DATAMARINE INTERNATIONAL, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 9, 1999
To the Shareholders:
A Special Meeting of the Shareholders (the "Meeting") of DATAMARINE
INTERNATIONAL, INC. (the "Company") will be held on March 9, 1999, at 9:30
a.m. at the offices of Davis, Wright, Tremaine, LLP, 26th Floor, 2600
Century Square, 1501 Fourth Avenue, Seattle, Washington 98101, for the
following purposes:
1. To elect one (1) Director to serve for a term of three years and
until his successor shall be elected and qualified.
2. To consider and vote upon a proposal to change the Company's
state of incorporation from Massachusetts to Washington by a
merger with and into a newly formed wholly-owned Washington
subsidiary.
3. To authorize Ten Million (10,0000,000) shares of Common stock
for the newly formed Washington corporation, the current
Massachusetts corporation has Three Million (3,000,000) shares
of Common stock authorized.
4. To consider and act upon any other business which may properly
come before the Meeting and any adjournments or postponements
thereof
The Board of Directors has fixed the close of business on January 22,
1999 as the record date for the Meeting. All Shareholders of record on that
date are entitled to notice of and to vote at the Meeting and any
adjournments or postponements thereof.
All shareholders are cordially invited to attend the meeting in
person. TO ENSURE THAT YOUR SHARES ARE REPRESENTED AT THE MEETING, PLEASE
FILL IN, SIGN AND RETURN THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE, using
the return envelope which requires no postage if mailed in the United
States.
By Order of the Board of Directors,
DAVID C. THOMPSON
President, CEO and Secretary
Mountlake Terrace, Washington
January 26, 1999
A copy of the Annual Report of Datamarine International, Inc. for the
year ended October 3, 1998 is enclosed herewith.
DATAMARINE INTERNATIONAL, INC.
PROXY STATEMENT
This statement is furnished to shareholders of Datamarine
International, Inc. (the "Company") in connection with the solicitation by
the Board of Directors of proxies to be used at the Special Meeting of
shareholders of the Company (the "Meeting") to be held on March 9, 1999, at
the time and place set forth in the Notice of the Meeting, and at any
adjournments or postponements thereof. The principal executive offices of
the Company are located at 7030 - 220th Street S.W., Mountlake Terrace,
Washington, 98043, telephone (425) 771-2182. The approximate date on which
this Proxy Statement and form of proxy are first being sent to shareholders
is on or about February 1, 1999.
What is the purpose of the meeting?
At the Company's Meeting, shareholders will act upon matters outlined
in the accompanying notice of meeting, including the election of directors,
a change in the Company's state of incorporation and an increase in the
number of authorized shares of Common stock. In addition, the Company's
management will report on the performance of the Company during fiscal 1998
and respond to questions from shareholders.
Who is entitled to vote?
Only shareholders of record at the close of business on the record
date, January 22, 1999, are entitled to receive notice of the Meeting and to
vote the shares of common stock they held on that date at the Meeting, or
any postponement or adjournment of the Meeting. Each outstanding share
entitles its holder to cast one vote on each matter to be voted upon.
What constitutes a quorum?
The holders of a majority in interest of all common stock issued,
outstanding and entitled to vote are required to be present in person or be
represented by proxy at the Meeting in order to constitute a quorum for the
transaction of business. As of the record date, the Company had outstanding
and entitled to vote 1,531,820 shares of common stock with a par value of
$.01 per share. Proxies received but marked as abstentions and broker non-
votes will be included in the calculation of the number of shares considered
present at the meeting.
How do I vote?
If the enclosed proxy is properly executed and returned, it will be
voted in the manner directed by the shareholder. If you are a registered
shareholder and attend the Meeting, you may deliver you completed proxy card
in person. "Street name" shareholders who wish to vote at the Meeting will
need to obtain a proxy form from the institution that holds their shares.
What are the Board's recommendations?
Unless you give other instructions on your proxy card, the persons named
as proxy holders on the proxy card will vote in accordance with the
recommendations of the Board of Directors. The Board's recommendation is
set forth together with the description of each item in this proxy
statement. In summary, the Board recommends a vote:
for the election of the director recommended by the Board of
Directors;
to approve a change in domicile of the Company from Massachusetts to
Washington; and
to authorize Ten Million (10,0000,000) shares of Common stock for the
newly formed Washington corporation, the current Massachusetts corporation
has Three Million (3,000,000) shares of Common stock authorized
With respect to any other matter that properly comes before the
Meeting, the proxy holders will vote as recommended by the Board of
Directors or, if no recommendation is given, in their own discretion.
Can I change my vote after I return my proxy card?
Yes. Any person giving the enclosed form of proxy has the power to
revoke it by voting in person at the Meeting, or by giving written notice of
revocation to the Secretary of the Company at any time before the proxy is
exercised.
What vote is required to approve each item?
Election of Director. The election of the nominee for director will
be decided by plurality vote. In the election of directors, any action
other than a vote for the nominee, including broker non-votes, will have the
effect of a vote withheld with respect to that nominee.
Change in domicile of the Company. The affirmative vote of the
holders of at least two-thirds of the shares of all classes and series of
the Company's outstanding capital stock, voting together as a single class,
is required to approve the change in domicile from Massachusetts to
Washington. With respect to the change of domicile from Massachusetts to
Washington, a broker non-vote or abstention will have the same effect as a
vote against the proposal.
Increase in number of authorized shares of Common Stock. The proposal
to increase the number of authorized shares of Common Stock will be decided
by plurality vote. Any action other than a vote for the proposal, including
broker non-votes, will have the effect of a vote withheld with respect to
the proposal.
The Company will bear the costs of this solicitation. It is expected
that the solicitation will be made primarily by mail, but regular employees
or representatives of the Company (none of whom will receive any extra
compensation for their activities) may also solicit proxies by telephone,
mail and in person and arrange for brokerage houses and their custodians,
nominees and fiduciaries to send proxies and proxy material to their
principals at the expense of the Company.
ITEM 1 - ELECTION OF DIRECTORS
Pursuant to the Articles of Organization of the Company, the Board of
Directors is divided into three classes, with each class as nearly equal in
number as possible. At each annual meeting, one of the classes is elected
for a term of three years. The Company presently has a Board of Directors
of three members. It is proposed that the nominee listed below be elected
to serve for a term of three years commencing on the date of the Meeting and
continuing until his successor is duly elected and qualified or until he
sooner dies, resigns or is removed.
The persons named in the accompanying proxy will vote, unless
authority is withheld, for the election of the nominee named below. If the
nominee should become unavailable for election, which is not anticipated,
the persons named in the accompanying proxy will vote for such substitute as
the Board of Directors may recommend.
Certain information as of January 22, 1999 regarding the nominee and
each director is set forth below, including such individual's age and
principal occupation, a brief account of business experience during at least
the last five years, and directorships held at other publicly held
companies.
<TABLE>
<CAPTION>
Nominated for a term ending in 2002:
Director Position with Company or Principal
Name Age Since Occupation During the Past Five Years
---- --- -------- -------------------------------------
<S> <C> <C> <S>
Stephen W. Frankel 52 1997 Since 1996, self-employed private investor.
From 1988 through 1995, served in various
capacities including President, COO,
Chairman and CEO of RETIX, a
manufacturer of networking products.
<CAPTION>
Serving for a term ending in 2000:
Director Position with Company or Principal
Name Age Since Occupation During the Past Five Years
---- --- -------- -------------------------------------
<S> <C> <C> <S>
Peter D. Brown 50 1991 President and CEO of the Company from
September 1991 through October 1997.
Chairman of the Board of the Company
since December 1995. CEO of the South
Beach Company, a management company,
since 1990. Currently, Vice President and
Treasurer of Gordon & Ferguson, a
manufacturer of men's and boy's outerwear.
From 1974 through 1990, CEO of Heather
Hill Sportswear Co., an apparel company.
<CAPTION>
Serving for a term ending in 2001:
Director Position with Company or Principal
Name Age Since Occupation During the Past Five Years
---- --- -------- -------------------------------------
<S> <C> <C> <S>
David C. Thompson 69 1987 President and CEO of the Company since
October 1997. Secretary and Treasurer of
the Company since March 1996. Principal
Financial and Accounting Officer of the
Company from 1995 to October 1997.
President and CEO of SEA Inc., a wholly
owned subsidiary of the Company.
Previously President and CEO of Stephens
Engineering Associates, Inc., which was
acquired by the Company in 1986.
</TABLE>
INFORMATION CONCERNING THE BOARD OF DIRECTORS
During fiscal 1998 there were five meetings of the Board of Directors
of the Company. All the Directors attended at least 75% of the aggregate of
(1) the total number of meetings of the Board and (2) the total number of
the meeting held by committees of the Board on which they served. The Board
of Directors does not have a nominating committee.
The Company has an Audit Committee which reviews with the Company's
independent auditors the scope of the audit for the year, the results of the
audit when completed and the independent auditor's fees for services
performed. The Audit Committee also recommends independent auditors to the
Board of Directors and reviews with management various matters related to
its internal accounting controls. The present members of the Audit
Committee are Peter D. Brown and Stephen W. Frankel. During fiscal 1998
there were two meetings of the Audit Committee.
The Company has a Management Development Committee/Stock Option
Committee which administers the Company's 1991 Stock Option Plan. The
Management Development Committee/Stock Option Committee is responsible for
reviewing and approving all options granted under the Company's 1991 Stock
Option Plan, and administering, or supervising the administration of the
Plan. The present members of the Management Development Committee/ Stock
Option Committee are Stephen W. Frankel and Peter D. Brown. During fiscal
1998 there were no meetings of the Management Development Committee/Stock
Option Committee.
The Company has a Strategic Planning & Acquisition Committee. The
Strategic Planning & Acquisitions Committee has such powers and authority as
are consistent with the By-Laws of the Company and as may be delegated to
such Committee from time to time by the Board of Directors. The members of
the Strategic Planning & Acquisitions Committee are Peter D. Brown and
Stephen W. Frankel. During fiscal 1998 there were no meetings of the
Strategic Planning & Acquisitions Committee.
Compensation of Directors
How are directors compensated?
Each non-employee director of the Company receives a fee of $500 per
quarter plus $400 for each meeting of the Board of Directors attended. In
addition, each non-employee director who serves on a committee of the Board
receives $300 for each committee meeting attended (other than on the day of
a Board meeting). Directors also receive reimbursement for out-of-pocket
expenses relating to attendance at Board or committee meetings. Effective
March 1996, each non-employee director also receives an immediately
exercisable option to purchase 2,000 shares of the Company's common stock as
of the date of each of the annual meetings of the Board of Directors. Such
options have a per share exercise price equal to the fair market value of
the Company's common stock at the time the option is granted.
PRINCIPAL HOLDERS OF VOTING SECURITIES
Who are the largest owners of the Company's stock? How much stock do the
Company's directors and officers own?
The following table sets forth information regarding the beneficial
ownership (determined in accordance with Rule 13d-3 under the Securities
Exchange Act of 1934, as amended) of the Company's common stock as of
January 22, 1999 (unless otherwise indicated) by (a) each person known by
the Company to beneficially own more than five percent of the outstanding
shares of common stock, (b) each director of the Company who beneficially
owns any shares,(c) each Named Officer (see "Executive Compensation"), and
(d) all directors and officers as a group:
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent
Title of Class of Beneficial Owner Beneficial Ownership(1) of Class
- -------------- ------------------- ----------------------- --------
<S> <C> <C> <C>
Common Stock Peter D. Brown 284,807(2) 18.4%
545 Cedar Lane
Teaneck NJ 07666
Common Stock David C. Thompson 161,109(3) 10.2%
SEA Inc.
7030 - 220th Street S.W.
Mountlake Terrace WA 98043
Common Stock Steven T. Newby 90,500(4) 5.9%
6116 Executive Blvd., Ste. 701
Rockville MD 20852
Common Stock Stephen W. Frankel 135,096(5) 8.7%
909 Via Mirada
Palos Verdes Estates CA 90274
Common Stock Jan Kallshian 53,249(6) 3.5
7030 - 220' Street S.W.
Mountlake Terrace WA 98043
Common Stock All Directors and Executive Officers as a 571,505 35.5%
group (4 persons)
<FN>
<F1> Includes common shares which may be acquired upon exercise of options
to purchase shares from the Company exercisable on or within 60 days
of January 22, 1999.
<F2> Represents 169,937 shares held of record, 12,500 shares subject to
presently exercisable stock options, 21,050 shares held in trust for
Mr. Brown's minor child, 18,564 shares held by a Retirement Plan Trust
for Mr. Brown, and 62,756 shares held in trust for the Company's
Employee Investment Plan for which Mr. Brown serves as a co-trustee.
Mr. Brown disclaims beneficial ownership of the 18,564 shares held by
his Retirement Plan Trust.
<F3> Represents 55,471 shares held of record, 42,882 shares subject to
presently exercisable stock options, and 62,756 shares held in trust
for the Company's Employee Investment Plan for which Mr. Thompson
serves as a co-trustee.
<F4> Based upon the Schedule 13D filed with the SEC by the beneficial owner
on March 25, 1997 and subsequent communication with the beneficial
owner as of January 21, 1999.
<F5> Represents 121,076 shares held of record, 4,000 shares subject to
presently exercisable stock options and 10,020 shares subject to
presently exercisable common stock warrants.
<F6> Represents 46,569 shares held of record and 6,680 shares subject to
presently exercisable common stock warrants.
</FN>
</TABLE>
EXECUTIVE OFFICERS
The names of the executive officers of the Company, their positions
and offices with the Company, and their ages are set forth below.
<TABLE>
<CAPTION>
Name Age Office
<S> <C> <S>
David C. Thompson 69 President and Chief Executive Officer
Jan Kallshian 44 Chief Financial Officer
</TABLE>
David C. Thompson was named President and CEO of the Company in
October 1997. Mr. Thompson has been Secretary and Treasurer of the Company
since March 1996, and served as the Company's Principal Financial and
Accounting Officer from 1995 to October 1997. Mr. Thompson is also
President and CEO of SEA Inc., a wholly owned subsidiary of the Company.
Mr. Thompson was previously President and CEO of Stephens Engineering
Associates, Inc., which was acquired by the Company in 1986.
Jan Kallshian was named Chief Financial Officer of the Company in
October 1997. Since April 1995 Mr. Kallshian has served as a consultant to
the Company which included performing the duties of the Chief Financial
Officer. Mr. Kallshian has over 15 years experience in the high technology
manufacturing industry and has held positions in finance and general
management. Mr. Kallshian is a CPA and was previously with the accounting
firm of Coopers & Lybrand.
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to, earned by,
or paid to the Company's Chief Executive officer and each of the Company's
executive officers (other than the Chief Executive Officer) who served
during the most recent fiscal year (the "Named Executive Officers") for all
services rendered in all capacities to the Company and its subsidiaries for
the Company's fiscal years ended October 3, 1998, September 27, 1997 and
September 28, 1996.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Compensation
Other Awards
Name and Annual Compensation Annual ------------ All Other
Principal ---------------------- Compensa- Stock Compensa-
Position(s) Year Salary($) Bonus($) tion($)(1) Options(#) tion($)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
David C. Thompson 1998 115,608 - - - 3,408(2)
President and Chief 1997 113,329 - - - 3,283(2)
Executive Officer 1996 102,935 - - 7,000 828(2)
Jan Kallshian, 1998 109,070 - - - -
Chief Financial 1997 78,790 - - - -
Officer 1996 65,374 - - - -
<FN>
- --------------------
<F1> In accordance with rules of the SEC the Company is not required to
report the value of personal benefits for any year unless the
aggregate dollar value exceeds the lesser of ten percent of the
executive officer's salary and bonus or $50,000.
<F2> Represents amounts contributed by the Company under its 401(k) Plan.
</FN>
</TABLE>
Option Grants in Last Fiscal Year
The following table sets forth certain information regarding the
grants of stock options to each of the Named Executive Officers during the
fiscal year ended October 3, 1998.
<TABLE>
<CAPTION>
Number of Percent of Total
Securities Options
Underlying Granted to Exercise or Market
Options Granted Employees in Base Price Price at Date Expiration
Name (#) Fiscal Year ($/Sh) of Grant Date
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
None
</TABLE>
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year End Option Values
The following table sets forth information on option exercises by the
Named Executive Officers during the fiscal year ended October 3, 1998, and
the value of unexercised options held by the Named Executive Officers on
October 3, 1998.
<TABLE>
<CAPTION>
Number of Shares Underlying
Shares Unexercised Options at Value of Unexercised Options
Acquired October 3, 1998(#) at October 3, 1998($)(1)
On Value ---------------------------- -----------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
David C. Thompson None None 42,882 1,750 25,000 -
<FN>
- --------------------
<F1> Value of unexercised options represents the difference between the
exercise prices of the stock options and the closing price ($4.00 per
share) of the Company's common stock in the over-the-counter market on
October 2, 1998, the last trading day of the Company's fiscal year.
Only in-the-money options are considered in the calculation.
</FN>
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During fiscal 1998, the Company paid interest of $32,656 on a
subordinated loan of $344,697 made by Mr. Thompson to the Company.
During fiscal 1998, the Company paid interest of $3,750 to Mr. Frankel
on a subordinated short term loan of $150,000. In August 1998, Mr. Frankel
exercised his right to convert the loan plus accrued interest into 56,776
shares of the Company's common stock.
During fiscal 1998, the Company paid interest of $7,500 to Mr.
Kallshian and members of his family (as defined by SEC rules) on a
subordinated short term loan of $300,000. In November 1998, Mr. Kallshian
and members of his family exercised their right to convert $200,000 of the
loans plus accrued interest into 91,961 shares of the Company's common stock.
ITEM 2 - CHANGE IN DOMICILE OF THE COMPANY
FROM MASSACHUSETTS TO WASHINGTON
GENERAL
CHANGE THE COMPANY'S STATE OF
INCORPORATION FROM MASSACHUSETTS TO WASHINGTON
At the meeting, the shareholders will be requested to approve a change
in the Company's state of incorporation from Massachusetts to Washington
(the "Reincorporation"). The Board has approved the Reincorporation, which,
if approved by the shareholders, will be accomplished by merging the Company
with and into its newly-formed, wholly owned Washington subsidiary,
Datamarine-Wash., Inc. ("Datamarine-Wash."). Upon effectiveness of the
merger, Datamarine-Wash.'s name will be changed to Datamarine, Inc., the
name under which the Company has operated since its incorporation. For the
reasons set forth below, the Board believes that the best interests of the
Company and its shareholders will be served by the Reincorporation. The
proposal to change the Company's state of incorporation does not give
shareholders of the Company dissenters' or appraisal rights under
Massachusetts law.
The Company is now headquartered in Washington and has minimal
operations remaining in Massachusetts. Reincorporation in Washington will
allow the Company to reduce certain administrative burdens resulting from
being incorporated under Massachusetts law but having minimal operations in
Massachusetts. Reincorporation will also enable the Company to avail itself
of Washington's modern and flexible corporate code which, like the corporate
codes of a majority of the states, is based on the Model Business
Corporation Act promulgated by the Committee on Corporate Laws of the
Business Law Section of the American Bar Association (the "ABA"). The
transaction will not result in any change in the business, management,
assets, liabilities or net worth of the Company. The purposes and effects
of the proposed transaction are summarized below.
To effect the Company's reincorporation in Washington, the Company
will be merged with and into a newly formed, wholly-owned subsidiary
incorporated in Washington. The Washington subsidiary, named Datamarine
International, Inc., a Washington corporation ("Datamarine-Wash."), will not
engage in any activities except in connection with the proposed transaction.
Following the merger, Datamarine-Wash. will conduct the business of the
Company as a Washington corporation under the name "Datamarine
International, Inc."
As part of its approval and recommendation of the Company's
reincorporation in Washington, the Board of Directors will approve and
recommend to the shareholders for their adoption and approval, (a) an
Agreement and Plan of Merger (the "Reincorporation Agreement") pursuant to
which the Company will be merged with and into Datamarine-Wash. and (b)
Articles of Incorporation of Datamarine-Wash. Approval by the shareholders
of the change in domicile of the Company will also constitute shareholder
approval of the Reincorporation Agreement and the proposed Articles of
Incorporation of Datamarine-Wash.
The reincorporation of the Company in Washington through the above-
described merger (hereafter referred to as the "Reincorporation") requires
approval of the Company's shareholders by the affirmative vote of at least
two-thirds of the shares of all classes and series of the Company's
outstanding capital stock, voting together as a single class. Shareholders
who do not vote for the proposal and who dissent by complying with the
procedures required by the Massachusetts Business Corporation Law ('MBCL")
will have the right, if the Reincorporation is consummated, to receive
payment for the fair value of their shares. See "-Right to Dissent and
Appraisal."
In the following discussion of the proposed Reincorporation, the term
"Datamarine-Mass." refers to the Company as currently organized under the
laws of the Commonwealth of Massachusetts; the term "Datamarine-Wash."
refers to the newly formed, wholly-owned Washington subsidiary of
Datamarine-Mass. that will be the surviving corporation after the completion
of the Reincorporation transaction; and the term "Company" includes either
or both, as the context requires, without regard to the state of
incorporation.
Upon shareholder approval of the Reincorporation, and upon approval of
appropriate articles of merger by the Secretary of State of the Commonwealth
of Massachusetts and the Secretary of State of the State of Washington,
Datamarine-Mass. will be merged with and into Datamarine-Wash. pursuant to
the Reincorporation Agreement, resulting in a change in the Company's state
of incorporation. The Company will then be subject to the Washington
Business Corporation Act and the Articles of Incorporation and Bylaws of
Datamarine-Wash. Upon consummation of the Reincorporation, each outstanding
share of the common stock and preferred stock of Datamarine-Mass., and each
share of Datamarine-Mass. common stock held in treasury, will automatically
be converted into a share of outstanding common stock or preferred stock of
Datamarine-Wash., or share of Datamarine-Wash. common stock held in
treasury, respectively. Outstanding warrants and options to purchase or
otherwise acquire shares of common stock of Datamarine-Mass. will be
converted into warrants and options, respectively, to purchase or otherwise
acquire the same number of shares of common stock of Datamarine-Wash. Each
employee stock plan and any other employee benefit plan to which Datamarine-
Mass is a party, whether or not such plan relates to the common stock of
Datamarine-Mass., will be assumed by Datamarine-Wash. and, to the extent any
such plan provides for the issuance or purchase of shares of common stock of
Datamarine-Mass., will be deemed to provide for the issuance or purchase of
shares of common stock of Datamarine-Wash.
IT WILL NOT BE NECESSARY FOR SHAREHOLDERS OF DATAMARINE-MASS. TO
EXCHANGE THEIR EXISTING STOCK CERTIFICATES FOR CERTIFICATES OF DATAMARINE-
WASH. OUTSTANDING STOCK CERTIFICATES OF DATAMARINE-MASS. SHOULD NOT BE
DESTROYED OR SENT TO THE COMPANY.
The Common stock will continue to be traded on the OTCBB under the
symbol "DMAR" and the OTCBB will consider delivery of the stock certificates
of Datamarine-Mass. which are outstanding on the Reincorporation date to
constitute "good delivery" of Datamarine-Wash. stock certificates in
transactions subsequent to the Reincorporation.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED AND, FOR THE REASONS
DESCRIBED BELOW UNDER "PRINCIPAL REASONS FOR THE REINCORPORATION,"
UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE APPROVAL OF THE
REINCORPORATION PROPOSAL.
PRINCIPAL REASONS FOR THE REINCORPORATION
The Company is now headquartered and maintains its principal
operations in Washington rather than Massachusetts, and has minimal
operations remaining in Massachusetts. The Company's Board of Directors
believes that a change in the Company's state of incorporation from
Massachusetts to Washington will provide flexibility for both the management
and business of the Company, as well as reduce certain administrative
burdens resulting from being incorporated under Massachusetts law but having
no significant operations located in Massachusetts. Washington is a
favorable legal and regulatory environment in which to operate, with a
modern and flexible corporate code which the Company believes will provide
greater guidance and certainty in corporate legal affairs than the MBCL.
Washington's corporate code is similar in many respects to the Model
Business Corporation Act which was drafted by the Committee on Corporate
Laws of the Business Law Section of the ABA to serve as a model state
corporate code. More than half of the states have now adopted corporate
codes that are based substantially on the Model Business Corporation Act.
However, the MBCL is not based on the Model Business Corporation Act.
In addition, the MBCL requires that either original or certified
copies of a Massachusetts corporation's articles of organization, bylaws,
records of shareholder and incorporator meetings and stock and transfer
records be available for inspection by shareholders in Massachusetts.
Because the Company maintains only a service facility in Massachusetts, it
would be required to establish an administrative office or to retain a third
party to maintain such records in Massachusetts on its behalf. If the
Reincorporation is consummated, the Company will no longer be subject to
this provision of the MBCL and will not be required to maintain such records
in Massachusetts.
CERTAIN DIFFERENCES BETWEEN THE CORPORATION LAWS
OF WASHINGTON AND MASSACHUSETTS
Washington law and Massachusetts law differ in many respects and,
consequently, it is not practical to summarize all of the differences.
However, the following is a summary of certain significant differences in
such laws which may affect the rights and interests of the Company's
shareholders as a result of the Reincorporation.
VOTE REQUIRED FOR CERTAIN MERGERS AND CONSOLIDATIONS
Washington and Massachusetts law both require shareholder approval for
most mergers, consolidations and dispositions of all or substantially all of
a corporation's property. Unless otherwise provided in a Washington
corporation's articles of incorporation or by the board of directors,
Washington law generally requires shareholder approval of any merger or
share exchange involving such a corporation, or any sale, lease, exchange or
other disposition involving all or substantially all of such a corporation's
property, by each voting group entitled to vote separately on the plan by
two-thirds of all the votes entitled to be cast on the plan by that voting
group.
Massachusetts law provides that shareholder approval of an agreement
of merger is not required if (a) the agreement of merger does not change the
name, the amount of shares authorized of any class of stock or other
provisions of the articles of organization, (b) the authorized unissued
shares or shares held in the treasury of such corporation of any class of
stock to be issued or delivered pursuant to the merger do not exceed fifteen
per centum of the shares of the corporation of the same class outstanding
immediately prior to the effective date of the merger, and (c) the issue by
vote of the directors of any unissued stock to be issued pursuant to the
agreement of merger has been authorized in accordance with the MBCL.
Massachusetts generally requires that any merger or consolidation involving
a Massachusetts corporation, or the sale, lease or exchange of all or
substantially all of such a corporation's property, be approved by the
affirmative vote of two-thirds of the shares of each class of such
corporation's stock entitled to vote on the transaction, voting together as
a single class or, if the articles of organization so provide, the vote of a
lesser proportion, but not less than a majority of each class of stock. In
addition, in the case of a merger or consolidation of a Massachusetts
corporation, any class of stock that is adversely affected must separately
approve the transaction by the affirmative vote of two-thirds of the shares
of each such class of stock.
Washington law provides that shareholder approval of a consolidation
or merger is not required where (a) the subject corporation's articles of
incorporation will not differ from those of the surviving corporation, (b)
each shareholder of the surviving corporation whose shares were outstanding
immediately before the effective date of the merger will hold the same
number of shares, with identical designations, preferences, limitations, and
relative rights, immediately after the merger, and (c) the number of voting
shares outstanding immediately after the merger, plus the number of voting
shares issuable as a result of the merger, either by the conversion of
securities issued pursuant to the merger or the exercise of rights and
warrants issued pursuant to the merger, will not exceed the total number of
voting shares of the surviving corporation authorized by its articles of
incorporation immediately before the merger, and (d) the number of
participating shares outstanding immediately after the merger, plus the
number of participating shares issuable as a result of the merger, either by
the conversion of securities issued pursuant to the merger or the exercise
of rights and warrants issued pursuant to the merger, will not exceed the
total number of participating shares authorized by its articles of
incorporation immediately before the merger.
In addition, a Washington corporation may also sell, lease or exchange
all or substantially all of its property without shareholder vote if the
sale, lease, exchange or disposition is in the usual and regular course of
business of the corporation. A corporation may sell, lease or exchange all
or substantially all of its property without shareholder vote if the sale,
lease, exchange or disposition is not in the usual and regular course of
business of the corporation if the board of directors proposes and its
shareholders approve the proposed transaction by two-thirds of all the votes
entitled to be cast in the transaction.
Under Massachusetts law any sale, lease or exchange of all or
substantially all of the corporation's property requires the shareholder
approval discussed above.
SHAREHOLDER MEETINGS AND SHAREHOLDER ACTIONS WITHOUT A MEETING
Annual and Special Shareholders' Meetings. Washington law requires a
shareholders' meeting to be held annually at a time stated in or fixed in
accordance with the bylaws. In addition, special meetings of shareholders
may be called (a) by the board of directors or by any person authorized to
do so under the articles of incorporation or bylaws; (b) by the written
demand of the holders of at least 10% (or such greater percentage as may be
specified in the articles of incorporation or bylaws) of all votes entitled
to be cast on any issue proposed to be considered at the special meeting.
If the corporation is other than a public company, the articles or bylaws
may require a demand be made by a greater percentage, not in excess of 25%,
of all the votes entitled to be cast on any issue proposed to be considered
at the proposed special meeting.
Under Massachusetts law, an annual meeting of the shareholders must be
held within six months of the end of the corporation's fiscal year. Special
shareholders' meetings of a corporation having a class of voting stock
registered under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), may be called by the president or by the board of
directors, and must be called upon written application of one or more
shareholders who own at least 40% of the capital stock entitled to vote at
the meeting, unless otherwise provided in the articles of organization or
bylaws. Special meetings of the shareholders of a corporation that does not
have stock registered under the Exchange Act may be called by the
corporation's president or board of directors and must be called upon
written application of the holders of at least 10% of the stock entitled to
vote at the meeting.
Shareholder Actions Without a Meeting. Under both Washington and
Massachusetts law, shareholders may take any action required or permitted to
be taken at a shareholders' meeting without such a meeting if the action is
taken by written consent filed with the corporation for inclusion in the
corporate records. Washington law requires the unanimous written consent of
all shareholders entitled to vote on the proposed action. Similarly,
Massachusetts law requires that any action taken without a meeting be by
unanimous consent of all shareholders entitled to vote on the matter.
CORPORATE RECORDS AND SHAREHOLDER LISTS
Under Washington law, a shareholder of a corporation is entitled to
inspect and copy, during regular business hours at the corporation's
principal office, any of the following records of the corporation, if the
shareholder gives the corporation written notice of the shareholder's demand
at least five business days before the date on which the shareholder wishes
to inspect and copy such records: (a) the articles or restated articles of
incorporation and all amendments to them currently in effect, (b) the bylaws
or restated bylaws and all amendments to them currently in effect, (c) the
minutes of all shareholders' meetings, and records of all action taken by
shareholders without a meeting, for the past three years, (d) certain
financial statements, (e) all written communications to shareholders
generally within the past three years, (f) a list of the names and business
addresses of the corporation's current directors and officers, and (g) the
corporation's initial report or most recent annual report delivered to the
secretary of state. If a shareholder of a corporation makes a demand in
good faith and for proper purpose, and describes with reasonable
particularity the shareholder's purpose and the records the shareholder
desires to inspect, and if the records requested are directly connected with
the shareholder's purpose, the shareholder is entitled to inspect and copy,
during regular business hours at a reasonable location specified by the
corporation, any of the following records of the corporation if the
shareholder gives the corporation written notice of the shareholder's demand
at least five days before the date on which the shareholder wishes to
inspect and copy: (a) excerpts from the minutes of any meeting of the board
of: directors, records of any action of a committee of the board of
directors, minutes of any meeting of the shareholders, and records of action
taken by the shareholders or board of directors without a meeting, (b)
accounting records of the corporation, and (c) the record of shareholders.
Massachusetts law requires that every domestic corporation maintain in
Massachusetts, and make available for inspection by its shareholders, the
original, or attested copies, of the corporation's articles of organization,
bylaws, records of all meetings of incorporators and shareholders, and the
stock and transfer records listing the names of all shareholders and their
record addresses and the amount of stock held by each. In addition, if any
officer or agent of a corporation having charge of such corporate records
(or copies thereof) refuses or neglects to exhibit them in legible form or
to produce for examination a list of shareholder names, record addresses and
amount of stock held by each, such officer or agent or the corporation will
be liable to any shareholder for actual damages or a proceeding in equity
under the foregoing provision, however, it is a defense to such action that
the actual purpose and reason for the inspection being sought is to secure a
list of shareholders or other information for the purpose of selling the
list or other information or of using them for purposes other than in the
interest of the person seeking them, as a shareholder, relate to the affairs
of the corporation. The foregoing rights relating to inspection are deemed
to include the right to copy materials and to be represented by agent or
counsel in exercising these rights. In addition to the rights of inspection
provided by Massachusetts law, a shareholder of a Massachusetts corporation
has a common law right to inspect additional documents which, if such
request is refused by the corporation, may be obtained by petitioning a
court for the appropriate order. In petitioning a court for such an order,
the granting of which is discretionary, the shareholder has the burden of
demonstrating (a) that such holder is acting in good faith and for the
purposes of advancing the interests of the corporation and protecting such
holder's own interest as a shareholder and (b) that the requested documents
are relevant to those purposes.
DISTRIBUTIONS TO SHAREHOLDERS
Washington law prohibits distributions to shareholders if, after
giving effect to any such distribution, (a) the corporation would not be
able to pay its debts as they become due in the usual course of business, or
(b) the corporation's total assets would be less than the sum of its total
liabilities plus, unless the articles of incorporation permit otherwise, the
amount would be needed, if the corporation were to dissolved at the time of
the distribution, to satisfy the preferential rights upon dissolution of
shareholders whose preferential rights are superior to those receiving the
distribution, "Distribution" is defined broadly under Washington law to
include dividends, distributions of indebtedness, the purchase, redemption
or other acquisition of shares, and other direct and indirect transfers of
money or property to shareholders. A director who votes for or assents to a
prohibited distribution is personally liable to the corporation for the
amount of the distribution that exceeds what could have been lawfully
distributed if it is established that the director did not perform the
director's duties of care under Washington law in voting for or assenting to
the distribution. A director found liable in accordance with the preceding
sentence is entitled to contribution from every other director who could be
held liable for the unlawful distribution and from each shareholder for the
amount the shareholder accepted knowing the distribution was unlawful or
prohibited.
Under Massachusetts law, the directors of a corporation will be
jointly and severally liable if a payment of a distribution, whether by way
of dividend, repurchase or redemption of stock or otherwise, which is made
when the corporation is insolvent, renders the corporation insolvent or
violates the corporation's articles of organization. Shareholders to whom a
corporation makes any such distribution (except a distribution of stock of
the corporation), if the corporation is or is thereby rendered insolvent,
are liable to the corporation for the amount of such distribution made, or
for the amount of such distribution which exceeds that which could have been
made without rendering the corporation insolvent, but in either event only
to the extent of the amount paid or distributed to them, respectively. In
such event, a shareholder who pays more than such holder's proportionate
share of such distribution or excess shall have a claim for contribution
against the other shareholders.
THE BOARD OF DIRECTORS
Classification of the Board of Directors; Number of Directors; Vote
Required to Elect Directors. Under Washington law, a board of directors
must consist of one or more individuals, with the number specified in or
fixed in accordance with the articles of incorporation or bylaws. The
directors are elected at the first annual shareholders' meeting and at each
annual meeting thereafter unless their terms are staggered by dividing the
total number of directors into two or three groups, with each group
containing one-half or one-third of the total, as near as may be, or if the
corporation is registered under the Investment Company Act of 1940 and
includes in its articles of incorporation or bylaws a provision establishing
terms of directors longer than one year. If the terms of the directors are
staggered, and the board of directors consists of two classes, directors
will generally be elected for terms of two years, while directors of a three
class board of directors will generally be elected for terms of three years.
Unless otherwise provided in the articles of incorporation, in any election
of the directors the candidates elected are those receiving the largest
numbers of votes cast by the shares entitled to vote in the election, up to
the number of directors to be elected by such shares.
Under Massachusetts law, the board of directors shall be fixed by or
determined in the manner provided in the bylaws, but shall not be less than
three, except that whenever there shall be only two shareholders the number
of directors shall be not less than two and whenever there shall be only one
shareholder or prior to the issuance of any stock, there shall be at least
one director. Except as provided in the articles of organization, the
directors shall be elected at the annual meeting of the shareholders by such
shareholders as have the right to vote thereon. The board of directors may
be enlarged by the shareholders at any meeting or, if authorized by the
bylaws, by vote of a majority of the directors then in office. The
directors shall hold office until the next annual meeting of the
shareholders and until their respective successors are chosen and qualified,
provided that the articles of organization may require the division of the
directors into classes and prescribe the tenure of office of the several
classes and the class of stock by which each class of directors shall be
elected, but no class shall be elected for a shorter period than one year,
or for a longer period than five years, and the term of office of at least
one class shall expire in each year. The articles of organization may
require that the term of office of a director shall terminate upon the
occurrence of an event or events specified in the articles of organization
and may determine the manner, if any, by which any vacancy so created shall
be filled.
Notwithstanding anything to the contrary in the articles of
organization or bylaws of any registered corporation, under Massachusetts
law, the directors of a registered corporation may be classified, with
respect to the time for which they severally hold office, into three
classes, as nearly equal in number as possible. The term of office of those
of the first class shall continue until the first annual meeting following
the date such corporation becomes subject to the relevant provisions of the
MBCL and until their successors are duly elected and qualified. The term of
office of those of the second class shall continue until the second annual
meeting following the date such corporation becomes subject to the relevant
provisions of the MBCL and until their successors are duly elected and
qualified, and the term of office of those of the third class shall continue
until the third annual meeting following the date such corporation becomes
subject to the relevant provisions of the MBCL and until their successors
are duly elected and qualified. At each annual meeting of a registered
corporation subject to this section, the successors to the class of
directors whose term expires at that meeting shall be elected to hold office
for a term continuing until the annual meeting held in the third year
following the year of their election and until their successors are duly
elected and qualified. The articles of organization may confer upon holders
of any class or series of preference or preferred stock the right to elect
one or more directors who shall serve for such term, and have such voting
powers, as shall be stated in the articles of organization. However, no
such provision in the articles of organization which confers upon such
holders any such right shall become effective unless prior to its adoption
it was approved by a vote of a majority in number of the directors of such
registered corporation. A corporation will be exempt from the term of
office provisions of this paragraph if the board of directors or the
shareholders by a vote of two-thirds of each class of stock outstanding at a
meeting duly called for the purpose of such vote shall adopt a vote
providing that such corporation elects to be exempt from the provisions.
Notwithstanding anything to the contrary in the articles of
organization or bylaws, in the case of directors of a registered corporation
who are classified with respect to the time for which they severally hold
office, vacancies and newly created directorships, whether resulting from an
increase in the size of the board of directors, from the death, resignation,
disqualification or removal of a director or otherwise, shall be filled
solely by the affirmative vote of a majority of the remaining directors then
in office, even though less than a quorum of the board of directors. Any so
elected director shall hold office for the remainder of the full term of the
class of directors in which the vacancy occurred or the new directorship was
created and until such director's successor shall have been elected and
qualified. No decrease in the number of directors constituting the board of
directors shall shorten the term of any incumbent director. The number of
directors shall be fixed only by vote of its board of directors.
Removal of Directors by Shareholders. Under Washington law, the
shareholders may remove one or more directors with or without cause unless
the articles of incorporation provide that directors may be removed only for
cause. If a director is elected by holders of one or more authorized
classes or series of shares, only the holders of those classes or series of
shares may participate in the vote to remove the director. If cumulative
voting is authorized, and if less than the entire board is to be removed, no
director may be removed if the number of votes sufficient to elect the
director under cumulative voting is voted against the director's removal.
If cumulative voting is not authorized, a director may be removed only if
the number of votes cast to remove the director exceeds the number of votes
cast not to remove the director. A director may be removed by the
shareholders only at a special meeting called for the purpose of removing
the director and the meeting notice must state that purpose, or one of the
purposes, is removal of the director.
Under Massachusetts law, in the case of directors of a registered
corporation who are classified with respect to the time for which they
severally hold office, unless otherwise provided in the articles of
organization or bylaws, the shareholders of the corporation may affect, by
the affirmative vote of a majority of shares outstanding and entitled to
vote in the election of directors, the removal of any director or directors
or the entire board of directors only for cause. Otherwise, except as
otherwise provided in the articles of organization or bylaws, directors
elected by shareholders, including persons elected by directors to fill
vacancies in the board or in such offices, may be removed from their
respective offices with or without cause by the vote of the holders of a
majority of the shares entitled to vote in the election of directors or such
officers, as the case may be, provided that the directors of a class elected
by a particular class of shareholders may be removed only by the vote of the
holders of a majority of shares of the particular class of shareholders
entitled to vote for the election of such directors, as the case may be.
Any director, and any officer elected by the shareholders, may be removed
from office for cause by vote of a majority of directors then in office. A
director may be removed for cause only after a reasonable notice and
opportunity to be heard before the body proposing to remove the director.
Vacancies. Under Washington law, unless the articles of incorporation
provide otherwise, if a vacancy occurs on a board of directors, including a
vacancy resulting from an increase in the number of directors, the
shareholders may fill the vacancy, or the board of directors may fill the
vacancy, or if the directors in office constitute fewer than a quorum of the
board, they may fill the vacancy by the affirmative vote of a majority of
all the directors in office. If the vacant office was held by a director
elected by holders of one or more authorized classes or series of shares,
only the holders of those classes or series of shares are entitled to fill
the vacancy. A vacancy that will occur at a specific later date, by reason
of a resignation effective at a later date, may be filled before the vacancy
occurs but the new director may not take office until the vacancy occurs.
Under Massachusetts law, unless the articles of organization provide
otherwise, any vacancy in the board of directors, however occurring,
including a vacancy resulting from the enlargement of the board, and any
vacancy in any other office may be filled in the manner prescribed in the
bylaws or, in the absence of such bylaw, by the directors.
DIRECTOR LIABILITY
Washington law permits a corporation's articles of incorporation to
include a provision eliminating or limiting the personal liability of a
director to the corporation or its shareholders for monetary damages for
conduct as a director, provided that such provisions shall not eliminate the
liability of a director for (a) acts or omissions that involve intentional
misconduct by a director or a knowing violation of law by a director, (b)
unlawful distributions, or (c) any transaction from which the director will
personally receive a benefit in money, property, or services to which the
director is not legally entitled. No such provision shall eliminate or limit
the liability of a director for any act or omission occurring prior to the
date when such provision becomes effective.
Under Massachusetts law, a corporation's articles of organization may
include a provision eliminating or limiting the personal liability of a
director to the corporation or its shareholders for monetary damages for
breach of fiduciary duty as a director, except that such a provision may not
eliminate or limit the liability of a director for (a) any breach of the
director's duty of loyalty to the corporation or its shareholders, (b) acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (c) authorizing an unlawful distribution or
improper loan of corporate assets, or (d) any transaction from which the
director derived an improper personal benefit.
INDEMNIFICATION
Under Washington law, a corporation may indemnify an individual
against liability to a proceeding because the individual is or was a
director if (a) the individual acted in good faith, and (b) the individual
reasonably believed that the individual's conduct was in the corporation's
best interests and not opposed to the corporation's best interests. In the
case of a criminal proceeding, the individual also must have had no
reasonable cause to believe the individual's conduct was unlawful. A
corporation may not indemnify a director (a) in connection with a proceeding
by or in the right of the corporation in which the director was adjudged
liable to the corporation, or (b) in connection with any other proceeding
charging improper personal benefit to the director, whether or not involving
action in the director's official capacity, in which the director was
adjudged liable on the basis that personal benefit was improperly received
by the director. Unless limited by its articles of incorporation, a
corporation shall indemnify a director who was wholly successful in the
defense of any proceeding to which the director was a party because of being
a director of the corporation against reasonable expenses incurred by the
director in connection with the proceeding. The determination that a
director shall be indemnified by the corporation shall be made by (a) the
board of directors by majority vote of a quorum consisting of directors not
at the time parties to the proceeding, or (b) if a quorum cannot be
obtained, by a majority vote of a committee duly designated by the board of
directors, or (c) by special legal counsel designated by the board of
directors, or (d) by the shareholders, but shares owned by or voted under
the control of directors who are at the time parties to the proceeding may
not be voted on the determination. If authorized by the articles of
incorporation, a bylaw adopted or ratified by the shareholders, or a
resolution adopted or ratified, before or after the event, by the
shareholders, a corporation may indemnify a director made a party to a
proceeding, or obligate itself to advance or reimburse expenses incurred in
a proceeding, provided that no such indemnity shall indemnify any director
from or on account of (a) acts or omissions of the director finally adjudged
to be intentional misconduct or a knowing violation of law, or (b) conduct
of the director finally adjudged to be an unlawful distribution, or (c) any
transaction with respect to which it was finally adjudged that such director
personally received a benefit in money, property, or services to which the
director was not legally entitled.
Under Massachusetts law, indemnification of directors, officers,
employees and other agents of a corporation may be provided by the
corporation to whatever extent shall be specified in or authorized by (a)
the articles of organization or (b) a bylaw adopted by the shareholders or
(c) a vote adopted by the holders of a majority of shares of stock entitled
to vote on the election of directors. Except as the articles of
organization or bylaws otherwise require, indemnification of any of the
above referenced persons who are not directors of the corporation may be
provided by the corporation to the extent authorized by the directors. Any
such indemnification may be provided although the person to be indemnified
is no longer an officer, director, employee or agent of the corporation or
of such other organization. No indemnification shall be provided for any
person with respect to any matter as to which he shall have been adjudicated
in any proceeding not to have acted in good faith in the reasonable belief
that his action was in the best interest of the corporation or to the extent
that such matter relates to service with respect to any employee benefit
plan, in the best interests of the participants or beneficiaries of such
employee benefit plan.
AMENDMENTS OF ARTICLES AND BYLAWS
Washington law.
Amendment of Articles by the Board of Directors. Unless the articles
of incorporation provide otherwise, under Washington law a corporation's
board of directors may adopt one or more amendments to the corporation's
articles of incorporation without shareholder action if (a) the corporation
has only one class of shares outstanding, to provide, change, or eliminate
any provision with respect to the par value of any class of shares, (b) to
delete the names and addresses of the initial directors, (c) to delete the
name and address of the initial registered agent or registered office, if a
statement of change is on file with the secretary of state, (d) if the
corporation has only one class of shares outstanding, solely to change the
number of authorized shares to effectuate a split of, or stock dividend in,
the corporation's own shares, or solely to do so and to change the number of
authorized shares in proportion thereto, (e) to change the corporate name,
or (f) to make any other change expressly permitted by this title to be made
without shareholder action.
Amendment of Articles by the Board of Directors and Shareholders. In
all other cases, a corporation's board of directors must propose an
amendment to the articles of incorporation for submission to the
shareholders. In order for the amendment to be adopted (a) the board of
directors must recommend the amendment to the shareholders unless the board
of directors determines that because of conflict of interest or other
special circumstances it should make not recommendation and communicates the
basis for its determination to the shareholders with the amendment, and (b)
the amendment to be adopted must be approved by each voting group entitled
to vote thereon by two-thirds, or, in the case of a public company, a
majority, of all the votes entitled to be cast by that voting group, unless
the articles of incorporation or the board of directors require a greater
vote or a vote by voting groups. The articles of incorporation other than a
public company may provide for a lesser vote than that provided for in this
subsection, or for a lesser vote by separate voting groups, so long as the
vote provided for each voting group entitled to vote separately on the
amendment is not less than a majority of all the votes entitled to be cast
on the amendment by that voting group.
Voting on Amendments to Articles by Voting Groups. The holders of the
outstanding shares of a class are entitled to vote as a separate voting
group, if shareholder voting is otherwise required by this title, on a
proposed amendment if the amendment would (a) increase or decrease the
aggregate number of authorized shares of the class, (b) effect an exchange
or reclassification of all or part of the shares of the class into shares of
another class, (c) effect an exchange or reclassification, or create the
right of exchange, of all or part of the shares of another class into shares
of the class, (d) change the designation, rights, preference, or limitations
of all or part of the shares of the class, (e) change the shares of all or
part of the class into a different number of shares of the same class, (f)
create a new class of shares having rights or preferences with respect to
distribution s or to dissolution that are prior, superior, or substantially
equal to the shares of the class, (g) increase the rights, preferences, or
number of authorized shares of any class that, after giving effect to the
amendment, have rights or preferences with respect to distributions or to
dissolution that are prior, superior, or substantially equal to the shares
of the class, (h) limit or deny an existing preemptive right of all or part
of the shares of the class, or (i) cancel or otherwise affect rights to
distributions or dividends that have accumulated but not yet been declared
on all or part of the shares of the class. If a proposed amendment would
affect only a series of a class of shares in one or more of the ways
described above, only the shares of that series are entitled to vote as a
separate voting group on the proposed amendment. If a proposed amendment
that entitles two or more series of shares within a class to vote as
separate voting groups under this section would affect those two or more
series in the same or a substantially similar way, the shares of all the
series within the class so affected must vote together as a single voting
group on the proposed amendment.
Restatement of Articles of Organization. Any officer of a corporation
may restate its articles of incorporation at any time. A restatement may
include one or more amendments to the articles of incorporation. If the
restatement includes an amendment not requiring shareholder approval, it
must be adopted by the board of directors. If the board of directors
submits a restatement for shareholder action, the corporation shall notify
each shareholder, whether or not entitled to vote, of the proposed
shareholders' meeting. The notice must also state that the purpose, or one
of the purposes, of the meeting is to consider the proposed restatement and
contain or be accompanied by a copy of the restatement that identifies any
amendment or other change it would make in the articles of incorporation.
Bylaws. Under Washington law, a corporation's board of directors may
amend or repeal the corporation's bylaws, or adopt new bylaws, unless (a)
the articles of incorporation reserve this power exclusively to the
shareholders in whole or in part, or (b) the shareholders, in amending or
repealing a particular bylaw, provide expressly that the board of directors
may not amend or repeal that law. A corporation's shareholders may amend or
repeal the corporation's bylaws, or adopt new bylaws, even though the bylaws
may also be amended or repealed, or new bylaws may also be adopted, by its
board of directors.
Massachusetts law.
Amendments Requiring Majority Vote. Under Massachusetts law, a
corporation may authorize, at a meeting duly called for the purpose, an
amendment of its articles of organization, by vote of a majority of each
class of stock outstanding and entitled to vote thereon affecting any one or
more of the following: (a) an increase or a reduction of its capital stock
of any class then authorized, (b) a change of the par value of its
authorized shares with part value or any class thereof, (c) a change of its
authorized shares with par value or any class thereof into any number of
shares without par value, or the exchange thereof pro rata for any number of
shares without par value, (d) a change of its authorized shares without par
value or any class thereof into a greater or lesser number of shares without
par value, or the exchange thereof pro rata for a greater or lesser number
of shares without par value, (e) a change of its authorized shares with par
value or any class thereof into a greater or lesser number of shares with
par value, or the exchange thereof pro rata for a greater or lesser number
of shares with par value, (f) a change of its authorized shares without par
value or any class thereof into any number of shares with par value, or the
exchange thereof pro rata for any number of shares with par value, or (g) a
change to its corporate name.
Amendment by Two-Thirds Vote; Class of Stock Adversely Affected to
Vote Separately. A corporation may authorize, at a meeting duly called for
the purpose, by vote of two-thirds of each class of stock outstanding and
entitled to vote thereon or, if the articles of organization so provide, by
vote of a lesser proportion but not less than a majority of each class of
stock outstanding and entitled to vote thereon, any amendment of its
articles or organization, provided only that any provision added to or any
changes made in its articles of organization by such amendment could have
been omitted from, original articles of organization filed at the time of
such meeting. If any such amendment would adversely affect the rights of
any class of stock, the vote in the proportion provided for in or pursuant
to this section of such class, voting separately, shall also be necessary to
authorize such amendment. Any series of a class which is adversely affected
in a manner different from other series of the same class shall, together
with any other series of the same class adversely affected in the same
manner, be treated as a separate class.
Restatement of Articles of Organization. Every corporation may
authorize, by vote of a majority of each class of stock outstanding and
entitled to vote thereon, a restatement of its articles of organization.
The restated articles may effect further amendments of the articles,
provided that every such further amendment is lawfully adopted in accordance
with the provisions of, and is authorized by the MBCL. If the restated
articles only restate and do not amend the articles, such restated articles
may be authorized and adopted by the directors without a vote of the
shareholders.
Bylaws. The power to make, amend or repeal bylaws shall be in the
shareholders under Massachusetts law, provided that if authorized by the
articles of organization, the bylaws may provide that the directors may also
make, amend or repeal the bylaws in whole or in part, except with respect to
any provision thereof which by law, the articles of organization or the
bylaws requires action by the shareholders. Not later than the time of
giving notice of the meeting of shareholders next following the making,
amending or repealing by the directors of any bylaw, notice thereof stating
the substance of such change shall be given to all shareholders entitled to
vote on amending the bylaws. Any bylaw adopted by the directors may be
amended or repealed by the shareholders.
ANTI-TAKEOVER LAWS
The Massachusetts Business Combinations Statute generally prohibits a
publicly held Massachusetts corporation from engaging in a "business
combination" with an "interested shareholder" for a period of three years
after the date of the transaction in which the person becomes an interested
shareholder, unless (a) the interested shareholder obtains the approval of
the board of directors prior to becoming an interested shareholder, (b) the
interested shareholder acquires 90% of the outstanding voting stock of the
corporation (excluding shares held by certain affiliates of the corporation)
at the time it becomes an interested shareholder or (c) the business
combination is approved by both the board of directors and the holders of
two-thirds of the outstanding voting stock of the corporation (excluding
shares held by the interested shareholder). Generally, an "interested
shareholder" is a person who, together with affiliates and associates, owns
(or at any time within the prior three years did own) 5% or more of the
outstanding voting stock of the corporation.
Under the Massachusetts Control Share Acquisition Statute, a person
who acquires beneficial ownership of shares of stock of a subject
Massachusetts corporation in a threshold amount equal to or greater than
one-fifth, one-third or a majority of the voting stock of the corporation (a
"control share acquisition") must obtain the approval of a majority of
shares entitled to vote generally in the election of directors (excluding
(a) any shares owned by such person acquiring or proposing to acquire
beneficial ownership of shares in a control share acquisition, (b) any
shares owned by any officer of the corporation and (c) any shares owned by
any employee of the corporation who is also a director of the corporation)
in order to vote the shares that such person acquires. The statute does not
require that such person consummate the purchase before the shareholder vote
is taken. The Control Share Acquisition Statute permits, to the extent
authorized by a corporation's articles of organization or bylaws, redemption
of all shares acquired by an acquiring person in a control share acquisition
for fair value (which is to be determined in accordance with procedures
adopted by the corporation) if (a) no control acquisition statement is
delivered by the acquiring person or (b) a control share acquisition
statement has been delivered and voting rights were not authorized for such
shares by the shareholders in accordance with applicable law. The Control
Share Acquisition Statute permits a Massachusetts corporation to elect not
to be governed by the statute by including a provision to such effect in the
corporation's articles of organization or bylaws.
Washington law prohibits certain "Significant Business Transactions"
between an "acquiring person" and a "target corporation." Generally, an
"acquiring person" is a person or group of persons who beneficially own ten
percent or more of the outstanding shares of the target corporation. A
"target corporation" is every domestic corporation with a class of voting
shares registered with the securities and exchange commission pursuant to
section 12 or 15 of the Exchange Act or whose articles of incorporation have
been amended to provide that such corporation shall be subject to the
prohibited significant business transactions provided in the Washington
Business Corporation Act. A target corporation also includes foreign
corporations with (a) a class of voting shares registered with the
securities and exchange commission pursuant to section 12 or 15 of the
Exchange Act, (b) its principal executive office located in Washington, (c)
more than ten percent of its shareholders of record resident in Washington,
or more than ten percent of its shares owned of record by Washington
residents, or 1,000 or more shareholders of record residents in Washington,
(d) either 1,000 or a majority of the corporation's employees residents of
Washington, and (e) either more than $50 million worth of tangible assets
located in Washington or a majority of the corporation's tangible assets are
located in Washington.
Under Washington law, a target corporation is prohibited from engaging
in any significant business transaction for a period of five years following
the acquiring person's share acquisition time, unless the significant
business transaction or the purchase of shares made by the acquiring person
is approved prior to the acquiring person's share acquisition time by a
majority of the members of the board of directors of the target corporation.
Generally, a "significant business transaction" means a merger, share
exchange or consolidation of a target corporation or a subsidiary with an
acquiring person or any other domestic or foreign corporation which is or
would be an affiliate or associate of the acquiring person after the
transaction. A "significant business transaction" also means a sale, lease,
exchange, mortgage, pledge, transfer, or other disposition or encumbrance to
or with an acquiring person of assets of a target corporation or subsidiary
having aggregate market value equal to five percent or more of the aggregate
market value of all the assets or outstanding shares of the target
corporation, or representing five percent or more of the earning power or
net income of the target corporation. Also included is the termination of
five percent or more of the employees of the target corporation employed in
Washington, while the corporation has an acquiring person and as a result of
the acquiring person's acquisition of ten percent or more of the shares of
the corporation. Other issuances, transfers or redemptions of shares by a
target corporation are prohibited, as well as certain reclassifications of
securities. Also prohibited is the liquidation or dissolution of a target
corporation proposed by or agreed by an acquiring person.
FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Davis Wright Tremaine LLP, counsel to the Company,
the Reincorporation will constitute a tax-free reorganization under section
368(a)(1)(F) of the Internal Revenue Code of 1986, as amended (the "Code").
In rendering its opinion, such counsel has relied upon representations
contained in certificates of the Company, including the representation that
Company assets used to pay expenses incurred in connection with the
transaction, Company assets used to pay shareholders who exercise and
perfect their appraisal rights, and Company assets used to make redemptions
and distributions (except normal, regular dividends) immediately preceding
the transaction will not, in the aggregate, constitute 1% of the value of
the net assets of the Company. If any such representations are inaccurate
or incomplete in any material respect, such opinion cannot be relied upon.
No ruling has been or is expected to be requested from the Internal Revenue
Service ("IRS") as to the tax consequences of the Reincorporation and,
accordingly, no assurance can be given by the Company that the IRS will
agree with the conclusions of counsel.
Assuming that the Reincorporation constitutes such a tax-free
reorganization, it will not adversely affect the federal income tax
consequences to the Company and its shareholders. In addition, the federal
income tax consequences to the Company and its shareholders resulting from
the Reincorporation will be as follows: (a) no gain or loss will be
recognized by Datamarine-Mass. or Datamarine-Wash. as a result of the
transaction; and (b) no gain or loss will be recognized by shareholders who
exchange their Datamarine-Mass. shares solely for Datamarine-Wash. shares.
Shareholders will have the same tax basis in the shares of Datamarine-Wash.
received in the Reincorporation that they had in the shares of Datamarine-
Mass. exchanged therefor, and the holding period of the shares of
Datamarine-Wash. will include the period during which the shares of
Datamarine-Mass. were held, provided such shares of Datamarine-Mass. were
held as capital assets on the effective date of the Reincorporation. A
dissenting shareholder who receives payment for shares upon exercise of the
right of appraisal will recognize gain or loss for federal income tax
purposes measured by the difference between such shareholder's basis for the
shares and the amount of payment received. Such gain or loss will be
capital gain or loss if the shares were held as capital assets on the
effective date of the Reincorporation, subject to the provisions and
limitations of Sections 302 and 306 of the Code. Under recently enacted
legislation, capital gain recognized will be subject to a maximum federal
income tax rate of 20% if the shares have been held by such dissenter for
more than 18 months, and to a maximum federal income tax rate of 28% if such
shares have been held for more than one year but not more than 18 months.
See "-Right to Dissent and Appraisal."
The foregoing summary of federal income tax consequences is included
for general information only and does not address the federal income tax
consequences to all holders of the Company's capital stock (including those
who do not hold their shares as a capital asset). In view of the individual
nature of tax consequences, holders are urged to consult their own tax
advisors as to the specific tax consequences of the transaction, including
the application and effect of state, local and foreign income and other tax
laws.
RIGHT TO DISSENT AND APPRAISAL
Both Washington and Massachusetts law provide appraisal rights for
dissenting shareholders in the event of specified corporate actions.
However, the events which permit a shareholder to assert such rights and the
procedures a dissenting shareholder must follow to assert such rights differ
for Washington and Massachusetts corporations.
Under Washington law, a properly dissenting shareholder is entitled to
dissent from, and obtain payment of the fair market value of the
shareholders' shares in the event the corporation consummates certain
mergers, share exchanges or sales or exchanges of all or substantially all
of its property (unless, for each of the foregoing transactions, shareholder
approval was not required to approve such transaction), or if the
corporation effects certain amendments to its articles of incorporation.
Under Massachusetts law, a properly dissenting shareholder may assert
appraisal rights if the corporation votes to (a) sell, lease or exchange all
or substantially all of its property and assets, (b) amend its articles of
organization in a manner which adversely affects the rights of the
dissenting shareholder, or (c) merger or consolidate with another entity,
unless a vote of the shareholders was not required to approve such a merger
or consolidation.
If the Reincorporation proposal is approved by the required vote of
the Company's shareholders and is not abandoned or terminated, holders of
the Company's capital stock who did not vote for the Reincorporation
proposal may, by complying with Sections 85 through 98 of Chapter 156B of
the MBCL, be entitled to appraisal rights as described therein ("Appraisal
Rights"). The record holders of the Company's capital stock who are
eligible to, and do, exercise their Appraisal Rights with respect to the
Reincorporation are referred to herein as "Dissenting Shareholders," and the
shares of stock with respect to which they exercise Appraisal Rights are
referred to herein as "Dissenting Shares." If a shareholder of the Company
has a beneficial interest in shares of the Company's capital stock that are
held of record in the name of another person, and such shareholder desires
to perfect whatever Appraisal Rights such beneficial shareholder may have,
such beneficial shareholder must act promptly to cause the holder of record
timely and properly to follow the steps summarized below. Pursuant to
Massachusetts law, a shareholder of the Company may dissent from the
proposed corporate action to approve the Reincorporation and receive the
right to an appraisal of such shareholder's shares. As required by
Massachusetts law, a copy of Sections 85 through 98 of the MBCL is attached
hereto as Exhibit A. If the Reincorporation is consummated, the Dissenting
Shareholders will be entitled, if they strictly comply with the provisions
of the MBCL, to have the fair value of their shares judicially determined
and paid to them.
ITEM 3 - PROPOSAL TO AUTHORIZE 10,000,000 SHARES OF COMMON STOCK
FOR THE NEWLY FORMED WASHINGTON CORPORATION
The Board of Directors proposes to authorize 10,000,000 shares of
common stock for the newly formed Washington corporation, the current
Massachusetts corporation has 3,000,000 shares of common stock authorized.
As of January 22, 1999 there were issued and outstanding 1,531,820
shares of Common stock. Of the unissued shares of common stock, 175,639
were reserved for issuance upon conversion of the Company's Convertible
Subordinated Debentures, 84,389 were reserved for issuance upon the possible
conversion of the Subordinated Notes, 53,420 were reserved for currently
outstanding common stock warrants and an aggregate of 360,885 shares were
reserved for issuance pursuant to the Company's stock option and stock
purchase plans for employees and directors. Consequently, the Company
presently has available for issuance 793,847 shares of common stock.
Purposes and Reasons for the Proposed Increase in Authorized Capital
If the Authorized Capital proposal is approved, the increased number
of authorized shares of common shares will be available for issuance from
time to time, for such purposes and consideration, and on such terms, as the
Board of Directors may approve, and no further vote of the shareholders of
the Company will be required, except as provided under the Washington
Business Corporation Act or the rules of the appropriate stock exchange.
An increase in authorized shares will enable the Company to meet possible
contingencies and opportunities in which the issuance of shares of common
stock in amounts greater than would otherwise remain available for issuance
may be deemed advisable, such as in equity and convertible debt financings,
acquisition transactions, stock dividends and distributions and employee
benefit plans. By approving the increase in authorized shares at this time,
consummation of issuance of any additional shares of common stock would be
facilitated, because the delay and expense incident to calling a special
meeting of the Company's shareholders, in cases where such a meeting would
not otherwise be required, would be avoided. The timing of the actual
issuance of additional shares of common stock, if any, will depend upon
market conditions, the specific purpose for which the stock is to be issued,
and other similar factors. Any additional issuance of common stock could
have a dilutive effect on existing shareholders of common stock.
The terms of the additional shares of common stock for which approval
is sought will be identical with the terms of the common stock currently
authorized and outstanding, and approval of the proposal will not affect the
terms, or the rights of holders, of such shares. The common stock has no
cumulative voting, conversion, preemptive, or subscription rights and is not
redeemable.
Preferred Stock
The Company also has 1,000,000 authorized shares of Preferred Stock,
$1 par value. None of these Preferred shares are issued or outstanding.
The Company is not proposing any change in the number of authorized
Preferred shares.
Vote Required
The approval of the increase in authorized shares will require the
affirmative vote of a plurality of the votes cast.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED AND UNANIMOUSLY
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE ADOPTION OF THE PROPOSAL TO
AUTHORIZE 10,000,000 SHARES OF COMMON STOCK FOR THE NEWLY FORMED WASHINGTON
CORPORATION.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Grant Thornton LLP, certified
public accountants, to act as independent auditors to examine the
consolidated financial statements of the Company and its subsidiaries for
the fiscal year ended October 2, 1999. A representative of Grant Thornton
LLP is expected to be present at the Meeting and will have the opportunity
to make a statement if he or she so desires and to respond to appropriate
questions.
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who beneficially own
more than ten percent of the Company's stock, to file initial reports of
ownership and reports of changes in ownership with the Securities and
Exchange Commission. Officers, directors and greater than ten percent
holders of common stock are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they file.
Based upon a review of filings with the Securities and Exchange
Commission and written representations that no other reports were required,
the Company believes that all of the Company's directors and executive
officers complied during fiscal 1998 with the reporting requirements of
Section 16(a) of the Securities Exchange Act of 1934.
DEADLINES FOR SUBMISSION OF
SHAREHOLDER PROPOSALS
Under regulations adopted by the Securities and Exchange Commission,
any proposal submitted for inclusion in the Company's Proxy Statement
relating to the Annual Meeting of Shareholders to be held in 2000 must be
received at the Company's principal executive offices in Mountlake Terrace
on or before September 28, 1999. Receipt by the Company of any such
proposal from a qualified shareholder in a timely manner will not ensure its
inclusion in the proxy material because there are other requirements in the
proxy rules for such inclusion.
In addition to the Securities and Exchange Commission requirements
regarding shareholder proposals, the Company's By-Laws contain provisions
regarding matters to be brought before shareholder meetings. If shareholder
proposals, including proposals regarding the election of directors, are to
be considered at the 2000 Annual Meeting, notice of them, whether or not
they are included in the Company's proxy statement and form of proxy, must
be given by personal delivery or by United States mail, postage prepaid, to
the Secretary of the Company on or before December 3, 1999.
OTHER MATTERS
Management knows of no matters to be brought before the meeting other
than the election of director. However, if any other matters properly come
before the Meeting, the persons named in the enclosed proxy will vote in
accordance with their best judgment.
10-K REPORT
THE COMPANY WILL PROVIDE EACH BENEFICIAL OWNER OF ITS SECURITIES WITH
A COPY OF ITS ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS
AND SCHEDULES THERETO, REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION FOR THE COMPANY'S MOST RECENT FISCAL YEAR, WITHOUT CHARGE, UPON
RECEIPT OF A WRITTEN REQUEST FROM SUCH PERSON. SUCH REQUEST SHOULD BE
DIRECTED TO CHIEF FINANCIAL OFFICER, DATAMARINE INTERNATIONAL, INC., 7030 -
220TH STREET S.W., MOUNTLAKE TERRACE, WASHINGTON 98043.
By Order of the Board of Directors
DAVID C. THOMPSON,
Secretary
Mountlake Terrace, Washington
January 26, 1999
EXHIBIT A
SECTIONS 85 THROUGH 98 OF THE MASSACHUSETTS
BUSINESS CORPORATION LAW
THE FOLLOWING DISCUSSION IS NOT A COMPLETE STATEMENT OF MASSACHUSETTS
LAW RELATING THE APPRAISAL RIGHTS, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SECTIONS 85 THROUGH 98 OF THE MBCL ATTACHED TO THIS PROXY
STATEMENT AS EXHIBIT A AND INCORPORATED HEREIN BY REFERENCE. THIS
DISCUSSION AND SECTIONS 85 THROUGH 98 OF THE MBCL SHOULD BE REVIEWED
CAREFULLY BY ANY HOLDER WHO WISHES TO EXERCISE STATUTORY APPRAISAL RIGHTS OR
WISHES TO PRESERVE THE RIGHT TO DO SO, BECAUSE FAILURE TO COMPLY WITH THE
REQUIRED PROCEDURE WILL RESULT IN THE LOSS OF SUCH RIGHTS. A SHAREHOLDER OF
THE COMPANY WHO VOTES FOR THE ADOPTION AND APPROVAL OF THE REINCORPORATION
PROPOSAL WILL BE DEEMED TO HAVE WAIVED SUCH SHAREHOLDER'S RIGHT TO EXERCISE
APPRAISAL RIGHTS WITH RESPECT TO ALL SHARES OF THE COMPANY'S CAPITAL STOCK
HELD BY SUCH SHAREHOLDER. ANY HOLDER WHO IS CONSIDERING DISSENTING SHOULD
CONSULT HIS OR HER LEGAL ADVISOR.
1. To exercise Appraisal Rights, a shareholder must (a) file with the
Company, before the taking of the shareholders' vote on the approval of the
Reincorporation proposal at the Annual Meeting, a written objection to the
Reincorporation proposal stating that the intention of such shareholder is
to demand payment for shares owned by such shareholder if the
Reincorporation proposal is approved and (b) the shareholder must not vote
in favor of the Reincorporation proposal. A vote in favor of the
Reincorporation proposal will waive such holder's Appraisal Fights.
However, a shareholder's failure to vote on the Reincorporation proposal
will not in itself be a waiver of such holder's Appraisal Rights. A vote
against the Reincorporation proposal does not, alone, constitute a written
objection. A shareholder who dissents and demands Appraisal Rights must do
so as to all shares of the Company's capital stock held by such shareholder.
A shareholder may not assert Appraisal Rights with respect to less than all
of such shareholder's shares.
2. If the Reincorporation proposal is approved and adopted by the
Company's shareholders, within 10 days after the effective date of the
Reincorporation proposal, the Company must give written notice that the
Reincorporation proposal has become effective to each shareholder who gave
notice before the Annual Meeting of such shareholder's objection to the
Reincorporation proposal and who did not vote in favor of the
Reincorporation proposal.
3. If the shareholder did not vote in favor of the Reincorporation
proposal, such Dissenting Shareholder may, within 20 days after the mailing
of the notice that the Reincorporation proposal is effective, make written
demand on the Company for the payment of the fair value of such holder's
Dissenting Shares. Any shareholder failing to make demand for payment
within the 20-day period shall be bound by the Reincorporation proposal.
4. Within 30 days after the expiration of the Dissenting
Shareholders' 20-day notice period, the Company must deliver to any
Dissenting Shareholder payment of the fair value of such holder's Dissenting
Shares.
5. If, during the 30-day period after the expiration of the period
during which the demand may be made, the Dissenting Shareholder and the
Company do not agree as to the fair value of the Dissenting Shares, then
either of them may file a bill in equity in the Superior Court in the County
where the Company had or has its principal office (the "Court") requesting a
determination of the fair value of such holder's Dissenting Shares. The
bill in equity must be filed within four months after the date of expiration
of the foregoing 30-day period.
6. If the bill in equity is timely filed, the Court or an appointed
special master will hold a hearing. After the hearing on the petition, the
Court shall enter a decree determining the fair value of the Dissenting
Shares and shall order the Company to make payment of such value, together
with interest, from the date of the vote approving the Reincorporation
proposal to the Dissenting Shareholders entitled to said payment, subject to
receipt of duly endorsed certificates for the Dissenting Shares. Pursuant
to the MBCL, the fair value of the Dissenting Shares is the value thereof as
of the day immediately preceding the Annual Meeting, excluding any element
of value arising from the expectation or accomplishment of the
Reincorporation. All court costs, including appraisers' fees, shall be
allocated by the Court in a manner it determines to be fair and equitable.
7. Upon consummation of the Reincorporation, each Dissenting
Shareholder will cease to have any rights of a shareholder except the right
to be paid the fair value of the Dissenting Shares and the right to receive
other distributions, if any, payable to shareholders of record prior to the
effective date of the Reincorporation proposal and any other rights under
applicable Massachusetts law.
CONDITION TO THE REINCORPORATION RELATED TO DISSENTING SHARES
It is a condition to the consummation of the Reincorporation that the
aggregate amounts paid or to be paid to Dissenting Shareholders constitute
less than 1% of the value of the net assets of the Company as of the date of
the Reincorporation. However, such condition may be waived by the Boards of
Directors of Datamarine-Mass. and Datamarine-Wash., acting in their sole
discretion.
In addition, any determination regarding the satisfaction of such
condition will be made by the Boards of Directors of Datamarine-Mass. and
Datamarine-Wash., acting in their sole discretion.
AMENDMENT AND WAIVER OF THE REINCORPORATION AGREEMENT
Datamarine-Wash. and Datamarine-Mass. may, by resolution of their
respective Boards of Directors, amend, modify or supplement the
Reincorporation Agreement, or waive the application of any provision
thereof, provided that any such amendment, modification, supplement or
waiver is in writing and signed by Datamarine-Wash. and Datamarine-Mass.
TERMINATION OF THE REINCORPORATION AGREEMENT
The Reincorporation Agreement will provide that the Boards of
Directors of Datamarine-Mass. and Datamarine-Wash. may terminate the
Reincorporation Agreement and abandon the merger contemplated thereby at any
time prior to its effective time for any reason, whether before or after
approval by the shareholders of Datamarine-Mass.
SHAREHOLDER VOTE REQUIRED TO APPROVE THE REINCORPORATION PROPOSAL
Approval of the Reincorporation proposal will require the affirmative
vote of the holders of at least two-thirds of the shares of all classes and
series of the Company's outstanding capital stock, voting together as a
single class, as well as the affirmative vote of Datamarine-Mass. as the
sole shareholder of Datamarine-Wash.
PROXY
DATAMARINE INTERNATIONAL, INC.
SPECIAL MEETING OF SHAREHOLDERS
March 9, 1999
The undersigned hereby appoints Peter D. Brown and David C. Thompson,
and each of them, with full power of substitution, proxies to represent the
undersigned at the Special Meeting in lieu of the Annual Meeting of
Shareholders of DATAMARINE INTERNATIONAL, INC. to be held March 9, 1999 at
9:30 a.m. at the offices of Davis Wright Tremaine L.L.P., 2600 Century
Square, 1501 Fourth Avenue, Seattle, Washington 98101, and at any
adjournments or postponements thereof, to vote in the name and place of the
undersigned, with all powers which the undersigned would possess if
personally present, all of the shares of DATAMARINE INTERNATIONAL, INC.
standing in the name of the undersigned upon such business as may properly
come before the meeting.
PLEASE DATE AND SIGN THIS PROXY IN THE SPACE PROVIDED AND RETURN IT
IN THE ENCLOSED ENVELOPE, WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN
PERSON.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
PROXY
[x] Please mark votes as in this example.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THE BOARD
RECOMMENDS AN AFFIRMATIVE VOTE ON ALL PROPOSALS SPECIFIED. SHARES WILL BE
VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THE SHARES REPRESENTED WILL
BE VOTED FOR THE ELECTION OF THE DIRECTOR AND FOR PROPOSALS 2 AND 3 AS SET
FORTH IN THE PROXY STATEMENT.
1. Election of Director
Nominee: Stephen W. Frankel
FOR WITHHELD
[ ] [ ]
2. The approval of a change in domicile of the Company from Massachusetts
to Washington, including the approval of the related Agreement and
Plan of Merger between the Company and Datamarine International, Inc.,
a Washington corporation, and new Washington articles of
Incorporation.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To authorize ten million (10,000,000) shares of Common Stock for the
new Washington corporation. The Company currently has authorized three
million (3,000,000) shares of Common Stock.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting.
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Please sign exactly as your name(s) appear(s) on the Proxy. When shares are
held by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Signature: _______________________ Date: _________
Signature: _______________________ Date: _________
