EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
DATAMARINE-WASH., INC.
Pursuant to RCW 23B.02.020 of the Washington Business Corporation
Act, the undersigned does hereby submit these Articles of Incorporation for
the purpose of forming a business corporation.
ARTICLE I
NAME
The name of this corporation is Datamarine-Wash., Inc.
ARTICLE II
PURPOSES
This corporation is organized for the purpose of engaging in any
business, trade or activity which may be conducted lawfully by a
corporation organized under the Washington Business Corporation Act.
ARTICLE III
SHARES
This corporation is authorized to issue twenty million (20,000,000)
shares of common stock with a par value of one cent ($.01) and one million
(1,000,000) shares of preferred stock with a par value of one dollar
($1.00).
ARTICLE IV
TERMS FOR CONVERTIBLE PREFERRED STOCK
AND REDEEMABLE PREFERRED STOCK
Convertible Preferred Stock. This series of preferred stock par
value $1.00 per share ("Preferred Stock") of Datamarine International, Inc.
(the "Corporation") shall be comprised of 2,000 shares designated as
"Redeemable Convertible Participating Preferred Stock" (hereinafter
referred to as "Convertible Preferred Stock"). The relative rights,
preferences, restrictions and other matters relating to the Convertible
Preferred Stock are as follows:
A. Dividends. The holders of the Convertible Preferred Stock
shall be entitled to receive, out of funds legally available therefor,
dividends at the same rate as dividends are paid with respect to this
Corporation's common stock, par value $.01 per share (the "Common Stock")
(treating each share of Convertible Preferred Stock as being equal to the
number of shares of Common Stock into which each such share of Convertible
Preferred Stock could be converted pursuant to the provisions of Section E
hereof with such number determined as of the record date for the
determination of holders of Common Stock entitled to receive such
dividend).
B. Preference on Liquidation. In the event of any liquidation,
dissolution or winding up of the Corporation, the holders of the
Convertible Preferred Stock shall be entitled to share in any distribution
of any of the assets, capital, surplus or earnings of the Corporation
ratably with the holders of the Common Stock of the Corporation (after the
payment in full of the liquidation preference on the Redeemable Preferred
Stock), based upon the amount which such Convertible Preferred Stock would
have been entitled to receive in connection with such liquidation,
dissolution or winding up if such share had been converted into Common
Stock at the Conversion Price (as defined in Section E below) in effect on
such date, together with an amount equal to all declared but unpaid
dividends on the Convertible Preferred Stock as provided in Section A
above, if any.
C. Redemption.
1. At the election of the Corporation, subject to the
holders' of Convertible Preferred Stock rights of conversion pursuant
to the terms of Section E below, the Corporation may redeem all, but
not less than all, of the shares of Convertible Preferred Stock then
outstanding on or after December 31, 2000, so long as the Redeemable
Preferred Stock shall have been redeemed in full on or prior to such
date. If the Corporation elects to redeem the Convertible Preferred
Stock, it shall give written notice of such election at least 60 days
prior to the date of redemption, together with the date of
redemption, and, if the Corporation's Common Stock is not then
publicly held, the Corporation's estimate of the Fair Market Value of
the Convertible Preferred Stock, to the holders of the Convertible
Preferred Stock and all shares of Convertible Preferred Stock will
be redeemed on the date specified for redemption in the Company's
notice (the "Redemption Date") for a per share cash purchase price
equal to the Fair Market Value (as determined in Section C.4 below)
of the Convertible Preferred Stock plus any accumulated and unpaid
dividends (the "Redemption Price"). On or after the Redemption Date,
each holder of shares of Convertible Preferred Stock called for
redemption shall surrender the certificate evidencing such shares to
the Corporation at the place designated in such notice and shall
thereupon be entitled to receive payment of the Redemption Price.
2. Rights. From and after the Redemption Date, unless there
shall have been a default in payment or tender by the Corporation of
the Redemption Price, all rights of the holders with respect to such
redeemed shares of Convertible Preferred Stock (except the right to
receive the Redemption Price in accordance with the terms hereof upon
surrender of their certificate) shall cease and such shares shall not
thereafter be transferred on the books of this Corporation or be
deemed to be outstanding for any purpose whatsoever.
3. Insufficient Funds. If the funds of the Corporation
legally available for redemption of shares of Convertible Preferred
Stock on the Redemption Date are insufficient to redeem the total
number of shares of Convertible Preferred Stock, the Corporation
shall use those funds which are legally available to redeem the
maximum possible number of such shares ratably among the holders of
such shares to be redeemed. At any time thereafter when additional
funds of the Corporation are legally available for the redemption of
shares of Convertible Preferred Stock, such funds will immediately be
used to redeem the balance of the shares which the Corporation has
become obligated to redeem on the Redemption Date but which it has
not redeemed at the Redemption Price together with any accrued
interest thereon as provided below. If any shares of Convertible
Preferred Stock are not redeemed because the Corporation failed to
pay or tender to pay the aggregate Redemption Price on all
outstanding shares of Convertible Preferred Stock, all shares which
have not been redeemed shall remain outstanding and entitled to all
the rights and preferences provided herein, and the Corporation shall
pay interest on the unpaid portion of the Redemption Price for the
unredeemed portion at a per annum rate equal to twenty percent (20%)
or the maximum rate of interest permitted under applicable law,
whichever is less.
4. Fair Market Value Determination. If the Corporation's
Common Stock is publicly traded at the Redemption Date, the Fair
Market Value of each share of Convertible Preferred Stock shall equal
the product of the number of shares of Common Stock into which each
share of the Convertible Preferred Stock may then be converted
multiplied by the average closing price for the Corporation's Common
Stock for the thirty (30) trading days immediately preceding the
Redemption Date. If the Corporation's Common Stock is not publicly
traded on the Redemption Date, the Fair Market Value shall be
determined in accordance with the following provisions. If the
holders of a majority in interest of the Convertible Preferred Stock
do not object in writing to the Corporation's estimate of the Fair
Market Value of the Convertible Preferred Stock within fifteen (15)
days after receipt of the Corporation's written notice of redemption,
such estimate shall be the Fair Market Value for purposes of
determining the Redemption Price of the Convertible Preferred Stock.
If the holders of a majority in interest of the Convertible Preferred
Stock do timely object to the Corporation's estimate of Fair Market
Value, the Corporation and such holders shall seek for a ten (10) day
period thereafter to negotiate the Fair Market Value in good faith.
If the Corporation and the holders of a majority in interest of the
Convertible Preferred Stock are unable to agree upon such Fair Market
Value by the end of such period, each of the Corporation and the
holders (acting by a majority in interest) shall, within ten (10)
days thereafter, select an unaffiliated investment banking firm of
nationally recognized standing in the telecommunications equipment
industry to appraise the Fair Market Value of the Convertible
Preferred Stock. Each such firm will deliver its appraisal of the
Fair Market Value within fifteen (15) days thereafter, and if the
lower appraisal is at least 90% of the higher appraisal, the
arithmetic mean of the two shall be the Fair Market Value. If the
two appraisals vary by more than 10%, the two firms shall promptly
select a third investment banking firm of nationally recognized
standing in the telecommunications equipment industry. Such third
firm shall, within ten (10) days thereafter, deliver its appraisal of
the Fair Market Value of the Convertible Preferred Stock, the two
appraisals which are closest together in value shall be averaged and
such amount shall be the Fair Market Value for purposes of
determining the Redemption Price. The Fair Market Value of the
Convertible Preferred Stock shall be determined: (i) without regard
to the illiquid nature of such stock or for any discount attributable
to the minority interest represented by such stock; (ii) with the
Corporation valued as a going concern (including all net working
capital); and (iii) on the basis of what a willing buyer would pay to
a seller under no compunction to sell. All costs of the appraisals
hereunder shall be borne by the Corporation.
D. Voting. Except as otherwise provided herein or as required by
law, the shares of the Convertible Preferred Stock shall be voted together
with the Corporation's Common Stock as a single voting group at any annual
or special meeting of the stockholders of the Corporation, or may act by
written consent as a single voting group with the Corporation's Common
Stock, and shall otherwise have the same voting rights of the Common Stock.
Each share of Convertible Preferred Stock shall entitle the holder thereof
to such number of votes per share as shall equal the number of shares of
Common Stock into which such share of Convertible Preferred Stock is then
convertible.
E. Conversion Rights. The holders of Convertible Preferred Stock
shall have conversion rights as follows:
1. Conversion at Holder's Election. Each share of
Convertible Preferred Stock shall be converted promptly upon the
written election to so convert by holders of a majority in interest
of the Convertible Preferred Stock into shares of Common Stock,
initially at a conversion price equal to $9.00 per share of Common
Stock, which price shall be adjusted as hereinafter provided (and, as
so adjusted, is hereinafter sometimes referred to as the "Conversion
Price"), with each share of Convertible Preferred Stock being valued
for such purpose at $737.85.
2. Conversion at the Company's Election. At any time on or
after December 19, 2000, the Company may, in its sole discretion,
elect to convert each share of Convertible Preferred Stock into
shares of Common Stock, at the Conversion Price, with each share of
Convertible Preferred Stock being valued for such purpose at $737.85,
by providing written notice of the Company's election to each holder
of Convertible Preferred Stock specifying a date not earlier than
sixty (60) days from the mailing date of such notice as the date for
surrender of certificates of Convertible Preferred Stock in
connection with such conversion (the "Initial Surrender Date") and
provided that the Company shall redeem all outstanding shares of
Redeemable Preferred Stock (defined below) at or prior to the Initial
Surrender Date.
3. Dividends. If Convertible Preferred Stock is converted
pursuant to Section E.1 or Section E.2 and at such time there are
declared and unpaid dividends or other amounts due on such shares,
such dividends shall be paid in full by the Corporation in connection
with such conversion.
4. Conversion Procedures. Any holder of Convertible
Preferred Stock whose shares are converted into shares of Common
Stock shall promptly, in the case of conversion pursuant to Section
E.1, or at or within five (5) days after the Initial Surrender Date,
in the case of conversion pursuant to Section E.2, surrender the
certificate or certificates representing the Convertible Preferred
Stock being converted, duly assigned or endorsed for transfer to the
Corporation (or accompanied by duly executed stock powers relating
thereto), at the principal executive office of the Corporation or the
offices of the transfer agent for the Convertible Preferred Stock or
such office or offices in the continental United States of an agent
for conversion as may from time to time be designated by notice to
the holders of the Convertible Preferred Stock by the Corporation,
accompanied, in the case of a voluntary conversion pursuant to
Section E.1, by written notice of conversion. Such notice of
conversion shall specify (i) the number of shares of Convertible
Preferred Stock to be converted, (ii) the name or names in which such
holder wishes the certificate or certificates for Common Stock to be
issued, and (iii) the address to which such holder wishes delivery to
be made of such new certificates to be issued upon such conversion.
Upon surrender of a certificate representing Convertible Preferred
Stock for conversion, the Corporation shall issue and send by hand
delivery, by courier or by overnight courier to the holder thereof or
to such holder's designee, at the address designated by such holder,
a certificate or certificates for the number of shares of Common
Stock to which such holder shall be entitled upon conversion.
5. Effective Date of Conversion. The issuance by the
Corporation of shares of Common Stock upon a conversion of
Convertible Preferred Stock into shares of Common Stock pursuant to
Section E.1 or Section E.2 hereof shall be effective as of the date
of the surrender of the certificate or certificates for the
Convertible Preferred Stock to be converted, duly assigned or
endorsed for transfer to the Corporation (or accompanied by duly
executed stock powers relating thereto); provided, however, that in
the event of conversion pursuant to Section E.2, any shares of
Convertible Preferred Stock in respect of which certificates have not
been surrendered in accordance with Section E.4 by the Corporation's
close of business on the fifth day after the Initial Surrender Date
(such day, the "Final Surrender Date") shall be automatically
converted into shares of Common Stock in accordance with Section E.2,
without any further action on the part of the holder of such shares,
effective as of the Final Surrender Date. On and after the effective
date of conversion, the person or persons entitled to receive the
Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such shares of Common
Stock.
6. Fractional Shares. The Corporation shall not be
obligated to deliver to holders of Convertible Preferred Stock any
fractional share of Common Stock issuable upon any conversion of such
Convertible Preferred Stock, but in lieu thereof may make a cash
payment in respect thereof in any manner permitted by law.
7. Reservation of Common Stock. The Corporation shall at
all times reserve and keep available out of its authorized and
unissued Common Stock, solely for issuance upon the conversion of
Convertible Preferred Stock as herein provided, free from any
preemptive rights or other obligations, such number of shares of
Common Stock as shall from time to time be issuable upon the
conversion of all the Convertible Preferred Stock then outstanding.
The Corporation shall prepare and shall use its best efforts to
obtain and keep in force such governmental or regulatory permits or
other authorizations as may be required by law, excluding permits or
authorizations relating to registration under Federal or state
securities laws, in order to enable the Corporation lawfully to issue
and deliver to each holder of record of Convertible Preferred Stock
such number of shares of its Common Stock as shall from time to time
be sufficient to effect the conversion of all Convertible Preferred
Stock then outstanding and convertible into shares of Common Stock.
8. Adjustments to Conversion Price. The Conversion Price in
effect from time to time shall be subject to adjustment from and
after December 19, 1995 and through the effective date of the
conversion of all of the then outstanding Convertible Preferred Stock
and regardless of whether any shares of Convertible Preferred Stock
are then issued and outstanding as follows:
(a) Stock Dividends, Subdivisions and Combinations.
Upon the issuance of additional shares of Common Stock as a
dividend or other distribution on outstanding Common Stock, the
subdivision of outstanding shares of Common Stock into a
greater number of shares of Common Stock, or the combination of
outstanding shares of Common Stock into a smaller number of
shares of Common Stock, the Conversion Price shall,
simultaneously with the happening of such dividend, subdivision
or split be adjusted by multiplying the then effective
Conversion Price by a fraction, the numerator of which shall be
the number of shares of Common Stock outstanding immediately
prior to such event and the denominator of which shall be the
number of shares of Common Stock outstanding immediately after
such event. An adjustment made pursuant to this Section E.8(a)
shall be given effect, upon payment of such a dividend or
distribution, as of the record date for the determination of
stockholders entitled to receive such dividend or distribution
(on a retroactive basis) and in the case of a subdivision or
combination shall become effective immediately as of the
effective date thereof.
(b) Sale of Common Stock. In the event the Corporation
shall at any time, or from time to time, issue, sell or
exchange any shares of Common Stock (including shares held in
the Corporation's treasury but excluding any shares of Common
Stock issued (i) to employees or officers of the Corporation
under the Corporation's Datamarine Employee Investment Plan
(401(k) Plan) and/or the 1980 Employee Stock Purchase Plan,
each as in effect as of November 1, 1995 or (ii) to officers,
directors, employees, consultants, advisors or agents of the
Corporation upon the exercise of Excluded Options (as defined
in Section E.8(c) below)), for a consideration per share less
than the Conversion Price in effect immediately prior to the
issuance, sale or exchange of such shares, then, and thereafter
successively upon each such issuance, sale or exchange, the
Conversion Price in effect immediately prior to the issuance,
sale or exchange of such shares shall forthwith be reduced to
an amount determined by multiplying such Conversion Price by a
fraction:
(I) the numerator of which shall be (i) the
number of shares of Common Stock of all classes
outstanding immediately prior to the issuance of such
additional shares of Common Stock (excluding treasury
shares but including all shares of Common Stock issuable
upon conversion, exercise or exchange of any outstanding
Preferred Stock, options, warrants, rights or convertible
or exchangeable securities (including the convertible
debentures due December 19, 2000 issued by this
Corporation (the "Convertible Debentures") pursuant to
that certain Debenture Purchase Agreement dated as of
December 19, 1995 among the Company and the parties named
on the signature pages and Exhibit A thereto (the
"Debenture Purchase Agreement.)), plus (ii) the number of
shares of Common Stock which the net aggregate
consideration received by the Corporation for the total
number of such additional shares of Common Stock so
issued would purchase at the Conversion Price (prior to
adjustment), and
(II) the denominator of which shall be (i) the
number of shares of Common Stock of all classes
outstanding immediately prior to the issuance of such
additional shares of Common Stock (excluding treasury
shares but including all shares of Common Stock issuable
upon conversion, exercise or exchange of any outstanding
Preferred Stock, options, warrants, rights or convertible
or exchangeable securities (including the Convertible
Debentures)), plus (ii) the number of such additional
shares of Common Stock so issued.
(c) Sale of Options, Rights or Convertible Securities.
In the event the Corporation shall at any time or from time to
time, issue options, warrants or rights to subscribe for shares
of Common Stock (other than any options or warrants for shares
of Common Stock granted to officers, directors, employees,
consultants, advisors or agents of the Corporation pursuant to
either (a) the Corporation's 1991 Stock Option Plan at an
exercise price equal to at least 80% of the then current fair
market value of the Common Stock, or (b) the Corporation's 1992
Stock Option Plan for Non-Employee Directors at exercise prices
equal to the then current fair market value of the Common Stock
(the "Excluded Options")), or issue any securities convertible
into or exchangeable for shares of Common Stock, for a
consideration per share (determined by dividing the Net
Aggregate Consideration (as determined below) by the aggregate
number of shares of Common Stock that would be issued if all
such options, warrants, rights or convertible or exchangeable
securities were exercised, converted or exchanged to the fullest
extent permitted by their terms) less than the Conversion Price
in effect immediately prior to the issuance of such options,
warrants, rights or convertible or exchangeable securities, the
Conversion Price in effect immediately prior to the issuance of
such options, warrants, rights or convertible or exchangeable
securities shall forthwith be reduced to an amount determined by
multiplying such Conversion Price by a fraction:
(I) the numerator of which shall be (i) the
number of shares of Common Stock of all classes
outstanding immediately prior to the issuance of such
options, rights or convertible or exchangeable securities
(excluding treasury shares but including all shares of
Common Stock issuable upon conversion, exercise or
exchange of any outstanding Preferred Stock, options,
warrants, rights or convertible securities (including the
Convertible Debentures)), plus (ii) the number of shares
of Common Stock which the total amount of consideration
received by the Corporation for the issuance of such
options, warrants, rights or convertible or exchangeable
securities plus the minimum amount set forth in the terms
of such security as payable to the Corporation upon the
exercise, conversion or exchange thereof (the "Net
Aggregate Consideration") would purchase at the
Conversion Price prior to adjustment, and
(II) the denominator of which shall be (i) the
number of shares of Common Stock of all classes
outstanding immediately prior to the issuance of such
options, warrants, rights or convertible or exchangeable
securities (excluding treasury shares but including all
shares of Common Stock issuable upon conversion, exercise
or exchange of any outstanding Preferred Stock, options,
warrants, rights or convertible or exchangeable
securities (including the Convertible Debentures)), plus
(ii) the aggregate number of shares of Common Stock that
would be issued if all such options, warrants, rights or
convertible or exchangeable securities were exercised,
converted or exchanged.
(d) Expiration or Change in Price. If the
consideration per share provided for in any options, warrants
or rights to subscribe for shares of Common Stock or any
securities exchangeable for or convertible into shares of
Common Stock changes at any time, the Conversion Price in
effect at the time of such change shall be readjusted to the
Conversion Price which would have been in effect at such time
had such options, warrants rights or convertible or
exchangeable securities provided for such changed consideration
per share (determined as provided in Section E.8(c) hereof), at
the time initially granted, issued or sold; provided, that such
adjustment of the Conversion Price will be made only as and to
the extent that the Conversion Price effective upon such
adjustment remains less than or equal to the Conversion Price
that would be in effect if such options, warrants, rights or
convertible or exchangeable securities had not been issued. No
adjustment of the Conversion Price shall be made under this
Section E upon the issuance of any shares of Common Stock which
are issued pursuant to the exercise of any options, warrants or
other subscription or purchase rights or pursuant to the
exercise of any conversion or exchange rights in any
convertible or exchangeable securities if an adjustment shall
previously have been made upon the issuance of such options,
warrants, rights or convertible or exchangeable securities.
Any adjustment of the Conversion Price shall be disregarded if,
as, and when the rights to acquire shares of Common Stock upon
exercise or conversion of the options, warrants, rights or
convertible or exchangeable securities which gave rise to such
adjustment expire or are canceled without having been
exercised, so that the Conversion Price effective immediately
upon such cancellation or expiration shall be equal to the
Conversion Price in effect at the time of the issuance of the
expired or cancelled warrants, options, rights or convertible
securities, with such additional adjustments as would have been
made to that Conversion Price had the expired or cancelled
warrants, options, rights or convertible securities not been
issued.
9. Other Adjustments. In the event the Corporation shall
make or issue, or fix a record date for the determination of holders
of Common Stock entitled to receive, a non-cash dividend or other
distribution payable in securities of the Corporation other than
shares of Common Stock, then and in each such event lawful and
adequate provision shall be made so that the holders of Convertible
Preferred Stock shall receive upon conversion thereof in addition to
the number of shares of Common Stock receivable thereupon, the number
of securities of the Corporation which they would have received had
their Convertible Preferred Stock been converted into Common Stock on
the date of such event and had they thereafter, during the period
from the date of such event to and including the Conversion Date (as
that term is hereafter defined), retained such securities receivable
by them as aforesaid during such period.
If the Common Stock issuable upon the conversion of the
Convertible Preferred Stock shall be changed into the same or
different number of shares of any class or classes of stock, whether
by reorganization, reclassification or otherwise (other than a
subdivision or combination of shares or stock dividend provided for
above, or a reorganization, merger, consolidation or sale of assets
provided for elsewhere in this Section E), then and in each such
event the holder of each share of Convertible Preferred Stock shall
have the right thereafter to convert such share into the kind and
amount of shares of stock and other securities and property
receivable upon such reorganization, reclassification or other
change, by holders of the number of shares of Common Stock into which
such shares of Convertible Preferred Stock might have been converted
immediately prior to such reorganization, reclassification or change,
all subject to further adjustment as provided herein.
10. Mergers and Other Reorganizations. If at any time or
from time to time there shall be a capital reorganization of the
Common Stock (other than a subdivision, combination, reclassification
or exchange of shares provided for elsewhere in this Section E) or a
merger or consolidation of the Corporation with or into another
corporation or the sale of all or substantially all of the
Corporation's properties and assets to any other person, then, as a
part of and as a condition to the effectiveness of such
reorganization, merger, consolidation or sale, lawful and adequate
provision shall be made so that the holders of the Convertible
Preferred Stock shall thereafter be entitled to receive upon
conversion of the Convertible Preferred Stock the number of shares of
stock or other securities or property of the Corporation or of the
successor corporation resulting from such merger or consolidation or
sale, to which such holders would have been entitled upon such
capital reorganization, merger, consolidation or sale had such
holders converted their shares of Convertible Preferred Stock into
Common Stock immediately prior to such capital reorganization,
merger, consolidation, or sale. In any such case, appropriate
provisions shall be made with respect to the rights of the holders of
the Convertible Preferred Stock after the reorganization, merger,
consolidation or sale to the end that the provisions of this Section
E (including without limitation provisions for adjustment of the
Conversion Price and the number of shares purchasable upon conversion
of the Convertible Preferred Stock) shall thereafter be applicable,
as nearly as may be, with respect to any shares of stock, securities
or assets to be deliverable thereafter upon the conversion of the
Convertible Preferred Stock.
11. Notices. In each case of an adjustment or readjustment
of the Conversion Price, the Corporation will furnish each holder of
Convertible Preferred Stock or any Convertible Debentures with a
certificate, prepared by the chief financial officer of the
Corporation, showing such adjustment or readjustment, and stating in
detail the facts upon which such adjustment or readjustment is based;
provided, however, that the Corporation shall be entitled to deliver
any such notices to the representative of the holders as set forth in
Section 12.6 of the Debenture Purchase Agreement.
F. Restrictions and Limitations. So long as the Convertible
Preferred Stock remains outstanding, the Corporation shall not without the
affirmative vote or written consent of the holders of a majority in
interest of the then outstanding shares of the Convertible Preferred Stock
(adjusted appropriately for stock splits, stock dividends and the like):
(a) Redeem, purchase or otherwise acquire for value (or pay
into or set aside for a sinking fund for such purpose), any share or
shares of stock other than redemption of the Redeemable Preferred
Stock in accordance with the terms thereof or pursuant to Section B
or Section C hereof; provided, however, that this restriction shall
not apply to the repurchase or redemption of shares of Common Stock
issued pursuant to stock repurchase or similar agreements under which
the Company has the option to repurchase such shares upon the
occurrence of certain events, including the termination of employment
and involuntary transfers by operation of law, provided that (unless
the purchase is approved by unanimous vote of the Board of Directors
of the Corporation) the repurchase price paid by the Corporation does
not exceed the purchase price paid to the Corporation for such
shares;
(b) Authorize or issue, or obligate itself to issue, any
other equity security senior to the Convertible Preferred Stock as to
liquidation preferences, redemptions, or dividend rights or with any
special voting rights (other than the Redeemable Preferred Stock);
(c) Increase or decrease (other than by conversion as
permitted hereby) the total number of authorized shares of
Convertible Preferred Stock or Redeemable Preferred Stock;
(d) Pay any dividends on any of its capital stock or
otherwise make any payments to any holders of its Common Stock,
except as otherwise expressly permitted in the Debenture Purchase
Agreement;
(e) Authorize any merger or consolidation of the
Corporation or SEA, Inc. with or into any other corporation,
partnership or entity (other than a wholly-owned subsidiary of the
Corporation or in connection with an acquisition which is permitted
under the terms of a certain Debenture Purchase Agreement dated
December 19, 1995 by and among the holders of the Corporation's
Convertible Debentures issued thereunder and the Corporation (the
"Debenture Purchase Agreement"), authorize or permit the liquidation,
dissolution or winding up of the Corporation, SEA, Inc. of Delaware
or Narrowband Network Systems, Inc. or authorize or permit the sale
of all or any substantial portion of the capital stock or assets of
the Corporation, SEA, Inc. of Delaware or Narrowband Network Systems,
Inc. (except as permitted pursuant to Sections 5.11 and 5.12 of the
Debenture Purchase Agreement); or
(f) Amend the Amended and Restated Articles of Incorporation
or By-Laws of the Corporation in a manner which, or take any other
action or enter into any other agreements which, could prohibit or
conflict with the Corporation's obligations hereunder with respect to
the holders of the Convertible Preferred Stock.
G. No Reissuance of Convertible Preferred Stock. No share or
shares of the Convertible Preferred Stock acquired by the Corporation by
reason of redemption, purchase, conversion or otherwise shall be reissued,
and all such shares shall be canceled, retired, and eliminated from the
shares which the Corporation shall be authorized to issue. The Corporation
may from time to time take such appropriate corporate action as may be
necessary to reduce the authorized number of shares of the Convertible
Preferred Stock accordingly.
H. Notices of Record Date. In the event (i) the Corporation
establishes a record date to determine the holders of any class of
securities who are entitled to receive any dividend or other distribution,
or (ii) there occurs any capital reorganization of the Corporation, any
reclassification or recapitalization of the capital stock of the
Corporation, any merger or consolidation of the Corporation, and any
transfer of all or substantially all of the assets of the Corporation to
any other Corporation, or any other entity or person, or any voluntary or
involuntary dissolution, liquidation or winding up of the Corporation, the
Corporation shall mail to the representative of the holders of Convertible
Preferred Stock as set forth in Section 12.6 of the Debenture Purchase
Agreement at least twenty (20) days prior to the record date specified
therein, a notice specifying (a) the date of such record date for the
purpose of such dividend or distribution and a description of such dividend
or distribution, (b) the date on which any such reorganization,
reclassification, transfer, consolidation, merger, dissolution, liquidation
or winding up is expected to become effective, and (c) the time, if any,
that is to be fixed, as to when the holders of record of Common Stock (or
other securities) shall be entitled to exchange their shares of Common
Stock (or other securities) for securities or other property deliverable
upon such reorganization, reclassification, transfer, consolidation,
merger, dissolution, liquidation or winding up.
Redeemable Preferred Stock. This series of Preferred Stock of the
Corporation shall be comprised of 2,000 shares designated as "Redeemable
Preferred Stock" (hereinafter referred to as "Redeemable Preferred Stock").
The relative rights, preferences, restrictions and other matters relating
to the Redeemable Preferred Stock are as follows:
A. Dividends. The holders of the Redeemable Preferred Stock shall
be entitled to receive, and the Corporation shall be bound to pay on the
earlier of the RPF Redemption Date or the Optional Redemption Date (unless
sooner paid at the election of the Company), cumulative dividends in an
amount per share determined by (i) accruing dividends for each calendar
year or portion thereof that any shares of the Redeemable Preferred Stock
are outstanding (A) through December 31, 1996 at the per annum rate of
$100.00, (B) during calendar year 1997 at the per annum rate of $110.00,
(C) during calendar year 1998 at the per annum rate of $120.000, (D) during
calendar year 1999 at the per annum rate of $140.00, and (E) during
calendar year 2000 and thereafter at the per annum rate of $150.00, and
(ii) compounding such dividends on each calendar year end until paid (or
through any date on which such dividends are to be paid) at the per annum
dividend rate for such year.
B. Preference on Liquidation.
1. In the event of any liquidation, dissolution or winding
up of the Corporation, the holders of the Redeemable Preferred Stock
shall be entitled to receive in cash and prior and in preference to
any distribution of any assets, capital, surplus or earnings of the
Corporation to the holders of any other capital stock of the
Corporation (including the Convertible Preferred Stock and the Common
Stock), the amount of $1,000.00 per share for each share of
Redeemable Preferred Stock then held by them (adjusted for any stock
split, combination, consolidation, or stock distributions or stock
dividends with respect to such shares) together with all accrued but
unpaid cumulative dividends on the Redeemable Preferred Stock (the
"Liquidation Preference Amount"). If the assets and funds thus
distributed among the holders of the Redeemable Preferred Stock shall
be insufficient to permit the payment to such holders of the full
Liquidation Preference Amount then the entire assets and funds of the
Corporation legally available for distribution shall be distributed
ratably among the holders of the Redeemable Preferred Stock.
2. The following shall be deemed to be a liquidation,
dissolution or winding up within the meaning of this Section B.2
(with each such event being referred to herein as a "Corporate
Disposition"): (i) a consolidation or merger of this Corporation with
or into any other corporation or corporations (other than a wholly-
owned subsidiary or in connection with an acquisition permitted under
the Debenture Purchase Agreement); (ii) the sale, transfer or other
disposition of all or substantially all of the assets of this
Corporation; or (iii) the effectuation by the Corporation or its
shareholders of a transaction or series of related transactions in
which more than 50% of the voting power of the Corporation is
disposed of (other than as permitted under the Debenture Purchase
Agreement).
C. Redemption.
1. Mandatory Redemption. The Corporation shall redeem all
of the shares of Redeemable Preferred Stock then outstanding on
December 19, 2000. On or prior to June 30, 1999, the Corporation
shall give written notice by mail, postage prepaid, to the holders of
the then outstanding Redeemable Preferred Stock at the address of
each such holder appearing on the books of the Corporation or given
by such holder to the Corporation for the purpose of notice. Such
notice shall set forth the date specified for redemption (December
19, 2000) and the Redemption Price (which shall be the Liquidation
Preference Amount). The notice shall further call upon such holders
to surrender to the Corporation on or before the applicable
redemption date at the place designated in the notice such holder's
certificate or certificates representing the shares to be redeemed on
December 19, 2000 (the "RPF Redemption Date") or an indemnification
and loss certificate. On or before the applicable RPF Redemption
Date, each holder of shares of Redeemable Preferred Stock called for
redemption shall surrender the certificate evidencing such shares, or
such indemnification and loss certificate, to the Corporation. At
such time, the Corporation shall pay to each of the holders of
Redeemable Preferred Stock a per share cash price equal to the
Redemption Price.
2. Optional Redemption. The Corporation may, in its sole
discretion, at any time after December 19, 1997, redeem all of the
shares of Redeemable Preferred Stock then outstanding. The
Corporation shall give the holders of the then outstanding Redeemable
Preferred Stock not less than sixty (60) days prior written notice by
mail, postage prepaid, at the address of each such holder appearing
on the books of the Corporation or given by such holder to the
Corporation for the purpose of such notice. Such notice shall set
forth the date specified for redemption (the "Optional Redemption
Date") and the Redemption Price (which shall be the Liquidation
Preference Amount). The notice shall further call upon such holders
to surrender to the Corporation on or before the Optional Redemption
Date at the place designated in the notice such holder's certificate
or certificates representing the shares to be redeemed on the
Optional Redemption Date or an indemnification and loss certificate.
On or before the applicable Optional Redemption Date, each holder of
shares of Redeemable Preferred Stock called for redemption shall
surrender the certificate evidencing such shares, or such
indemnification and loss certificate, to the Corporation. At such
time, the Corporation shall pay to each of the holders of Redeemable
Preferred Stock a per share cash price equal to the Redemption Price.
3. Termination of Rights. From and after any applicable RPF
Redemption Date or Optional Redemption Date, unless there shall have
been a default in payment or tender by the Corporation of the
Redemption Price, all rights of the holders with respect to such
redeemed shares of Redeemable Preferred Stock (except the right to
receive the Redemption Price upon surrender of their certificate)
shall cease and such shares shall not thereafter be transferred on
the books of this Corporation or be deemed to be outstanding for any
purpose whatsoever.
4. Insufficient Funds. If the funds of the Corporation
legally available for redemption of shares of Redeemable Preferred
Stock on the applicable RPF Redemption Date or Optional Redemption
Date are insufficient to redeem the total number of shares of
Redeemable Preferred Stock on such redemption date, the Corporation
shall use those funds which are legally available to redeem the
maximum possible number of such shares ratably among the holders of
such shares to be redeemed. At any time thereafter when additional
funds of the Corporation are legally available for the redemption of
shares of Redeemable Preferred Stock, such funds will immediately be
used to redeem the balance of the shares which the Corporation has
become obligated to redeem on the applicable RPF Redemption Date or
Optional Redemption Date, but which it has not redeemed, at the
Redemption Price together with any accrued interest thereon as
provided below. If any shares of Redeemable Preferred Stock are not
redeemed for the foregoing reason or because the Corporation
otherwise failed to pay or tender to pay the aggregate Redemption
Price on all outstanding shares of Redeemable Preferred Stock, all
shares which have not been redeemed shall remain outstanding and
entitled to all the rights and preferences provided herein, and the
Corporation shall pay interest on the unpaid portion of the
Redemption Price for the unredeemed portion at an aggregate per annum
rate equal to twenty percent (20%) or the maximum rate permitted by
applicable law, whichever is less.
D. Voting. Except as required by law, the shares of the
Redeemable Preferred Stock shall not have any voting rights or powers.
E. No Reissuance of Redeemable Preferred Stock. No share or
shares of the Redeemable Preferred Stock acquired by the Corporation by
reason of redemption, purchase, conversion or otherwise shall be reissued,
and all such shares shall be canceled, retired, and eliminated from the
shares which the Corporation shall be authorized to issue. The Corporation
may from time to time take such appropriate corporate action as may be
necessary to reduce the authorized number of shares of the Redeemable
Preferred Stock accordingly.
ARTICLE V
NO PREEMPTIVE RIGHTS
Except as may otherwise be provided by the Board of Directors, no
preemptive rights shall exist with respect to shares of stock or securities
convertible into shares of stock of this corporation.
ARTICLE VI
NO CUMULATIVE VOTING
At each election for directors, every shareholder entitled to vote at
such election has the right to vote in person or by proxy the number of
shares held by such shareholder for as many persons as there are directors
to be elected. No cumulative voting for directors shall be permitted.
ARTICLE VII
BYLAWS
The Board of Directors shall have the power to adopt, amend or repeal
the Bylaws or adopt new Bylaws. Nothing herein shall deny the concurrent
power of the shareholders to adopt, alter, amend or repeal the Bylaws.
ARTICLE VIII
REGISTERED AGENT AND OFFICE
The name of the initial registered agent of this corporation and the
address of its initial registered office are as follows:
Name Address
---- -------
David C. Thompson 7030 220th St. S.W.
Mountlake Terrace, WA 98043
ARTICLE IX
DIRECTORS
A. The number of directors of this corporation shall be determined
in the manner specified by the Bylaws and may be increased or decreased
from time to time in the manner provided therein.
B. The term of the initial directors shall be until the first
annual meeting of the shareholders or until their successors are elected
and qualified, unless removed in accordance with the provisions of the
Bylaws.
C. The Directors of the corporation shall be divided into three
classes: Class I, Class II and Class III. Each class shall consist, as
nearly as may be possible, of one-third of the whole number of the Board of
Directors. In the first annual meeting of stockholders, the Class I
Director shall be elected to hold office for a term to expire at the first
annual meeting of the stockholders thereafter; the Class II Director shall
be elected to hold office for a term to expire with the second annual
meeting of the stockholders thereafter; and the Class III Director shall be
elected to hold office for a term to expire at the third annual meeting of
the stockholders thereafter, and in the case of each class, until his
respective successor is duly elected and qualified. At each annual election
held after the next annual meeting of the stockholders, the Director
elected to succeed the one whose term expires shall be identified as being
of the same class as the Director he succeeds and shall be elected to hold
office for a term to expire at the third annual meeting of the stockholders
after his election, and until his successor is duly elected and qualified.
If the number of Directors changes, any increase or decrease in Directors
shall be apportioned among the classes so as to maintain all classes as
equal in number as possible, and any additional Director elected to any
class shall hold office for a term which shall coincide with the terms of
the other Directors in such class and until his successor is duly elected
and qualified.
ARTICLE X
SHAREHOLDER VOTING REQUIREMENTS FOR CERTAIN TRANSACTIONS
In order to obtain shareholder approval in connection with the
following corporate actions, such actions must be approved by each voting
group of shareholders entitled to vote thereon by a majority of all the
votes entitled to be cast by that voting group: amendment of the Articles
of Incorporation; a plan of merger or share exchange; the sale, lease,
exchange, or other disposition of all, or substantially all, of the
corporation's assets other than in the usual and regular course of
business; or dissolution of the corporation.
ARTICLE XI
INCORPORATOR
The name and address of the incorporator is as follows:
Name Address
---- -------
Eric A. DeJong 2600 Century Square
1501 Fourth Avenue
Seattle, WA 98101-1688
ARTICLE XII
LIMITATION OF DIRECTORS' LIABILITY
A director shall have no liability to the corporation or its
shareholders for monetary damages for conduct as a director, except for
acts or omissions that involve intentional misconduct by the director, or a
knowing violation of law by the director, or for conduct violating RCW
23B.08.310, or for any transaction from which the director will personally
receive a benefit in money, property or services to which the director is
not legally entitled. If the Washington Business Corporation Act is
hereafter amended to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability of a
director shall be eliminated or limited to the full extent permitted by the
Washington Business Corporation Act, as so amended. Any repeal or
modification of this Article shall not adversely affect any right or
protection of a director of the corporation existing at the time of such
repeal or modification for or with respect to an act or omission of such
director occurring prior to such repeal or modification.
ARTICLE XIII
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1. Right to Indemnification. Each person who was, or is
threatened to be made a party to or is otherwise involved (including,
without limitation, as a witness) in any actual or threatened action, suit
or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he or she is or was a director or officer of the
corporation or, while a director or officer, he or she is or was serving at
the request of the corporation as a director, trustee, officer, employee or
agent of another corporation or of a partnership, joint venture, trust or
other enterprise, including service with respect to employee benefit plans,
whether the basis of such proceeding is alleged action in an official
capacity as a director, trustee, officer, employee or agent or in any other
capacity while serving as a director, trustee, officer, employee or agent,
shall be indemnified and held harmless by the corporation, to the full
extent permitted by applicable law as then in effect, against all expense,
liability and loss (including attorney's fees, judgments, fines, ERISA
excise taxes or penalties and amounts to be paid in settlement) actually
and reasonably incurred or suffered by such person in connection therewith,
and such indemnification shall continue as to a person who has ceased to be
a director, trustee, officer, employee or agent and shall inure to the
benefit of his or her heirs, executors and administrators; provided,
however, that except as provided in Section 2 of this Article with respect
to proceedings seeking to enforce rights to indemnification, the
corporation shall indemnify any such person seeking indemnification in
connection with a proceeding (or part thereof) initiated by such person
only if such proceeding (or part thereof) was authorized by the board of
directors of the corporation. The right to indemnification conferred in
this Section 1 shall be a contract right and shall include the right to be
paid by the corporation the expenses incurred in defending any such
proceeding in advance of its final disposition; provided, however, that the
payment of such expenses in advance of the final disposition of a
proceeding shall be made only upon delivery to the corporation of an
undertaking, by or on behalf of such director or officer, to repay all
amounts so advanced if it shall ultimately be determined that such director
or officer is not entitled to be indemnified under this Section 1 or
otherwise.
Section 2. Right of Claimant to Bring Suit. If a claim under
Section 1 of this Article is not paid in full by the corporation within
sixty (60) days after a written claim has been received by the corporation,
except in the case of a claim for expenses incurred in defending a
proceeding in advance of its final disposition, in which case the
applicable period shall be twenty (20) days, the claimant may at any time
thereafter bring suit against the corporation to recover the unpaid amount
of the claim and, to the extent successful in whole or in part, the
claimant shall be entitled to be paid also the expense of prosecuting such
claim. The claimant shall be presumed to be entitled to indemnification
under this Article upon submission of a written claim (and, in an action
brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition, where the required
undertaking has been tendered to the corporation), and thereafter the
corporation shall have the burden of proof to overcome the presumption that
the claimant is so entitled. Neither the failure of the corporation
(including its board of directors, independent legal counsel or its
shareholders) to have made a determination prior to the commencement of
such action that indemnification of or reimbursement or advancement of
expenses to the claimant is proper in the circumstances nor an actual
determination by the corporation (including its board of directors,
independent legal counsel or its shareholders) that the claimant is not
entitled to indemnification or to the reimbursement or advancement of
expenses shall be a defense to the action or create a presumption that the
claimant is not so entitled.
Section 3. Nonexclusivity of Rights. The right to indemnification
and the payment of expenses incurred in defending a proceeding in advance
of its final disposition conferred in this Article shall not be exclusive
of any other right which any person may have or hereafter acquire under any
statute, provision of the Articles of Incorporation, Bylaws, agreement,
vote of shareholders or disinterested directors or otherwise.
Section 4. Insurance, Contracts and Funding. The corporation may
maintain insurance, at its expense, to protect itself and any director,
trustee, officer, employee or agent of the corporation or another
corporation, partnership, joint venture, trust or other enterprise against
any expense, liability or loss, whether or not the corporation would have
the power to indemnify such person against such expense, liability or loss
under the Washington Business Corporation Act. The corporation may,
without further shareholder action, enter into contracts with any director
or officer of the corporation in furtherance of the provisions of this
Article and may create a trust fund, grant a security interest or use other
means (including, without limitation, a letter of credit) to ensure the
payment of such amounts as may be necessary to effect indemnification as
provided in this Article.
Section 5. Indemnification of Employees and Agents of the
Corporation. The corporation may, by action of its board of directors from
time to time, provide indemnification and pay expenses in advance of the
final disposition of a proceeding to employees and agents of the
corporation with the same scope and effect as the provisions of this
Article with respect to the indemnification and advancement of expenses of
directors and officers of the corporation or pursuant to rights granted
pursuant to, or provided by, the Washington Business Corporation Act or
otherwise.
Dated March __, 2000
________________________________
Eric A. DeJong, Incorporator
CONSENT TO SERVE AS REGISTERED AGENT
I, David C. Thompson, hereby consent to serve as Registered Agent, in
the State of Washington, for Datamarine-Wash., Inc. I understand that as
agent for the corporation, it will be my responsibility to receive service
of process in the name of the corporation; to forward all mail to the
corporation; and to immediately notify the office of the Secretary of State
in the event of my resignation, or of any changes in the registered office
address of Datamarine-Wash., Inc.
Dated: March __, 2000
________________________________
David C. Thompson
7030 220th St. S.W.
Mountlake Terrace, WA 98043
