effectiveness of
this corporation's registration statement on Form S-1 pursuant to which Common
Stock is sold to the public by the corporation (or selling shareholders, if any)
in a public offering registered under the Securities Act of 1933, as amended,
(or the equivalent registration or qualification for sale to the public under
the laws of any province of Canada) at a per share public offering price of not
less than three times the Original Issue Price of Series B Stock (equitably
adjusted for any stock split, combination or similar event) and an aggregate
public offering price greater than $5,000,000 or the equivalent amount in
Canadian currency), each share of Preferred Stock shall automatically be
converted into shares of Common Stock at the


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Conversion Price for Preferred Stock then in effect. On and after said
conversion date, notwithstanding that any certificates for the shares of
Preferred Stock shall not have been surrendered for conversion, the shares of
Preferred Stock evidenced thereby shall be deemed to be no longer outstanding,
and all rights with respect thereto shall forthwith cease and terminate, except
only the rights of the holder (i) to receive the shares of Common Stock to which
he shall be entitled upon conversion thereof, (ii) to receive the amount of cash
payable in respect of any fractional share of Common Stock to which he shall be
entitled, and (iii) with respect to dividends declared but unpaid on Preferred
Stock prior to such conversion date. In the event that any holder of Preferred
Stock presents such holder's certificate therefor for surrender to this
corporation or its transfer agent upon such conversion, a certificate for the
number of shares of Common Stock into which the shares of Preferred Stock
surrendered were convertible on such conversion date promptly will be issued and
delivered to such holder.

2.4     DESIGNATION OF RIGHTS AND PREFERENCES OF SERIES C PREFERRED STOCK

        Pursuant to the Washington Business Corporation Act (the "Act"), there
is hereby designated a series of convertible preferred stock to be known as
Series C Convertible Preferred Stock, each share having the following rights and
preferences:

        The shares of the series shall be designated as Series C Convertible
Preferred Stock ("Series C Stock") and the number of shares constituting such
series shall be 3,000,000.

               2.4.1      DIVIDENDS

        Dividends shall be declared and set aside for any shares of Series C
Stock only upon resolution of the Board of Directors; provided that no cash
dividends shall be declared on the Common Stock, the Series A Stock or the
Series B Stock unless and until a cash dividend in an amount equal to or greater
than the dividend declared on the Common Stock, the Series A Stock or the Series
B Stock (dividends shall be compared on an as-converted-to-Common-Stock basis)
shall have been paid to, or declared and a sum sufficient for the payment
thereof set apart for, the Series C Stock.

               2.4.2     LIQUIDATION RIGHTS

        Upon the voluntary or involuntary dissolution, liquidation or winding up
of the corporation, the assets of the corporation available for distribution to
its shareholders shall be distributed in the following order and amounts:

               (a) General. After the Series A Liquidation Amount has been paid
in full, the holders of shares of Series C Stock shall be entitled to receive,
before any


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amount shall be paid to holders of Common Stock or Series B Stock, an amount per
share equal to One Dollar ($1.00), plus any declared but unpaid dividend per
share on outstanding shares of Series C Stock (the "Series C Liquidation
Amount"). After the Series A Liquidation Amount, the Series C Liquidation Amount
and the Series B Liquidation Amount have been paid in full, the holders of
shares of Common Stock shall be entitled to receive the Common Liquidation
Amount. If upon the occurrence of such event, the assets of the corporation
shall be insufficient to permit the payment of the full Series A Liquidation
Amount, Series C Liquidation Amount, Series B Liquidation Amount and Common
Liquidation Amount, then the assets of the corporation available for
distribution shall: (i) first be distributed ratably among the holders of the
Series A Stock in the same proportions as the aggregate of the Series A
Liquidation Amount each such holder would otherwise be entitled to receive bears
to the total Series A Liquidation Amount that would otherwise be payable to all
such holders; (ii) after payment in full to the holders of the Series A Stock of
the full amount of the Series A Liquidation Amount, next be distributed ratably
among the holders of the Series C Stock in the same proportions as the aggregate
of the Series C Liquidation Amount each such holder would otherwise be entitled
to receive bears to the total Series C Liquidation Amount that would otherwise
be payable to all such holders, (iii) after payment in full to the holders of
the Series A Stock of the full amount of the Series A Liquidation Amount and the
Series C Stock of the full amount of the Series C Liquidation Amount, next be
distributed ratably among the holders of the Series B Stock in the same
proportions as the aggregate of the Series B Liquidation Amount each such holder
would otherwise be entitled to receive bears to the total Series B Liquidation
Amount that would otherwise be payable to all such holders, and (iv) after
payment in full to the holders of the Series A Stock of the full amount of the
Series A Liquidation Amount, the Series C Stock of the full amount of the Series
C Liquidation Amount, and the Series B Stock of the full amount of the Series B
Liquidation Amount, next be distributed ratably among the holders of the Common
Stock in the same proportions as the aggregate of the Common Liquidation Amount
each such holder would otherwise be entitled to receive bears to the total
Common Liquidation Amount that would otherwise be payable to all such holders.

               (b) Limitation. Upon the completion of the distributions
contemplated pursuant to paragraph (a), if assets remain in the corporation,
such remaining assets shall be distributed ratably to the holders of Common
Stock and all issued and outstanding Preferred Stock.

               (c) Sale of Assets or Merger. A sale of all or substantially all
of the corporation's assets or the acquisition of the corporation by another
entity by reason of merger or consolidation shall be deemed to be a dissolution,
liquidation or winding up of the corporation.


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               2.4.3     VOTING

        Except as otherwise provided in the corporation's Restated Articles of
Incorporation or as required by law, the holders of the Series C Stock shall be
entitled to notice of any shareholders' meeting and to vote on all matters
submitted to shareholders for a vote. The holders of the Series C Stock shall be
entitled to that number of votes equal to the number of shares of Common Stock
into which the number of shares of Series C Stock held is then convertible at
the record date for the determination of shareholders entitled to vote on such
matter, or, if no such record date is established, at the date on which notice
of the meeting of shareholders at which the vote is to be taken is mailed, or
the date any written consent of shareholders is solicited if the vote is not to
be taken at a meeting. Except as otherwise expressly provided in the
corporation's Restated Articles of Incorporation or as required by law, the
holders of shares of all issued and outstanding Preferred Stock and Common Stock
shall vote together as a single class on all matters.

               2.4.4     CONVERSION TO COMMON STOCK

        The Series C Stock shall be convertible into Common Stock of the
corporation as follows:

               (a)  Definitions. For purposes of this Section the following
definitions shall apply:

                    (i)       "Issuance Date" for the Series C Stock shall mean
the first date on which the corporation issues any shares of the Series C Stock.

                    (ii)      "Conversion Price" shall mean the price,
determined pursuant to this Section 2.4.4, at which shares of Common Stock shall
be deliverable upon conversion of the Series C Stock.

                    (iii)     "Current Conversion Price" shall mean the
Conversion Price immediately before the occurrence of any event, which, pursuant
to Section 2.4.4(c), causes an adjustment to the Conversion Price.

                    (iv)      "Convertible Securities" shall mean any
indebtedness or shares of stock convertible into or exchangeable for Common
Stock, including the Series C Stock.

                    (v)       "Options" shall mean any rights, warrants or
options to subscribe for or purchase Common Stock or Convertible Securities.


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                    (vi)      "Common Stock Outstanding" shall mean the
aggregate of all Common Stock outstanding and all Common Stock issuable upon
exercise of all outstanding Options and conversion of all outstanding
Convertible Securities.

                    (vii)     "Distribution" shall have the meaning of the term
"distribution to its shareholders" set forth in RCW 23B.0l.400(6) as in effect
on the date of filing of this Designation.

                    (viii)    "Common Stock Equivalents" shall mean Convertible
Securities and rights entitling the holder thereof to receive directly, or
indirectly, additional shares of Common Stock without the payment of any
consideration by such holder for such additional shares of Common Stock or
Common Stock Equivalents.

                    (ix)      "Original Issue Price" shall mean the per share
price of the first offering of the shares.

               (b)  Right to Convert; Initial Conversion Price. Each holder of
the Series C Stock may, at any time, convert any or all of such Series C Stock
into fully-paid and non-assessable shares of Common Stock at the Conversion
Price. Each share of Series C Stock shall be convertible into the number of
shares of Common Stock that results from dividing the Conversion Price in effect
at the time of conversion into $1.00 for each share of Series C Stock being
converted; the Conversion Price shall initially be $1.00 per share for the
Series C Stock. The initial Conversion Price shall be subject to adjustment from
time to time in certain instances as hereinafter provided. No adjustments with
respect to conversion shall be made on account of any dividends that may be
declared but unpaid on the Series C Stock surrendered for conversion, but no
dividends shall thereafter be paid on the Common Stock unless such unpaid
dividends have first been paid to the holders entitled to payment at the time of
conversion of the Series C Stock.

               Before any holder of Series C Stock shall be entitled to convert
the same into Common Stock, he shall surrender the certificate or certificates
therefor, duly endorsed, to the office of the corporation or any transfer agent
for the Series C Stock and shall give written notice to the corporation at such
office that he elects to convert the same. The corporation shall, as soon as
practicable thereafter, issue and deliver at such office to such holder of
Series C Stock, or to his nominee or nominees, certificates for the number of
full shares of Common Stock to which he shall be entitled, together with cash in
lieu of any fraction of a share as hereinafter provided, and, if less than all
of the shares of the Series C Stock represented by such certificate are
converted, a certificate representing the shares of the Series C Stock not
converted. Such conversion shall be deemed to have been made as of the date of
such surrender of the certificate for the Series C Stock to be converted, and
the person or persons


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entitled to receive the Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such Common Stock on
such date. If the conversion is in connection with an offer of securities
registered pursuant to the Securities Act of 1933, as amended, the conversion
may, at the option of any holder tendering the Series C Stock for conversion, be
conditioned upon the closing of the sale of securities pursuant to such
offering, in which event the person(s) entitled to receive the Common Stock
issuable upon such conversion of the Series C Stock shall not be deemed to have
converted the Series C Stock until immediately prior to the closing of such sale
of securities.

               (c)  Adjustments to Conversion Price. The Conversion Price in
effect from time to time for the Series C Stock shall be subject to adjustment
in certain cases as follows:

                    (i)       Stock Splits, Dividends Distributions and
Combinations. In the event the corporation should at any time or from time to
time after the Issuance Date fix a record date for the effectuation of a split
or subdivision of the outstanding shares of Common Stock or the determination of
holders of Common Stock entitled to receive a dividend payable in additional
shares of Common Stock or Common Stock Equivalents, then, following such record
date (or the date of such dividend, split or subdivision if no record date is
fixed), the Conversion Price of the Series C Stock shall be appropriately
decreased so that the number of shares of Common Stock issuable on conversion of
each share of the Series C Stock shall be increased in proportion to such
increase in the number of outstanding shares of Common Stock (including for this
purpose, Common Stock Equivalents). If the number of shares of Common Stock
outstanding at any time after the Issuance Date is decreased by a combination of
the outstanding shares of Common Stock, then, following the record date of such
combination, the Conversion Price for the Series C Stock shall be appropriately
increased so that the number of shares of Common Stock issuable on conversion of
each share of the Series C Stock shall be decreased in proportion to such
decrease in the number of outstanding shares of Common Stock.

                    (ii)      Other Dividends. In the event the corporation
shall declare a Distribution payable in securities of other persons, evidences
of indebtedness issued by the corporation or other persons, assets (excluding
cash dividends) or options or rights not referred to in Section
2.4.4(c)(viii)(iii)then, in each such case for the purpose of this Section
2.4.4(c)(ii), the holders of Series C Stock shall be entitled to a proportionate
share of any such Distribution as though they were the holders of the number of
shares of Common Stock of the corporation into which their shares of Series C
Stock are convertible as of the record date fixed for the determination of the
holders of Common Stock of the corporation entitled to receive such
Distribution.


                                      -13-
   14

                    (iii)     Recapitalizations. If at any time or from time to
time there shall be a recapitalization of the Common Stock (other than a
subdivision, combination or merger or a sale of assets transaction provided for
elsewhere in this Section 2.4.4) provision shall be made so that the holders of
the Series C Stock shall thereafter be entitled to receive upon conversion of
shares of the Series C Stock the number of shares of stock or other securities
or property of the corporation or otherwise, to which a holder of Common stock
deliverable upon conversion would have been entitled on such recapitalization.
In any such case, appropriate adjustment shall be made in the application of the
provisions of this Section with respect to the rights of the holders of the
Series C Stock after the recapitalization to the end that the provisions of this
Section (including adjustment of the Conversion Price then in effect and the
number of shares purchasable upon conversion of shares of the Series C Stock)
shall be applicable after that event as nearly equivalent as may be practicable.

                    (iv)      Successive Chances. The above provisions of this
Section shall similarly apply to successive issuances, sales, dividends or other
Distributions, subdivisions and combinations on or of the Common Stock after the
Issuance Date.

                    (v)       Other Events Altering Conversion Price. Upon the
occurrence of any event not specifically denominated in this Section 2.4.4 as
reducing the Conversion Price that, in the reasonable exercise of the business
judgment of the Board of Directors of the corporation requires, on equitable
principles, the reduction of the Conversion Price, the Conversion Price will be
equitably reduced.

                    (vi)      No Impairment. The corporation will not, by
amendment of the Restated Articles of Incorporation, this Designation or through
any reorganization, recapitalization, transfer or assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this Section 2.4.4 and in
the taking of all such action as may be necessary or appropriate in order to
protect the conversion rights of the holders of the Series C Stock against
impairment.

                    (vii)     Miscellaneous Conversion Price Matters. The
corporation shall at all times reserve and keep available out of its authorized
but unissued Common Stock the full number of shares of Common Stock deliverable
upon conversion of all the then outstanding Series C Stock and shall, at its own
expense, take all such actions and obtain all such permits and orders as may be
necessary to enable the corporation lawfully to issue such Common Stock upon the
conversion of the Series C Stock.


                                      -14-
   15

                    (viii)    Excluded Events. Notwithstanding anything in this
Section 2.4.4 to the contrary, the Conversion Price shall not be adjusted by
virtue of (i) the conversion of shares of the Series C Stock into shares of
Common Stock, (ii) the repurchase of shares from the corporation's employees,
consultants, officers or directors at such person's cost, or (iii) the issuance
and sale of, or the grant of options to purchase or acquire through the receipt
of Convertible Securities, shares of Common Stock, and none of such shares shall
be included in any manner in the computation from time to time of the Conversion
Price under paragraph (c) or in Common Stock Outstanding for purposes of such
computation.

                    (ix)      No Fractional Shares. No fractional shares shall
be issued upon conversion of shares of the Series C Stock and the number of
shares of Common Stock to be issued shall be rounded to the nearest whole share.
Whether or not fractional shares are issuable upon such conversion shall be
determined on the basis of the total number of shares of the Series C Stock the
holder is at the time converting into Common Stock and the number of shares of
Common Stock issuable upon such aggregate conversion.

                    (x)       Certificate as to Adjustments. Upon the occurrence
of each adjustment or readjustment of the Conversion Price of the Series C Stock
pursuant to this Section 2.4.4, the corporation, at its expense upon request by
any holder of Series C Stock, shall compute such adjustment or readjustment in
accordance with the terms hereof and prepare and furnish to each holder of
Series C Stock a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
The corporation shall, upon the written request at any time of any holder of
Series C Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (A) such adjustment and readjustment, (B) the Current
Conversion Price at the time in effect, and (C) the number of shares of Common
Stock and the amount, if any, of other property which at the time would be
received upon the conversion of a share of Series C Stock.

               (d)  Automatic Conversion. Immediately upon the effectiveness of
the corporation's registration statement on Form S-1 pursuant to which Common
Stock is sold to the public by the corporation (or selling shareholders, if any)
in a public offering registered under the Securities Act of 1933, as amended,
(or the equivalent registration or qualification for sale to the public under
the laws of any province of Canada) and which the aggregate public offering
price is greater than $5,000,000 or the equivalent amount in Canadian currency),
each share of Series C Stock shall automatically be converted into shares of
Common Stock at the Conversion Price for the Series C Stock then in effect. On
and after said conversion date, notwithstanding that any certificates for the
shares of the Series C Stock shall not have been


                                      -15-
   16

surrendered for conversion, the shares of the Series C Stock evidenced thereby
shall be deemed to be no longer outstanding, and all rights with respect thereto
shall forthwith cease and terminate, except only the rights of the holder (i) to
receive the shares of Common Stock to which he shall be entitled upon conversion
thereof, (ii) to receive the amount of cash payable in respect of any fractional
share of Common-Stock to which he shall be entitled, and (iii) with respect to
dividends declared but unpaid on the Series C Stock prior to such conversion
date. In the event that any holder of Series C Stock presents such holder's
certificate therefor for surrender to the Company or its transfer agent upon
such conversion, a certificate for the number of shares of Common Stock into
which the shares of the Series C Stock surrendered were convertible on such
conversion date promptly will be issued and delivered to such holder.

2.5     DESIGNATION OF RIGHTS AND PREFERENCES OF SERIES D PREFERRED STOCK

        Pursuant to the Act and authority of the Board of , there is hereby
designated a series of convertible preferred stock to be known as Series D
Convertible Preferred Stock, each share having the following rights and
preferences:

        The shares of the series shall be designated as Series D Convertible
Preferred Stock ("Series D Stock") and the number of shares constituting such
series shall be 2,664,185.

               2.5.1     DIVIDENDS

        Dividends shall be declared and set aside for any shares of Series D
Stock only upon resolution of the Board of Directors; provided that no cash
dividends shall be declared on the Common Stock unless and until a cash dividend
in an amount equal to or greater than the dividend declared on the Common Stock
shall have been paid to, or declared and a sum sufficient for the payment
thereof set apart for, the Series D Stock.

               2.5.2     LIQUIDATION RIGHTS

        Upon the voluntary or involuntary dissolution, liquidation or winding up
of the corporation, the assets of the corporation available for distribution to
its shareholders shall be distributed in the following order and amounts:

               (a) General. After the Series A Liquidation Amount, the Series C
Liquidation Amount and the Series B Liquidation Amount have been paid in full,
the holders of shares of Series D Stock shall be entitled to receive, before any
amount shall be paid to holders of Common Stock, an amount per share equal to
Two Dollars ($2.00), plus any declared but unpaid dividend per share on
outstanding shares of Series D Stock (the "Series D Liquidation Amount"). After
the Series A Liquidation


                                      -16-
   17

Amount, the Series C Liquidation Amount, the Series B Liquidation Amount and the
Series D Liquidation Amount have been paid in full, the holders of shares of
Common Stock shall be entitled to receive the Common Liquidation Amount. If upon
the occurrence of such event, the assets of the corporation shall be
insufficient to permit the payment of the full Series A Liquidation Amount,
Series C Liquidation Amount, Series B Liquidation Amount, Series D Liquidation
Amount and Common Liquidation Amount, then the assets of the corporation
available for distribution shall: (i) first be distributed ratably among the
holders of the Series A Stock in the same proportions as the aggregate of the
Series A Liquidation Amount each such holder would otherwise be entitled to
receive bears to the total Series A Liquidation Amount that would otherwise be
payable to all such holders; (ii) after payment in full to the holders of the
Series A Stock of the full amount of the Series A Liquidation Amount, next be
distributed ratably among the holders of the Series C Stock in the same
proportions as the aggregate of the Series C Liquidation Amount each such holder
would otherwise be entitled to receive bears to the total Series C Liquidation
Amount that would otherwise be payable to all such holders, (iii) after payment
in full to the holders of the Series A Stock of the full amount of the Series A
Liquidation Amount and the Series C Stock of the full amount of the Series C
Liquidation Amount, next be distributed ratably among the holders of the Series
B Stock in the same proportions as the aggregate of the Series B Liquidation
Amount each such holder would otherwise be entitled to receive bears to the
total Series B Liquidation Amount that would otherwise be payable to all such
holders; (iv) after payment in full to the holders of the Series A Stock of the
full amount of the Series A Liquidation Amount, the Series C Stock of the full
amount of the Series C Liquidation Amount and the Series B Stock of the full
amount of the Series B Liquidation Amount, next be distributed ratably among the
holders of the Series D Stock in the same proportions as the aggregate of the
Series D Liquidation Amount each such holder would otherwise be entitled to
receive bears to the total Series D Liquidation Amount that would otherwise be
payable to all such holders; and (iv) after payment in full to the holders of
the Series A Stock of the full amount of the Series A Liquidation Amount, the
Series C Stock of the full amount of the Series C Liquidation Amount, the Series
B Stock of the full amount of the Series B Liquidation Amount, And the Series D
Stock of the full amount of the Series D Liquidation Amount, next be distributed
ratably among the holders of the Common Stock in the same proportions as the
aggregate of the Common Liquidation Amount each such holder would otherwise be
entitled to receive bears to the total Common Liquidation Amount that would
otherwise be payable to all such holders.

               (b)  Limitation. Upon the completion of the distributions
contemplated pursuant to paragraph (a), if assets remain in the corporation,
such


                                      -17-
   18

remaining assets shall be distributed ratably to the holders of Common Stock and
all issued and outstanding Preferred Stock.

               (c)  Sale of Assets or Merger. A sale of all or substantially all
of the corporation's assets or the acquisition of Me corporation by another
entity by reason of merger or consolidation shall be deemed to be a dissolution,
liquidation or winding up of the corporation.

               2.5.3     VOTING

        Except as otherwise provided in the corporation's Restated Articles of
Incorporation or as required by law, the holders of the Series D Stock shall be
entitled to notice of any shareholders' meeting and to vote on all matters
submitted to shareholders for a vote. The holders of the Series D Stock shall be
entitled to that number of votes equal to the number of shares of Common Stock
into which the number of shares of Series D Stock held is then convertible at
the record date for the determination of shareholders entitled to vote on such
matter, or, if no such record date is established, at the date on which notice
of the meeting of shareholders at which the vote is to be taken is mailed, or
the date any written consent of shareholders is solicited if the vote is not to
be taken at a meeting. Except as otherwise expressly provided in the
corporation's Restated Articles of Incorporation or as required by law, the
holders of shares of all issued and outstanding Preferred Stock and Common Stock
shall vote together as a single class on all matters.

               2.5.4     CONVERSION TO COMMON STOCK

        The Series D Stock shall be convertible into Common Stock of the
corporation as follows:

               (a)  Definitions. For purposes of this Section 2.5.4 the
following definitions shall apply:

                    (i)       "Issuance Date" for the Series D Stock shall mean
the first date on which the corporation issues any shares of the Series D Stock.

                    (ii)      "Conversion Price" shall mean the price,
determined pursuant to this Section, at which shares of Common Stock shall be
deliverable upon conversion of the Series D Stock.

                    (iii)     "Current Conversion Price" shall mean the
Conversion Price immediately before the occurrence of any event, which, pursuant
to Section 2.5.4(c), causes an adjustment to the Conversion Price.


                                      -18-
   19

                    (iv)      "Convertible Securities" shall mean any
indebtedness or shares of stock convertible into or exchangeable for Common
Stock, including the Series D Stock.

                    (v)       "Options" shall mean any rights, warrants or
options to subscribe for or purchase Common Stock or Convertible Securities.

                    (vi)      "Common Stock Outstanding" shall mean the
aggregate of all Common Stock outstanding and all Common Stock issuable upon
exercise of all outstanding Options and conversion of all outstanding
Convertible Securities.

                    (vii)     "Distribution" shall have the meaning of the term
"distribution to its shareholders" set forth in RCW 23B.01.400(6) as in effect
on the date of filing of this Designation.

                    (viii)    "Common Stock Equivalents" shall mean Convertible
Securities and rights entitling the holder thereof to receive directly, or
indirectly, additional shares of Common Stock without the payment of any
consideration by such holder for such additional shares of Common Stock or
Common Stock Equivalents.

                    (ix)      "Original Issue Price" shall mean the per share
price of the first offering of the shares.

               (b)  Right to Convert: Initial Conversion Price. Each holder of
the Series D Stock may, at any time, convert any or all of such Series D Stock
into fully-paid and non-assessable shares of Common Stock at the Conversion
Price. Each share of Series D Stock shall be convertible into the number of
shares of Common Stock that results from dividing the Conversion Price in effect
at the time of conversion into $2.00 for each share of Series D Stock being
converted; the Conversion Price shall initially be $2.00 per share for the
Series D Stock. The initial Conversion Price shall be subject to adjustment from
time to time in certain instances as hereinafter provided. No adjustments with
respect to conversion shall be made on account of any dividends that may be
declared but unpaid on the Series D Stock surrendered for conversion, but no
dividends shall thereafter be paid on the Common Stock unless such unpaid
dividends have first been paid to the holders enticed to payment at the time of
conversion of the Series D Stock.

               Before any holder of Series D Stock shall be entitled to convert
the same into Common Stock, he shall surrender the certificate or certificates
therefor, duly endorsed, to the office of the corporation or any transfer agent
for the Series D Stock and shall give written notice to the corporation at such
office that he elects to convert the same. The corporation shall, as soon as
practicable thereafter, issue and deliver at


                                      -19-
   20

such office to such holder of Series D Stock or to his nominee or nominees,
certificates for the number of full shares of Common Stock to which he shall be
entitled, together with cash in lieu of any fraction of a share as hereinafter
provided, and, if less than all of the shares of the Series D Stock represented
by such certificate are converted, a certificate representing the shares of the
Series D Stock not converted. Such conversion shall be deemed to have been made
as of the date of such surrender of the certificate for the Series D Stock to be
converted, and the person or persons entitled to receive the Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such Common Stock on such date. If the conversion is in
connection with an offer of securities registered pursuant to the Securities Act
of 1933, as amended, the conversion may, at the option of any holder tendering
the Series D Stock for conversion, be conditioned upon the closing of the sale
of securities pursuant to such offering, in which event the person(s) entitled
to receive the Common Stock issuable upon such conversion of the Series D Stock
shall not be deemed to have converted the Series D Stock until immediately prior
to the closing of such sale of securities.

               (c)  Adjustments to Conversion Price. The Conversion Price in
effect from time to time for the Series D Stock shall be subject to adjustment
in certain cases as follows:

                    (i)       Stock Splits, Dividends, Distributions and
Combinations. In the event the corporation should at any time or from time to
time after the Issuance Date fix a record date for the effectuation of a split
or subdivision of the outstanding shares of Common Stock or the determination of
holders of Common Stock entitled to receive a dividend payable in additional
shares of Common Stock or Common Stock Equivalents, then, following such record
date (or the date of such dividend, split or subdivision if no record date is
fixed), the Conversion Price of the Series D Stock shall be appropriately
decreased so that the number of shares of Common Stock issuable on conversion of
each share of the Series D Stock shall be increased in proportion to such
increase in the number of outstanding shares of Common Stock (including for this
purpose, Common Stock Equivalents). If the number of shares of Common Stock
outstanding at any time after the Issuance Date is decreased by a combination of
the outstanding shares of Common Stock then, following the record date of such
combination, the Conversion Price for the Series D Stock shall be appropriately
increased so that the number of shares of Common Stock issuable on conversion of
each share of the Series D Stock shall be decreased in proportion to such
decrease in the number of outstanding shares of Common Stock.

                    (ii)      Other Dividends. In the event the corporation
shall declare a Distribution payable in securities of other persons, evidences
of indebtedness issued by the corporation or other persons, assets (excluding
cash dividends) or


                                      -20-
   21

options or rights not referred to in Section 2.5.4(c)(viii)(iii)then, in each
such case for the purpose of this Section 2.5.4(c)(ii), the holders of Series D
Stock shall be entitled to a proportionate share of any such Distribution as
though they were the holders of the number of shares of Common Stock of the
corporation into which their shares of Series D Stock are convertible as of the
record date fixed for the determination of the holders of Common Stock of the
corporation entitled to receive such Distribution.

                    (iii)     Recapitalizations. If at any time or from time to
time there shall be a recapitalization of the Common Stock (other than a
subdivision, combination or merger or a sale of assets transaction provided for
elsewhere in this Section) provision shall be made so that the holders of the
Series D Stock shall thereafter be entitled to receive upon conversion of shares
of the Series D Stock the number of shares of stock or other securities or
property of the corporation or otherwise, to which a holder of Common stock
deliverable upon conversion would have been entitled on such recapitalization.
In any such case, appropriate adjustment shall be made in the application of the
provisions of this Section 2.5.4 with respect to the rights of the holders of
the Series D Stock after the recapitalization to the end that the provisions of
this Section 2.5.4 (including adjustment of the Conversion Price then in effect
and the number of shares purchasable upon conversion of shares of the Series D
Stock) shall be applicable after that event as nearly equivalent as may be
practicable.

                    (iv)      Successive Chances. The above provisions of this
Section shall similarly apply to successive issuances, sales, dividends or other
Distributions, subdivisions and combinations on or of the Common Stock after the
Issuance Date.

                    (v)       Other Events Altering Conversion Price. Upon the
occurrence of any event not specifically denominated in this Section 2.5.4 as
reducing the Conversion Price that, in the reasonable exercise of the business
judgment of the Board of Directors of the corporation requires, on equitable
principles, the reduction of the Conversion Price, the Conversion Price will be
equitably reduced.

                    (vi)      No Impairment. The corporation will not, by
amendment of the Restated Articles of Incorporation, this Designation or through
any reorganization, recapitalization, transfer or assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this Section and in the
taking of all such action as may be necessary or appropriate in order to protect
the conversion rights of the holders of the Series D Stock against impairment.


                                      -21-
   22

                    (vii)     Miscellaneous Conversion Price Matters. The
corporation shall at all times reserve and keep available out of its authorized
but unissued Common Stock the full number of shares of Common Stock deliverable
upon conversion of all the then outstanding Series D Stock and shall, at its own
expense, take all such actions and obtain all such permits orders as may be
necessary to enable the corporation lawfully to issue such Common Stock upon the
conversion of the Series D Stock.

                    (viii)    Excluded Events. Notwithstanding anything in this
Section 2.5.4 to the contrary, the Conversion Price shall not be adjusted by
virtue of (i) the conversion of shares of the Series D Stock into shares of
Common Stock, (ii) the repurchase of shares from the corporation's employees,
consultants, officers or directors at such person's cost, or (iii) the issuance
and sale of, or the grant of options to purchase or acquire through the receipt
of Convertible Securities, shares of Common Stock, and none of such shares shall
be included in any manner in the computation from time to time of the Conversion
Price under paragraph (c) or in Common Stock Outstanding for purposes of such
computation.

                    (ix)      No Fractional Shares. No fractional shares shall
be issued upon conversion of shares of the Series D Stock and the number of
shares of Common Stock to be issued shall be rounded to the nearest whole share.
Whether or not fractional shares are issuable upon such conversion shall be
determined on the basis of the total number of shares of the Series D Stock the
holder is at the time converting into Common Stock and the number of shares of
Common Stock issuable upon such aggregate conversion.

                    (x)       Certificate as to Adjustments. Upon the occurrence
of each adjustment or readjustment of the Conversion Price of the Series D Stock
pursuant to this Section 2.5.4, the corporation, at its expense upon request by
any holder of Series D Stock shall compute such adjustment or readjustment in
accordance with the terms hereof and prepare and furnish to each holder of
Series D Stock a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
The corporation shall, upon the written request at any time of any holder of
Series D Stock furnish or cause to be furnished to such holder a like
certificate setting forth (A) such adjustment and readjustment, (B) the Current
Conversion Price at the time in effect, and (C) the number of shares of Common
Stock and the amount, if any, of other property which at the time would be
received upon the conversion of a share of Series D Stock.

               (d)  Automatic Conversion. Immediately upon the effectiveness of
the corporation's registration statement on Form S-1 pursuant to which Common
Stock is sold to the public by the corporation (or selling shareholders, if any)
in a


                                      -22-
   23

public offering registered under the Securities Act of 1933, as amended, (or the
equivalent registration or qualification for sale to the public under the laws
of any province of Canada) and which the aggregate public offering price is
greater than $5,000,000 or the equivalent amount in Canadian currency), each
share of Series D Stock shall automatically be converted into shares of Common
Stock at the Conversion Price for the Series D Stock then in effect. On and
after said conversion date, notwithstanding that any certificates for the shares
of the Sales D Stock shall not have been surrendered for conversion, the shares
of the Series D Stock evidenced thereby shall be deemed to be no longer
outstanding, and all rights with respect thereto shall forthwith cease and
terminate, except only the rights of the holder (i) to receive the shares of
Common Stock to which he shall be entitled upon conversion thereof, (ii) to
receive the amount of cash payable in respect of any fractional share of Common
Stock to which he shall be entitled, and (iii) with respect to dividends
declared but unpaid on the Series D Stock prior to such conversion date. In the
event that any holder of Series D Stock presents such holder's certificate
therefor for surrender to the Company or its transfer agent upon such
conversion, a certificate for the number of shares of Common Stock into which
the shares of the Series D Stock surrendered were convertible on such conversion
date promptly will be issued and delivered to such holder.

2.6     DESIGNATION OF RIGHTS AND PREFERENCES OF SERIES E PREFERRED STOCK

        Pursuant to the Act and authority of the Board of Directors , there is
hereby designated a series of convertible preferred stock to be known as Series
E Convertible Preferred Stock, each share having the following rights and
preferences:

        The shares of the series shall be designated as Series E Convertible
Preferred Stock ("Series E Stock") and the number of shares constituting such
series shall be 250,000.

               2.6.1     DIVIDENDS

        Dividends shall be declared and set aside for any shares of Series E
Stock only upon resolution of the Board of Directors; provided that no cash
dividends shall be declared on the Common Stock unless and until a cash dividend
in an amount equal to or greater than the dividend declared on the Common Stock
shall have been paid to, or declared and a sum sufficient for the payment
thereof set apart for, the Series E Stock.


                                      -23-
   24

               2.6.2     LIQUIDATION RIGHTS

        Upon the voluntary or involuntary dissolution, liquidation or winding up
of the corporation, the assets of the corporation available for distribution to
its shareholders shall be distributed in the following order and amounts:

               (a) General. After the Series A Liquidation Amount, the Series C
Liquidation Amount, the Series B Liquidation Amount and the Series D Liquidation
Amount have been paid in full, the holders of shares of Series E Stock and the
holders of shares of Series F Stock (as defined in Section 2.7) shall be
entitled to receive, before any amount shall be paid to holders of Common Stock,
(i) in the case of Series E Stock, an amount per share equal to Fifty Dollars
($50.00), plus any declared but unpaid dividend per share on outstanding shares
of Series E Stock (the "Series E Liquidation Amount") and (ii) in the case of
Series F Stock, an amount per share equal to One Hundred Twenty Dollars
($120.00), plus any declared but unpaid dividend per share on outstanding shares
of Series F Stock (the "Series F Liquidation Amount"). After the Series A
Liquidation Amount, the Series C Liquidation Amount, the Series B Liquidation
Amount, the Series D Liquidation Amount, the Series E Liquidation Amount and the
Series F Liquidation Amount have been paid in full, the holders of shares of
Common Stock shall be entitled to receive the Common Liquidation Amount. If the
assets of the corporation shall be insufficient, after payment in full of the
Series A Liquidation Amount, the Series C Liquidation Amount, the Series B
Liquidation Amount and the Series D Liquidation Amount, to permit the payment in
full of the Series E Liquidation Amount and the Series F Liquidation Amount, the
remaining assets of the Corporation available for distribution to holders of
Series E Stock and holders of Series F Stock shall be distributed ratably among
such holders in the same proportions as the aggregate of the Series E
Liquidation Amount and the Series F Liquidation Amount each such holder would
otherwise be entitled to receive bears to the total aggregate Series E
Liquidation Amount and Series F Liquidation Amount that would otherwise be
payable to all such holders.

               (b) Limitation. Upon the completion of the distributions
contemplated pursuant to Paragraph (a), if assets remain in the corporation,
such remaining assets shall be distributed ratably to the holders of Common
Stock and all issued and outstanding Preferred Stock.

               (c) Sale of Assets or Merger. A sale of all or substantially all
of the corporation's assets or the acquisition of the corporation by another
entity by reason of merger or consolidation shall be deemed to be a dissolution,
liquidation or winding up of the corporation.


                                      -24-
   25

               2.6.3     VOTING

        Except as otherwise provided in the corporation's Restated Articles of
Incorporation or as required by law, the holders of the Series E Stock shall be
entitled to notice of any shareholders' meeting and to vote on all matters
submitted to shareholders for a vote. The holders of the Series E Stock shall be
entitled to that number of votes equal to the number of shares of Common Stock
into which the number of shares of Series E Stock held is convertible, pursuant
to Section 2.6.4(b), at the record date for the determination of shareholders
entitled to vote on such matter, or, if no such record date is established, at
the date on which notice of the meeting of shareholders at which the vote is to
be taken is mailed, or the date any written consent of shareholders is solicited
if the vote is not to be taken at a meeting. Except as otherwise expressly
provided in the corporation's Restated Articles of Incorporation or as required
by law, the holders of shares of all issued and outstanding Preferred Stock and
Common Stock shall vote together as a single class on all matters.

               2.6.4     CONVERSION TO COMMON STOCK

        The Series E Stock shall be convertible into Common Stock of the
corporation as follows:

               (a)  Definitions. For purposes of this Section the following
definitions shall apply:

                    (i)       "Issuance Date" for the Series E Stock shall mean
the first date on which the corporation issues any shares of the Series E Stock.

                    (ii)      "Conversion Price" shall mean the price,
determined pursuant to this Section, at which shares of Common Stock shall be
deliverable upon conversion of the Series E Stock.

                    (iii)     "Current Conversion Price" shall mean the
Conversion Price immediately before the occurrence of any event, which, pursuant
to Section 2.6.4(c), causes an adjustment to the Conversion Price.

                    (iv)      "Convertible Securities" shall mean any
indebtedness or shares of stock convertible into or exchangeable for Common
Stock, including the Series E Stock.

                    (v)       "Options" shall mean any rights, warrants or
options to subscribe for or purchase Common Stock or Convertible Securities.


                                      -25-
   26

                    (vi)      "Common Stock Outstanding" shall mean the
aggregate of all Common Stock outstanding and all Common Stock issuable upon
exercise of all outstanding Options and conversion of all outstanding
Convertible Securities.

                    (vii)     "Distribution" shall have the meaning of the term
"distribution to its shareholders" set forth in RCW 23B.0l.400(6) as in effect
on the date of filing of this Designation.

                    (viii)    "Common Stock Equivalents" shall mean Convertible
Securities and rights entitling the holder thereof to receive directly, or
indirectly, additional shares of Common Stock without the payment of any
consideration by such holder for such additional shares of Common Stock or
Common Stock Equivalents.

                    (ix)      "Original Issue Price" shall mean the per share
price of the first offering of the shares.

               (b)  Right to Convert; Initial Conversion Price. Each holder of
the Series E Stock may, at any time more than twelve (12) months after the
Initial Date (as defined in Section 2.6.4(d) below) for each share of Series E
Stock held, convert any or all of such Series E Stock into fully-paid and
non-assessable shares of Common Stock at the Conversion Price. Each share of
Series E Stock shall be convertible into the number of shares of Common Stock
that results from dividing the Conversion Price in effect at the time of
conversion into the Series E Liquidation Amount for each share of Series E Stock
being converted; the Conversion Price shall initially be $4.50 per share for the
Series E Stock. The initial Conversion Price shall be subject to adjustment from
time to time in certain instances as hereinafter provided. No adjustments with
respect to conversion shall be made on account of any dividends that may be
declared but unpaid on the Series E Stock surrendered for conversion, but no
dividends shall thereafter be paid on the Common Stock unless such unpaid
dividends have first been paid to the holders entitled to payment at the time of
conversion of the Series E Stock.

               Before any holder of Series E Stock shall be entitled to convert
the same into Common Stock, he shall surrender the certificate or certificates
therefor, duly endorsed, to the office of the corporation or any transfer agent
for the Series E Stock and shall give written notice to the corporation at such
office that he elects to convert the same. The corporation shall, as soon as
practicable thereafter, issue and deliver at such office to such holder of
Series E Stock, or to his nominee or nominees, certificates for the number of
full shares of Common Stock to which he shall be entitled, together with cash in
lieu of any fraction of a share as hereinafter provided, and, if less than all
of the shares of the Series E Stock represented by such certificate are
converted, a certificate representing the shares of the Series E Stock not
converted.


                                      -26-
   27

Such conversion shall be deemed to have been made as of the date of such
surrender of the certificate for the Series E Stock to be converted, and the
person or persons entitled to receive the Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such Common Stock on such date. If the conversion is in connection with an offer
of securities registered pursuant to the Securities Act of 1933, as amended, the
conversion may, at the option of any holder tendering the Series E Stock for
conversion, be conditioned upon the closing of the sale of securities pursuant
to such offering, in which event the person(s) entitled to receive the Common
Stock issuable upon such conversion of the Series E Stock shall not be deemed to
have converted the Series E Stock until immediately prior to the closing of such
sale of securities.

               (c)  Adjustments to Conversion Price. The Conversion Price in
effect from time to time for the Series E Stock shall be subject to adjustment
in certain cases as follows:

                    (i)       Stock Splits, Dividends Distributions and
Combinations. In the event the corporation should at any time or from time to
time after the Issuance Date fix a record date for the effectuation of a split
or subdivision of the outstanding shares of Common Stock or the determination of
holders of Common Stock entitled to receive a dividend payable in additional
shares of Common Stock or Common Stock Equivalents, then, following such record
date (or the date of such dividend, split or subdivision if no record date is
fixed), the Conversion Price of the Series E Stock shall be appropriately
decreased so that the number of shares of Common Stock issuable on conversion of
each share of the Series E Stock shall be increased in proportion to such
increase in the number of outstanding shares of Common Stock (including for this
purpose, Common Stock Equivalents). If the number of shares of Common Stock
outstanding at any time after the Issuance Date is decreased by a combination of
the outstanding shares of Common Stock, then, following the record date of such
combination, the Conversion Price for the Series E Stock shall be appropriately
increased so that the number of shares of Common Stock issuable on conversion of
each share of the Series E Stock shall be decreased in proportion to such
decrease in the number of outstanding shares of Common Stock.

                    (ii)      Other Dividends. In the event the Corporation
shall declare a Distribution payable in securities of other persons, evidences
of indebtedness issued by the corporation or other persons, assets (excluding
cash dividends) or options or rights not referred to in Section
2.6.4(c)(viii)(C) then, in each such case for the purpose of this Section
2.6.4(c)(ii) shall be entitled to a proportionate share of any such Distribution
as though they were the holders of the number of shares of Common Stock of the
corporation into which their shares of Series E Stock are convertible as of


                                      -27-
   28

the record date fixed for the determination of the holders of Common Stock of
the corporation entitled to receive such Distribution.

                    (iii)     Recapitalizations. If at any time or from time to
time there shall be a recapitalization of the Common Stock (other than a
subdivision, combination or merger or a sale of assets transaction provided for
elsewhere in this Section 2.6.4) provision shall be made so that the holders of
the Series E Stock shall thereafter be entitled to receive upon conversion of
shares of the Series E Stock the number of shares of stock or other securities
or property of the corporation or otherwise, to which a holder of Common stock
deliverable upon conversion would have been entitled on such recapitalization.
In any such case, appropriate adjustment shall be made in the application of the
provisions of this Section 2.6.4 with respect to the rights of the holders of
the Series E Stock after the recapitalization to the end that the provisions of
this Section (including adjustment of the Conversion Price then in effect and
the number of shares purchasable upon conversion of shares of the Series E
Stock) shall be applicable after that event as nearly equivalent as may be
practicable.

                    (iv)      Successive Chances. The above provisions of this
Section shall similarly apply to successive issuances, sales, dividends or other
Distributions, subdivisions and combinations on or of the Common Stock after the
Issuance Date.

                    (v)       Other Events Altering Conversion Price. Upon the
occurrence of any event not specifically denominated in this Section 2.6.4 as
reducing the Conversion Price that, in the reasonable exercise of the business
judgment of the Board of Directors of the Corporation requires, on equitable
principles, the reduction of the Conversion Price, the Conversion Price will be
equitably reduced.

                    (vi)      No Impairment. The corporation will not, by
amendment of the Restated Articles of Incorporation, this Designation or through
any reorganization, recapitalization, transfer or assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this Section 2.6.4 and in
the taking of all such action as may be necessary or appropriate in order to
protect the conversion rights of the holders of the Series E Stock against
impairment.

                    (vii)     Miscellaneous Conversion Price Matters. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued Common Stock the full number of shares of Common Stock deliverable
upon conversion of all the then outstanding Series E Stock and shall, at its own
expense, take all such actions and obtain all such permits and orders as may be

                                      -28-
   29

necessary to enable the corporation lawfully to issue such Common Stock upon the
conversion of the Series E Stock.

                    (viii)    Excluded Events. Notwithstanding anything in this
Section to the contrary, the Conversion Price shall not be adjusted by virtue of
(A) the conversion of shares of the Series E Stock into shares of Common Stock,
(B) the repurchase of shares from the Corporation's employees, consultants,
officers or directors at such person's cost, or (C) the issuance and sale of, or
the grant of options to purchase or acquire through the receipt of Convertible
Securities, shares of Common Stock, and none of such shares shall be included in
any manner in the computation from time to time of the Conversion Price under
Section 2.6.4(c) or in Common Stock Outstanding for purposes of such
computation.

                    (ix)      No Fractional Shares. No fractional shares shall
be issued upon conversion of shares of the Series E Stock and the number of
shares of Common Stock to be issued shall be rounded to the nearest whole share.
Whether or not fractional shares are issuable upon such conversion shall be
determined on the basis of the total number of shares of the Series E Stock the
holder is at the time converting into Common Stock and the number of shares of
Common Stock issuable upon such aggregate conversion.

                    (x)       Certificate as to Adjustments. Upon the occurrence
of each adjustment or readjustment of the Conversion Price of the Series E Stock
pursuant to this Section, the Corporation, at its expense upon request by any
holder of Series E Stock, shall compute such adjustment or readjustment in
accordance with the terms hereof and prepare and furnish to each holder of
Series E Stock a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
The Corporation shall, upon the written request at any time of any holder of
Series E Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (A) such adjustment and readjustment, (B) the Current
Conversion Price at the time in effect, and (C) the number of shares of Common
Stock and the amount, if any, of other property which at the time would be
received upon the conversion of a share of Series E Stock.

               (d)  Automatic Conversion. Immediately upon the effectiveness of
the corporation's registration statement on Form S-1 pursuant to which Common
Stock is sold to the public by the corporation (or selling shareholders, if any)
in a public offering registered under the Securities Act of 1933, as amended,
(or the equivalent registration or qualification for sale to the public under
the laws of any province of Canada) and which the aggregate public offering
price is greater than $5,000,000 (or the equivalent amount in Canadian
currency), each share of Series E Stock shall automatically be converted into
shares of Common Stock:


                                      -29-
   30

                    (i)       at the Conversion Price for the Series E Stock
then in effect, as calculated pursuant to Sections 2.6.4(b) and 2.6.4(c), if the
effectiveness of such registration statement is more than twelve (12) months
after the Initial Date and

                    (ii)      at the Conversion Price that is the lesser of (A)
Five Dollars ($5.00) per share and (B) the amount determined by the following
table, if the effectiveness of such registration statement is within twelve (12)
months of the Initial Date:



If said registration statement becomes                    Conversion Price will be y
effective                                                 percent of the public offering
within x months of the Initial Date                       price
--------------------------------------                    ------------------------------
                                                       
               x = 4                                                  y = 75

               x = 6                                                  y = 74

               x = 8                                                  y = 73

               x = 10                                                 y = 72

               x = 12                                                 y = 71


               The Initial Date shall be the date on which such shares of Series
E Stock were initially issued by the corporation. The Conversion Price set forth
in Section 2.6.4(d)(ii) shall not be adjusted by Section 2.6.4(c)(i). The
Conversion Price set forth in Section 2.6.4(d)(ii) shall not be used in the
calculation of voting rights pursuant to Section 2.6.3.

               On and after said conversion date, notwithstanding that any
certificates for the shares of the Series E Stock shall not have been
surrendered for conversion, the shares of the Series E Stock evidenced thereby
shall be deemed to be no longer outstanding, and all rights with respect thereto
shall forthwith cease and terminate, except only the rights of the holder (A) to
receive the shares of Common Stock to which he shall be entitled upon conversion
thereof, (B) to receive the amount of cash payable in respect of any fractional
share of Common Stock to which he shall be entitled, and (C) with respect to
dividends declared but unpaid on the Series E Stock prior to such conversion
date. In the event that any holder of Series E Stock presents such holder's
certificate therefor for surrender to the corporation or its transfer agent upon
such conversion, a certificate for the number of shares of Common Stock into
which the shares of the Series E Stock surrendered were convertible on such
conversion date promptly will be issued and delivered to such holder.


                                      -30-
   31

2.7     DESIGNATION OF RIGHTS AND PREFERENCES OF SERIES F PREFERRED STOCK

        Pursuant to the Act and authority of the Board of Directors, there is
hereby designated a series of convertible preferred stock to be known as Series
F Convertible Preferred Stock, each share having the following rights and
preferences:

        The shares of the series shall be designated as Series F Convertible
Preferred Stock ("Series F Stock") and the number of shares constituting such
series shall be 150,000.

               2.7.1     DIVIDENDS

        Dividends shall be declared and set aside for any shares of Series F
Stock only upon resolution of the Board of Directors; provided that no cash
dividends shall be declared on the Common Stock unless and until a cash dividend
in an amount equal to or greater than the dividend declared on the Common Stock
shall have been paid to, or declared and a sum sufficient for the payment
thereof set apart for, the Series F Stock.

               2.7.2     LIQUIDATION RIGHTS

        Upon the voluntary or involuntary dissolution, liquidation or winding up
of the corporation, the assets of the corporation available for distribution to
its shareholders shall be distributed in the following order and amounts:

               (a) General. After the Series A Liquidation Amount, the Series C
Liquidation Amount, the Series B Liquidation Amount, the Series D Liquidation
Amount and the Series E Liquidation Amount have been paid in full, the holders
of shares of Series F Stock shall be entitled to receive, before any amount
shall be paid to holders of Common Stock , an amount per share equal to One
Hundred Twenty Dollars ($120.00), plus any declared but unpaid dividend per
share on outstanding shares of Series F Stock (the "Series F Liquidation
Amount"). After the Series A Liquidation Amount, the Series C Liquidation
Amount, the Series B Liquidation Amount, the Series D Liquidation Amount, the
Series E Liquidation Amount and the Series F Liquidation Amount have been paid
in full, the holders of shares of Common Stock shall be entitled to receive the
Common Liquidation Amount. If the assets of the Corporation shall be
insufficient, after payment in full of the Series A Liquidation Amount, the
Series C Liquidation Amount, the Series B Liquidation Amount, the Series D
Liquidation Amount and the Series E Liquidation Amount, to permit the payment in
full of the Series F Liquidation Amount, the remaining assets of the Corporation
available for distribution to holders of Series F Stock shall be distributed
ratably among the holders of the Series F Stock in the same proportions as the
aggregate of the Series F Liquidation Amount each such holder would otherwise be


                                      -31-
   32

entitled to receive bears to the total Series F Liquidation Amount that would
otherwise be payable to all such holders.

               (b)  Limitation. Upon the completion of the distributions
contemplated pursuant to Section 2.7.2(a), if assets remain in the corporation,
such remaining assets shall be distributed ratably to the holders of Common
Stock and all issued and outstanding Preferred Stock.

               (c)  Sale of Assets or Merger. A sale of all or substantially all
of the corporation's assets or the acquisition of the corporation by another
entity by reason of merger or consolidation shall be deemed to be a dissolution,
liquidation or winding up of the corporation.

               2.7.3.    VOTING

               (a)  General. Except as otherwise provided in the corporation's
Restated Articles of Incorporation or as required by law, the holders of the
Series F Stock shall be entitled to notice of any shareholders' meeting and to
vote on all matters submitted to shareholders for a vote. The holders of the
Series F Stock shall be entitled to that number of votes equal to the number of
shares of Common Stock into which the number of shares of Series F Stock held is
convertible, pursuant to Section 2.7.4(b), at the record date for the
determination of shareholders entitled to vote on such matter, or, if no such
record date is established, at the date on which notice of the meeting of
shareholders at which the vote is to be taken is mailed, or the date any written
consent of shareholders is solicited if the vote is not to be taken at a
meeting. Except as otherwise expressly provided in the corporation's Restated
Articles of Incorporation or as required by law, the holders of shares of all
issued and outstanding Preferred Stock and Common Stock shall vote together as a
single class on all matters.

               (b)  Election of Directors. The holders of the Series F Stock,
voting as a separate class, shall be entitled to elect one director of the
corporation. The provisions of this Section 2.7.3(b) shall expire and be of no
further force or effect upon the conversion of all of the outstanding shares of
Series F Stock pursuant to the provisions of Section 2.7.4 hereof. In the case
of any vacancy in the office of a director elected by the holders of the Series
F Stock, a successor shall be elected to hold office for the unexpired term of
such director by the affirmative vote of a majority of the holders of the Series
F Stock given at a special meeting of such shareholders duly called for or by
action by written consent for that purpose. Any director who shall have been
elected by the holders of the Series F Stock may be removed during the aforesaid
term of office, either for or without cause, by, and only by, the affirmative
vote of the holders of a majority of the Series F Stock, given at a


                                      -32-
   33

special meeting of such shareholders duly called or by any action by written
consent for that purpose, and any such vacancy thereby created, may be filled by
the vote of the holders of a majority of the Series F Stock represented at such
meeting or in such consent.

               2.7.4     CONVERSION TO COMMON STOCK

        The Series F Stock shall be convertible into Common Stock of the
Corporation as follows:

               (a)  Definitions. For purposes of this Section 2.7.4 the
following definitions shall apply:

                    (i)       "Issuance Date" for the Series F Stock shall mean
the first date on which the Corporation issues any shares of the Series F Stock.

                    (ii)      "Conversion Price" shall mean the price,
determined pursuant to this Section 2.7.4, at which shares of Common Stock shall
be deliverable upon conversion of the Series F Stock.

                    (iii)     "Current Conversion Price" shall mean the
Conversion Price immediately before the occurrence of any event, which, pursuant
to Section 2.7.4 (c), causes an adjustment to the Conversion Price.

                    (iv)      "Convertible Securities" shall mean any
indebtedness or shares of stock convertible into or exchangeable for Common
Stock, including the Series F Stock.

                    (v)       "Options" shall mean any rights, warrants or
options to subscribe for or purchase Common Stock or Convertible Securities.

                    (vi)      "Common Stock Outstanding" shall mean the
aggregate of all Common Stock outstanding and all Common Stock issuable upon
exercise of all outstanding Options and conversion of all outstanding
Convertible Securities.

                    (vii)     "Distribution" shall have the meaning of the term
"distribution to its shareholders" set forth in RCW 23B.0l.400(6) as in effect
on the date of filing of this Designation.

                    (viii)    "Common Stock Equivalents" shall mean Convertible
Securities and rights entitling the holder thereof to receive directly, or
indirectly, additional shares of Common Stock without the payment of any
consideration by such holder for such additional shares of Common Stock or
Common Stock Equivalents.


                                      -33-
   34

                    (ix)      "Original Issue Price" shall mean the per share
price of the first offering of the shares.

               (b)  Right to Convert; Initial Conversion Price. Each holder of
the Series F Stock may, at any time, convert any or all of such Series F Stock
into fully-paid and non-assessable shares of Common Stock at the Conversion
Price. Each share of Series F Stock shall be convertible into the number of
shares of Common Stock that results from dividing the Conversion Price in effect
at the time of conversion into the Series F Liquidation Amount for each share of
Series F Stock being converted; the Conversion Price shall initially be $5.00
per share for the Series F Stock. The initial Conversion Price shall be subject
to adjustment from time to time in certain instances as hereinafter provided. No
adjustments with respect to conversion shall be made on account of any dividends
that may be declared but unpaid on the Series F Stock surrendered for
conversion, but no dividends shall thereafter be paid on the Common Stock unless
such unpaid dividends have first been paid to the holders entitled to payment at
the time of conversion of the Series F Stock.

               Before any holder of Series F Stock shall be entitled to convert
the same into Common Stock, he shall surrender the certificate or certificates
therefor, duly endorsed, to the office of the corporation or any transfer agent
for the Series F Stock and shall give written notice to the corporation at such
office that he elects to convert the same. The corporation shall, as soon as
practicable thereafter, issue and deliver at such office to such holder of
Series F Stock, or to his nominee or nominees, certificates for the number of
full shares of Common Stock to which he shall be entitled, together with cash in
lieu of any fraction of a share as hereinafter provided, and, if less than all
of the shares of the Series F Stock represented by such certificate are
converted, a certificate representing the shares of the Series F Stock not
converted. Such conversion shall be deemed to have been made as of the date of
such surrender of the certificate for the Series F Stock to be converted, and
the person or persons entitled to receive the Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such Common Stock on such date. If the conversion is in connection with an offer
of securities registered pursuant to the Securities Act of 1933, as amended, the
conversion may, at the option of any holder tendering the Series F Stock for
conversion, be conditioned upon the closing of the sale of securities pursuant
to such offering, in which event the person(s) entitled to receive the Common
Stock issuable upon such conversion of the Series F Stock shall not be deemed to
have converted the Series F Stock until immediately prior to the closing of such
sale of securities.


                                      -34-
   35

               (c)  Adjustments to Conversion Price. The Conversion Price in
effect from time to time for the Series F Stock shall be subject to adjustment
in certain cases as follows:

                    (i)       Stock Splits, Dividends Distributions and
Combinations. In the event the corporation should at any time or from time to
time after the Issuance Date fix a record date for the effectuation of a split
or subdivision of the outstanding shares of Common Stock or the determination of
holders of Common Stock entitled to receive a dividend payable in additional
shares of Common Stock or Common Stock Equivalents, then, following such record
date (or the date of such dividend, split or subdivision if no record date is
fixed), the Conversion Price of the Series F Stock shall be appropriately
decreased so that the number of shares of Common Stock issuable on conversion of
each share of the Series F Stock shall be increased in proportion to such
increase in the number of outstanding shares of Common Stock (including for this
purpose, Common Stock Equivalents). If the number of shares of Common Stock
outstanding at any time after the Issuance Date is decreased by a combination of
the outstanding shares of Common Stock, then, following the record date of such
combination, the Conversion Price for the Series F Stock shall be appropriately
increased so that the number of shares of Common Stock issuable on conversion of
each share of the Series F Stock shall be decreased in proportion to such
decrease in the number of outstanding shares of Common Stock.

                    (ii)      Other Dividends. In the event the corporation
shall declare a Distribution payable in securities of other persons, evidences
of indebtedness issued by the corporation or other persons, assets (excluding
cash dividends) or options or rights not referred to in Section
2.7.4(c)(viii)(C) then, in each such case for the purpose of this Section
2.7.4(c)(ii), the holders of Series F Stock shall be entitled to a proportionate
share of any such Distribution as though they were the holders of the number of
shares of Common Stock of the corporation into which their shares of Series F
Stock are convertible as of the record date fixed for the determination of the
holders of Common Stock of the corporation entitled to receive such
Distribution.

                    (iii)     Recapitalizations. If at any time or from time to
time there shall be a recapitalization of the Common Stock (other than a
subdivision, combination or merger or a sale of assets transaction provided for
elsewhere in this Section 2.7.4) provision shall be made so that the holders of
the Series F Stock shall thereafter be entitled to receive upon conversion of
shares of the Series F Stock the number of shares of stock or other securities
or property of the corporation or otherwise, to which a holder of Common stock
deliverable upon conversion would have been entitled on such recapitalization.
In any such case, appropriate adjustment shall be made in the application of the
provisions of this Section 2.7.4 with respect to the rights of the holders of
the Series F Stock after the recapitalization to the end that


                                      -35-
   36

the provisions of this Section 2.7.4 (including adjustment of the Conversion
Price then in effect and the number of shares purchasable upon conversion of
shares of the Series F Stock) shall be applicable after that event as nearly
equivalent as may be practicable.

                    (iv)      Successive Chances. The above provisions of this
Section 2.7.4 shall similarly apply to successive issuances, sales, dividends or
other Distributions, subdivisions and combinations on or of the Common Stock
after the Issuance Date.

                    (v)       Other Events Altering Conversion Price. Upon the
occurrence of any event not specifically denominated in this Section 2.7.4 as
reducing the Conversion Price that, in the reasonable exercise of the business
judgment of the Board of Directors of the corporation requires, on equitable
principles, the reduction of the Conversion Price, the Conversion Price will be
equitably reduced.

                    (vi)      No Impairment. The corporation will not, by
amendment of the Restated Articles of Incorporation, this Designation or through
any reorganization, recapitalization, transfer or assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the Corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this Section 2.7.4 and in
the taking of all such action as may be necessary or appropriate in order to
protect the conversion rights of the holders of the Series F Stock against
impairment.

                    (vii)     Miscellaneous Conversion Price Matters. The
corporation shall at all times reserve and keep available out of its authorized
but unissued Common Stock the full number of shares of Common Stock deliverable
upon conversion of all the then outstanding Series F Stock and shall, at its own
expense, take all such actions and obtain all such permits and orders as may be
necessary to enable the corporation lawfully to issue such Common Stock upon the
conversion of the Series F Stock.

                    (viii)    Excluded Events. Notwithstanding anything in this
Section 2.7.4 to the contrary, the Conversion Price shall not be adjusted by
virtue of (A) the conversion of shares of the Series F Stock into shares of
Common Stock, (B) the repurchase of shares from the corporation's employees,
consultants, officers or directors at such person's cost, or (C) the issuance
and sale of, or the grant of options to purchase or acquire through the receipt
of Convertible Securities, shares of Common Stock, and none of such shares shall
be included in any manner in the computation from time to time of the Conversion
Price under Section 2.7.4(c) or in Common Stock Outstanding for purposes of such
computation.


                                      -36-
   37

                    (ix)      No Fractional Shares. No fractional shares shall
be issued upon conversion of shares of the Series F Stock and the number of
shares of Common Stock to be issued shall be rounded to the nearest whole share.
Whether or not fractional shares are issuable upon such conversion shall be
determined on the basis of the total number of shares of the Series F Stock the
holder is at the time converting into Common Stock and the number of shares of
Common Stock issuable upon such aggregate conversion.

                    (x)       Certificate as to Adjustments. Upon the occurrence
of each adjustment or readjustment of the Conversion Price of the Series F Stock
pursuant to this Section 2.7.4, the corporation, at its expense upon request by
any holder of Series F Stock, shall compute such adjustment or readjustment in
accordance with the terms hereof and prepare and furnish to each holder of
Series F Stock a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
The corporation shall, upon the written request at any time of any holder of
Series F Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (A) such adjustment and readjustment, (B) the Current
Conversion Price at the time in effect, and (C) the number of shares of Common
Stock and the amount, if any, of other property which at the time would be
received upon the conversion of a share of Series F Stock.

               (d)  Automatic Conversion. Immediately upon the effectiveness of
the corporation's registration statement on Form S-1 pursuant to which Common
Stock is sold to the public by the corporation (or selling shareholders, if any)
in a public offering registered under the Securities Act of 1933, as amended,
(or the equivalent registration or qualification for sale to the public under
the laws of any province of Canada) and which the aggregate public offering
price is greater than $5,000,000 or (the equivalent amount in Canadian
currency), each share of Series F Stock shall automatically be converted into
shares of Common Stock at the Conversion Price for the Series F Stock then in
effect. On and after said conversion date, notwithstanding that any certificates
for the shares of the Series F Stock shall not have been surrendered for
conversion, the shares of the Series F Stock evidenced thereby shall be deemed
to be no longer outstanding, and all rights with respect thereto shall forthwith
cease and terminate, except only the rights of the holder (i) to receive the
shares of Common Stock to which he shall be entitled upon conversion thereof,
(ii) to receive the amount of cash payable in respect of any fractional share of
Common Stock to which he shall be entitled, and (iii) with respect to dividends
declared but unpaid on the Series F Stock prior to such conversion date. In the
event that any holder of Series F Stock presents such holder's certificate
therefor for surrender to the corporation or its transfer agent upon such
conversion, a certificate for the number of shares of Common Stock into which
the shares of the Series F Stock surrendered were


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convertible on such conversion date promptly will be issued and delivered to
such holder.

2.8     COVENANTS

               2.8.1     SERIES B COVENANTS

        In addition to any other rights provided by law, this corporation shall
not, without first obtaining the affirmative vote or written consent (which vote
or consent need not satisfy statutory requirements for shareholder actions to be
taken by vote or written consent) of the holders of more than fifty percent
(50%) of the outstanding shares of Series B Stock:

               (a)  amend or repeal any provision of, or add any provision to,
this corporation's Restated Articles of Incorporation if such action would
materially alter or change the preferences, rights, privileges, or powers of, or
the restrictions provided for the benefit of, the Series B Stock;

               (b)  increase or decrease the authorized number of shares of
Series B Stock;

               (c)  authorize or issue shares of any class or series of stock
(except Series A Stock) having any preference or priority as to dividends or
liquidation preferences superior to the Series B Stock;

               (d)  reclassify any shares of capital stock of this corporation
into shares having any preference or priority as to dividends or liquidation
preferences superior to the Series B Stock;

               2.8.2     SERIES C COVENANTS

        In addition to any other rights provided by law, the corporation shall
not, without first obtaining the affirmative vote or written consent (which vote
or consent need not satisfy statutory requirements for shareholder actions to be
taken by vote or written consent) of the holders of more than fifty percent
(50%) of the outstanding shares of Series C Stock:

               (a)  amend or repeal any provision of, or add any provision to,
the corporation's Restated Articles of Incorporation if such action would
materially alter or change the preferences, rights, privileges, or powers of, or
the restrictions provided for the benefit of, the Series C Stock;


                                      -38-
   39

               (b)  increase or decrease the authorized number of shares of
Series C Stock;

               (c)  authorize or issue shares of any class or Series of stock
(except Series A Stock) having any preference or priority as to dividends or
liquidation preferences superior to the Series C Stock;

               (d)  reclassify any shares of capital stock of the corporation
into shares having any preference or priority as to dividends or liquidation
preferences superior to the Series C Stock.

               2.8.3     SERIES D COVENANTS

        In addition to any other rights provided by law, the corporation shall
not, without first obtaining the affirmative vote or written consent (which vote
or consent need not satisfy statutory requirements for shareholder actions to be
taken by vote or written consent) of the holders of more than fifty percent
(50%) of the outstanding shares of Series D Stock:

               (a)  amend or repeal any provision of, or add any provision to,
the corporation's Restated Articles of Incorporation if such action would
materially alter or change the preferences, rights, privileges, or powers of, or
the restrictions provided for the benefit of, the Series D Stock;

               (b)  increase or decrease the authorized number of shares of
Series D Stock;

               (c)  authorize or issue shares of any class or series of stock
(except Series A Stock) having any preference or priority as to dividends or
liquidation preferences superior to the Series D Stock;

               (d)  reclassify any shares of capital stock of the corporation
into shares having any preference or priority as to dividends or liquidation
preferences superior to the Series D Stock.

               2.8.4    SERIES E COVENANTS

        In addition to any other rights provided by law, the corporation shall
not, without first obtaining the affirmative vote or written consent (which vote
or consent need not satisfy statutory requirements for shareholder actions to be
taken by vote or written consent) of the holders of more than fifty percent
(50%) of the outstanding shares of Series F Stock:


                                      -39-
   40

               (a) amend or repeal any provision of, or add any provision to,
the corporation's Restated Articles of Incorporation if such action would
materially alter or change the preferences, rights, privileges, or powers of, or
the restrictions provided for the benefit of, the Series F Stock;

               (b)  increase the authorized number of shares of Series F Stock;

               (c) authorize or issue shares of any class or Series of stock
(except Series A Stock) having any preference or priority as to dividends or
liquidation preferences superior to the Series F Stock;

               (d) reclassify any shares of capital stock of the Corporation
into shares having any preference or priority as to dividends or liquidation
preferences superior to the Series F Stock.

               2.8.5     SERIES F COVENANTS

        In addition to any other rights provided by law, the Corporation shall
not, without first obtaining the affirmative vote or written consent (which vote
or consent need not satisfy statutory requirements for shareholder actions to be
taken by vote or written consent) of the holders of more than fifty percent
(50%) of the outstanding shares of Series F Stock:

               (a)  amend or repeal any provision of, or add any provision to,
the corporation's Restated Articles of Incorporation if such action would
materially alter or change the preferences, rights, privileges, or powers of, or
the restrictions provided for the benefit of, the Series F Stock;

               (b)  increase the authorized number of shares of Series F Stock;

               (c)  authorize or issue shares of any class or series of stock
(except Series A Stock) having any preference or priority as to dividends or
liquidation preferences superior to the Series F Stock;

               (d)  reclassify any shares of capital stock of the corporation
into shares having any preference or priority as to dividends or liquidation
preferences superior to the Series F Stock.

2.9     ELIMINATION OF PREFERRED STOCK PROVISIONS UPON CONVERSION OF OUTSTANDING
        SHARES

        When, as a result of the conversion of the outstanding shares of
Preferred Stock into Common Stock, no shares of such Preferred Stock remain
outstanding,


                                      -40-
   41

Sections 2.3, 2.4, 2.5, 2.6, 2.7 and 2.8 of these Amended and Restated Articles
of Incorporation shall no longer be in effect and operative.

                     ARTICLE 3. REGISTERED OFFICE AND AGENT

        The address of the registered office of the corporation is 1201 Third
Avenue, 40th Floor, Seattle, Washington 98101-3099, and the name of the
registered agent at such address is Lawco of Washington, Inc.

                          ARTICLE 4. PREEMPTIVE RIGHTS

        No preemptive rights shall exist with respect to shares of stock or
securities convertible into shares of stock of this corporation.

                          ARTICLE 5. CUMULATIVE VOTING

        The right to cumulate votes in the election of Directors shall not exist
with respect to shares of stock of this corporation.

                              ARTICLE 6. DIRECTORS

        Following an event in which all outstanding shares of Preferred Stock of
this corporation convert into Common Stock (a "Full Conversion Event"), the
number of Directors of this corporation shall be determined, and the Directors
of this corporation shall be elected and removed from office, as provided in
this Article 6.

        The number of Directors of this corporation shall be determined in the
manner provided by the Bylaws and may be increased or decreased from time to
time in the manner provided therein. Prior to the first annual election of
Directors following such a Full Conversion Event, unless a Director earlier
dies, resigns or is removed, his or her term of office shall expire at the next
annual meeting of shareholders. At the first annual election of Directors
following such a Full Conversion Event, the Board of Directors shall be divided
into three classes, with said classes to be as equal in number as may be
possible, with any Director or Directors in excess of the number divisible by
three being assigned to Class 3 and Class 2, as the case may be. At the first
election of Directors to such classified Board of Directors, each Class 1
Director shall be elected to serve until the next ensuing annual meeting of
shareholders, each Class 2 Director shall be elected to serve until the second
ensuing annual meeting of shareholders and each Class 3 Director shall be
elected to serve until the third ensuing annual meeting of


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   42

shareholders. At each annual meeting of shareholders following the meeting at
which the Board of Directors is initially classified, the number of Directors
equal to the number of Directors in the class whose term expires at the time of
such meeting shall be elected to serve until the third ensuing annual meeting of
shareholders. Notwithstanding any of the foregoing provisions of this Article,
Directors shall serve until their successors are elected and qualified or until
their earlier death, resignation or removal from office, or until there is a
decrease in the number of Directors.

        The Directors of this corporation may be removed only for cause; such
removal shall be by the holders of not less than two-thirds of the shares
entitled to elect the Director or Directors whose removal is sought in the
manner provided by the Bylaws.

                                ARTICLE 7. BYLAWS

        The Board of Directors shall have the power to adopt, amend or repeal
the Bylaws of this corporation, subject to the power of the shareholders to
amend or repeal such Bylaws. The shareholders shall also have the power to amend
or repeal the Bylaws of this corporation and to adopt new Bylaws.

                        ARTICLE 8. AMENDMENTS TO ARTICLES

        This corporation reserves the right to amend or repeal any of the
provisions contained in these Amended and Restated Articles of Incorporation in
any manner now or hereafter permitted by law, and the rights of the shareholders
of this corporation are granted subject to this reservation. Following a Full
Conversion Event, the limitations on amendment of these Articles of
Incorporation set forth in Section 8.1, 8.2 and 8.3 shall apply.

8.1.    SUPERMAJORITY VOTING

        Except as provided in Section 8.2 or Section 8.3, the following Articles
may be amended or repealed only upon the affirmative vote of the holders of at
least two-thirds of the outstanding shares entitled to vote thereon and, to the
extent, if any, provided by resolution adopted by the Board authorizing the
issuance of a class or series of Common Stock or Preferred Stock, by the
affirmative vote of the holders of at least two-thirds of the outstanding shares
of such class or series, voting as a separate voting group:

        Article 6 ("Directors")

        Article 8 ("Amendments to Articles of Incorporation")

        Article 9 ("Limitation of Director Liability")

        Article 10 ("Indemnification")


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   43

        Article 11 ("Special Meeting of Shareholders")

8.2.    MAJORITY VOTING

        Notwithstanding the provisions of Section 8.1, and except as provided in
Section 8.3, an amendment or repeal of an Article identified in Section 8.1 that
is approved by a majority of the Continuing Directors (as defined in Section
8.3), voting separately and as a subclass of Directors, shall require the
affirmative vote of the holders of at least a majority of the outstanding shares
entitled to vote thereon and, to the extent, if any, provided by resolution
adopted by the Board of Directors authorizing the issuance of a class or series
of Common Stock or Preferred Stock or required by the provisions of the
Washington Business Corporation Act, by the affirmative vote of the holders of
at least a majority of the outstanding shares of such class or series, voting as
a separate voting group.

8.3.    NO SHAREHOLDER VOTE

        Notwithstanding the provisions of Section 8.1 or 8.2 hereof, if the
amendment or repeal of any Article not identified in Section 8.1 shall have been
approved by a majority of the Continuing Directors, voting separately and as a
subclass of Directors, and if such amendment or repeal is not otherwise required
to be approved by this corporation's shareholders pursuant to the provisions of
the Washington Business Corporation Act or of these Amended and Restated
Articles of Incorporation other than this Article 8, then no vote of the
shareholders of this corporation shall be required for approval of such
amendment or repeal.

8.4     DEFINITION OF "CONTINUING DIRECTOR"

        "Continuing Director" means any member of the Board of Directors who was
a member of the Board of Directors on July 6, 2000 or who is elected to the
Board of Directors after July 6, 2000 upon the recommendation of a majority
of the Continuing Directors voting separately and as a subclass of Directors
on such recommendation.

                   ARTICLE 9. LIMITATION OF DIRECTOR LIABILITY

        To the full extent that the Washington Business Corporation Act, as it
exists on the date hereof or may hereafter be amended, permits the limitation or
elimination of the liability of Directors, a Director of this corporation shall
not be liable to this corporation or its shareholders for monetary damages for
conduct as a Director. Any amendments to or repeal of this Article 9 shall not
adversely affect any right or protection of a Director of this corporation for
or with respect to any acts or omissions of such Director occurring prior to
such amendment or repeal.


                                      -43-
   44

                           ARTICLE 10. INDEMNIFICATION

        This corporation shall indemnify any individual made a party to a
proceeding because that individual is or was a Director of this corporation and
shall advance or reimburse the reasonable expenses incurred by such individual
in advance of final disposition of the proceeding, without regard to the
limitations in RCW 23b.08.510 through 23b.08.550 of the Washington Business
Corporation Act, or any other limitation which may hereafter be enacted to the
extent such limitation may be disregarded if authorized by these amended and
restated articles of incorporation, to the full extent and under all
circumstances permitted by applicable law.

                  ARTICLE 11. SPECIAL MEETINGS OF SHAREHOLDERS

        Following a Full Conversion Event, special meetings of shareholders
shall be called in the manner set forth in this Article 11.

        The Chairman of the Board, the President or the Board of Directors may
call special meetings of the shareholders for any purpose. Further, a special
meeting of the shareholders shall be held if the holders of not less than
twenty-five (25%) percent of all the votes entitled to be cast on any issue
proposed to be considered at such special meeting have dated, signed and
delivered to the Secretary of this corporation, no later than twenty (20) days
prior to the date of such meeting, one or more written demands for such meeting
describing the purpose or purposes for which it is to be held.

              ARTICLE 12. RESTATEMENT OF ARTICLES OF INCORPORATION

        Following a Full Conversion Event, the Board of Directors may, at its
discretion and without a further vote of the shareholders of this corporation,
cause the elimination of the provisions of these Restated Articles of
Incorporation which are no longer operative and in effect by reason of such Full
Conversion Event, including, without limitation, Sections 2.3, 2.4, 2.5, 2.6,
2.7 and 2.8, and make such clerical amendments as are appropriate to effectuate
any amendments to the provisions of these Restated Articles of Incorporation
that become effective upon such Full Conversion Event, by providing for the
filing of restated articles of incorporation setting forth the provisions of
these Restated Articles of Incorporation, as they may be amended, which remain
in effect and operative.

        DATED: July 6, 2000


                                      -44-
   45

                                      EDEN BIOSCIENCE CORPORATION



                                      By: /s/ Jerry L. Butler
                                          ----------------------------------
                                          Jerry L. Butler
                                          President and Chief Executive Officer



















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