<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 240.14a-11(c)or Rule 240.14a-12
PLENUM COMMUNICATIONS, INC.
(Name of Registrant as Specified In Its Charter)
Not Applicable
(Name of Persons(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(I)(1)and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:__________________
(5) Total fee paid:___________________________________________________
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
(1) Amount Previously Paid:__________________________________________
(2) Form, Schedule or Registration Statement No.:____________________
(3) Filing Party:____________________________________________________
(4) Date Filed:______________________________________________________
<PAGE>
LION INC.
OCTOBER 20, 2000
Dear Shareholder:
You are cordially invited to attend the 2000 annual meeting of
shareholders ("Annual Meeting") of Plenum Communications, Inc., dba LION Inc.
("Company") which will be held at the West Coast Bellevue Hotel located at 625
116th Ave. NE, Bellevue, Washington on Tuesday, November 28, 2000, beginning at
10:00 a.m. local time.
The items of business which will be acted upon at the Annual Meeting
are described in the accompanying Notice of Annual Meeting and Proxy Statement.
Enclosed with this proxy statement are your proxy card and a copy of the LION
Inc. 1999 Annual Report.
If you do not plan to attend the Annual Meeting, please complete, date,
sign, and promptly return the enclosed proxy in the envelope provided so that
your shares can be voted at the meeting in accordance with your instructions. If
you decide to attend the Annual Meeting and wish to change your proxy vote, you
may do so by voting in person at the Annual Meeting.
During the Annual Meeting, management will report on operations and
other matters affecting the Company and will respond to shareholders' questions.
On behalf of the Board of Directors, we would like to express our appreciation
for your continued interest in the affairs of the Company. We look forward to
seeing you at the Annual Meeting.
Sincerely,
JOHN A. MCMILLAN
Chief Executive Officer
--------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
In order to assure your representation at the meeting, you are requested to
complete, sign and date the enclosed proxy as promptly as possible and return it
in the enclosed envelope (no postage required if mailed in the United States).
--------------------------------------------------------------------------------
<PAGE>
LION INC.
2201 LIND AVE. SW, STE. 200
RENTON, WA 98055
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD TUESDAY, NOVEMBER 28, 2000
The annual meeting of shareholders ("Annual Meeting") of Plenum
Communications, Inc., dba Lion Inc. ("Company") will be held at the West Coast
Bellevue Hotel located at 625 116th Ave. NE, Bellevue, Washington on Tuesday,
November 28, 2000, beginning at 10:00 a.m. local time. At the meeting,
shareholders will act on the following matters:
1) Election of five directors to serve for a term of one year;
2) Approval of a proposal to change the Company's state of incorporation
from Minnesota to Washington by a merger with and into a newly formed,
wholly-owned Washington subsidiary;
3) Ratification of the appointment of Grant Thornton LLP as the Company's
independent accountants;
4) Any other matters as may properly come before the Annual Meeting.
Shareholders of record at the close of business on October 9, 2000 are
entitled to notice of and to vote at the meeting or any postponement or
adjournment.
By order of the Board of Directors
John A. McMillan
Chairman
Renton, Washington
October 20, 2000
IMPORTANT NOTICE
Whether or not you plan to attend the meeting in person, please complete, sign,
date, and return the accompanying proxy in the enclosed envelope. No postage is
required if it is mailed in the United States. Your proxy may be revoked at any
time prior to the Annual Meeting. If you decide to attend the Annual Meeting and
wish to change your proxy vote, you may do so by voting in person at the Annual
Meeting.
<PAGE>
LION INC.
2201 LIND AVENUE SW, SUITE 200
RENTON, WA 98055
(425) 902-4140
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 28, 2000
<TABLE>
TABLE OF CONTENTS
PAGE
<S> <C>
Information Concerning Solicitation and Voting ................................. 1
Proposal One -- Election of Directors ......................................... 3
Security Ownership of Certain Beneficial Owners and Management ................ 7
Executive Officers ............................................................ 8
Executive Compensation and Other Information .................................. 9
Proposal Two -- Approval of the Reincorporation of the Company in the State of
Washington and Related Changes to the Rights of Shareholders ............ 16
Proposal Three -- Ratification of Appointment of Auditors....................... 28
Other Matters ................................................................. 28
Shareholder Proposals .......................................................... 29
</TABLE>
<PAGE>
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
LION INC.
Your proxy, using the enclosed form, is solicited by the Board of
Directors of Plenum Communications, Inc., dba LION Inc. ("Company") for the
Annual Meeting of Shareholders ("Annual Meeting") to be held at 10:00 a.m. on
Tuesday, November 28, 2000, at the West Coast Bellevue Hotel located at 625
116th Ave. NE, Bellevue, Washington, and at any adjournment or postponement of
the Annual Meeting.
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
This Proxy Statement and the enclosed proxy are furnished to the
holders of our common stock and to the holders of our Series A Preferred Stock.
As used in this Proxy Statement, the holders of common stock and the holders of
Series A Preferred Stock are referred to together as "Shareholders." Management
anticipates that the mailing to Shareholders of these proxy materials and the
Annual Report to shareholders for the fiscal year ended December 31, 1999,
including financial statements, will occur on or about October 20, 2000.
PURPOSE OF MEETING
The specific proposals to be considered and acted upon at the Annual
Meeting are summarized in the accompanying Notice of Annual Meeting. Each
proposal is described in more detail in this Proxy Statement.
VOTING RIGHTS
Our common stock and the Series A Preferred Stock are the only classes
of securities entitled to vote at the Annual Meeting. Pursuant to the
Certificate of Designation adopted by the Board of Directors on April 27, 2000,
the holders of Series A Preferred Stock were granted the right to one vote for
each share of common stock into which the Preferred Stock could then be
converted, and are entitled to vote, together with holders of common stock, with
respect to any matter upon which the holders of common stock have the right to
vote. Only Shareholders of record at the close of business on October 9, 2000
("Record Date") are entitled to receive notice of the Annual Meeting and to vote
the shares they hold at the Annual Meeting or at any adjournment or
postponement. As of the Record Date, there were 32,912,811 shares of common
stock outstanding, and 1,500,000 shares of Series A Preferred Stock outstanding,
each share entitled to one vote on each matter to be voted upon.
Our bylaws provide that the presence at the meeting, either in person
or by proxy, of the holders of forty percent (40%) of the outstanding shares
entitled to vote on the Record Date will constitute a
-1-
<PAGE>
quorum, permitting the transaction of business at the Annual Meeting. Proxies
received but marked as abstentions and broker non-votes will be included in the
calculation of the number of shares considered to be present at the Annual
Meeting for purposes of determining the presence of a quorum. Each voting
proposal is tabulated separately. The approval of Proposal No. 2, the
reincorporation of the Company in the State of Washington, will require the
affirmative vote of the holders of a majority of our outstanding voting shares.
For Proposal No. 2, abstentions and broker non-votes, since they are not
affirmative votes, will have the same practical effect as a vote against the
proposal. In contrast, to approve Proposal No. 1 (the election of Directors),
Proposal No. 3 (the ratification of auditors), or any additional proposals which
may be presented at the Annual Meeting, the affirmative vote of a majority of
the shares present and entitled to vote will be required. A properly executed
proxy marked "ABSTAIN" with respect to any matter will not be voted, although it
will be included in tabulations of the votes cast for purposes of determining
whether a proposal has been approved. Broker non-votes will not be counted for
purposes of determining the number of votes cast for proposals other than
Proposal No. 2.
Whether or not you are able to attend the meeting in person, you are
urged to complete, sign, date, and return the accompanying proxy in the enclosed
envelope. Your proxy is solicited by our Board of Directors and when properly
completed, will be voted at the Annual Meeting in accordance with your
instructions. Proxies which are executed but do not specify a vote for, against,
or in abstention, will be voted FOR all of the nominees of the Board of
Directors, FOR approval of the change in our state of incorporation from
Minnesota to Washington Delaware by a merger with and into a newly formed,
wholly-owned Washington subsidiary, and FOR ratification of the appointment of
Grant Thornton LLP as the Company's independent public accountants. If other
matters come before the Annual Meeting, the proxies will be voted as recommended
by the Board of Directors or, if no recommendation is given, in the discretion
of the proxy holders.
Your proxy may be revoked or changed at any time prior to the Annual
Meeting. You may do this by advising the Secretary of the Company in writing of
your desire to revoke your proxy, or by sending the Secretary another signed
proxy with a later date before the beginning of the Annual Meeting. If you
decide to attend the Annual Meeting and wish to change your proxy vote, you may
do so by voting in person. Attendance at the meeting will not, by itself, revoke
a proxy.
SOLICITATION OF PROXIES
The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing, and mailing of this Proxy Statement, the proxy,
and any additional solicitation material furnished to Shareholders. Copies of
solicitation material will be furnished to brokerage houses, fiduciaries, and
custodians holding shares in their names that are beneficially owned by others
so that they may forward this solicitation material to the beneficial owners,
and we may reimburse them for reasonable out-of-pocket and clerical expenses
incurred by them in so doing. We have not retained a proxy solicitor in
conjunction with the Annual Meeting. Solicitation will be by mail. Proxies may
be solicited without extra compensation by our officers and employees by
telephone, fax or personally.
-2-
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
As permitted by the Minnesota Business Corporations Act, our
bylaws currently provide for classification of directors. The Board of
Directors is currently divided into three classes, having three-year terms
that expire in successive years. It is the recommendation of the Board of
Directors to eliminate the classification of the Board. If Proposal No. 2 is
adopted by Shareholders, providing for our reincorporation in the State of
Washington, new articles of incorporation and bylaws will be in effect which
do not make provision for a classified Board. Under the new articles and
bylaws, all directors elected by Shareholders, regardless of class, are
elected for a one-year term.
The terms of all Class I and Class II directors have expired or
expire at the Annual Meeting. The current three-year term of office of directors
in Class III expires at the 2001 annual meeting. There currently is only one
Class III director, Sam Ringer. The Board of Directors proposes that the five
nominees described below, all of whom are currently serving as directors, be
re-elected for a new term of one year and until their successors are duly
elected and qualified. Each of the nominees has consented to stand for election
at the Annual Meeting and to serve a one-year term.
The number of directors authorized by our bylaws is a range from
three to nine, with the exact number to be fixed by the Board. The Board of
Directors currently consists of eight (8) directors. The Board of Directors
proposes that the board of directors be decreased in size to five (5) directors.
The decrease will not have the effect of shortening the term of any incumbent
director. The five nominees receiving the affirmative vote by holders of a
majority of the shares present and entitled to vote at the Annual Meeting will
be elected directors of the Company to serve until the next annual meeting and
until their successors have been elected and qualified. The directors may act at
any time to increase the size of the Board of Directors, however any director
appointed to fill a vacancy created by reason of an increase in the number of
directors will serve for a term of office continuing only until the next
election of directors.
The names of persons who are nominees for director and their
positions and offices with the Company are set forth in the table below. Except
for Tuck Marshall and John McMillan, who were appointed by the current Board
of Directors, each nominee for director is currently a director who was
previously elected by the shareholders. The proxy holders intend to vote all
proxies received by them in the accompanying form for the five nominees listed
below unless otherwise instructed. Each person nominated for election has
agreed to serve if elected, and the Board of Directors has no reason to
believe that any nominee will be unable or unwilling to serve as a director.
If any nominee at the time of the Annual Meeting is unavailable for election
as a result of an unexpected occurrence, the proxies will be voted for any
substitute nominee who may be designated by the present Board of Directors to
fill the vacancy. Shareholders may not cumulate votes in the election of
directors.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board recommends voting "FOR" the five nominees listed on the
following page.
-3-
<PAGE>
INFORMATION REGARDING DIRECTOR NOMINEES
The names, ages and positions with the Company of each nominee for
director are listed below as of the Record Date:
<TABLE>
<CAPTION>
POSITIONS AND OFFICES HELD
NOMINEES AGE WITH THE COMPANY
-------- --- ----------------
<S> <C> <C>
John A. McMillan (1) 68 Director, Chief Executive Officer, Chief Financial
Officer
J.C. "Tuck" Marshall (1) 53 Director, President of LionInc.com
Sam Ringer 39 Director, Chief Technology Officer of LionInc.com
Jacob L. Smith 61 Director
Kurt Springman (2) (3) 39 Director
</TABLE>
(1) Member of the Executive Committee
(2) Member of the Audit Committee
(3) Member of the Compensation Committee
BUSINESS EXPERIENCE OF DIRECTOR NOMINEES
Sam Ringer is a full-time employee of the Company and is the son of
Allen Ringer . The other directors and executive officers devote only such time
as may be necessary to our business and affairs.
JOHN A. MCMILLAN has been a director of the Company since January 1999,
has served as Chief Executive Officer since October 1999 and as Chief Financial
Officer since December 1999. Mr. McMillan is a Director and member of the
Executive Committee of the Board of Directors for Nordstrom, Inc. Mr. McMillan
has been associated with Nordstrom for 40 years and has served as a member of
the office of chief executive officer since 1971. Mr. McMillan's business and
civic affiliations include sitting on the Board of Directors for Vision Youth
(Chairman), Follet Company, Seattle YMCA, Seattle Foundation, ZION Preparatory
Academy Capitol Campaign (Chairman), Crista Ministries, World Concern, Urban
Enterprise Council (Chairman), Bob Walsh Enterprises, Global Partnerships,
Catholic Fund, and Seattle Pacific University.
J.C. (TUCK) MARSHALL was appointed to the Board of Directors in July
1999. Mr. Marshall formerly served as president of the National Association of
Mortgage Brokers (NAMB) and is currently the president of J.C. Marshall
Financial Services Inc., a licensed brokerage of mortgages, real estate, and
insurance in Tinley Park, Illinois. He is a former president of Margo Financial
Services LLC, a national provider of wholesale residential mortgages and a
division of Argo FSB. He is currently president of the Illinois Association of
Mortgage Brokers Education Foundation and a member of the UG/UIG Advisory Board.
He was formerly Advisory Association Member for Chase Mortgage. His past
accomplishments also include; president of the Illinois Association of Mortgage
Brokers, NAMB Regional broker of the
-4-
<PAGE>
Year in 1995, NAMB Volunteer of the Year in 1996/1997, and NAMB Legislative
Chairman in 1998. As president of NAMB, Tuck developed contacts at all levels of
congress and state governments through his lobbying efforts. He also developed
strong working relationships with the leadership of the national and state
mortgage broker associations along with the nation's leading mortgage industry
companies. Mr. Marshall assumed the role of President of LionInc.com in March
2000.
SAM RINGER has been a director of the Company since 1989. Since March
2000, he has served as Chief Technology Officer of LionInc.com. He served as
Chief Executive Officer of LionInc.com from February 1999 to March 2000, and as
its President from 1997 to March 2000, and during the period from 1991 through
1995. Sam Ringer was co-founder, co-architect and author of the LION software.
He received his training as a computer engineer and programmer in Spokane, WA at
Spokane Falls Community College and Gonzaga University. Prior to his tenure with
the Company, Mr. Ringer served for two years as a mortgage broker at MorNet
Mortgage, a Seattle mortgage brokerage firm.
KURT SPRINGMAN has been a director of the Company since 1997. Kurt is
currently the Strategic Alliance Manager for NetIQ Corporation, with
responsibility for the development and maintenance of technical and marketing
alliances with Microsoft, Citrix, Veritas and other technology companies. From
1999 to 2000, Mr. Springman was the Market Manager for Attachmate, responsible
for the strategic marketing of the EXTRA! line of mainframe terminal emulation
products. From 1996 to 1999, Mr. Springman was Compaq Computer Corporation's
(formerly Digital Equipment Corporation) Senior Marketing Consultant for the
Enterprise Solution Center for Windows in Bellevue, WA. From 1991 to 1996, he
was the principal owner and CEO of Prestige Events, Inc., a firm specializing in
high tech event marketing. Customers of Prestige included major names like
Microsoft, Intel, Digital, and Paul Allen Group. From 1985 to 1991, he served
with Merrill Lynch Securities and JP Morgan in New York as an Associate Officer
where he was involved in creating and trading jumbo mortgage pools and
derivative products, and structuring real estate and corporate financings. From
1983 to 1986, Mr. Springman was a CPA with Peat Marwick - KMPG in Denver,
Colorado. He was an elected Council member of the City of Bellevue (term
1996-1999), and is well known in the Washington Software Alliance. Mr. Springman
received an MS degree in accounting from the University of Denver in 1983, and
an MBA in Finance from New York University in 1987. He is a Microsoft Certified
Professional, a Compaq Accredited Systems Engineer and a Citrix Certified
Administrator.
JACOB SMITH has been a director of the Company since June 1998. Mr.
Smith has practiced business and civil law in Lynden, Washington for the last
thirty-three years, with an emphasis on real estate, estate planning, and
municipal law. He is the senior partner in the Lynden law firm of Smith &
Kosanke which he founded in 1972. Mr. Smith received a B.S. degree in
Chemical Engineering from the University of Washington in 1962. He received a
J.D. law degree from Willamette University Law School in Salem Oregon in 1965.
Mr. Smith is past president of the Whatcom County Bar Association.
MEETINGS OF THE BOARD AND BOARD COMMITTEES
The standing committees of the Board of Directors of the Company are
the Executive Committee, Audit Committee and the Compensation Committee. There
is no standing nominating committee. The Executive Committee, established in
February 1999, consists of 2 members. The Executive Committee exercises all
powers of the Board in the management of the Company between meetings of the
Board, to the maximum extent permitted by law, except those functions assigned
to specific committees or reserved
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<PAGE>
to the Board by the bylaws of the Company. Messrs. McMillan and Marshall serve
on the Executive Committee.
The Compensation Committee, established in October 1998, makes
recommendations concerning retirement and benefit plans and salaries and
incentive compensation of executive personnel, employees of, and consultants to,
the Company. The Compensation Committee administers the Company's 1998 Stock
Option Plan. The Audit Committee, established in May 1998, is responsible for
reviewing the results and scope of audits and other services provided by the
Company's independent auditors, and the fees for related services performed
during the year. The Audit Committee also recommends to the Board of Directors
the firm to be appointed as independent auditors. At times, the Audit Committee
may meet with representatives of the Company's independent auditors without any
officers or employees of the Company present. It is anticipated that the
functions of the Audit Committee will be expanded during 2001 to include,
without limitation: developing a written charter to govern Audit Committee
functions; reviewing and discussing audited financial statements with
management; discussing with the independent auditors specific auditing
standards; receiving from the auditors and discussing with auditors disclosures
regarding the auditors' independence; drafting a statement as to whether, based
on its review and its discussions, it recommends to the Board of Directors that
the audited financial statements be included in the 2001 Annual Report on Form
10-KSB; evaluating whether its members are "independent" and disclosing certain
information to the Company regarding any director on the audit committee who is
not "independent." Mr. Springman is currently the sole member of the
Compensation and Audit Committees.
The Executive Committee met on a monthly basis during the year ended
December 31, 1999. The Compensation Committee met eight times and the Audit
Committee met once during 1999. The Board of Directors met eight times during
1999. During 1999, each Director attended at least 75% of the total number of
meetings of the Board of Directors that were held during the period in which
such Director was a director and committees on which the Director served that
were held during the period in which such Director served on such committee. In
addition to attending meetings, directors discharge their responsibilities by
review of management reports to directors, visits to our facilities, and
correspondence and telephone conferences with our executive officers and other
employees regarding matters of interest and concern to the Company.
DIRECTOR COMPENSATION
Except for grants of stock options and reimbursement of expenses, our
directors do not receive compensation for services rendered as a director. We do
not compensate our directors for committee participation or for performing
special assignments for the Board of Directors. Directors who are not officers
or employees of the Company receive as an initial retainer options to purchase
50,000 shares of common stock, exercisable at not less than the fair market
value of our common stock on the day of grant. Thereafter, under our 1998 Stock
Incentive Plan, non-employee directors receive automatic option grants each year
to purchase 15,000 shares of common stock upon their reelection at the annual
meeting of shareholders.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of our common stock as of October 9, 2000 for (a) each
person we know to be a beneficial owner of five percent or more of our common
stock, (b) each executive officer and each director, and (c) all directors and
executive officers as a group.
<TABLE>
<CAPTION>
Shares
Name and Address(1) Beneficially Percentage
of Beneficial Owner Owned of Shares(2)
------------------- ---- ------------
<S> <C> <C>
Allen C. Ringer 2,127,365 (3) 6.2%
Sam Ringer 2,377,086 (4) 6.9%
Joe Ringer 2,415,967 (5) 7.0%
Billy Anders, Sr. 1,130,091 (6) 3.3%
John A. McMillan 645,000 (7) 1.8%
Kurt Springman 144,600 (8) *
Jacob L. Smith 37,500 (9) *
J.C. (Tuck) Marshall 102,750 (10) *
ICM Asset Management, Inc. 2,949,275 (11) 8.2%
All Officers and Directors 9,372,359 26.7%
As a Group (8 persons)
</TABLE>
------------------------
* Less than one percent.
(1) Except as noted below, the business address of all directors and executive
officers is 2201 Lind Avenue SW, Suite 200, Renton, WA 98055.
(2) Percentage of beneficial ownership is based on 34,412,811 shares outstanding
as of October 9, 2000 including the Series A Preferred Stock. Beneficial
ownership is calculated based on SEC requirements. All shares of the common
stock subject to options or warrants currently exercisable or exercisable within
60 days after October 9, 2000 are deemed to be outstanding for the purpose of
computing the percentage of ownership of the person holding such options or
warrants, but are not deemed to be outstanding for computing the percentage of
ownership of any other person. Unless otherwise indicated below, each
stockholder named in the table has sole voting and investment power with respect
to all shares beneficially owned, subject to applicable community property laws.
(3) Includes 915,000 shares underlying stock options exercised by promissory
note. Mr. Ringer is deemed the beneficial owner of the 1,294,365 shares of the
Company's stock beneficially owned by American Management and Consulting Inc.
because of his power to vote and dispose of those shares. Excludes 632,278
shares beneficially owned by Dutchman Irrevocable Trust, of which his wife
Marilyn
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<PAGE>
K. Ringer is trustee, and 12,500 shares underlying stock options owned by his
wife, as to which Mr. Ringer disclaims beneficial ownership.
(4) Includes 1,000,000 shares underlying stock options exercised by promissory
note.
(5) Includes 1,000,000 shares underlying stock options exercised by promissory
note.
(6) Includes 105,000 shares which could be acquired within 60 days of October 9,
2000 through the exercise of warrants. The address of Mr. Anders is 2010 S.
Overbluff Ct., Spokane, WA 99203.
(7) Includes 265,000 shares which could be acquired within 60 days of October 9,
2000 through the exercise of stock options and 140,000 shares underlying
warrants granted but not yet exercised. The address of Mr. McMillan is 500 Pine
Street, Seattle, WA 98101.
(8) Includes 30,000 shares which could be acquired within 60 days of October 9,
2000 through the exercise of stock options.
(9) Includes 30,000 shares which could be acquired within 60 days of October 9,
2000 through the exercise of stock options. The address of Mr. Smith is 3800 Ft.
Bellingham Rd., Bellingham, WA 98225.
(10) Includes 101,750 shares which could be acquired within 60 days of October
9, 2000 through the exercise of stock options. The address of Mr. Marshall is
7601 W. 191st Street, Tinley Park, IL 60447.
(11) ICM Asset Management, Inc. is deemed the beneficial owner of the 1,500,000
voting shares of Series A Preferred Stock owned by Koyah Leverage Partners LP
and Koyah Partners LP because of its power to vote and dispose of those shares.
Includes 1,449,275 voting shares of Series A Preferred Stock, which may be
acquired on or before October 28, 2000 through the exercise of a stock purchase
option.
EXECUTIVE OFFICERS AND DIRECTORS
The names, ages and positions of our executive officers and those
incumbent directors who are not nominees at the Annual Meeting are listed below.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
John A. McMillan 68 Chief Executive Officer, Chief Financial Officer
Allen C. Ringer 60 President
J.C. "Tuck" Marshall 53 President of LionInc.com
Sam Ringer 39 Chief Technology Officer of LionInc.com
Billy Anders, Sr. 56 Director
Joe Ringer 37 Director
</TABLE>
Officers identified above serve at the discretion of the Board. Joe
Ringer is a full-time employee of the Company, and is the son of Allen Ringer. A
brief biography of the persons identified above who are not nominee for director
is set forth below.
-8-
<PAGE>
ALLEN RINGER served as CEO of the Company from 1989 to October 1999 and
has served as President since 1989. Mr. Ringer is the founder and President of
PlenTech Electronics, Inc. a company listed on the Vancouver Stock Exchange; and
he serves as a director of its subsidiary, Consolidated Electronics, Inc., a
Spokane manufacturing and marketing firm serving primarily the utility and
processing industries. Mr. Ringer is also founder of Settlement Plus Inc., a
company organized in 1999 to provide escrow settlement and outsourced mortgage
loan processing services. From 1978 to 1986 Mr. Ringer operated United Farm
Agency, a real estate brokerage firm in Colville, Washington. From 1987 to
February 1990, Mr. Ringer managed the operations of Mortgage Brokers Network,
Inc., an electronic mortgage brokerage company which originated mortgage loan
applications.
BILLY ANDERS, SR. joined the Company as a member of the Board of
Directors in 1995 and served as Chairman from January 1997 to February 2000. Mr.
Anders served as the President of the Mars Hotel Corporation in Spokane,
Washington, from 1994 to June 1997, and was Chairman of the board of directors
of Pacific Marine & Steel, Inc. in La Jolla, California, in 1995 and 1996. Mars
Hotel Corporation was general partner of the Spokane Mars Limited Partnership
("Partnership"). Subsequent to Mr. Anders' association with the corporation, in
November 1997 the Partnership filed for bankruptcy under Chapter 11, which was
converted to Chapter 7 in November 1998. He was a member of the board of
directors of Output Technology, Spokane, Washington from 1989 through 1993, and
served as its President and CEO during 1992 and 1993. Mr. Anders was President
and CEO and served as Chairman of the board of directors of Soricon Corporation,
Boulder, Colorado, from 1986 through 1991. He also served as a business
consultant and inaugural member of the board of directors of International
Pacific, Inc., Spokane, Washington, from 1986 to 1992. From 1983 through 1986 he
was Senior Vice-President and General Manager of Key Tronic Corporation,
Spokane, Washington. Mr. Anders spent 16 years from 1967 through 1983 with the
IBM Corporation in several cities in various key management positions. He was
Director of Field Operations in the General Systems Division of IBM in 1980. Mr.
Anders graduated from Southern University, Baton Rouge, Louisiana, in 1964 where
he completed the Advanced R.O.T.C. program and was commissioned as a 2nd
Lieutenant in the U.S. Army.
JOE RINGER has served as a director of the Company since 1989. He is
the other co-founder of LION, and has served as Executive Vice President since
1995. He is responsible for identifying and negotiating with potential industry
partners as well as potential acquisition targeted companies. Prior to
co-founding LION, Joe worked for three years at MorNet Mortgage in virtually
every position of the mortgage brokerage firm, including operations, as a
mortgage broker and in the management of the business.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table sets forth all compensation paid or earned for
services rendered to the Company in all capacities during the years ended
December 31, 1999, 1998 and 1997 to our Chief Executive Officer and President.
No other executive officers received total annual salary, bonus and other
compensation in excess of $100,000 in the fiscal years disclosed below.
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<TABLE>
<CAPTION>
Summary Compensation Table*
---------------------------
Annual Compensation Long-Term Compensation
--------------------------------------- ---------------------------------
Securities
Underlying
Stock Options/
Name and Principal Position Year Salary Other Awards Warrants
--------------------------- -------- -------------- --------------- ------------- -------------------
<S> <C> <C> <C> <C> <C>
John A. McMillan 1999 - $16,250(1) - 440,000(1)
CEO and CFO
Allen Ringer 1999 $59,552(2) $132,150(3) - -
President
1998 $60,000(2) - - -
1997 - $3,405(4) 236,593(4) 236,593(4)
</TABLE>
* Columns in the Summary Compensation Table that were not relevant to the
compensation paid to the Named Executive Officers were omitted.
(1) In September 1999, Mr. McMillan, as guarantor on LionInc.com's line of
credit, was paid a loan fee of $16,250 and granted warrants to purchase 140,000
shares of the Company's common stock at $1.06 per share. In December 1999, Mr.
McMillan, as CEO of the Company, was granted stock options to purchase 300,000
shares of the Company's common stock at $.66 per share.
(2) Mr. Ringer's cash compensation was paid to him by the Company for 1998 and
first quarter of 1999 through American Management and Consulting, Inc., a
consulting firm, of which Mr. Ringer is Chief Executive Officer and President.
See below, "Certain Relationships and Related Transactions."
(3) During first quarter 1999, Mr. Ringer exercised stock options totaling
85,000 shares of the Company's common stock which created taxable ordinary
income of $132,150.
(4) In January 1998, Mr. Ringer purchased 144,000 shares of common stock and
144,000 warrants, exercisable at $.50 per share, in exchange for 1997 deferred
compensation of $36,000. In addition, Mr. Ringer purchased 92,593 shares of
common stock and 92,594 warrants, exercisable at $.50 per share, in exchange
for interest earned of $23,148 on deferred compensation and loans to the
Company. Interest earned and paid in cash during 1997 to Mr. Ringer related to
deferred compensation and loans to the Company totaled $3,405.
OPTION GRANTS LAST FISCAL YEAR.
The following table sets forth options granted to Named Officers during
1999. No other executive officers received option grants in the last fiscal
year.
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<TABLE>
<CAPTION>
Percent of
Number of total stock
securities options
underlying to granted Exercise or
stock options employees in base price Expiration
Name and Principal Position granted fiscal year ($/Sh) date
--------------------------- ------------- ------------ ----------- ----------
<S> <C> <C> <C> <C>
John A. McMillan, CEO and CFO 300,000 11.3% $0.66 12/13/03
</TABLE>
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
The following table provides information with respect to the Named
Executive Officers regarding the exercise of options or warrants during the
fiscal year ended December 31, 1999 and unexercised options or warrants held as
of December 31, 1999. No stock appreciation rights were exercised during 1999 or
were outstanding at December 31, 1999.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money
Acquired Value Options/Warrants Options/Warrants
on Realized at Fiscal Year-End (#) at Fiscal Year-End ($)
Exercise --------------------------------- -----------------------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John A. McMillan,
CEO and CFO
Options - - 50,000 300,000 - -
Warrants 120,000 $11,160 140,000 - - -
Allen Ringer (1)
President
Options 1,000,000 $589,650 - - - -
Warrants - - 740,164 - $92,520 -
</TABLE>
(1) Includes 740,164 warrants owned by American Management and Consulting, Inc.,
a consulting firm, of which Mr. Ringer is Chief Executive Officer and President,
and deemed the beneficial owner because of his power to vote and dispose of
those securities.
STOCK OPTION PLAN
The Company's 1998 Stock Option Plan ("1998 Plan") is intended to serve as
an equity incentive program for management, qualified employees, non-employee
members of the Board of Directors, and independent advisors or consultants. The
1998 Plan became effective on October 30, 1998 upon adoption by the Board of
Directors, and was approved by the shareholders at the December 1998 annual
shareholders' meeting. Under the 1998 Plan, the total number of shares of common
stock reserved for
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<PAGE>
issuance is 15,000,000, which may be Incentive Stock Options ("ISOs") within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended, or
nonqualified stock options.
The 1998 Plan contains two separate components: (i) a discretionary
option grant program under which eligible individuals in the Company's employ or
service (including officers and other employees, non-employee Board members and
independent advisors or consultants) may, at the discretion of the Plan
Administrator, be granted options to purchase shares of common stock; and (ii)
an automatic option grant program under which option grants will automatically
be made at periodic intervals to eligible non-employee Board members to purchase
shares of Common Stock at an exercise price equal to their fair market value on
the grant date.
The discretionary option grant program will be administered by the
Board of Directors or a committee of two or more members of the Board. Plan
administrators have sole authority to prescribe the form, content and status of
options to be granted, select the eligible recipients, determine the timing of
option grants, determine the number of shares subject to each grant, the
exercise price, vesting schedule, and term for which any option will remain
outstanding. The Board of Directors have the authority to correct any defect,
supply any omission or reconcile any inconsistency in the Plan, determine the
terms and restrictions on all restricted option awards granted under the Plan,
and in general, to construe and interpret any provision of the 1998 Plan or of
any option granted thereunder. The administration of the automatic option grant
program will be self-executing in accordance with the provisions of the 1998
Plan.
The exercise price for outstanding option grants under the 1998 Plan
may be paid in cash or, upon approval of the Plan administrators, in shares of
common stock valued at fair market value on the exercise date. The option may
also be exercised through a same-day cashless exercise program or a reduction in
the amount of any Company liability to the optionee. In addition, the Plan
administrator may provide financial assistance to one or more optionees in the
exercise of their outstanding options by allowing the individuals to deliver a
full-recourse, interest-bearing promissory note in payment of the exercise price
and any associated withholding taxes incurred in connection with the exercise.
Under the automatic option grant program, immediately after each annual
meeting of shareholders, each elected non-employee director of the Company shall
automatically be granted a nonqualified stock option to purchase 15,000 shares
of common stock for each year included in the term for which such he or she was
elected, provided that individual has not previously received an option grant
from the Company in connection with his or her Board service which remains
unvested.
Under the 1998 Plan, no stock option can be granted for a period longer
than ten years or for a period longer than five years for ISOs granted to
optionees possessing more than 10% of the total combined voting power of all
classes of stock of the Company. Following the effective date of any
registration of the Company's securities under the Exchange Act, the per share
exercise price for any option granted may not be less than the fair market value
of the Company's securities on the grant date. Unless extended by the Plan
administrators until a date not later than the expiration date of the option,
the right to exercise an option terminates thirty days after the termination of
an optionee's employment, contractual or director relationship with the Company.
If the optionee dies or is disabled, the option will remain exercisable for a
period of one year after the termination of employment or relationship with the
Company.
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<PAGE>
At the sole discretion of the Plan administrators, options granted
under the 1998 Plan may contain resale provisions pursuant to which the
purchaser of the common stock issued upon exercise of the option may be limited
to sales of common stock in an amount which may not exceed 250,000 shares during
any three-month period.
As of December 31, 1999, the Company had granted options to purchase an
aggregate of 12,077,500 shares of common stock, of which 5,182,500 were
outstanding at December 31, 1999. Of the options granted, 4,595,000 were issued
to directors of the Company, of which 1,445,000 were outstanding at December 31,
1999.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has previously entered into certain transactions with
various parties, which had, at the time of the transaction, a material direct or
indirect relationship with the Company, its officers, directors, or principal
shareholders, their respective affiliates, or other persons associated with the
foregoing, as set forth below.
American Management and Consulting Inc. ("AMC") is a consulting firm of
which Allen Ringer serves as President and CEO. The Company received management
consulting services from AMC during the first quarter of 1999, marketing and
sales consulting services from Billy Anders, Sr., Chairman of the Board, during
all of 1999, and administrative and clerical consulting services from Marilyn
Ringer, wife of the Company's president, during the first quarter of 1999. For
the year ended December 31, 1999, AMC, Billy Anders, Sr. and Mrs. Ringer were
paid cash compensation totaling $15,000, $72,000 and $4,000, respectively. For
the year ended December 31, 1998, AMC, Billy Anders, Sr. and Mrs. Ringer were
paid cash compensation totaling $60,000, $66,830 and $31,550, respectively
From time to time, AMC and members of Allen Ringer's family, including
children Sam Ringer, Joe Ringer and Shadda Lee, have deferred salaries and made
working capital advances and loans to the Company. At December 31, 1997 the
company owed this group a combined total of $538,162. With respect to AMC, the
Company owed $149,041 which was comprised of $36,000 of deferred compensation
and $113,041 of loans and interest. In January of 1998 the $149,041 was paid off
through the issuance of 596,164 shares of the Company's common stock at $.25 per
share and warrants representing 596,164 shares exercisable at $.50 per share.
Sam Ringer was owed $161,613 which was comprised of $103,722 of deferred
compensation and interest and $57,891 of loans to the Company. In January of
1998 the Company paid off the $103,722 of deferred compensation and interest by
the issuance of 414,888 shares of the Company's common stock at $.25 per share
and warrants representing 414,888 shares exercisable at $.50 per share. The
loans of $57,891 were paid off in cash in June 1998. Joe Ringer was owed
$121,449 which was comprised of $104,142 of deferred compensation and interest
and $17,307 of loans to the Company. In January of 1998 the Company paid off the
$104,142 of deferred compensation and interest by the issuance of 416,568 shares
of the Company's common stock at $.25 per share and warrants representing
416,568 shares exercisable at $.50 per share. The loans of $17,307 were paid off
in cash in June 1998. Shadda Lee was owed $106,059 which was comprised of
$47,720 of deferred compensation and interest and $57,891 of loans and interest
to the Company. In January of 1998 the Company paid off $90,672 of this balance
through the issuance of 362,689 shares of
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<PAGE>
the Company's common stock at $.25 per share and warrants representing 362,689
shares exercisable at $.50 per share. The remaining $15,387 of debt was paid off
in cash throughout the first six months of 1998. At December 31, 1998 the
Company owed a total of $26,188 which was comprised of $13,094 each to Sam and
Joe Ringer for deferred compensation and interest. In January of 1999 this debt
was paid off in full through a cash payout. At December 31, 1999, Sam Ringer
loaned the Company $60,500 payable with interest on March 30, 2000. The loan and
accrued interest was paid in May 2000.
In June 1996 the Company engaged Howard Baskin, a management
consultant, to help the Company grow its customer and revenue base and expand
nationally. In January 1997, the Company entered into a consulting agreement
with Mr. Baskin under which he agreed to temporarily relocate to Seattle and
advise the Company on a full-time basis. From January 1997 through July 1998 he
served as "Managing Executive" of LION under the consulting agreement, advising
management on strategic and operating decisions. In consideration for his
services, the consulting agreement entered into in January 1997 originally
provided for incentive compensation under a formula that would have created a
cash bonus in the high six figures to low seven figures upon achieving certain
financial targets. In March 1998 the consulting agreement was amended to replace
this substantial potential cash obligation by an option to purchase 700,000
shares of the Company's common stock exercisable at $.01, which were fully
vested as of December 31, 1998. Compensation expense of $412,930 related to
these options was recognized by the Company during the year ended December 31,
1997. The consulting agreement also provides for certain other options to
purchase 1,800,000 shares of the Company's common stock at prices ranging from
$.75 to $3.00 per share which are to be granted contingent upon the occurrence
of certain events. Based on certain events that did occur, options to purchase
25,000 shares at $.75 per share were granted during 1998 and again to purchase
25,000 shares at $.75 per share during 1999 and are both fully vested.
Compensation expense of $16,825 and $41,072 was recognized for the years ended
December 31, 1998 and 1999, respectively. Under the consulting agreement Mr.
Baskin received cash compensation of $79,797 and $88,312 for the years ended
December 31, 1998 and 1999, respectively.
During September 1998, the Company sold 62,500 shares of common stock
to Mr. Billy Anders, a director of the Company, in connection with the exercise
of outstanding options for cash consideration of $15,625. In addition, the
Company sold 62,500 shares of common stock to Mr. Anders at a purchase price of
$.50 and 125,000 shares of common stock at a purchase price of $1.00 in
connection with the exercise of outstanding options. The aggregate purchase
price of $156,250 was payable by promissory note with principal balance,
together with interest at the rate of 10% per annum, due on or before March 1,
2000. The 187,500 shares of common stock purchased by the promissory note were
pledged to the Company as collateral until the note was paid in full. The
promissory note was not paid by March 1, 2000, and the Company cancelled the
issuance of the shares of common stock. Mr. Anders is associated as a registered
representative with Craig & Associates, Inc., an NASD member broker-dealer.
During the period from January 1996 to March 1998, the Company utilized Craig &
Associates to assist in the sales of three discrete offerings of securities.
Placement agent fees were paid to Craig & Associates in connection with these
sales, consisting of 7% of the of the offering price of the units sold, plus
warrants exercisable at $.25 per share with an aggregate offering price equaling
7% of the price of the units sold.
During 1999, Allen Ringer, Sam Ringer and Joe Ringer each exercised
stock options in consideration for nonrecourse promissory notes. Under APB
Opinion No. 25, the issuance of stock options under such notes is in essence a
new granting of options. By issuing nonrecourse notes, the
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<PAGE>
Company extended the original terms of the fixed award, creating a new
measurement date. As such, additional compensation cost is recognized to the
extent that the intrinsic value of the new award exceeds the original intrinsic
value of the original award. For the year ended December 31, 1999, the Company
recorded compensation expense of $2,190,989 to these individuals for the
difference between the original intrinsic value and the intrinsic value of the
new award. The purchased shares are reflected as issued and outstanding, however
the shares were pledged to the Company as collateral until the note was paid in
full. The Company recorded notes receivable from shareholders totaling
$1,081,251 for the exercise of these stock options. The promissory notes bear
interest at 10% per annum with accrued interest to be paid quarterly until the
notes are paid in full. Notes are due on or before April 1, 2001. The
shareholders have ninety (90) days to cure any default caused by nonpayment of
quarterly interest payments, after which they will suffer loss of the collateral
pledged to secure payment.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires that our directors and executive officers, and persons who own more
than ten percent of the our common stock, file with the SEC initial reports of
ownership and reports of changes in ownership of our common stock and other
equity securities. Officers, directors and greater-than-ten percent shareholders
are required by the SEC regulation to furnish us with copies of all Section
16(a) forms they file. Specific due dates have been established by the SEC, and
we are required to disclose in this report any failure to file by those dates.
Based upon a review of the copies of the Section 16(a) reports
furnished to us, or written representations from one or more of these persons
that no annual Form 5 reports were required to be filed by them for the 1999
fiscal year, we believe that there has been compliance with all Section 16(a)
filing requirements applicable to our officers, directors and ten-percent
beneficial owners; except that Jack McMillan failed to file an initial report on
Form 3, and two monthly reports covering 3 transactions on Form 4, but did
report the initial Form 3 and transactions on his year-end report on Form 5,
which was filed late; Allen Ringer failed to file an initial report on Form 3
for an affiliated company, and five monthly reports covering 6 transactions on
Form 4, but did report the initial Form 3 and transactions on his year-end
report on Form 5, which was filed late; Sam Ringer failed to file one monthly
report covering one transaction on Form 4, but did report the transaction on his
year-end report on Form 5, which was filed late; Joe Ringer failed to file one
monthly report covering one transaction on Form 4, but did report the
transaction on his year-end report on Form 5, which was filed late; Billy
Anders, Sr. failed to file an initial report on Form 3, and five monthly reports
covering 6 transactions on Form 4, but did report the initial Form 3 and
transactions on his year-end report on Form 5, which was filed late; Alan
Dernbach failed to file two monthly reports covering 2 transactions on Form 4,
but did report the transactions on his year-end report on Form 5, which was
filed late; Kurt Springman failed to include one item on a Form 3 previously
filed and failed to file one monthly report covering one transaction on Form 4,
but did report the Form 3 omission and the transaction on his year-end report on
Form 5, which was filed late; Steve Thomson failed to file one monthly report
covering one transaction on Form 4, but did report the transaction on his
year-end report on Form 5, which was filed late.
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<PAGE>
PROPOSAL NO. 2
CHANGE OUR STATE OF INCORPORATION FROM MINNESOTA TO WASHINGTON
At the Annual Meeting, the shareholders will be requested to approve a
change in the Company's state of incorporation from Minnesota to Washington (the
"Reincorporation"). In preparation for the submission of this proposal to the
shareholders, the Company ("LION Minnesota") has formed a wholly-owned
Washington subsidiary named LION Inc. ("LION Washington"). The Board has
approved the Reincorporation, which, if approved by the Shareholders, will be
accomplished by merging LION Minnesota with and into LION Washington. 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 our state of incorporation does not give shareholders of the Company
dissenters' or appraisal rights under Minnesota law. As used in this section,
the term "Company" refers to LION Minnesota or LION Washington or both, as the
context requires.
PRINCIPAL REASONS FOR THE PROPOSED REINCORPORATION
Upon effectiveness of the merger, our name will be changed to LION Inc.
Under our current Minnesota corporate charter, our name is Plenum
Communications, Inc. We currently conduct business under the name LION Inc., and
the Reincorporation will complete a process that began last year. In a Special
Meeting of shareholders held August 20, 1999, shareholders authorized the
amendment of our articles of incorporation to change our name from Plenum
Communications, Inc. to LION Inc. However, the name LION Inc. is currently in
use in Minnesota, and has not been available. In order to facilitate the
Reincorporation and ensure the availability of its name, the Company has
registered the name LION Inc. as a trade name in the State of Washington.
The principal factor in the Board of Directors' recommendation to
reincorporate in Washington is to effectuate the change of the Company's name to
LION Inc., the name under which we presently conduct business.
Another reason is that our corporate headquarters are located in Washington.
PLAN OF MERGER
The Company will be merged with and into LION Washington pursuant to
the terms of the proposed Agreement and Plan of Merger (the "Merger Agreement"),
a copy of which is attached to this Proxy Statement as EXHIBIT A. Upon the
completion of the merger, the owner of each outstanding share of common stock or
Series A Preferred Stock of the Company will automatically own one share of
common stock or Series A Preferred Stock of LION Washington, respectively. Each
outstanding certificate representing a share or shares of the Company's stock
will continue to represent the same number of shares in LION Washington (e.g., a
certificate representing one share of the Company's common stock will then equal
one share of LION Washington common stock). On the effective date of the
Reincorporation, the number of outstanding shares of common stock and preferred
stock of LION Washington will be equal to the number of shares of LION Minnesota
outstanding immediately prior to the effective date of the Reincorporation. It
will not be necessary for shareholders of the Company to exchange their existing
stock certificates. The Company's common stock will continue to be traded on the
OTC Bulletin Board under the symbol "LINN" subsequent to the merger.
In addition, each outstanding option or right to acquire shares of
common stock or preferred stock of the Company, including options outstanding
under the Company's stock option plans, as well as outstanding options,
convertible securities and purchase rights issued outside of any plan, will be
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<PAGE>
converted into an option or right to acquire an equal number of shares of common
stock or preferred stock of LION Washington, under the same terms and conditions
as the original options or rights. All of the Company's employee benefit plans,
including the 1998 Stock Option Plan, will be adopted and continued by LION
Washington following the Reincorporation. Shareholders should recognize that
approval of the proposed Reincorporation will constitute approval of the
adoption and assumption of those plans by LION Washington.
EFFECT OF REINCORPORATION
As a result of the Reincorporation, the existing shareholders of LION
Minnesota will become shareholders of LION Washington and LION Minnesota will
cease to exist. The Reincorporation and the merger will effect a change in the
legal domicile of the Company and other changes of a legal nature, the most
significant of which are described in this Proxy Statement. The Reincorporation
will not result in any change in its business, management, location of the
Company's principal executive offices, assets, liabilities, net worth or
accounting practices. The Reincorporation will not result in a change in the
number of authorized shares of common stock or preferred stock. Moreover, as
noted above, the shares of common stock will continue to be publicly traded and
reported on the OTC Bulletin Board.
In addition, as part of the Reincorporation, LION Washington will
assume all of the liabilities and obligations of the Company, including those
obligations under all of its outstanding stock options, convertible securities,
purchase rights and under all existing stock option plans. The Company expects
to continue all other employee benefit plans and arrangements without material
change. The Reincorporation will not give rise to any dissenters' or appraisal
rights under Minnesota corporate law.
EFFECTIVE DATE
Subject to the terms and conditions of the Reincorporation, the Company
intends to file, as soon as practicable after the adoption and approval of the
Plan of Merger by the shareholders of the Company, appropriate merger documents
with the Secretary of State of Minnesota and the Secretary of State of
Washington. It is presently contemplated that such filings will be made on or
about December 1, 2000. Filings generally are effective on the date they are
completed unless a delayed effective time and date is specified. The Plan of
Merger specifies a delayed effective date of December 31, 2000. Accordingly, the
Reincorporation shall become effective on December 31, 2000 (the "Effective
Date"). The Plan of Merger, however, provides that the Merger may be abandoned
by the Board prior to the Effective Date either before or after shareholder
approval. In addition, the Plan of Merger may be amended prior to the Effective
Date, either before or after shareholder approval. The Plan of Merger, however,
may not be amended after shareholder approval if such amendment would have a
material adverse effect on the rights of such shareholders or violate applicable
law.
CERTAIN DIFFERENCES IN CORPORATE LAW AND CORPORATE CHARTERS
Our corporate affairs are governed at present by the corporate law of
Minnesota, our state of incorporation, and by the Minnesota Articles and the
Minnesota Bylaws, which have been adopted pursuant to Minnesota law. The
Minnesota Articles and Minnesota Bylaws are available for inspection during
business hours at the principal executive offices of the Company. In addition,
copies may be obtained by writing to the Company at LION Inc., 2201 Lind Ave.
SW, Ste. 200, Renton, WA 98055. Attention: Corporate Secretary.
If the Reincorporation is approved, the Company will merge into, and
its business will be continued by, LION Washington. Following the merger, issues
of corporate governance and control would be controlled by Washington rather
than Minnesota law, and by new articles of incorporation and bylaws, which have
been adopted pursuant to Washington law. Copies of the Articles of Incorporation
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("Washington Articles") and Bylaws ("Washington Bylaws") of LION Washington are
attached to this Proxy Statement as EXHIBITS B AND C, respectively.
Although Washington and Minnesota corporation laws currently in effect
are similar in many respects, certain differences will affect the rights of our
shareholders if the Reincorporation is consummated. Accordingly, the differences
among these documents and between Washington and Minnesota law are relevant to
your decision whether to approve the Reincorporation. The following discussion
summarizes certain differences which may be considered by management to be
significant.
- ANTI-TAKEOVER LEGISLATION. Both Minnesota law and Washington law contain
provisions intended to protect shareholders from individuals or companies
attempting a takeover of a corporation in certain circumstances. The
anti-takeover provisions of Minnesota law and Washington law differ in a
number of respects, and the following is a summary of certain significant
differences.
A. CONTROL SHARE ACQUISITION. The Minnesota control share acquisition
statute establishes various disclosure and shareholder approval
requirements to be met by individuals or companies attempting a
takeover of an "issuing public corporation" For purposes of Minnesota
law, an "issuing public corporation" is a corporation having 50
shareholders, and which has its principal place of business or
substantial assets located in Minnesota. LION Minnesota has neither
its principal place of business or substantial assets located in
Minnesota, and is not currently subject to the Minnesota statute.
Washington law has no comparable provision, although as discussed
below it does have provisions with respect to acquisitions and
business combinations.
B. BUSINESS COMBINATIONS. Both Minnesota and Washington have business
combination statutes that are intended primarily to deter
highly-leveraged takeover bids which propose to use the target's
assets as collateral for the offeror's debt financing or to liquidate
the target, in whole or in part, to satisfy financing obligations.
Proponents of the business combination statutes argue that such
takeovers have a number of abusive effects, such as adverse effects on
the community and employees, when the target is broken up. Further,
proponents argue that if the offeror can wholly finance its bid with
the target's assets, that fact suggests that the price offered is not
fair in relation to the value of the company, regardless of the
current market price.
Minnesota law provides that an "issuing public corporation" (defined
in Subsection A above) may not engage in certain business combinations
with any person that acquires beneficial ownership of 10 percent or
more of the voting stock of that corporation (i.e., an "interested
shareholder") for a period of four years following the date that the
person became an interested shareholder (the "share acquisition date")
unless, prior to that share acquisition date, a committee of the
corporation's disinterested directors approve either the business
combination or the acquisition of shares.
Only defined types of "business combinations" are prohibited by the
Minnesota statute. In general, the definition includes: any merger or
exchange of securities of the corporation with the interested
shareholder; certain sales, transfers or other disposition of assets
of the corporation to an interested shareholder; transfers by the
corporation to interested shareholders of shares that have a market
value of five percent or more of the value of all outstanding shares,
except for a
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pro rata transfer made to all shareholders; any liquidation or
dissolution of, or reincorporation in another jurisdiction of, the
corporation which is proposed by the interested shareholder; certain
transactions proposed by the interested shareholder or any affiliate
or associate of the interested shareholder that would result in an
increase in the proportion of shares entitled to vote owned by the
interested shareholder; and transactions whereby the interested
shareholder receives the benefit of loans, advantages, guarantees,
pledges or other financial assistance or tax advances or credits from
the corporation.
For purposes of selecting a committee to approve a business
combination or a share acquisition, a director or person is
"disinterested" under Minnesota law if the director or person is
neither an officer nor an employee, nor within five years preceding
the formation of the committee has been an officer or employee of the
issuing public corporation or of a related corporation. The committee
must consider and act on any written, good faith proposal to acquire
shares or engage in a business combination. The committee must
consider and take action on the proposal and within 30 days render a
decision in writing regarding the proposal.
Washington law prohibits a "target corporation," with certain
exceptions, from engaging in certain "significant business
transactions" (such as a merger or sale of assets) with an "acquiring
person" who acquires more than 10% of the voting securities of a
target corporation for a period of five years after such acquisition,
unless the transaction is approved by a majority of the members of the
target corporation's board of directors prior to the date of the
acquisition or the purchase of the shares made by the acquiring person
or unless the aggregate amount of the cash and the market value of
non-cash consideration received by holders of outstanding shares of
any class or series of stock of the target corporation is equal to
certain minimum amounts. For a domestic corporation to be covered by
this provision of Washington law, it must have a class of voting
shares registered with the SEC under the Securities Exchange Act of
1934. Because our common stock is so registered, LION Washington would
be covered by these provisions. For a foreign corporation to be
covered by these provisions, among other requirements, it must have
its principal executive office located in Washington, and meet certain
significant Washington business contact tests relating to
shareholders, location of assets, and location of employees. Even as a
Minnesota corporation, we are likely covered by these provisions.
In comparison, the law with respect to business combinations is
similar in Washington and Minnesota. In both states an interested
shareholder is one who owns 10 percent of the outstanding shares. In
both states, a person is deemed to beneficially own shares which that
person has the right to acquire pursuant to the exercise of stock
options, warrants or other rights. An interested shareholder must wait
four years in Minnesota to engage in prohibited business combinations,
while the waiting period is five years in Washington. Both states have
a potentially broad definition of a business combination which
encompasses a large variety of transactions. In both states, a
prohibited transaction is only permitted by advance board committee
approval.
C. OTHER ANTI-TAKEOVER PROVISIONS. Minnesota law includes three other
provisions relating to takeovers that are not included in Washington
law. These provisions address a corporation's use of golden
parachutes, greenmail and the standard of conduct of the board of
directors in connection with the consideration of takeover proposals.
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Minnesota law contains a provision which prohibits a publicly-held
corporation from entering into or amending agreements (commonly
referred to as "golden parachutes") that increase current or future
compensation of any officer or director during any tender offer or
request or invitation for tenders.
Minnesota law also contains a provision which limits the ability of a
corporation to repurchase shares at a price above market value
(commonly referred to as "greenmail"). The statute provides that a
publicly-held corporation is prohibited from purchasing or agreeing to
purchase any shares from a person who beneficially owns more than five
percent of the voting power of the corporation if the shares had been
beneficially owned by that person for less than two years, and if the
purchase price would exceed the market value of those shares. However,
such a purchase will not violate the statute if the purchase is
approved at a meeting of the shareholders by a majority of the voting
power of all shares entitled to vote or if the corporation's offer is
made at an equal value per share to all holders of shares of the class
or series and to all holders of any class or series into which the
securities may be converted.
Minnesota law authorizes the board of directors, in considering the
best interests of the corporation with respect to a proposed
acquisition of an interest in the corporation, to consider the interest
of the corporation's employees, customers, suppliers and creditors, the
economy of the state and nation, community and social considerations
and the long-term as well as short-term interests of the corporation
and its shareholders, including the possibility that these interests
may be best served by the continued independence of the corporation.
- SHAREHOLDER VOTING
A. SIGNIFICANT CORPORATE TRANSACTIONS. Under Washington law, significant
corporate transactions, such as a merger, consolidation, sale of
substantially all of a corporation's assets other than in the regular
course of business, or dissolution of a public corporation must be
approved by the affirmative vote of a majority of directors when a
quorum is present, and by two-thirds of all votes entitled to be cast
by each voting group entitled to vote as a separate group, unless
another proportion (but not less than a majority) is specified in the
articles of incorporation. The Washington Articles provide that these
significant corporate transactions must be approved by each voting
group of shareholders entitled to vote thereon by a majority of all
votes entitled to be cast by that voting group.
Washington law also provides that certain mergers need not be approved
by the shareholders of the surviving corporation if (i) the articles
of incorporation will not change in the merger, except for specified
permitted amendments, (ii) no change occurs in the number,
designations, preferences, limitations, and relative rights of shares
held by those shareholders who were shareholders prior to the merger,
(iii) the number of voting shares outstanding immediately after the
merger, plus the voting shares issuable as a result of the merger,
will not exceed the authorized voting shares specified in the
surviving corporation's articles of incorporation immediately prior to
the merger, and (iv) the number of participating shares outstanding
immediately after the merger, plus the number of participating shares
issuable as a result of the
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merger, will not exceed the authorized participating shares specified
in the corporation's articles of incorporation immediately prior to
the merger.
Under Minnesota law, action on certain matters, including the sale,
lease or exchange of all or substantially all of the corporation's
property or assets, mergers, and consolidations and voluntary
dissolution, must be approved by the holders of a majority of the
outstanding shares. In addition, both states' laws provide that the
articles of incorporation may provide for a supermajority of the
voting power of the outstanding shares to approve such extraordinary
corporate transactions.
B. CLASS VOTING. Under Washington law, the articles of incorporation of a
corporation may authorize one or more classes of shares that have
special, conditional or limited voting rights, including the right to
vote on certain matters as a group. Under Minnesota law, all shares
are of one class and one series, unless the articles establish, or
authorize the board to establish, more than one class or series.
Both the Minnesota and the Washington Articles provide that all common
stock votes together as a single class, but authorize the directors to
issue preferred stock in series and to fix the voting powers and
rights of the shares of each such series. Both the Minnesota and the
Washington Articles provide that the Series A Preferred Stock votes
together as a single class with common stock. Under both Washington
and Minnesota law, a corporation's articles of incorporation may not
limit the rights of holders of a class to vote as a group with respect
to certain amendments to the articles of incorporation that adversely
affect the rights of holders of that class.
C. CUMULATIVE VOTING FOR DIRECTORS. Minnesota and Washington law both
provide that each stockholder entitled to vote for directors has the
right to cumulate those votes in the election of directors by giving
written notice of intent to do so, unless the corporation's articles
of incorporation provide otherwise. Under the Washington Articles and
the Minnesota Articles, no such cumulative voting exists.
- DIRECTORS' STANDARD OF CARE AND PERSONAL LIABILITY. Minnesota and
Washington law provide that a director shall discharge the director's
duties in good faith, in a manner the director reasonably believed to be in
the best interests of the corporation, and with the care an ordinarily
prudent person in a like position would have exercised under similar
circumstances. A director who so performs those duties may not be held
liable by reason of being a director or having been a director of the
corporation for any action taken as a director, or any failure to take any
action.
- LIMITATION OR ELIMINATION OF DIRECTORS' PERSONAL LIABILITY. Minnesota law
provides that, if the articles of incorporation so provide, the personal
liability of a director for breach of fiduciary duty as a director may be
eliminated or limited, but that the articles may not limit or eliminate
such liability 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
that involve intentional misconduct or a knowing violation of law, (c) the
payment of unlawful dividends, stock repurchases or redemptions, (d) any
transaction in which the director received an improper personal benefit,
(e) certain violations of the Minnesota securities laws, and (f) any act or
omission occurring prior to the date when the provision in the articles
eliminating or limiting liability becomes effective.
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Washington law provides that a corporation's articles of incorporation
may include a provision that eliminates or limits the personal liability
of a director to the corporation or its shareholders for monetary damages
for conduct as a director. The provision, however, may not eliminate or
limit liability of a director for acts or omissions that involve
intentional misconduct by a director, a knowing violation of law by a
director, for unlawful distributions, 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. The Washington
Articles include this limitation of liability.
- INDEMNIFICATION. Minnesota law generally provides for mandatory
indemnification of persons acting in an official capacity on behalf of the
corporation if such a person acted in good faith, received no improper
personal benefit, acted in a manner the person reasonably believed to be in
or not opposed to the best interest of the corporation and, in the case of
a criminal proceeding, had no reasonable cause to believe that the conduct
was unlawful.
Under Washington law, if authorized by the articles of incorporation, a
bylaw adopted or ratified by shareholders, or a resolution adopted or
ratified, before or after the event, by the shareholders, a corporation has
the power to indemnify a director or officer made a party to a proceeding,
or advance or reimburse expenses incurred in a proceeding, under any
circumstances, except that no such indemnification shall be allowed on
account of: (i) acts or omissions of the directors finally adjudged to be
intentional misconduct or a knowing violation of the law; (ii) conduct of
the director finally adjudged to be an unlawful distribution; or (iii) 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.
Written commentary by the drafters of the Washington law specifically
indicates that, under Washington law, in a proceeding by or in the right of
a corporation (e.g., a shareholder derivative suit), a corporation may
indemnify an individual made a party to a proceeding because the individual
is or was a director against liability incurred in the proceeding for the
individual's reasonable expenses incurred in connection with the proceeding
if the individual acted in good faith, and, in the case of conduct in the
individual's official capacity, he or she reasonably believed his or her
conduct was in the best interests of the corporation (in all other cases,
the individual must have reasonably believed that the conduct was not
opposed to the corporation's best interests). In the case of a criminal
proceeding, the individual must have had no reasonable cause to believe the
conduct was unlawful. A corporation may not indemnify a director if the
director is adjudged liable to the corporation, or the director is adjudged
liable for receiving improper personal benefit in an action charging the
same. The Washington Articles provide that the Company shall indemnify its
directors and officers to the fullest extent permitted by Washington law.
- APPRAISAL RIGHTS IN CONNECTION WITH CORPORATE REORGANIZATIONS AND OTHER
ACTIONS. Under Minnesota law and Washington law, shareholders have the
right, in some circumstances, to dissent from certain corporate
transactions by demanding payment in cash for their shares equal to the
fair value as determined by agreement with the corporation or by a court in
an action timely brought by the dissenters. Both Minnesota and Washington
law, in general, afford dissenters' rights upon certain amendments to the
articles that materially and adversely affect the rights or preferences of
the shares
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of the dissenting shareholder, upon the sale of substantially all corporate
assets, and upon mergers, consolidations, or share exchanges, regardless of
whether the shares of the corporation are listed on a national securities
exchange or widely held.
- CONFLICTS OF INTEREST. Under Minnesota law, a contract or transaction
between a corporation and one or more of its directors, or an entity in or
of which one or more of the corporation's directors are directors,
officers, or legal representatives or have a material financial interest,
is not void or voidable solely by reason of the conflict, provided that the
contract or transaction is fair and reasonable at the time it is
authorized, it is ratified by the corporation's stockholders after
disclosure of the relationship or interest, or is authorized in good faith
by a majority of the disinterested members of the board of directors after
disclosure of the relationship or interest. However, if the contract or
transaction is authorized by the board, under Minnesota law the interested
director may not be counted in determining the presence of a quorum and may
not vote.
Washington law sets forth a safe harbor for transactions between a
corporation and one or more of its directors. A conflicting interest
transaction may not be enjoined, set aside or give rise to damages if: (i)
it is approved by a majority of qualified directors, but no fewer than two;
(ii) it is approved by the affirmative vote of all qualified shares; or
(iii) at the time of commitment, the transaction was fair to the
corporation. For purposes of this provision, "qualified director" is one
who does not have a conflicting interest respecting the transaction, or a
familial, financial, professional, or employment relationship with a second
director which relationship would reasonably be expected to exert an
influence on the first director's judgment when voting on the transaction.
"Qualified shares" are defined generally as shares other than those
beneficially owned, or the voting of which is controlled, by a director who
has a conflicting interest respecting the transaction. Washington law
permits the interested director to be counted in determining whether a
quorum of the directors is present at the meeting approving the
transaction.
- CLASSIFIED BOARD OF DIRECTORS. Both Minnesota and Washington permit a
corporation's charter documents to provide for a classified board of
directors. Washington permits a maximum of three classes; Minnesota law
does not limit the number of classes. The Washington Articles do not make
provision for a classified board.
- REMOVAL OF DIRECTORS. Under Minnesota law, in general, unless a
corporation's articles provide otherwise, a director may be removed with or
without cause by the affirmative vote of a majority of the shareholders.
Under Washington law, a director of a corporation may be removed 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. The Washington Articles do not make provision for removal only
for cause.
- VACANCIES ON BOARD OF DIRECTORS. Under Minnesota and Washington law, unless
the articles or bylaws provide otherwise, a vacancy on a corporation's
board of directors may be filled by the vote of a majority of directors
then in office, although less than a quorum; a newly created directorship
resulting from an increase in the number of directors may be filled by the
board; and any director so
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elected shall hold office only until a qualified successor is elected at
the next regular or special meeting of shareholders.
- ANNUAL MEETINGS OF STOCKHOLDERS. Minnesota law provides that if a regular
meeting of shareholders has not been held during the immediately preceding
fifteen months, a shareholder or shareholders holding 3 percent or more of
the voting power of all shares entitled to vote may demand a regular
meeting of stockholders. Washington law provides that if an annual meeting
was not held within the earlier of six months after the end of the
corporation's fiscal year or fifteen months after its last annual meeting,
any shareholder may demand a meeting.
- SPECIAL MEETINGS OF STOCKHOLDERS. Minnesota law provides that the chief
executive officer, the chief financial officer, two or more directors, a
person authorized in the articles or bylaws to call a special meeting, or a
shareholder holding 10 percent or more of the voting power of all shares
entitled to vote, may call a special meeting of the stockholders, except
that a special meeting concerning a business combination must be called by
25 percent of the voting power of all shares entitled to vote. Under
Washington law, the board of directors or those persons authorized by the
corporation's articles of incorporation or bylaws may call a special
meeting of the corporation's stockholders. In addition, unless limited by
the articles of incorporation, holders of at least ten percent of all the
votes entitled to be cast on any issue may call a special meeting of the
stockholders. The Washington Articles provide that the Chairman of the
Board, the President or the Board of Directors may call special meetings of
the shareholders for any purpose. Further, a special meeting of the
shareholders may be called by the holders of not less than ten percent of
all the votes entitled to be cast on any issue.
- VOLUNTARY DISSOLUTION. Minnesota law provides that a corporation may be
dissolved by the voluntary action of holders of a majority of a
corporation's shares entitled to vote at a meeting called for the purpose
of considering such dissolution. Washington law provides that voluntary
dissolution of a corporation first must be recommended by the board of
directors unless the board of directors determines that because of conflict
of interest or other special circumstances it should make no recommendation
and communicates the basis for its determination to the shareholders. The
shareholders entitled to vote must approve the proposal to dissolve.
- INVOLUNTARY DISSOLUTION. Minnesota and Washington law provide that a court
may dissolve a corporation in an action by a shareholder where: (a) the
situation involves a deadlock in the management of corporate affairs and
the shareholders cannot break the deadlock (and, in Washington, irreparable
injury to the corporation is threatened or being suffered, or the business
and affairs of the corporation can no longer be conducted to the advantage
of the shareholders generally, because of the deadlock); (b) the directors
or control persons have acted fraudulently, illegally, or in a manner
unfairly prejudicial to the corporation; (c) the shareholders are divided
in voting power for two consecutive regular meetings to the point where
successor directors are not elected; (d) there is a case of misapplication
or waste of corporate assets; or (e) in Minnesota, the duration of the
corporation has expired, or in Washington, the corporation has ceased all
business activity and has failed, within a reasonable time, to dissolve, to
liquidate its assets, or to distribute its remaining assets among its
shareholders.
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- AMENDMENT OF THE BYLAWS. Minnesota law provides that, unless reserved by
the articles to the shareholders, the power to adopt, amend or repeal a
corporation's bylaws is vested in the board, subject to the power of the
shareholders to adopt, repeal or amend the bylaws. After adoption of
initial bylaws, the board of a Minnesota corporation cannot adopt, amend or
repeal a bylaw fixing a quorum for meetings of shareholders, prescribing
procedures for removing directors or filling vacancies in the board, or
fixing the number of directors or their classifications qualifications or
terms of office, but may adopt or amend a bylaw to increase the number of
directors.
Washington law vests the power to adopt, amend or repeal bylaws in the
board, unless reserved by the articles exclusively to the shareholders.
Under Washington law, the fact that such power has been placed in the board
of directors neither divests nor limits the stockholders' power to adopt,
amend or repeal bylaws. The Washington Articles authorize the Board of
Directors to make, alter or repeal any or all of the bylaws, to the fullest
extent provided by Washington law.
- AMENDMENT OF ARTICLES. Under Minnesota law, before the shareholders may
vote on an amendment to the articles of incorporation, either a resolution
to amend the articles must have been approved by the affirmative vote of
the majority of the directors present at the meeting where such resolution
was considered, or the amendment must have been proposed by shareholders
holding three percent or more of the voting power of the shares entitled to
vote. Amending the articles of incorporation requires the affirmative vote
of the holders of the majority of the voting power present and entitled to
vote at the meeting (and of each class, if entitled to vote as a class),
unless the articles of incorporation require a larger proportion. Minnesota
law provides that a proposed amendment may be voted upon by the holders of
a class or series even if the articles of incorporation would deny that
right, if among other things, the proposed amendment would increase or
decrease the aggregate number of authorized shares of the class or series,
change the rights or preferences of the class or series, create a new class
or series of shares having rights and preferences prior and superior to the
shares of that class or series or limit or deny any existing preemptive
right of the shares of the class or series.
Washington law authorizes a corporation's board of directors to make
various changes to its articles of incorporation without shareholder
approval. These changes of an administrative nature include changes of
corporate name, of the number of outstanding shares in order to effectuate
a stock split or stock dividend in the corporation's own shares, and to
change or eliminate provisions with respect to par value of its shares.
Otherwise, amendments to a corporation's articles of incorporation must be
recommended to the shareholders by the board of directors, unless the board
determines that because of a conflict of interest or other special
circumstances, it should make no recommendation. Such amendment then must
be approved by two-thirds of all votes entitled to be cast by each voting
group which has a right to vote on the amendment, unless another proportion
(but not less than a majority) is specified in the articles of
incorporation, by the board of directors as a condition to its
recommendation, or by provisions of Washington law. The Washington Articles
provide that, except as expressly reserved to the Board of Directors by
Washington law for certain modifications, the power to alter, amend or
repeal the Articles of Incorporation is vested exclusively in the
shareholders and must be approved by each voting group of shareholders
entitled to vote thereon by a majority of all votes entitled to be cast by
that voting group.
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- PROXIES. Both Minnesota law and Washington law permit proxies of definite
duration. In the event the proxy is indefinite as to its duration, under
both Minnesota and Washington law it is valid for eleven months.
- PREEMPTIVE RIGHTS. Under Minnesota law, shareholders have preemptive rights
to acquire a certain fraction of the unissued securities or rights to
purchase securities of a corporation before the corporation may offer them
to other persons, unless the corporation's articles of incorporation
otherwise provide. Under Washington law, a similar preemptive right to
acquire proportional amounts of the corporation's unissued shares exists,
unless the articles of incorporation specify otherwise. Neither the
Washington Articles nor the Minnesota Articles provide for any preemptive
rights.
- SHAREHOLDERS' ACTION WITHOUT A MEETING. Under Minnesota law, any action
required or permitted to be taken at a shareholders' meeting may be taken
without a meeting by written consent signed by all of the shareholders
entitled to vote on such action. This power cannot be restricted by a
Minnesota corporation's articles. Washington law permits non-public
companies to take an action if a written consent is signed by the holders
of shares that would have been required to effect the action at an actual
meeting of the stockholders. Generally, holders of a majority of
outstanding shares could effect such an action. However, under Washington
law public companies may take actions by written consent without a meeting
only if written consent is signed by all of the shareholders entitled to
vote on such action. The Company is a public company. Washington law does
not allow the requirement of unanimous consent to be restricted by a
Washington corporation's articles.
- STOCK REPURCHASES. A Minnesota corporation may acquire its own shares if,
after the acquisition, it is able to pay its debts as they become due in
the ordinary course of business and if enough value remains in the
corporation to satisfy all preferences of senior securities. Under
Washington law, a corporation may acquire its own shares except when the
corporation would not be able to pay its debts as they become due in the
usual course of business; or 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 that would be needed, if the
corporation were to be 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. There
is no such provision in the Washington Articles.
- CAPITALIZATION; BLANK CHECK PREFERRED. LION Minnesota's capital stock
consists of 50,000,000 authorized shares of common stock, $.001 par value,
of which 32,912,811 shares were issued and outstanding as of the Record
Date, and 5,000,000 authorized shares of preferred stock, $.001 par value,
of which 1,500,000 shares were outstanding as of the Record Date. Upon the
effectiveness of the Reincorporation, LION Washington will have the same
number of outstanding shares of common stock that the Company had
outstanding immediately prior to the Reincorporation. The capitalization of
the LION Washington is identical to the capitalization of LION Minnesota
with authorized capital stock of 50,000,000 shares of common stock, $.001
par value, and 5,000,000 shares of preferred stock, $.001 par value. The
LION Washington's authorized but unissued shares of preferred stock will be
available for future issuance.
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Under the Washington Articles, as under the Minnesota Articles, the Board
of Directors has the authority to determine or alter the rights,
preferences, privileges and restrictions to be granted to or imposed upon
any wholly unissued series of preferred stock and to fix the number of
shares constituting any such series and to determine the designation
thereof. The Board may authorize the issuance of preferred stock for the
purpose of adopting shareholder rights plans and in connection with various
corporate transactions, including corporate partnering arrangements. If the
Reincorporation is approved, it is not the present intention of the Board
of Directors to seek shareholder approval prior to any issuance of
preferred stock, except as required by law or regulation.
OTHER DIFFERENCES IN THE CHARTER DOCUMENTS AND BYLAWS
The Washington Articles and Bylaws differ from the Minnesota Articles
and Bylaws in other aspects. These differences generally are reflective of
technical differences between Washington and Minnesota law and a policy decision
not to include provisions which are adequately covered by statute or not
required to be included in such charter documents. The foregoing discussion is
an attempt to summarize the more important differences in the corporation laws
of Washington and Minnesota and is not an exhaustive discussion of all of the
differences. Such differences can be determined in full by reference to the
Washington General Corporation Law and to the Minnesota General Corporation Law.
In addition, both Washington and Minnesota law provide that some of the
statutory provisions as they affect various rights of holders of shares may be
modified by provisions in the articles or bylaws of the corporation.
TAX CONSEQUENCES
The Reincorporation provided for in the Merger Agreement is intended to
be tax free under the Internal Revenue Code. Accordingly, it is anticipated that
no gain or loss will be recognized by the Company's shareholders for federal
income tax purposes as a result of the consummation of the Reincorporation. Each
shareholder will have a tax basis in the shares of capital stock of LION
Washington deemed received equal to the tax basis of the shareholder in the
shares of capital stock deemed exchanged therefor. Provided that the shareholder
held the shares of capital stock as a capital asset, each such shareholder's
holding period for the shares of capital stock of LION Washington deemed to have
been received will include the holding period of the shares of capital stock
deemed exchanged therefor. No gain or loss will be recognized for federal income
tax purposes by LION Minnesota or LION Washington, and LION Washington will
succeed, without adjustment, to the tax attributes of the Company. The Company
has not obtained a ruling from the Internal Revenue Service or an opinion of
legal or tax counsel with respect to the consequences of the Reincorporation.
The foregoing is only a summary of certain federal income tax
consequences. SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISERS REGARDING THE
SPECIFIC TAX CONSEQUENCES TO THEM OF THE MERGER, INCLUDING THE APPLICABILITY OF
THE LAWS OF ANY STATE OR OTHER JURISDICTION.
VOTE REQUIRED AND BOARD RECOMMENDATION
Approval of the Reincorporation will require the affirmative vote of a
majority of the outstanding voting shares of the Company. The holders of Series
A Preferred Stock are entitled to vote together with
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holders of common stock. As a result, the Reincorporation will not be effected
if less than 50 percent of the outstanding shares are voted in favor of the
Reincorporation.
The Board recommends voting "FOR" the Reincorporation, merger and Plan
of Merger related thereto. A vote FOR the Reincorporation proposal will
constitute approval of the merger, the Washington Articles, the Washington
Bylaws, the adoption and assumption by LION Washington of each of the Company's
stock option, stock purchase and employee benefit plans and all other aspects of
this Proposal No. 2.
PROPOSAL NO. 3
RATIFICATION OF INDEPENDENT ACCOUNTANTS
Grant Thornton LLP has audited the Company's financial statements since
the year ended December 31, 1997. The Board has selected Grant Thornton LLP as
independent public accountants for the Company for the year ending December 31,
2000. Shareholder ratification of the selection of Grant Thornton LLP as the
Company's independent auditors is not required by the Company's bylaws or
otherwise. However, the Board is submitting the selection of Grant Thornton LLP
for shareholder ratification as a matter of good corporate practice. The persons
named in the accompanying proxy will vote the Common Stock represented by the
proxy for ratification of the selection of Grant Thornton LLP, unless a contrary
choice has been specified in the proxy. If the shareholders fail to ratify the
appointment, the Board of Directors will reconsider its selection, although the
Board would not be required to select different independent public accountants
for the Company. Even if the selection is ratified, the Board of Directors, in
its discretion, may direct the appointment of a different independent accounting
firm at any time during the year if the Board of Directors feels that such a
change would be in the Company's and the shareholders' best interests.
A representative of Grant Thornton LLP is expected to be present at the
Annual Meeting and will have the opportunity to make a statement if he or she
desires to do so. The representative is expected to be available to respond to
appropriate questions.
VOTE REQUIRED AND BOARD RECOMMENDATION
The affirmative vote by holders of a majority of the shares present and
entitled to vote will be required to ratify the selection. The Board recommends
voting "FOR" the Proposal.
OTHER MATTERS
The Board of Directors does not know of any other matters that may come
before the Annual Meeting, but if any are properly presented at the Annual
Meeting, or any adjournments or postponements, the persons named in the enclosed
proxy will vote the proxy and act according to their best judgment.
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SHAREHOLDER PROPOSALS
In order for proposals of shareholders to be included in the proxy
materials for presentation at the 2001 Annual Meeting of Shareholders, such
proposals must be received by the Corporate Secretary no later than January 31,
2001.
AVAILABILITY OF REPORTS ON FORM 10-KSB
We will furnish without charge to each person whose proxy is being
solicited, upon written request of any such person, a copy of our Annual Report
on Form 10-KSB for the year ended December 31, 1999, as filed with the SEC,
including the financial statements and schedules thereto. Requests for copies of
such Annual Report on Form 10-KSB should be directed to Investor Relations, LION
Inc., 2201 Lind Ave. SW, Ste. 200, Renton, WA 98055.
OTHER INFORMATION
Our 2000 Annual Report for the fiscal year ended December 31, 1999 was
mailed to shareholders together with the mailing of this Proxy Statement.
Shareholders who did not receive a copy of the 2000 Annual Report with their
Proxy Statement may obtain a copy by writing to or calling Dave Charnock,
Investor Relations, LION Inc., 2201 Lind Ave. SW, Ste. 200, Renton, WA 98055,
telephone number (888) 541-5466.
BY ORDER OF THE BOARD OF DIRECTORS
-------------------------------------
John A. McMillan
Chairman
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PROXY
LION INC.
ANNUAL MEETING OF SHAREHOLDERS, NOVEMBER 28, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE UNDERSIGNED (SEE REVERSE SIDE OF THIS PROXY) REVOKES ALL PREVIOUS PROXIES,
ACKNOWLEDGES RECEIPT OF THE NOTICE OF THE SHAREHOLDERS MEETING TO BE HELD
NOVEMBER 28, 2000 AND THE PROXY STATEMENT, AND APPOINTS JOHN A. MCMILLAN AND
ALLEN C. RINGER, OR EITHER OF THEM THE PROXY OF THE UNDERSIGNED, WITH FULL POWER
OF SUBSTITUTION, TO VOTE ALL SHARES OF COMMON STOCK OF PLENUM COMMUNICATIONS,
INC., DBA LION INC. THAT THE UNDERSIGNED IS ENTITLED TO VOTE, EITHER ON HIS OR
HER OWN BEHALF OR ON BEHALF OF AN ENTITY OR ENTITIES, AT THE ANNUAL MEETING OF
SHAREHOLDERS OF THE COMPANY TO BE HELD ON NOVEMBER 28, 2000,, AND AT ANY
ADJOURNMENT OR POSTPONEMENT THEREOF, WITH THE SAME FORCE AND EFFECT AS THE
UNDERSIGNED MIGHT OR COULD DO IF PERSONALLY PRESENT. THE SHARES REPRESENTED BY
THIS PROXY ARE AS OF OCTOBER 9, 2000, AND SHALL BE VOTED IN THE MANNER SET FORTH
BELOW:
1. TO ELECT FIVE MEMBERS OF THE BOARD OF DIRECTORS TO SERVE UNTIL THE NEXT
ANNUAL MEETING AND UNTIL THEIR SUCCESSORS HAVE BEEN ELECTED AND QUALIFIED;
NOMINEES: 01 - SAM RINGER; 02 - J.C. "TUCK" MARSHALL; 03 - JOHN A. MCMILLAN;
04 - KURT SPRINGMAN 05 - JACOB L. SMITH
/ / FOR ALL NOMINEES / / WITHHELD FROM ALL NOMINEES
/ / WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE.
WRITE NAME OR NUMBER(S) OF NOMINEES.
2. TO APPROVE THE CHANGE IN THE COMPANY'S STATE OF INCORPORATION FROM MINNESOTA
TO WASHINGTON BY A MERGER WITH AND INTO A NEWLY FORMED, WHOLLY-OWNED WASHINGTON
SUBSIDIARY.
/ / FOR / / AGAINST / / ABSTAIN
3. TO RATIFY THE SELECTION OF GRANT THORNTON LLP AS THE COMPANY'S INDEPENDENT
ACCOUNTANTS;
/ / FOR / / AGAINST / / ABSTAIN
4. TO ACT UPON ANY OTHER MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING
OR ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.
/ / FOR / / AGAINST / / ABSTAIN
THE SHARES REPRESENTED BY THIS PROXY MAY BE VOTED ON THE ABOVE ITEMS BY MARKING
AN "X" IN THE SPACE PROVIDED FOR THAT PURPOSE. UNLESS OTHERWISE SPECIFIED, THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED FOR PROPOSALS 1-4, AND WILL BE VOTED
IN THE DISCRETION OF THE PROXIES ON SUCH OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF (SEE NOTES TO THIS
PROXY ON REVERSE SIDE).
DATED , 2000 DATED , 2000
-------------- --------------
-------------------- -------------------
SIGNATURE SIGNATURE
PLEASE SIGN YOUR NAME EXACTLY AS IT APPEARS HEREON. IF ACTING AS ATTORNEY,
EXECUTOR, TRUSTEE, OR IN OTHER REPRESENTATIVE CAPACITY, SIGN NAME AND TITLE.
<PAGE>
LION INC.
ANNUAL MEETING TO BE HELD ON NOVEMBER 28, 2000
FOR HOLDERS AS OF 10/09/00
NOTES
1. The shares represented by this proxy will be voted or withheld from voting
at the Annual Meeting as requested by a shareholder or proxyholder (provided the
instructions are certain). If the shareholder (or an intermediary holding shares
on behalf of an unregistered shareholder) has specified a choice with respect to
any of the items herein by marking an "X" in the space provided for that
purpose, the shares will be voted in accordance with that choice. If no choice
is specified, the proxyholder, if one proposed by management, intends to vote
the shares as if the shareholder had specified an affirmative vote. If any
amendments or variations to matters identified in the Notice of Meeting are
proposed at the meeting or if any other matters properly come before the
meeting, discretionary authority is hereby conferred with respect thereto.
2. This Proxy will not be valid unless it is dated and signed by the
shareholder, by his or her attorney authorized in writing or by the
intermediary. In the case of a corporation, this Proxy must be signed under its
full corporate name by a duly authorized officer or person.
3. To be effective, the Proxy together with the power of attorney or other
authority, if any, under which it was signed must be received by the Company
prior to Annual Meeting.
YOUR NAME AND ADDRESS ARE SHOWN AS REGISTERED - PLEASE NOTIFY THE COMPANY OF ANY
CHANGE IN YOUR ADDRESS.
/ / MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (hereinafter called the "Merger
Agreement") is made as of November 28, 2000, by and between Plenum
Communications Inc., dba LION Inc., a Minnesota corporation ("LION Minnesota"),
and LION Inc., a Washington corporation ("LION Washington"). LION Minnesota and
LION Washington are sometimes referred to as the "Constituent Corporations."
1.0 RECITALS
1.1 Each of the Constituent Corporations is a corporation organized and
existing under the laws of its respective state as indicated in the first
paragraph of this Agreement.
1.2 The authorized capital stock of LION Minnesota consists of fifty
million (50,000,000) shares of common stock, $.001 par value, and five million
(5,000,000) shares of preferred stock, $.001 par value. The authorized capital
stock of LION Washington, upon effectuation of the transactions set forth in
this Merger Agreement, will consist of fifty million (50,000,000) shares of
common stock, $.001 par value, and five million (5,000,000) shares of preferred
stock, $.001 par value.
1.3 The directors of the Constituent Corporations deem it advisable and
to the advantage of the Constituent Corporations that LION Minnesota merge into
LION Washington upon the terms and conditions herein provided.
1.4 NOW, THEREFORE, the parties do hereby adopt the plan of
reorganization encompassed by this Merger Agreement and do hereby agree that
LION Minnesota shall merge into LION Washington on the following terms,
conditions and other provisions:
2.0 TERMS AND CONDITIONS
2.1 MERGER AND EFFECTIVE DATE. LION Minnesota shall be merged with and
into LION Washington (the "Merger"), and LION Washington shall be the surviving
corporation (the "Surviving Corporation"). The Merger shall not be effective
immediately upon the date appropriate merger documents are filed with the
Secretary of State of Minnesota and the Secretary of State of Washington, but
rather on the delayed effective date of December 31, 2000 (the "Effective
Date").
2.2 NAME OF CORPORATION. On the Effective Date, the name of LION
Washington shall be LION Inc.
2.3 SUCCESSION. On the Effective Date, LION Washington shall continue
its corporate existence under the laws of the State of Washington, and the
separate existence and corporate organization of LION Minnesota, except insofar
as it may be continued by operation of law, shall be terminated and cease.
2.4 TRANSFER OF ASSETS AND LIABILITIES. On the Effective Date, the
rights, privileges, powers and franchises, both of a public as well as of a
private nature, of each of the Constituent Corporations
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shall be vested in and possessed by the Surviving Corporation, subject to all of
the disabilities, duties and restrictions of or upon each of the Constituent
Corporations; and all and singular rights, privileges, powers and franchises of
each of the Constituent Corporations, and all property, real, personal and
mixed, of each of the Constituent Corporations, and all debts due to each of the
Constituent Corporations on whatever account, and all things in action or
belonging to each of the Constituent Corporations shall be transferred to and
vested in the Surviving Corporation; and all property, rights, privileges,
powers and franchises, and all and every other interest, shall be thereafter the
property of the Surviving Corporation as they were of the Constituent
Corporations, and the title to any real estate vested by deed or otherwise in
either of the Constituent Corporations shall not revert or be in any way
impaired by reason of the Merger; PROVIDED, HOWEVER, that the liabilities of the
Constituent Corporations and of their shareholders, directors and officers shall
not be affected and all rights of creditors and all liens upon any property of
either of the Constituent Corporations shall be preserved unimpaired, and any
claim existing or action or proceeding pending by or against either of the
Constituent Corporations may be prosecuted to judgment as if the Merger had not
taken place except as they may be modified with the consent of such creditors
and all debts, liabilities and duties of or upon each of the Constituent
Corporations shall attach to the Surviving Corporation, and may be enforced
against it to the same extent as if such debts, liabilities and duties had been
incurred or contracted by it.
2.5 COMMON AND PREFERRED STOCK OF LION MINNESOTA AND LION WASHINGTON.
On the Effective Date, by virtue of the Merger and without any further action on
the part of the Constituent Corporations or their shareholders: (a) each share
of Common Stock of LION Minnesota issued and outstanding immediately prior
thereto shall be converted into one (1) fully paid and nonassessable share of
the Common Stock of LION Washington and each share of common stock of LION
Washington issued and outstanding immediately prior thereto shall be canceled
and returned to the status of authorized but unissued shares; and (b) each share
of Series A Preferred Stock of LION Minnesota issued and outstanding immediately
prior thereto shall be converted into one (1) fully paid and nonassessable share
of Series A Preferred Stock of LION Washington, with identical rights,
preferences, privileges, and restrictions granted to and imposed on the Series A
Preferred Stock.
2.6 STOCK CERTIFICATES. On and after the Effective Date, all of the
outstanding certificates which prior to that time represented shares of the
Common Stock or of the Preferred Stock of LION Minnesota shall be deemed for all
purposes to evidence ownership of and to represent the shares of LION Washington
into which the shares of LION Minnesota represented by such certificates have
been converted as herein provided and shall be so registered on the books and
records of the Surviving Corporation or its transfer agents. It will not be
necessary for shareholders to exchange their existing stock certificates for
stock certificates of LION Washington. However, shareholders may exchange their
certificates if they so choose. The registered owner of any such outstanding
stock certificate shall, until such certificate shall have been surrendered for
transfer or conversion or otherwise accounted for to the Surviving Corporation
or its transfer agent, have and be entitled to exercise any voting and other
rights with respect to and to receive any dividend and other distributions upon
the shares of LION Washington evidenced by such outstanding certificate as above
provided.
2.7 OPTIONS. On the Effective Date, the Surviving Corporation will
assume and continue LION Minnesota's 1998 Stock Option Plan and the outstanding
and unexercised portions of all options to purchase Common Stock of LION
Minnesota, including without limitation all options outstanding under such stock
plans and any other outstanding options, shall be converted into options of LION
Washington, such that an option for one (1) share of LION Minnesota shall be
converted into an option for one (1) share of LION Washington, with no change in
the exercise price of the LION Washington option. No other changes in the terms
and conditions of such options will occur. Effective on the Effective Date,
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LION Washington hereby assumes the outstanding and unexercised portions of such
options and the obligations of LION Minnesota with respect thereto.
2.8 ACQUISITION RIGHTS. On the Effective Date, all outstanding and
unexercised warrants, convertible debentures or other rights to acquire stock of
LION Minnesota (such warrants, debentures and other rights collectively,
"Acquisition Rights") shall become Acquisition Rights to acquire stock of LION
Washington, with no changes in the terms or conditions of such Acquisition
Rights. Effective on the Effective Date, LION Washington hereby assumes the
outstanding and unexercised portions of such Acquisition Rights and the
obligations of LION Minnesota with respect thereto.
2.9 EMPLOYEE BENEFIT PLANS. On the Effective Date, the Surviving
Corporation shall assume all obligations of LION Minnesota under any and all
employee benefit plans in effect as of such date. On the Effective Date, the
Surviving Corporation shall adopt and continue in effect all such employee
benefit plans upon the same terms and conditions as were in effect immediately
prior to the Merger and shall reserve that number of shares of LION Washington
Common Stock with respect to each such employee benefit plan as is proportional
to the number of shares of LION Minnesota Common Stock (if any) so reserved on
the Effective Date.
3.0 CHARTER DOCUMENTS, DIRECTORS AND OFFICERS
3.1 ARTICLES OF INCORPORATION AND BYLAWS. The Articles of Incorporation
and Bylaws of LION Washington in effect on the Effective Date shall continue to
be the Articles of Incorporation and Bylaws of the Surviving Corporation.
3.2 DIRECTORS. The directors of LION Minnesota immediately preceding
the Effective Date shall become the directors of the Surviving Corporation on
and after the Effective Date to serve until the expiration of their terms and
until their successors are elected and qualified.
3.3 OFFICERS. The officers of LION Minnesota immediately preceding the
Effective Date shall become the officers of the Surviving Corporation on and
after the Effective Date to serve at the pleasure of its Board of Directors.
4.0 MISCELLANEOUS
4.1 FURTHER ASSURANCES. From time to time, and when required by the
Surviving Corporation or by its successors and assigns, there shall be executed
and delivered on behalf of LION Minnesota such deeds and other instruments, and
there shall be taken or caused to be taken by it such further and other action,
as shall be appropriate or necessary in order to vest or perfect in or to
conform of record or otherwise, in the Surviving Corporation the title to and
possession of all the property, interests, assets, rights, privileges,
immunities, powers, franchises and authority of LION Minnesota and otherwise to
carry out the purposes of this Merger Agreement, and the officers and directors
of the Surviving Corporation are fully authorized in the name and on behalf of
LION Minnesota or otherwise to take any and all such action and to execute and
deliver any and all such deeds and other instruments.
4.2 AMENDMENT. At any time before or after approval by the shareholders
of LION Minnesota, this Merger Agreement may be amended in any manner (except
that, after the approval of the Merger Agreement by the shareholders of LION
Minnesota, the principal terms may not be amended without the further approval
of the shareholders of LION Minnesota) as may be determined in the
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<PAGE>
judgment of the respective Board of Directors of LION Washington and LION
Minnesota to be necessary, desirable, or expedient in order to clarify the
intention of the parties hereto or to effect or facilitate the purpose and
intent of this Merger Agreement.
4.3 CONDITIONS TO MERGER. The obligations of the Constituent
Corporations to effect the transactions contemplated hereby is subject to
satisfaction of the following conditions (any or all of which may be waived by
either of the Constituent Corporations in its sole discretion to the extent
permitted by law):
(a) the Merger shall have been approved by the shareholders of LION
Minnesota in accordance with applicable provisions of the Business
Corporation Act of the State of Minnesota; and
(b) LION Minnesota, as sole stockholder of LION Washington, shall have
approved the Merger in accordance with the Business Corporation Act
of the State of Washington; and
(c) any and all consents, permits, authorizations, approvals, and orders
deemed in the sole discretion of LION Minnesota to be material to
consummation of the Merger shall have been obtained.
4.4 ABANDONMENT OR DEFERRAL. At any time before the Effective Date,
this Merger Agreement may be terminated and the Merger may be abandoned by the
Board of Directors of either LION Minnesota or LION Washington or both,
notwithstanding the approval of this Merger Agreement by the shareholders of
LION Minnesota or LION Washington, or the consummation of the Merger may be
deferred for a reasonable period of time if, in the opinion of the Boards of
Directors of LION Minnesota and LION Washington, such action would be in the
best interest of such corporations. In the event of termination of this Merger
Agreement, this Merger Agreement shall become void and of no effect and there
shall be no liability on the part of either Constituent Corporation or its Board
of Directors or shareholders with respect thereto, except that LION Minnesota
shall pay all expenses incurred in connection with the Merger or in respect of
this Merger Agreement or relating thereto.
4.5 COUNTERPARTS. In order to facilitate the filing and recording of
this Merger Agreement, the same may be executed in any number of counterparts,
each of which shall be deemed to be an original.
IN WITNESS WHEREOF, this Merger Agreement, having first been duly
approved by the Board of Directors of LION Minnesota and LION Washington, is
hereby executed on behalf of each said corporation and attested by their
respective officers thereunto duly authorized.
PLENUM COMMUNICATIONS, INC. LION INC.
a Minnesota corporation a Washington corporation
By By
---------------------- ----------------------
John A. McMillan John A. McMillan
Chairman of the Board Chief Executive Officer
Chief Executive Officer
ATTEST:
------------------------
L. O. Falk
Secretary
A-4
<PAGE>
EXHIBIT B
ARTICLES OF INCORPORATION
OF
LION INC.
ARTICLE I.
NAME
The name of this corporation is LION Inc. (the "Company").
ARTICLE II.
DURATION
The Company is to have perpetual existence.
ARTICLE III.
REGISTERED OFFICE AND AGENT
The principal office of the Company in the State of Washington is 2201
Lind Avenue S.W., Suite 200, Renton, WA 98055. The initial registered agent is
John A. McMillan of the same address.
ARTICLE IV.
PURPOSES AND POWERS
The purposes and powers of the Company are:
1. To engage in any lawful activities for which companies may be
organized under the Washington Business Corporation Act.
2. To do anything which shall appear necessary or beneficial to the
Company in connection with (a) its operation, (b) accomplishment of its
purposes, or (c) exercise of its powers set forth in these Articles.
ARTICLE V.
CAPITALIZATION
The Company is authorized to issue Fifty-Five Million (55,0000,000)
shares of its capital stock, which shall be divided into two classes known as
Common Stock and Preferred Stock, respectively. No capital stock, after the
amount of the subscription price or par value has been paid, is subject to
assessment to pay the debts of the Company.
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The total number of shares of Common Stock which the Company is
authorized to issue is 50,000,000 with par value of $.001 per share. The total
number of shares of Preferred Stock which the Company is authorized to issue is
5,000,000 with par value of $.001 per share.
The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors of the Company is hereby authorized, within the
limitations and restrictions prescribed by law or stated in these Articles of
Incorporation, to provide for the issuance of Preferred Stock in series and (i)
to establish from time to time the number of shares to be included in each such
series; (ii) to fix the voting powers, designations, powers, preferences and
relative, participating, optional or other rights of the shares of each such
series and the qualifications, limitations or restrictions thereof, including
but not limited to, the fixing or alteration of the dividend rights, dividend
rate, conversion rights, conversion rates, voting rights, rights and terms of
redemption (including sinking fund provisions), the redemption price or prices,
and the liquidation preferences of any wholly unissued series of shares of
Preferred Stock; and (iii) to increase or decrease the number of shares of any
series subsequent to the issue of shares of that series, but not below the
number of shares of such series then outstanding. In case the number of shares
of any series shall be so decreased, the shares constituting such decrease shall
resume the status which they had prior to the adoption of the resolution
originally fixing the number of shares of such series.
SERIES A PREFERRED STOCK
The first series of Preferred Stock shall be designated "Series A
Preferred Stock" and shall consist of Four Million Seven Hundred Eighty Two
Thousand Six Hundred and Eight (4,782,608) shares. The rights, preferences,
privileges, and restrictions granted to and imposed on the Series A Preferred
Stock are as set forth below:
1. DIVIDEND PROVISIONS. The holders of shares of Series A
Preferred Stock shall be entitled to receive dividends out of any assets legally
available therefor, on a parity with any declaration or payment of any dividend
(payable other than in Common Stock or other securities and rights convertible
into or entitling the holder thereof to receive, directly or indirectly,
additional shares of Common Stock of the Corporation) on the Common Stock of the
Corporation, at a rate per share of the Series A Preferred Stock (on an
as-converted into that number of shares of Common Stock into which each share of
Series A Preferred Stock could then be converted) equal to the rate payable per
share of Common Stock, payable when, as and if declared by the Board of
Directors. Such dividends shall not be cumulative. No dividend shall be paid on
the Common Stock in any fiscal year unless a dividend shall first have been paid
in full on the Series A Preferred Stock in an amount for each such share of
Series A Preferred Stock equal to the aggregate amount of dividends for all
shares of Common Stock into which each such share of Series A Preferred Stock
could then be converted.
2. LIQUIDATION.
a. PREFERENCE. In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
the holders of the Series A Preferred Stock shall be entitled to receive, prior
and in preference to any distribution of any of the assets of the Corporation to
the holders of Common Stock by reason of their ownership thereof, an amount for
each share then held by them equal to the price per share (the "Original
Purchase Price") (appropriately adjusted to reflect stock splits, stock
dividends, stock combinations, recapitalizations and the like) at which such
share of Series A Preferred Stock is purchased pursuant to the terms of that
certain Series A Preferred Stock Purchase Agreement (the "Stock Purchase
Agreement") dated as of April 28, 2000, by and among the Company and the
purchasers party thereto, as determined on a share by share basis, plus declared
but unpaid
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dividends (appropriately adjusted to reflect stock splits, stock dividends,
stock combinations, recapitalizations and the like). If the assets and funds of
the Corporation to be distributed among the holders of the Series A Preferred
Stock shall be insufficient to permit payment to such holders of the full
aforesaid preferential amounts, then the entire assets and funds of the
Corporation legally available for distribution shall be distributed ratably
among the holders of the Series A Preferred Stock in proportion to the aggregate
preferential amounts each such holder is otherwise entitled to receive.
b. REMAINING ASSETS. Upon the completion of the
distribution required by Section 2(a) above, the remaining assets of the
Corporation available for distribution to shareholders shall be distributed
among the holders of the Common Stock and Series A Preferred Stock (on an
as-converted into that number of shares of Common Stock into which each share of
Series A Preferred Stock could then be converted) pro rata based on the number
of shares of Common Stock then held by each of them.
c. CERTAIN ACQUISITIONS.
(i) DEEMED LIQUIDATION. For purposes of
this Section 2, a liquidation, dissolution or winding up of the Corporation
shall be deemed to occur if the Corporation shall sell, convey, or otherwise
dispose of all or substantially all of its property or business or merge into or
consolidate with any other corporation (other than a wholly-owned subsidiary
corporation) or effect any other transaction or series of related transactions
in which more than fifty percent (50%) of the voting power of the Corporation is
disposed of, PROVIDED, that this Section 2(c)(i) shall not apply to a merger
effected solely for the purpose of changing the domicile of the Corporation.
(ii) VALUATION OF CONSIDERATION. In the
event of a deemed liquidation as described in Section 2(c)(i) above, if the
consideration received by the Corporation is other than cash, its value will be
deemed its fair market value. Any securities shall be valued as follows:
(A) Securities not subject to
investment letter or other similar restrictions on free marketability:
(1) If traded on a
securities exchange or The Nasdaq National Market, the value shall be deemed to
be the average of the closing prices of the securities on such exchange over the
thirty-day (30) period ending three (3) days prior to the closing;
(2) If actively traded
over-the-counter, the value shall be deemed to be the average of the closing bid
or sale prices (whichever is applicable) over the thirty-day (30) period ending
three (3) days prior to the closing; and
(3) If there is no active
public market, the value shall be the fair market value thereof, as mutually
determined by the Corporation and the holders of at least a majority of the
voting power of all then outstanding shares of Series A Preferred Stock, and if
not so mutually determined, then the Corporation and the holders of at least a
majority of the voting power of all then outstanding shares of Series A
Preferred stock will choose an independent third party to determine the
appropriate value.
(B) The method of valuation of
securities subject to investment letter or other restrictions on free
marketability (other than restrictions arising solely by virtue of a
shareholder's status as an affiliate or former affiliate) shall be to make an
appropriate discount from the market value determined as above in Section
2(c)(ii)(A) to reflect the approximate fair market value
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thereof, as mutually determined by the Corporation and the holders of at least a
majority of the voting power of all then outstanding shares of Series A
Preferred Stock, and if not so mutually determined, then the Corporation and the
holders of at least a majority of the voting power of all then outstanding
shares of Series A Preferred Stock will choose an independent third party to
determine the appropriate value.
(iii) NOTICE OF TRANSACTION. The Corporation
shall give each holder of record of at least 200,000 shares of Series A
Preferred Stock written notice of such impending transaction not later than
fifteen (15) days prior to the shareholders' meeting called to approve such
transaction, or fifteen (15) days prior to the closing of such transaction,
whichever is earlier, and shall also notify such holders in writing of the final
approval of such transaction. The first of such notices shall describe the
material terms and conditions of the impending transaction and the provisions of
this Section 2, and the Corporation shall thereafter give such holders prompt
notice of any material changes. The transaction shall in no event take place
sooner than fifteen (15) days after the Corporation has given the first notice
provided for herein or sooner than ten (10) days after the Corporation has given
notice of any material changes provided for herein; PROVIDED, HOWEVER, that such
periods may be shortened upon the written consent of the holders of Series A
Preferred Stock that are entitled to such notice rights or similar notice rights
and that represent at least a majority of the voting power of all then
outstanding shares of such Series A Preferred Stock.
3. REDEMPTION. The Series A Preferred Stock is not redeemable.
4. CONVERSION. The holders of the Series A Preferred Stock
shall have conversion rights as follows (the "CONVERSION RIGHTS"):
a. RIGHT TO CONVERT. Subject to Section 4(c), each
share of Series A Preferred Stock shall be convertible, at the option of the
holder thereof, at any time after the date of issuance of such share, at the
office of the Corporation or any transfer agent for such stock, into such number
of fully paid and nonassessable shares of Common Stock as is determined by
dividing the Original Purchase Price for each share of Series A Preferred Stock
by the Conversion Price, determined as hereafter provided, in effect on the date
the certificate is surrendered for conversion. The initial Conversion Price per
share of Series A Preferred Stock shall be the Original Purchase Price. The
initial Conversion Price shall be subject to adjustment as set forth in Section
4(d).
b. AUTOMATIC CONVERSION. Each share of Series A
Preferred Stock shall automatically be converted into shares of Common Stock at
the Conversion Price at the time in effect for such share immediately upon the
earlier of (i) except as provided below in Section 4(c), the Corporation's sale
of its Common Stock in a firm commitment underwritten public offering pursuant
to a registration statement under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), the public offering price of which is not less than $2.00 per
share (appropriately adjusted to reflect subsequent stock splits, stock
dividends, combinations or other recapitalizations) and which results in
aggregate cash proceeds to the Corporation of not less than $15,000,000 (net of
underwriting discounts and commissions), (ii) the date specified by written
consent or agreement of the holders of at least a majority of the then
outstanding shares of Series A Preferred Stock, or (iii) the date on which a
majority of shares of Series A Preferred Stock originally issued (appropriately
adjusted to reflect stock splits, stock dividends, stock combinations,
recapitalizations and the like) are voluntarily converted into shares of Common
Stock pursuant to Section 4(a).
c. MECHANICS OF CONVERSION. Before any holder of
Series A Preferred Stock shall be entitled to convert the same into shares of
Common Stock, it shall surrender the certificate or
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certificates therefor, duly endorsed, at the office of the Corporation or of any
transfer agent for such shares of Series A Preferred Stock, and shall give
written notice to the Corporation at its principal corporate office, of the
election to convert the same and shall state therein the name or names in which
the certificate or certificates for shares of Common Stock are to be issued. The
Corporation shall, as soon as practicable thereafter, issue and deliver at such
office to such holder of Series A Preferred Stock, or to the nominee or nominees
of such holder, a certificate or certificates for the number of shares of Common
Stock to which such holder shall be entitled as aforesaid. Such conversion shall
be deemed to have been made immediately prior to the close of business on the
date of such surrender of the shares of such Series A Preferred Stock to be
converted, and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock as of such date. If the
conversion is in connection with an underwritten offering of securities
registered pursuant to the Securities Act, the conversion may, at the option of
any holder tendering such Series A Preferred Stock for conversion, be
conditioned upon the closing with the underwriters of the sale of securities
pursuant to such offering, in which event the person(s) entitled to receive
Common Stock upon conversion of such Preferred Stock shall not be deemed to have
converted such Series A Preferred Stock until immediately prior to the closing
of such sale of securities.
d. CONVERSION PRICE ADJUSTMENTS OF PREFERRED STOCK
FOR CERTAIN DILUTIVE ISSUANCES, SPLITS AND COMBINATIONS. The Conversion Price of
the Series A Preferred Stock shall be subject to adjustment from time to time as
follows:
(i) (A) If this Corporation shall issue,
after the date on which any shares of Series A Preferred Stock were first issued
(the "PURCHASE DATE") any Additional Stock (as defined below in Section
4(d)(ii)) without consideration or for a consideration per share less than the
applicable Conversion Price for shares of Series A Preferred Stock in effect
immediately prior to the issuance of such Additional Stock, the applicable
Conversion Price for such Series A Preferred Stock in effect immediately prior
to each such issuance shall forthwith (except as otherwise provided in this
Section 4(d)(i)) be adjusted to a price determined by multiplying such
Conversion Price by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such issuance plus the
number of shares of Common Stock that the aggregate consideration received by
this Corporation for such issuance would purchase at such Conversion Price; and
the denominator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issuance plus the number of shares of such
Additional Stock.
(B) No adjustment of the Conversion
Price for shares of Series A Preferred Stock shall be made in an amount less
than one hundredth of one cent per share; PROVIDED, that any adjustments which
are not required to be made by reason of this sentence shall be carried forward
and shall be either taken into account in any subsequent adjustment made prior
to three (3) years from the date of the event giving rise to the adjustment
being carried forward, or shall be made at the end of three (3) years from the
date of the event giving rise to the adjustment being carried forward. Except to
the limited extent provided for in Sections 4(d)(i)(E)(3) and 4(d)(i)(E)(4), no
adjustment of such Conversion Price pursuant to this Section 4(d)(i) shall have
the effect of increasing the applicable Conversion Price above the applicable
Conversion Price in effect immediately prior to such adjustment.
(C) In the case of the issuance of
shares of Common Stock for cash, the consideration shall be deemed to be the
amount of cash paid therefor before deducting any reasonable discounts,
commissions or other expenses allowed, paid or incurred by this Corporation for
any underwriting or otherwise in connection with the issuance and sale thereof.
(D) In the case of the issuance of
shares of Common Stock for a consideration in whole or in part other than cash,
the consideration other than cash shall be deemed
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to be the fair value thereof as determined in good faith by the Board of
Directors irrespective of any accounting treatment.
(E) In the case of the issuance
(whether before, on or after the applicable Purchase Date) of options, warrants
or other rights to purchase or subscribe for shares of Common Stock, securities
by their terms convertible into or exchangeable for shares of Common Stock or
options, warrants or other rights to purchase or subscribe for such convertible
or exchangeable securities, the following provisions shall apply for all
purposes of this Section 4(d)(i) and Section 4(d)(ii):
(1) The aggregate maximum
number of shares of Common Stock deliverable on exercise (assuming the
satisfaction of any conditions to exercisability, including, without limitation,
the passage of time, but without taking into account potential antidilution
adjustments) of such options, warrants or other rights to purchase or subscribe
for shares of Common Stock shall be deemed to have been issued at the time such
options, warrants or other rights were issued and for a consideration equal to
the consideration (determined in the manner provided in Sections 4(d)(i)(C) and
4(d)(i)(D)), if any, received by this Corporation on the issuance of such
options, warrants or other rights plus the minimum exercise price provided in
such options, warrants or other rights (without taking into account potential
antidilution adjustments) for the Common Stock covered thereby.
(2) The aggregate maximum
number of shares of Common Stock deliverable on conversion of, or in exchange
for (assuming the satisfaction of any conditions to convertibility or
exchangeability, including, without limitation, the passage of time, but without
taking into account potential antidilution adjustments), any such convertible or
exchangeable securities or on the exercise of options, warrants or other rights
to purchase or subscribe for such convertible or exchangeable securities and
subsequent conversion or exchange thereof shall be deemed to have been issued at
the time such securities were issued or such options, warrants or other rights
were issued and for a consideration equal to the consideration, if any, received
by this Corporation for any such securities and related options, warrants or
other rights (excluding any cash received on account of accrued interest or
accrued dividends), plus the minimum additional consideration, if any, to be
received by this Corporation (without taking into account potential antidilution
adjustments) on the conversion or exchange of such securities or the exercise in
full of any related options, warrants or other rights (the consideration in each
case to be determined in the manner provided in Sections 4(d)(i)(C) and
4(d)(i)(D)).
(3) In the event of any
change in the number of shares of Common Stock deliverable or in the
consideration payable to this Corporation on exercise of such options, warrants
or other rights or on conversion of, or in exchange for, such convertible or
exchangeable securities, including, but not limited to, a change resulting from
the antidilution provisions thereof, the applicable Conversion Price for shares
of Series A Preferred Stock, to the extent in any way affected by or computed
using such options, warrants or other rights or securities, shall be recomputed
to reflect such change, but no further adjustment shall be made for the actual
issuance of Common Stock or any payment of such consideration on the exercise of
any such options, warrants or other rights or the conversion or exchange of such
securities.
(4) On the expiration of
any such options, warrants or other rights, the termination of any such rights
to convert or exchange or the expiration of any options, warrants or other
rights related to such convertible or exchangeable securities, the applicable
Conversion Price for shares of Series A Preferred Stock, to the extent in any
way affected by or computed using such options, warrants or other rights or
securities or options, warrants or other rights related to such securities,
shall be recomputed to reflect the issuance of only the number of shares of
Common Stock (and convertible or exchangeable securities which remain in effect)
actually issued on the exercise of such options, warrants or other rights, on
the conversion or exchange of such securities or on the exercise of the options,
warrants or other rights related to such securities.
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(5) The number of shares of
Common Stock deemed issued and the consideration deemed paid therefor pursuant
to Sections 4(d)(i)(E)(1) and (2) shall be appropriately adjusted to reflect any
change, termination or expiration of the type described in either Section
4(d)(i)(E)(3) or (4).
(ii) "ADDITIONAL STOCK" shall mean any
shares of Common Stock issued (or deemed to have been issued pursuant to Section
4(d)(i)(E)) by this Corporation after the Purchase Date other than the Excluded
Stock. "EXCLUDED STOCK" means the following:
(A) shares of Common Stock issued or
issuable on conversion of the Series A Preferred Stock;
(B) shares of Common Stock issued or
issuable in a public offering, before or in connection with which all
outstanding shares of Series A Preferred Stock will be converted to Common
Stock;
(C) shares of Common Stock or options
or warrants to purchase Common Stock, issued in any transaction pursuant to
which the Corporation is acquiring substantially all of the outstanding common
stock or other equity interests of any other corporation or entity or all or
substantially all of the assets of any such entity if approved by a majority of
the non-employee members of the Board of Directors;
(D) shares of Common Stock or options
or warrants to purchase Common Stock issued to financial institutions or lessors
in connection with commercial credit arrangements, equipment financings or
similar transactions in an annual amount not to exceed twenty-five percent (25%)
of the total amount of such loans or lease obligations entered into during such
fiscal year that are approved by a majority of the non-employee members of the
Board of Directors.
(E) shares of Common Stock or options
or warrants to purchase Common Stock issued to any person or entity that a
majority of the non-employee members of the Board of Directors, in the exercise
of their reasonable business judgment, determine offer the Corporation a
strategic advantage in the operation of the Corporation such that it would be
desirable to enter into a license agreement, joint marketing agreement,
technology development agreement or other similar strategic transactions with
such person or entity;
(F) shares of Common Stock issued upon
exercise of options, warrants, notes or other rights to acquire securities of
the Corporation outstanding as of the Purchase Date;
(G) shares of Common Stock issued or
issuable to employees, officers or directors of, or consultants or advisors to,
the Corporation or any subsidiary, directly or pursuant to stock option plan or
restricted stock purchase plan approved by the Board of Directors of the
Corporation (including options granted prior to the issuance of the Series A
Preferred Stock); and
(H) shares of Common Stock issued
pursuant to a transaction described in Section 4(d)(iii) hereof.
(iii) STOCK SPLITS AND DIVIDENDS. In the
event this Corporation should at any time or from time to time after the
Purchase Date fix a record date for the effectuation of a split or subdivision
of the outstanding shares of Common
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Stock or the determination of holders of Common Stock entitled to receive a
dividend or other distribution payable in additional shares of Common Stock or
other securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock (hereinafter
referred to as "COMMON STOCK EQUIVALENTS") without payment of any consideration
by such holder for the additional shares of Common Stock or the Common Stock
Equivalents (including the additional shares of Common Stock issuable on
conversion or exercise thereof), then, as of such record date (or the date of
such dividend distribution, split or subdivision if no record date is fixed),
the applicable Conversion Price of the Series A Preferred Stock shall be
appropriately decreased so that the number of shares of Common Stock issuable on
conversion of each share of such series shall be increased in proportion to such
increase of the aggregate of shares of Common Stock outstanding and those
issuable with respect to such Common Stock Equivalents with the number of shares
issuable with respect to Common Stock Equivalents determined from time to time
in the manner provided for deemed issuances in Section 4(d)(i)(E).
(iv) REVERSE STOCK SPLITS. If the number
of shares of Common Stock outstanding at any time after the Purchase Date is
decreased by a combination of the outstanding shares of Common Stock then,
following the record date of such combination, the applicable Conversion Price
for the Series A Preferred Stock shall be appropriately increased so that the
number of shares of Common Stock issuable on conversion of each share of such
series shall be decreased in proportion to such decrease in the outstanding
shares of Common Stock as a result of such combination.
e. OTHER DISTRIBUTIONS. In the event the Corporation
shall declare a distribution payable in securities of other persons, evidences
of indebtedness issued by the Corporation or other persons, assets (excluding
cash dividends) or options or rights not referred to in Section 4(d)(ii), then,
in each such case for the purpose of Section 1 and this Section 4(e), the
holders of Series A Preferred Stock shall be entitled to a proportionate share
of any such distribution as though they were the holders of the number of shares
of Common Stock of the Corporation into which their shares of Series A Preferred
Stock are convertible as of the record date fixed for the determination of the
holders of Common Stock of the Corporation entitled to receive such
distribution.
f. RECAPITALIZATIONS. If at any time or from time to
time there shall be a recapitalization of the Common Stock (other than a
subdivision, combination or merger or sale of assets transaction provided for
elsewhere in Section 2 or this Section 4) provision shall be made so that the
holders of the Series A Preferred Stock shall thereafter be entitled to receive
upon conversion of such Series A Preferred Stock the number of shares of stock
or other securities or property of the Corporation or otherwise, to which a
holder of Common Stock deliverable upon conversion would have been entitled on
such recapitalization. In any such case, appropriate adjustment shall be made in
the application of the provisions of this Section 4 with respect to the rights
of the holders of such Series A Preferred Stock after the recapitalization to
the end that the provisions of this Section 4 (including adjustment of the
applicable Conversion Price then in effect and the number of shares purchasable
upon conversion of such Series A Preferred Stock) shall be applicable after that
event and be as nearly equivalent as practicable.
g. NO IMPAIRMENT. The Corporation will not, without
the consent of the holders of a majority of shares of Series A Preferred Stock,
by amendment of its Articles of Incorporation or through any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Corporation, but will at all times in good faith assist in the
carrying out of all the provisions of this Section 4 and in the taking of all
such action as may be necessary or appropriate in order to protect the
Conversion Rights of the holders of Preferred Stock against impairment.
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h. NO FRACTIONAL SHARES AND CERTIFICATE AS TO
ADJUSTMENTS.
(i) No fractional shares shall be issued
on the conversion of any share or shares of the Series A Preferred Stock. All
shares of Common Stock (including fractions thereof) issuable upon conversion of
more than one share of Series A Preferred Stock by a holder thereof shall be
aggregated for purposes of determining whether the conversion would result in
the issuance of any fractional share. If, after the aforementioned aggregation,
the conversion would result in the issuance of any fractional share, the
Corporation shall, in lieu of issuing any fractional share, pay cash equal to
the product of such fraction multiplied by the Common Stock's fair market value
(as determined by the Corporation's Board of Directors) on the date of
conversion.
(ii) On the occurrence of each adjustment
or readjustment of the applicable Conversion Price of shares of Series A
Preferred Stock pursuant to this Section 4, this Corporation, at its expense,
shall promptly compute such adjustment or readjustment in accordance with the
terms hereof and prepare and furnish to each holder of Series A Preferred Stock
a certificate setting forth such adjustment or readjustment and showing in
detail the facts on which such adjustment or readjustment is based. This
Corporation shall, on the written request at any time of any holder of Series A
Preferred Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (A) such adjustment and readjustment, (B) the
applicable Conversion Price for such shares of Series A Preferred Stock at the
time in effect and (C) the number of shares of Common Stock and the amount, if
any, of other property which at the time would be received on the conversion of
a share of Series A Preferred Stock.
i. NOTICES OF RECORD DATE. In the event of any taking
by this Corporation of a record of the holders of any class of securities for
the purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, this
Corporation shall mail to each holder of Series A Preferred Stock, at least 20
days prior to the date on which any such record is to be taken for the purpose
of such dividend, distribution or right (the "RECORD DATE"), a notice specifying
the Record Date and the amount and character of such dividend, distribution or
right.
j. RESERVATION OF STOCK ISSUABLE UPON CONVERSION.
This Corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of the Series A Preferred Stock, such
number of its shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding shares of the Series A Preferred Stock;
and, if at any time the number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the conversion of all then outstanding shares
of the Series A Preferred Stock, in addition to such other remedies as shall be
available to the holder of such Series A Preferred Stock, this Corporation will
take such corporate action as may, in the opinion of its counsel, be necessary
to increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purposes, including, without limitation,
engaging in best efforts to obtain the requisite shareholder approval of any
necessary amendment to these Articles of Incorporation.
k. NOTICES. Any notice required by the provisions of
this Section 4 shall be in writing and shall be deemed effectively given: (i)
upon personal delivery to the party to be notified, (ii) when sent by confirmed
telex or facsimile if sent during normal business hours of the recipient, if
not, then on the next business day, (iii) five (5) days after having been sent
by registered or certified mail,
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return receipt requested, postage prepaid or (iv) one (1) day after deposit with
a nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All notices shall be addressed to each holder
of record at the address of such holder appearing on the books of this
Corporation.
5. VOTING RIGHTS.
Except as otherwise required by law, the holder of
each share of Series A Preferred Stock shall have the right to one vote for each
share of Common Stock into which such Preferred Stock could then be converted,
and with respect to such vote, such holder shall have full voting rights and
powers equal to the voting rights and powers of the holders of Common Stock, and
shall be entitled, notwithstanding any provision hereof, to notice of any
shareholders meeting in accordance with the Bylaws of the Corporation, and shall
be entitled to vote, together with holders of Common Stock, with respect to any
question upon which holders of Common Stock have the right to vote. Fractional
votes shall not, however, be permitted and any fractional voting rights
available on an as-converted basis (after aggregating all shares into which
shares of Series A Preferred Stock held by each holder could be converted) shall
be rounded to the nearest whole number (with one-half being rounded upward).
6. PROTECTIVE PROVISIONS.
a. This Corporation shall not without first
obtaining the approval (by vote or written consent, as provided by law) of the
holders of at least a majority of the then outstanding shares of Series A
Preferred Stock:
(i) amend or repeal any provision of, or
add any provision to, this Corporation's Articles of Incorporation or Bylaws to
change the rights, preferences or privileges of the Series A Preferred Stock, or
increase or decrease (other than by redemption or conversion) the number of
authorized shares of Series A Preferred Stock;
(ii) authorize or issue, or obligate itself
to issue, any other security having a preference or being superior or having a
priority over, or being on a parity with, the Series A Preferred Stock with
respect to voting, dividends, redemption or on liquidation, including any such
security convertible into or exercisable for any such security;
(iii) effect a reclassification or
recapitalization of the outstanding capital stock of this Corporation into
shares having a preference, being superior or having a priority over, or being
on a parity with, the Series A Preferred Stock with respect to voting,
dividends, redemption or on liquidation (as defined in Section 2(c));
(iv) alter or change the rights,
preferences or privileges of the Series A Preferred Stock or any other class of
shares so as to materially and adversely affect the Series A Preferred Stock;
(v) redeem, purchase or otherwise acquire
(or pay into or set aside for a sinking fund for such purpose) any share or
shares of Preferred Stock or Common Stock; PROVIDED, HOWEVER, that this
restriction shall not apply to the application of up to $50,000 of this
Corporation's assets per annum to the repurchase of shares of Common Stock from
employees, advisors, officers, directors, consultants or other persons
performing services for this Corporation or any subsidiary on terms approved by
the Board of Directors of this Corporation or the acquisition of shares of
Common Stock pledged to secure loans made by the Corporation prior to the first
issuance of the Series A Preferred Stock;
(vi) sell, lease, transfer convey, or
otherwise dispose of all or substantially all of its assets or business, merge
into or consolidate with any other corporation (other than
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a wholly-owned subsidiary corporation), effect any transaction or series of
related transactions in which more than fifty percent (50%) of the voting power
of this Corporation is disposed of, or otherwise effect a liquidation (as
defined in Section 2(c)); PROVIDED, that, this Section 6(a)(vi) shall not apply
to a merger effected solely for the purpose of changing the domicile of the
Corporation or any other transaction in which the holders of the Series A
Preferred Stock receive consideration having a value equal to or greater than
$1.20 per share of Series A Preferred Stock (appropriately adjusted to reflect
stock splits, stock dividends, stock combinations, recapitalizations and the
like); or
(vii) materially change the business of
this Corporation from the business in which this Corporation is engaged as of
the first issuance of the Series A Preferred Stock.
7. STATUS OF CONVERTED STOCK. In the event any shares of
Series A Preferred Stock shall be converted pursuant to Section 4 hereof, the
shares so converted shall be cancelled and shall not be issuable by the
Corporation. The Articles of Incorporation of the Corporation shall be
appropriately amended to effect the corresponding reduction in the Corporation's
authorized capital stock.
ARTICLE VI.
CUMULATIVE VOTING
No shareholder shall be entitled to cumulate his votes for election of
Directors.
ARTICLE VII.
PREEMPTIVE RIGHTS
Unless otherwise determined by the Board of Directors, the owners of
shares of stock of this corporation shall not be entitled to preemptive rights
to subscribe for or purchase any part of new or additional issues of stock or
securities convertible into stock of any class whatsoever, whether now or
hereafter authorized, and whether issued for cash, property, services by way of
dividends or otherwise.
ARTICLE VIII.
INITIAL DIRECTORS
The number of directors which will constitute the whole Board of Directors
shall be designated in the Bylaws of the Company. The initial Board of Directors
shall consist of one Director, whose name and address is:
John A. McMillan
2201 Lind Avenue S.W., Suite 200
Renton, WA 98055
ARTICLE IX.
CHANGE IN NUMBER OF DIRECTORS
The members of the governing Board shall be known as Directors. The
Directors of the Company need not be stockholders. The number of Directors may
at any time be increased or decreased by the Directors at any annual or special
meeting, provided that no decrease shall have the effect of shortening the term
of any incumbent Director. Any directorship to be filled by reason of an
increase in the number
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of Directors may be filled by the Board of Directors for a term of office
continuing only until the next election of Directors.
Notwithstanding any of the foregoing provisions of this Article, each
Director shall serve until his successor is elected and qualified or until his
death, retirement, resignation or removal. Should a vacancy occur or be created,
whether arising through death, resignation or removal of a Director or through
an increase in the number of Directors of any class, the vacancy shall be filled
by a majority vote of the remaining Directors of the class in which the vacancy
occurs, or by the sole remaining Director of that class if only one Director
remains, or by the majority vote of the remaining Directors of the other two
classes if there would be no remaining member of the class in which the vacancy
occurs. A Director so elected to fill a vacancy shall serve for the remainder of
the then present term of office of the class to which he was elected.
ARTICLE X.
AMENDMENT OF ARTICLES AND BYLAWS
The Company reserves the right to amend, change or repeal any provision
contained in these Articles of Incorporation, in the manner now or hereinafter
prescribed by law, and all rights and powers conferred by these Articles of
Incorporation on shareholders and directors are subject to this reserved power.
Except as expressly reserved to the Board of Directors by the Revised
Code of Washington for certain modifications of an administrative nature, the
power to alter, amend or repeal the Articles of Incorporation is vested
exclusively in the shareholders and must be approved by each voting group of
shareholders entitled to vote thereon by a majority of all votes entitled to be
cast by that voting group.
The Board of Directors is expressly authorized to make, alter or repeal
any or all of the Bylaws of the Company, to the fullest extent provided by the
Washington Business Corporation Act.
ARTICLE XI.
SPECIAL VOTING REQUIREMENTS
In addition to any affirmative vote required by law, by these Articles
of Incorporation or otherwise, any "Business Combination" (as hereinafter
defined) involving the Company shall be subject to approval in the manner set
forth in this Article XI. For the purposes of this Article XI: "Business
Combination" means (i) a merger, share exchange or consolidation of the Company
or any of its subsidiaries with any other corporation or entity; (ii) the sale,
lease, exchange, mortgage, pledge, transfer or other disposition or encumbrance,
whether in one transaction or a series of transactions, by the Company or any of
its subsidiaries of all or a substantial part of the Company's assets otherwise
than in the usual and regular course of business; or (iii) any agreement,
contract or other arrangement providing for any of the foregoing transactions.
Unless otherwise provided by the provisions of the Washington Business
Corporation Act or these Articles of Incorporation, pursuant to authority
granted under Sections 23B.10.030, 23B.11.030, 23B.12.020, and 23B.14.020 of the
Act, the vote of shareholders of the Company required in order to approve
amendments to the Articles of Incorporation, a Business Combination, or a
dissolution of the corporation shall be a majority of all of the votes entitled
to be cast by each voting group entitled to vote
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thereon, regardless of whether or not the Company is a "public company," as that
term is defined in Section 23B.01.400 of the Act.
ARTICLE XII.
CALL OF MEETINGS OF SHAREHOLDERS AND QUORUM REQUIREMENTS
The Chairman of the Board, the President or the Board of Directors may
call special meetings of the shareholders for any purpose. Further, a special
meeting of the shareholders shall be held if the holders of not less than
twenty-five percent (25%) of all the votes entitled to be cast on any issue
proposed to be considered at such special meeting have dated, signed and
delivered to the Secretary of the Company no later than 20 days prior to the
date of such meeting one or more written demands for such meeting, describing
the purpose or purposes for which it is to be held.
A quorum at any meeting of shareholders is constituted by the
representation in person or by proxy of forty percent (40%) of the shares
entitled to vote. Shares shall not be counted to make up a quorum for a meeting
if voting of them at the meeting has been enjoined or for any reason they cannot
be lawfully voted at the meeting. The shareholders present at a duly held
meeting at which a quorum is present may continue to do business until
adjournment in spite of the withdrawal of enough shareholders to leave less than
a quorum.
ARTICLE XIII.
INDEMNIFICATION
The Company shall indemnify and hold harmless each individual who is or
was serving as a Director or officer of the Company or who, while serving as a
Director or officer of the Company, is or was serving at the request of the
Company as a director, officer, partner, trustee, employee, or agent of another
foreign or domestic Company, partnership, joint venture, trust, employee benefit
plan, or other enterprise, against any and all liability incurred with respect
to any proceeding to which the individual is or is threatened to be made a party
because of such service, and shall make advances of reasonable expenses with
respect to such proceeding, to the fullest extent permitted by law, without
regard to the limitations in RCW 23B.08.510 through 23B.08.550; provided that no
such indemnity shall indemnify any Director or officer from or on account of (1)
acts or omissions of the Director or officer finally adjudged to be intentional
misconduct or a knowing violation of law; (2) conduct of the Director or officer
finally adjudged to be in violation of RCW 23B.08.310; or (3) any transaction
with respect to which it was finally adjudged that such Director or officer
personally received a benefit in money, property, or services to which the
Director or officer was not legally entitled.
The Company may purchase and maintain insurance on behalf of an
individual who is or was a Director, officer, employee, or agent of the Company
or, who, while a Director, officer, employee, or agent of the Company, is or was
serving at the request of the Company as a director, officer, partner, trustee,
employee, or agent of another foreign or domestic Company, partnership, joint
venture, trust, employee benefit plan, or other enterprise against liability
asserted against or incurred by the individual in that capacity or arising from
the individual's status as a Director, officer, employee, or agent, whether or
not the Company would have power to indemnify the individual against such
liability under RCW 23B.08.510 or 23B.08.520.
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If, after the effective date of this section, the Washington Business
Corporations Act is amended to authorize further indemnification of Directors or
officers, then Directors and officers of the Company shall be indemnified to the
fullest extent permitted by the Act as so amended.
To the extent permitted by law, the rights to indemnification and
advance of reasonable expenses conferred in this section shall not be exclusive
of any other right which any individual may have or hereafter acquire under any
statute, provision of the Bylaws, agreement, vote of shareholders or
disinterested Directors, or otherwise. The right to indemnification conferred in
this section shall be a contract right upon which each Director or officer shall
be presumed to have relied in determining to serve or to continue to serve as
such. Any amendment to or repeal of this section shall not adversely affect any
right or protection of a Director or officer of the Company for or with respect
to any acts or omissions of such Director or officer occurring prior to such
amendment or repeal.
If any provision of this section or any application thereof shall be
invalid, unenforceable, or contrary to applicable law, the remainder of this
section and the application of such provisions to individuals or circumstances
other than those as to which it is held invalid, unenforceable, or contrary to
applicable law, shall not be affected.
ARTICLE XIV.
LIMITATION OF DIRECTOR LIABILITY
A director of this Company shall not be personally liable to this
Company or its shareholders for monetary damages for conduct as a director,
except for liability of the director (i) for acts or omissions that involve
intentional misconduct by the director or a knowing violation of law by the
director, (ii) for conduct violating RCW 23B.08.310 of the Washington Business
Corporation Act, or (iii) 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
amended in the future to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability of a director
of this Company shall be eliminated or limited to the full extent permitted by
the Washington Business Corporation Act, as so amended, without any requirement
of further action by the shareholders.
ARTICLE XV.
CONTRACTS
The Company may make any contract or conveyance, which is authorized or
ratified by the Board of Directors, or is done within the scope of the
authority, actual or apparent, given by the Board of Directors, binds the
Company, and the Company acquires rights thereunder, whether the contract is
executed or is wholly or in part executory.
Subject to the limitations set forth in RCW 23B.19.040 and in RCW
23B.08.700 through 23B.08.730, to the extent applicable, the Company may enter
into contracts and otherwise transact business as vendor, purchaser, lender,
borrower, or otherwise with its directors and its shareholders, and with
corporations, associations, firms, and entities in which they are or may be or
become interested as directors, officers, shareholders, members, or otherwise.
Any such contract or transaction shall not be affected or invalidated or give
rise to liability by reason of the shareholder's having an interest in the
contract or transaction.
ARTICLE XVI.
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INCORPORATOR
The name and address of the incorporator is as follows:
John A. McMillan
2201 Lind Avenue S.W.
Suite 200
Renton, WA 98055
I, John A. McMillan, of 2201 Lind Avenue S.W., Suite 200, Renton, WA
98055, declare under penalties of perjury that I have examined the foregoing and
to the best of my knowledge and belief, it is true, correct and complete.
DATED: October 25, 2000
-------------------------------
John A. McMillan, Incorporator
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CONSENT TO SERVE AS REGISTERED AGENT
John A. McMillan hereby consents to serve as Registered Agent in the
State of Washington, for the following Company:
LION INC.
I understand that as agent for the Company, it will be my
responsibility to receive service of process in the name of the Company; to
forward all mail to the Company; and to immediately notify the office of the
Secretary of State in the event of our resignation, or of any changes in the
registered office address of the Company for which I am an agent.
DATED: October 25, 2000
-----------------------------------
By: John A. McMillan
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EXHIBIT C
BYLAWS
OF
LION INC.
A WASHINGTON CORPORATION
ADOPTED NOVEMBER 28, 2000
1.0 REGISTERED OFFICE AND REGISTERED AGENT
1.1. The registered office of the Company shall be located in the State
of Washington at such place as may be fixed from time to time by the Board of
Directors upon filing of such notices as may be required by law, and the
registered agent shall have a business office identical with the registered
office. A registered agent so appointed shall consent to appointment in writing
and the registered agent's consent shall be filed with the Secretary of State of
the State of Washington.
1.2. If a registered agent changes the street address of its business
office, the registered agent may change the street address of the registered
office of the Company by notifying the Company in writing of the change and
signing, either manually or in facsimile, and delivering to the Secretary of
State for filing a statement of such change, as required by law.
1.3. The Company may change its registered agent at any time upon the
filing of an appropriate notice with the Secretary of State, with the written
consent of the new registered agent either included in or attached to such
notice.
2.0 BOARD OF DIRECTORS
2.1 GENERAL POWERS AND DUTIES. Subject to the provisions of the Revised
Code of Washington and any limitations in the Articles of Incorporation or these
Bylaws relating to action required to be approved by the stockholders or by the
outstanding shares, the business and affairs of the Company shall be managed and
all corporate powers shall be exercised by or under the direction of the Board
of Directors. The Board of Directors may elect any member of the Board as
Chairman. He shall, if present, preside at all meetings of the Board of
Directors. He shall have other powers and duties as the Board prescribes, but
shall not be considered an officer of the Company by virtue of his duties as
Chairman.
2.2 NUMBER, TENURE AND QUALIFICATIONS. The number of Directors of the
Company shall be no fewer than three (3) nor more than nine (9). The number of
Directors may at any time be increased or decreased by the Directors or by the
shareholders at any regular or special meeting provided that no decrease shall
have the effect of shortening the term of any incumbent Director except as
otherwise provided in these Bylaws. Directors shall be elected at the annual
meeting of shareholders and the term of office of each Director shall be until
the next annual meeting of shareholders and the election and
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qualification of his successor. Any directorship to be filled by reason of an
increase in the number of Directors may be filled by the Board of directors for
a term of office continuing only until the next election of Directors, or by
shareholders for the term of office associated with the class to which Directors
are elected. Directors need not be shareholders of the Company or residents of
the State of Washington.
2.3 REGULAR MEETINGS. A regular meeting of the Board of Directors shall
be held without notice other than the notice given by these Bylaws immediately
after and at the same place as the annual meeting of shareholders. Additional
regular meetings shall be held at the principal office of the Company in the
absence of any designation in the resolution.
2.4 SPECIAL MEETINGS. Special meetings of the Board of Directors for
any purpose or purposes may be called by or at the request of the President,
Chairman of the Board, or any two directors, and shall be held at the principal
place of business of the Company or at any other place as the Directors may
determine.
2.5 ACTION OF DIRECTORS BY COMMUNICATIONS EQUIPMENT. Any regular or
special meeting of the Directors may be called and held over telephone or other
electronic means, and communication from a Director by telephone or other
electronic means constitutes attendance at the meeting so held.
2.6 NOTICE. Notice of any special meeting shall be given at least
forty-eight (48) hours before the time fixed for the meeting, by written or oral
notice delivered personally or mailed to each Director at his business address,
by facsimile, by telegram, or by teletype, wire or wireless equipment which
transmits a facsimile of the notice. If mailed, the notice shall be deemed to be
delivered when deposited in the United States mail with postage prepaid, not
less than five (5) days prior to the commencement of the above stated notice
period. If notice is given by telegram, the notice shall be deemed to be
delivered when the telegram is delivered to the telegraph company. Any Director
may waive notice of any meeting. The attendance of a Director at a meeting shall
constitute a waiver of notice of the meeting, except where a Director attends a
meeting for the express purpose of objecting to the transaction of any business
because the meeting was not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
Board of Directors need be specified in the notice or waiver of notice of the
meeting.
2.7 QUORUM. Except as otherwise required by law, a majority of the
number of Directors fixed by these Bylaws, or as amended, shall constitute a
quorum for the transaction of business at any meeting of the Board of Directors,
but if less than a majority is present at a meeting, a majority of the Directors
present may adjourn the meeting from time to time without further notice. At an
adjourned meeting at which a quorum is present or represented, any business may
be transacted that might have been transacted at the meeting as originally
notified. The Directors present at the duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
Directors to leave less than a quorum, if any action taken is approved by at
least a majority of the remaining Directors.
2.8 BOARD DECISIONS. The act of the majority of the Directors present
at a meeting at which a quorum is present shall be the act of the Board of
Directors. However, an actual majority shall be required for:
(a) Recommending to the shareholders an amendment to the Articles of
Incorporation;
(b) Adopting a plan of merger or consolidation;
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(c) Recommending to the shareholders the sale, lease, exchange, mortgage,
pledge, or other disposition of all or substantially all the property
and assets of the Company other than in the usual and regular course of
its business;
(d) Recommending to the shareholders a voluntary dissolution of the Company
or a revocation of the Company;
(e) Amending the Bylaws of the Company.
(f) Filling vacancies on the Board of Directors;
(g) Authorizing or approving reacquisition of shares, except according to a
formula or method prescribed by the Board of Directors;
(h) Authorizing or approving the issuance or sale or contract for sale of
shares, or determine the designation and relative rights, preferences
and limitations of a class or series of shares, except that the Board
of Directors may authorize a committee to do so within the limits
specifically prescribed by the Board of Directors.
2.9 VACANCIES. Any vacancy occurring in the Board of Directors
including one created by an increase in the number of Directors shall be filled
by the affirmative vote of a majority of the remaining Directors though less
than a quorum of the Board of Directors, or by a sole remaining Director. A
Director elected to fill a vacancy not created by an increase in the number of
Directors shall be elected for the unexpired term of his predecessor in office.
A Director elected to fill a vacancy created by an increase in the number of
directors shall be elected for a term of office continuing until the next
election of Directors.
2.10 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING. Unless
otherwise restricted by the Articles of Incorporation or these Bylaws, any
action required or permitted to be taken at any meeting of the Board of
Directors, or of any committee thereof, may be taken without a meeting if all
members of the board or committee, as the case may be, consent thereto in
writing is filed with the minutes of proceedings of the board or committee.
Written consents representing actions taken by the Board of Directors or
committee may be executed by telex, telecopy or other facsimile transmission,
and such facsimile shall be valid and binding to the same extent as if it were
an original.
2.11 COMPENSATION. Unless otherwise restricted by the Articles of
Incorporation or these bylaws, the Board of Directors shall have the authority
to fix the compensation of the Directors or reimburse the Directors for their
expenses, if any, of attendance at each meeting of the Board of Directors, and
may be paid a fixed sum for attendance at each meeting of the Board of Directors
or a stated salary as Director. No such payment shall preclude any Director from
serving the Company in any other capacity and receiving compensation therefor.
2.12 PRESUMPTION OF ASSENT. A Director who is present at a meeting of
the Board of Directors at which action on any corporate matter is taken shall be
presumed to have assented to the action taken unless his dissent shall be
entered in the minutes of the meeting or unless he shall file his written
dissent to such action with the person acting as the secretary of the meeting
before the adjournment of the meeting or shall forward his dissent by registered
mail to the secretary of the Company immediately after the adjournment of the
meeting. The right to dissent shall not apply to a Director who voted in favor
of the action.
2.13 APPROVAL OF LOANS TO OFFICERS. The Company may lend money to, or
guarantee any obligation of, or otherwise assist any officer or other employee
of the Company or of its subsidiary,
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including any officer or employee who is a director of the Company or its
subsidiary, whenever, in the judgment of the directors, such loan, guaranty or
assistance may reasonably be expected to benefit the Company. The loan, guaranty
or other assistance may be with or without interest and may be unsecured, or
secured in such manner as the Board of Directors shall approve, including,
without limitation, a pledge of shares of stock of the Company. Nothing in this
section contained shall be deemed to deny limit or restrict the powers of
guaranty or warranty of the Company at common law or under any statute.
2.14 EXECUTIVE COMMITTEE. By resolution passed by a majority of the
entire Board of Directors, the Board of Directors may designate one or more
committees, each committee to consist of one or more Directors to constitute an
executive committee to the extent provided in the resolution and shall have and
may exercise all the authority of the Board of Directors in the management of
the Company, but no such committee shall have the power or authority to :
(a) Recommend to the shareholders the amendment to the Articles of
Incorporation;
(b) Adopt a plan of merger or consolidation;
(c) Recommend to the shareholders the sale, lease, exchange, mortgage,
pledge, or other disposition of all or substantially all the property
and assets of the Company otherwise than in the usual and regular
course of its business;
(d) Recommend to the shareholders a voluntary dissolution of the Company or
a revocation of the Company;
(e) Amend the Bylaws of the Company.
(f) Fill vacancies on the Board of Directors;
(g) Authorize or approve reacquisition of shares, except according to a
formula or method prescribed by the Board of Directors;
(h) Authorize or approve the issuance or sale or contract for sale of
shares, including warrants, options and other derivative securities, or
determine the designation and relative rights, preferences and
limitations of a class or series of shares, except that the Board of
Directors may authorize a committee to do so within the limits
specifically prescribed by the Board of Directors;
(i) Take any action expressly required by the Revised Code of Washington to
be submitted to shareholders of the Company for approval.
2.15 STANDARDS OF CONDUCT FOR DIRECTORS. A Director shall discharge the
duties of a Director, including the duties as a member of a committee, in good
faith, with the care an ordinarily prudent person in a like position would
exercise under similar circumstances and in a manner the Director reasonably
believes to be in the best interests of the Company.
In discharging the duties of a Director, a Director is entitled to rely
in good faith upon information, opinions, reports or statements including
financial statements and other financial data, if prepared or presented by (1)
an officer or employee of the Company whom the Director reasonably believes to
be reliable and competent in the matters presented; (2) legal counsel, public
accountants or other persons as to matters the Director reasonably believes are
within the professional or expert competence of such legal counsel, public
accountants or other persons who have been selected with reasonable care by or
on behalf of the Company; or (3) a committee of the Board of Directors of which
the Director is not a member if the Director reasonably believes the committee
merits confidence.
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A Director is not liable for any action taken as a Director, or any
failure to take any action, if the Director performed the duties of the
Director's office in compliance with this Section.
3.0 SHAREHOLDERS
3.1 ANNUAL MEETING. The annual meeting of the shareholders of the
Company shall be held on such date, time, and place, either within or without
the State of Washington, as may be designated by resolution of the Board of
Directors each year. At the meeting, directors shall be elected and any other
proper business may be transacted.
3.2 SPECIAL MEETINGS. Special meetings of the shareholders, for any
purpose or purposes, unless otherwise prescribed by statute, may be called by
the Chairman of the Board, the President or by the Board of Directors. Further,
a special meeting of the shareholders shall be held if the holders of not less
than twenty-five percent (25%) of all the votes entitled to be cast on any issue
proposed to be considered at such special meeting have dated, signed and
delivered to the Secretary of the Company no later than 20 days prior to the
date of such meeting one or more written demands for such meeting, describing
the purpose or purposes for which it is to be held.
3.3 PLACE OF MEETING. The Board of Directors may designate any place
within or outside of the State of Washington as the place of meeting for any
annual meeting or for any special meeting called by the Board of Directors. A
waiver of notice signed by a majority of shareholders entitled to vote at a
meeting may designate any place, either within or without the State of
Washington, as the place for the holding of the meeting.
3.4 NOTICE OF MEETING. Written or printed notice stating the place,
day, and hour of the meeting and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than ten
(10) nor more than sixty (60) days, except as otherwise required by statute,
before the date of the meeting, either personally or by mail, by or at the
direction of the President, Secretary, or the officer or persons calling the
meeting, to each shareholder of record entitled to vote at the meeting. If
mailed, the notice shall be deemed to be delivered when deposited in the United
States mail with postage prepaid, addressed to the shareholder at his address as
it appears on the stock transfer books of the Company. Any shareholder may waive
notice of any meeting by written notice signed by him or his duly authorized
attorney-in-fact, either before or after the meeting.
3.5 RECORD DATE. For the purpose of determining the shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, the Board of Directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the Board of Directors, and which record date shall not be more
than sixty (60) days nor less than ten (10) days before the date of such
meeting. If no record date is fixed by the Board of Directors, the record date
for determining shareholders entitled to notice of or to vote at a meeting of
shareholders shall be at the close of business on the day preceding the date of
notice, or if notice is waived, at the close of business on the day preceding
the date of the meeting. Written notice of any meeting of shareholders, if
mailed, is given when deposited in the United States mail, postage prepaid,
directed to the stockholder at his address as it appears on the records of the
Company. An affidavit of the Secretary or an Assistant Secretary of the Company
shall, in the absence of fraud, be prima facie evidence of the facts stated
therein. A determination of shareholders of record entitled to notice of or to
vote at a meeting of shareholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
For the purpose of determining the shareholders entitled to consent to
any corporate action of the Company in writing without a meeting, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
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Directors, and which record date shall not be more than ten (10) days after the
date upon which the resolution fixing the record date is adopted by the Board of
Directors. If no record date has been fixed by the Board of Directors, the
record date for determining shareholders entitled to consent to corporate action
of the Company in writing without a meeting, when no prior action by the Board
of Directors is required under Washington law, shall be the first date on which
a signed written consent setting forth the action taken or proposed to be taken
is delivered to the Company. If no record date has been fixed by the Board of
Directors and prior action by the Board of Directors is required under
Washington law, the record date for determining which shareholders are entitled
to consent to corporate action of the Company in writing without a meeting shall
be at the close of business on the day on which the Board of Directors adopts a
resolution taking such prior action.
For the purpose of determining the shareholders entitled to receive
payment of any dividend or other distribution or allotment of any rights or the
shareholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which date shall be not more that sixty (60) days prior to such action. If
no record date is fixed, the record date for determining shareholders for any
such purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
3.6 QUORUM. Forty percent (40%) of the outstanding shares of the
Company entitled to vote, represented in person or by proxy, shall constitute a
quorum at a meeting of shareholders. If less than forty percent (40%) of the
outstanding shares is represented at a meeting, then either (a) the Chairman of
the meeting or (b) a majority of the shares so represented may adjourn the
meeting from time to time without further notice. At the adjourned meeting at
which a quorum is present or represented, any business may be transacted that
might have been transacted at the meeting as originally notified. The
shareholders present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum. If a quorum is present, unless
otherwise provided by the provisions of the Washington Business Corporation Act
or the Articles of Incorporation, the affirmative vote of the majority of the
shares represented at the meeting and entitled to vote on the subject matter
shall be the act of the shareholders.
3.7 PROXIES. At all meetings of shareholders, a shareholder may vote by
proxy executed in writing by the shareholder or by his duly authorized
attorney-in-fact. The proxy shall be filed with the Secretary of the Company
before or at the time of the meeting. Any solicitation of proxies by the
Directors or management of the Company shall be made by mailing the proxies by
certified mail or providing them to the shareholder in an alternative acceptable
manner at least not less than ten (10) days nor more than sixty (60) days before
the date of the meeting for which the proxies are solicited. Each shareholder as
of the record date shall receive a proxy. Proxies shall describe the location
and purpose of the meeting and the matter or business for which the proxy is
solicited. No proxy shall be valid after eleven (11) months from the date it is
received by the secretary of the Company or other officer or agent authorized to
tabulate votes unless otherwise provided in the proxy.
3.8 VOTING OF SHARES. Subject to the provisions of any applicable law,
each outstanding share entitled to vote shall be entitled to one vote on each
matter submitted to a vote at a meeting of the shareholders. No shareholder
shall be entitled to cumulate his votes for election of directors.
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3.9 CONSENT TO ACTION. Any action which may be taken at a meeting of
the shareholders may be taken without a meeting if a consent in writing setting
forth the action so taken is signed in original, facsimile or counterpart form
by shareholders holding at least a majority of the voting power.
3.10 ACTION OF SHAREHOLDERS BY COMMUNICATIONS EQUIPMENT. Shareholders
may participate in a meeting of shareholders by means of telephonic device by
means of which all persons participating in the meeting can hear each other at
the same time, and participation by these means shall constitute presence in
person at a meeting.
3.11 SHAREHOLDER'S RIGHT OF INSPECTION. Any shareholder, in person or
by attorney or other agent, upon written demand stating the purpose thereof, has
the right during usual hours for business to inspect for any proper purpose at
the Company's principal office any of the records of the Company set forth in
RCW 23B.16.010(5), as amended from time to time, if the shareholder gives the
Company written notice of the shareholder's demand at least five business days
before the date on which the shareholder wishes to inspect and copy: These
records include: (a) articles or restated articles of incorporation and all
amendments to them currently in effect; (b) bylaws or restated bylaws and all
amendments to them currently in effect; (c) minutes of all shareholders'
meetings, and records of all action taken by shareholders without a meeting, for
the past three years; (d) the financial statements described in RCW
23B.16.200(1) for the past three years; (e) all written communications to
shareholders generally within the past three years; (f) a list of the names and
business addresses of the current directors and officers of the Company; and (g)
the initial report or most recent annual report delivered to the Secretary of
State under RCW 23B.16.220.
Any shareholder may inspect and copy the additional records described
in subsection (2) of RCW 23B.16.020 only if: (a) the shareholder's demand is
made in good faith and for a proper purpose; (b) the shareholder describes with
reasonable particularity the shareholder's purpose and the records the
shareholder desires to inspect; and (c) the records are directly connected with
the shareholder's purpose.
4.0 OFFICERS
4.1 NUMBER. The officers of the Company shall be a Chief Executive
Officer, President, none, one or more Vice Presidents (the number of Vice
Presidents to be determined by the Board of Directors), a Secretary, a Chief
Financial Officer, a Controller and a Treasurer each of whom shall be elected by
the Board of Directors. Other officers and assistant officers as may be deemed
necessary may be elected or appointed by the Board of Directors. Any two or more
offices may be held by the same person.
Each officer has the authority and shall perform the duties set forth
in these Bylaws or, to the extent consistent with these Bylaws, the duties
prescribed by the Board of Directors or by direction of an officer authorized by
the Board of Directors to prescribe the duties of other officers.
4.2 ELECTION AND TERM OF OFFICE. The officers of the Company to be
elected by the Board of Directors shall be elected annually at the first meeting
of the Board of Directors held after each annual meeting of the shareholders. If
the election of officers is not held at the meeting, the election shall be held
as soon thereafter as is convenient. Each officer shall hold office until his
successor has been duly elected and qualifies or until his death or until he
resigns or is removed in the manner provided by these Bylaws.
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4.3 REMOVAL. Any officer or agent elected or appointed by the Board of
Directors may be removed by the Board of Directors whenever in its judgment the
best interests of the Company would be served by that removal, but the removal
shall be without prejudice to the contractual rights, if any, of the person so
removed.
4.4 VACANCIES. A vacancy in any office because of death, resignation,
removal, disqualification or otherwise, may be filled by the Board of Directors
for the unexpired portion of the term in the manner prescribed by these Bylaws
for the regular election or appointment of such office.
4.5 STANDARDS OF CONDUCT FOR OFFICERS. An officer with discretionary
authority shall discharge the duties of an officer under that authority in good
faith, with the care an ordinarily prudent person in a like position would
exercise under similar circumstances, and in a manner the officer reasonably
believes to be in the best interests of the Company.
In discharging the duties of an officer, an officer is entitled to rely
in good faith upon information, opinions, reports or statements including
financial statements and other financial data, if prepared or presented by an
officer or employee of the Company whom the officer reasonably believes to be
reliable and competent in the matters presented, or legal counsel, public
accountants or other persons as to matters the officer reasonably believes are
within the professional or expert competence of such legal counsel, public
accountants or other persons who have been selected with reasonable care by or
on behalf of the Company.
An officer is not acting in good faith if the officer has knowledge
concerning the matter in question that makes reliance otherwise permitted by
these bylaws unwarranted. An officer is not liable for any action taken as an
officer, or any failure to take any action, if the officer performed the duties
of the office in compliance with this section.
If any certificate or report made or public notice given by an officer
of the Company shall be false or fraudulent in any material representation, any
officer knowingly and intentionally signing the same shall be jointly and
severally and personally liable to any person who has become a creditor or
stockholder of the Company upon the faith of any such material representation
therein to the amount of the debt contracted upon the faith thereof if not paid
when due, or the damage sustained by any purchaser of or subscriber to its stock
upon the faith thereof.
The liability imposed by this section shall exist in all cases where
the contents of any such certificate, report or notice of any material
representation therein shall have been communicated either directly or
indirectly to the person so becoming a creditor or stockholder and he became
such creditor or stockholder upon the faith thereof.
4.6 POWERS AND DUTIES OF THE CHIEF EXECUTIVE OFFICER. The Chief
Executive Officer shall preside at all meetings of the shareholders and in the
absence of the Chairman of the Board, at all meetings of the Board of Directors.
He shall have ultimate responsibility and authority for management including but
not limited to, the power to appoint committees, officers, agents or employees
from time to time as he may, in his discretion, decide is appropriate to assist
in the conduct of the affairs of the Company. He shall enforce these Bylaws and
generally shall supervise and control the business, affairs and property of the
Company. He shall have general and active supervision over the Company's
officers and may sign, execute and deliver in the name of the Company corporate
documents, instruments, powers of attorney, contracts, bonds and other
obligations.
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4.7 POWERS AND DUTIES OF THE PRESIDENT. The President shall have the
authority and perform such duties as the Board of Directors authorizes or
directs. If no Chief Executive Officer has been appointed, or in the event of
the death of the Chief Executive Officer or his or her inability to act, the
President shall perform the duties of the Chief Executive Officer, except as may
be limited by resolution of the Board, with all the powers of, and subject to
all of the restrictions upon, the Chief Executive Officer.
4.8. DUTIES OF THE VICE PRESIDENT(S). The Vice President(s) shall have
the authority and perform duties as the Board of Directors or Chief Executive
Officer may authorize or direct.
4.9 DUTIES OF THE SECRETARY. The Secretary shall subscribe the minutes
of all meetings of the shareholders and the Board of Directors. He shall mail
notices to the shareholders and the Directors of the Company of the holding of
any meeting as prescribed by these Bylaws. If the Company has a seal, the
secretary shall be the custodian of the seal and shall affix it to minutes,
notices or other instruments executed by the Company as required. He shall have
the authority and perform other duties as the Board of Directors or Chief
Executive Officer may authorize or direct.
4.10 DUTIES OF THE ASSISTANT SECRETARY. The Assistant Secretary, in the
event of the appointment of an assistant secretary by the Board of Directors,
shall, in the Secretary's absence or in the case of the Secretary's inability to
act or in case it shall be inconvenient for the Secretary to so act, perform the
duties of the secretary as may be necessary. He shall have the authority and
perform other duties as the Board of Directors or Chief Executive Officer may
authorize or direct.
4.11 DUTIES OF THE CHIEF FINANCIAL OFFICER. The Chief Financial Officer
for the Company shall have charge of and be responsible for all funds and
securities belonging to the Company and shall keep and deposit the funds for and
on behalf of the Company in a bank or banks to be designated by the Board of
Directors. In the absence of a designation he may select the bank or banks in
which to deposit the funds. He shall have the authority and perform other duties
as the Board of Directors or Chief Executive Officer may authorize or direct.
4.12 DUTIES OF THE CONTROLLER. The Controller for the Company shall be
charged with certain duties in relation to the fiscal affairs of the Company,
principally to examine and audit the accounts, to keep records, and report the
financial situation from time to time. He shall have the authority and perform
other duties as the Board of Directors may authorize or direct.
4.13 DUTIES OF THE TREASURER. The Treasurer shall have the authority
and perform such duties as the Board of Directors authorize or direct.
4.14 SUBORDINATE OFFICERS AND GENERAL MANAGERS. The Board of Directors
may create subordinate offices and employ subordinate officers or agents as it
from time to time deems expedient and may fix the compensation of the officers
or agents and define their powers and duties, provided the powers and duties do
not constitute a delegation of the authority as is reposed in the Directors by
law, which shall be exercised and performed exclusively by them. The Board of
Directors shall also have the power to appoint a General Manager, who shall hold
office at the pleasure of the Board. The Board of Directors shall have the power
to delegate to the General Manager the executive power and authority as it may
deem necessary to facilitate the handling and management of the Company's
property and interests.
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4.15 SALARIES. The salaries of the officers shall be fixed from time to
time by the Board of Directors, and no officer shall be prevented from receiving
a salary by reason of the fact that he is also a Director of the Company.
5.0 CONTRACTS, CORPORATE FUNDS, LOANS, CHECKS AND DEPOSITS
5.1 CONTRACTS. Without limiting any powers elsewhere granted by these
Bylaws to the President or other officer of the Company, the Board of Directors
may authorize any officer or officers, agent or agents, to enter into any
contract or execute and deliver any instrument in the name of and on behalf of
the Company, and the authority may be general or confined to specific instances.
5.2 CORPORATE FUNDS. All funds of the Company shall be under the
supervision of the Board of Directors and shall be handled and disposed of in
the manner and by the officers or agents of the Company as provided in these
Bylaws or as the Board of Directors may authorize by proper resolutions from
time to time.
5.3 LOANS. No loans shall be contracted on behalf of the Company and no
evidences of indebtedness shall be issued in its name unless authorized by a
resolution of the Board of Directors. The authority may be general or confined
to specific instances.
5.4 CHECKS, DRAFTS, OR ORDERS. All checks, drafts, or other orders for
the payment of money, notes, or other evidence of indebtedness issued in the
name of the Company shall be signed by an officer or officers, agent or agents
of the Company and in a manner as shall from time to time be determined by
resolution of the Board of Directors.
5.5 DEPOSITS. All funds of the Company not otherwise employed shall be
deposited from time to time to the credit of the Company in banks, trust
companies, or other depositories as the Board of Directors may in its discretion
select.
6.0 CERTIFICATES FOR SHARES; TRANSFERS
6.1 CERTIFICATES FOR SHARES. Certificates representing shares of the
Company shall be in a form as shall be determined by the Board of Directors. The
certificates shall be signed by the President or a Vice President, if any. If
the Company has more than one shareholder, the certificate shall also be signed
by the Treasurer, the Secretary or an Assistant Secretary. All certificates for
shares shall be consecutively numbered or otherwise identified. The name and
address of the person to whom the shares represented by the certificates are
issued, with the number of shares and date of issue, shall be entered on the
stock transfer books to the Company. All certificates surrendered to the Company
for transfer shall be canceled and no new certificate shall be issued until the
former certificate for a like number of shares shall have been surrendered and
canceled, except that in case of a lost, destroyed, or mutilated certificate a
new one may be issued on the terms and indemnity to the Company as the Board of
Directors may prescribe.
6.2 REGISTRAR. The registrar is the person designated by the Company to
keep official shareholder records, including names and addresses of shareholders
and number of shares owned. The registrar may hold one or more offices or no
offices of the Company.
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6.3 TRANSFER OF SHARES. Transfer of shares of the Company shall be made
in the manner specified in the Uniform Commercial Code. The Company shall
maintain stock transfer books, and any transfer shall be registered only on
request and surrender of the stock certificate representing the transferred
shares, duly endorsed. The Company shall have the absolute right to recognize as
the owner of any shares of stock issued by it, the person or persons in whose
name the certificate representing the shares stands according to the books of
the Company for all proper Company purposes, including the voting of the shares
represented by the certificate at a regular or special meeting of shareholders,
and the issuance and payment of dividends on the shares.
6.4 SHARES OF ANOTHER CORPORATION. Shares owned by the Company in
another corporation, domestic or foreign, may be voted by an officer, agent or
proxy as the Board of Directors may determine or, in the absence of a
determination, by the President of the Company.
6.5 SUBSCRIPTIONS. Subscriptions to the shares shall be paid at times
and in installments as the Board of Directors may determine. The Board of
Directors may adopt resolutions prescribing penalties for default on
subscription agreements.
7.0 FISCAL YEAR
7.1 The fiscal year of the Company is the calendar year unless
otherwise changed by the Board of Directors. The Board of Directors may change
the fiscal year of the Company from time to time.
8.0 DIVIDENDS
8.1 Subject to the restrictions of the Revised Code of Washington, the
Board of Directors may from time to time declare, and the Company may pay,
dividends on its outstanding shares in the manner and on the terms and
conditions provided by law and its Articles of Incorporation.
9.0 SEAL
9.1 The Board of Directors may adopt a corporate seal, which shall be
circular in form and shall have inscribed on it the name of the Company, the
year incorporated, the state of incorporation and the words "corporate seal."
The seal shall be stamped or affixed to documents as may be prescribed by law or
by the Board of Directors.
10.0 CONFLICTS OF INTEREST
10.1 No contract or other transaction between the Company and one or
more of its Directors or any other corporation, firm, association or entity in
which one or more of its Directors are Directors or officers or are financially
interested, shall be either void or voidable because of the relationship or
interest or because the Director or Directors are present at the meeting of the
Board of Directors or a committee of Directors which authorizes, approves or
ratifies a contract or transaction or because his or their votes are counted for
that purpose, if:
(a) The material facts of a relationship or interest are disclosed or known
to the Board of Directors or committee which in good faith authorizes,
approves or ratifies the contract or transaction by a vote or consent
sufficient for the purpose without counting the votes or consents of
the interested Director(s); or
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(b) The material facts of a relationship or interest is disclosed or known
to the shareholders entitled to vote and they in good faith authorize,
approve or ratify a contract or transaction by vote or written consent;
or
(c) The contract or transaction is fair and reasonable as to the Company at
the time it is authorized, approved, and ratified by the Board of
Directors, committee designated by the Board of Directors, or the
shareholders.
11.0 NOTICE AND CONSENT
11.1 WAIVER OF NOTICE. Whenever any notice is required to be given to
any shareholder or Director of the Company under the provisions of these Bylaws,
the Articles of Incorporation, or by law, a waiver in writing, signed in
original, facsimile or counterpart by the person or persons entitled to notice,
whether before or after the time stated in the notice, shall be deemed
equivalent to the giving of a notice. Any shareholder or Director may waive
notice of any meeting by a notice signed by him or his duly authorized attorney,
either before or after the meeting. Attendance of a shareholder or Director of
the Company at a meeting shall constitute waiver of notice of a meeting except
where a shareholder or Director attends a meeting for the express purpose of
objecting to the transaction of any business because the meeting is not lawfully
called or adjourned.
11.2 CONSENT TO ACTION. To the extent permitted by the provisions of
the Washington Business Corporation Act or the Articles of Incorporation, any
action which may be taken at a meeting of the shareholders, may be taken without
a meeting if a consent in writing setting forth the action so taken is signed in
original, facsimile or counterpart by shareholders holding at least a majority
of the voting power. Notice requirements of these Bylaws which apply to meetings
of shareholders are deemed waived by all shareholders if a consent action is
signed in lieu of holding an actual meeting.
Any action which may be taken at a meeting of the Board of Directors
may be taken without a meeting if written consent is signed by all members of
the Board or Directors entitled to vote on the action. The consent shall have
the same force and effect as a unanimous vote of the Directors. Notice
requirements of these Bylaws which apply to meetings of Directors are deemed
waived by all Directors if a Consent to Action is signed in lieu of holding an
actual meeting.
12.0 RESTRICTIONS ON TRANSFER
12.1 TRANSFER OF SHARES. No securities of this Company or certificates
representing the securities shall be transferred in violation of any law or of
any restriction on transfer set forth in the Articles of Incorporation or
amendments to the Articles, or the Bylaws; or contained in any buy-sell
agreements, right of first refusal, or other agreement restricting a transfer
which has been executed by the Company, or filed with the Secretary of the
Company and signed by the parties to the agreement. The Company shall not be
bound by any restrictions not so filed and noted.
12.2 RESTRICTIVE LEGEND. The Company and any party to any agreement
shall have the right to have a restrictive legend imprinted upon any of the
certificates and any certificates issued in replacement or exchange or with
respect to them.
13.0 AMENDMENTS
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13.1 Except as expressly reserved to the Board of Directors by the
Revised Code of Washington for certain modifications of an administrative
nature, the power to alter, amend or repeal the Articles of Incorporation is
vested exclusively in the shareholders and must be approved by each voting group
of shareholders entitled to vote thereon by a majority of all votes entitled to
be cast by that voting group. Unless the board determines that because of a
conflict of interest or other special circumstances it should make no
recommendation to the shareholders, amendments to the Company's Articles of
Incorporation shall be recommended to the shareholders by the Board of
Directors.
13.2 The Board of Directors is expressly authorized to make, alter or
repeal any or all of the Bylaws of the Company, to the fullest extent provided
by the Washington Business Corporation Act.
14.0 INDEMNIFICATION AND LIABILITY
14.1 INDEMNIFICATION OF DIRECTORS. The Company shall indemnify officers
and Directors to the fullest extent possible under Washington law, against
expenses (including attorney's fees), judgments, fines, settlements, and other
amounts actually and reasonably incurred in connection with any proceeding,
arising by reason of the fact that such person is or was an agent of the
Company. For purposes of this section, a "director" or "officer" of the Company
includes any person (a) who is or was a director or officer of the corporation,
(b) who is or was serving at the request of the corporation as a director or
officer of another corporation, partnership, joint venture, trust or other
enterprise, or (c) who was a director or officer of a corporation which was a
predecessor corporation of the Company or of another enterprise at the request
of such predecessor corporation.
14.2 INDEMNIFICATION OF OTHERS. The Company shall have the power, to
the maximum extent and in the manner permitted by the Revised Code of
Washington, to indemnify each of its employees and agents (other than directors
and officers) against expenses (including attorneys' fees), judgments, fines,
settlements and other amounts actually and reasonably incurred in connection
with any proceeding, arising by reason of the fact that such person is or was an
agent of the Company. For purposes of this section, an "employee" or "agent" of
the Company (other than a director or officer) includes any person (a) who is or
was an employee or agent of the Company, (b) who is or was serving at the
request of the Company as an employee or agent of another corporation
partnership, joint venture, trust or other enterprise, or (c) who was an
employee or agent of a Company which was a predecessor corporation of the
Company or of another enterprise at the request of such predecessor corporation.
CERTIFICATION AS TO THE BYLAWS OF THE COMPANY
I, the undersigned, being the Chief Executive Officer of the Company do
hereby certify the foregoing to be the Bylaws of the Company.
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John A. McMillan, CEO
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