SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to
Section 14(a) of the Securities Exchange Act of 1934
Filed by 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-12
GeoResources, Inc.
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(Name of Registrant as Specified in its Charter)
NONE
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(Name of Person(s) Filing Proxy Statement, if other that 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)(4) 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 by written 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:
May 1, 2003
TO OUR SHAREHOLDERS:
You are cordially invited to attend our Annual Meeting of Shareholders to
be held on Tuesday, June 10, 2003, at 2:00 P.M. Central Daylight Savings
Time, at the El Rancho Motor Hotel, 1623 2nd Ave. W., Williston, North
Dakota. The other directors and officers join me in extending this
invitation.
The formal matters to be acted upon at the meeting are described in the
accompanying Notice of Annual Meeting of Shareholders and Proxy Statement.
In addition to the formal issues, a brief report of our operations will
also be presented.
It is very important that your shares are represented at the meeting. If
you are unable to attend the meeting but have questions or comments about
our operations, we would like to hear from you.
The form of proxy is enclosed. To assure that your shares will be voted
at the meeting, please complete and sign the enclosed postage paid proxy
and return it promptly. No additional postage is required if mailed in the
United States. The giving of a proxy will not affect your right to vote in
person if you attend the meeting.
Sincerely,
GEORESOURCES, INC.
/s/ J.P. Vickers
J.P. VICKERS
President
GeoResources, Inc.
1407 W. Dakota Parkway, Suite 1-B
Williston, ND 58801
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NOTICE OF 2003 ANNUAL MEETING OF SHAREHOLDERS
To be held on June 10, 2003
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TO OUR SHAREHOLDERS:
The 2003 Annual Meeting (the "Meeting") of Shareholders of GeoResources,
Inc. will be held at the El Rancho Motor Hotel, 1623 2nd Ave. W.,
Williston, North Dakota, on Tuesday, June 10, 2003, at 2:00 P.M., Central
Daylight Savings Time, for the following purposes:
1. To elect directors for the ensuing year;
2. To consider and act upon a proposal to amend our Articles of
Incorporation to delete an article which requires our stock ledger to
be held by a specified person in Denver, Colorado;
3. To consider and act upon a proposal to amend our Articles of
Incorporation to adopt a new article which limits the liability of our
directors under certain circumstances;
4. To consider and act upon a proposal to amend our Articles of
Incorporation to adopt a new article to require indemnification of our
directors to the fullest extent allowed by law;
5. To consider and act upon such other matters as may properly come
before the Meeting and any adjournments thereof.
Only shareholders of record at the close of business on April 22, 2003,
are entitled to notice of and to vote at the meeting.
Shareholders are requested to sign and date the enclosed proxy and return
it to our offices. The proxy requires no postage if mailed in the United
States.
By Order of the Board of Directors.
/s/ Cathy Kruse
CATHY KRUSE
Corporate Secretary
May 1, 2003
GeoResources, Inc.
PROXY STATEMENT
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INFORMATION CONCERNING SOLICITATION AND VOTING
The accompanying proxy is solicited by our Board of Directors for use at
our Annual Meeting of Shareholders to be held at 2 p.m. on Tuesday, June
10, 2003, at the El Rancho Motor Hotel, 1623 2nd Ave. W., Williston, North
Dakota, and for the following purposes:
1. To elect directors for the ensuing year;
2. To consider and act upon a proposal to amend our Articles of
Incorporation to delete an article which requires our stock ledger to
be held by a specified person in Denver, Colorado;
3. To consider and act upon a proposal to amend our Articles of
Incorporation to adopt a new article which limits the liability of our
directors under certain circumstances;
4. To consider and act upon a proposal to amend our Articles of
Incorporation to adopt a new article to require indemnification of our
directors to the fullest extent allowed by law;
5. To consider and act upon such other matters as may properly come
before the Meeting and any adjournments thereof.
The cost of soliciting proxies, including the preparation, assembly, and
mailing of the proxies and solicitation material, as well as the cost of
forwarding such material to the beneficial owners of stock, will be borne
by us. Directors, officers and regular employees may, without compensation
other than their regular remuneration, solicit proxies personally or by
telephone.
Any shareholder giving a proxy may revoke it at any time prior to its use
at the meeting by giving written notice of revocation to our Secretary or
by attending the meeting and voting in person. At any time before the vote
on a proposal, you can change your vote either by giving our Secretary a
written notice revoking your proxy or by signing, dating, and returning to
us a new proxy. We will honor the proxy with the latest date. If the
enclosed proxy is executed properly and returned in time to be voted at the
meeting, the shares represented will be voted as instructed. Proxies which
are signed but which lack any voting instructions will be voted in favor of
the slate of directors proposed by the Board of Directors and will be
deemed to grant discretionary authority to vote upon any other matters
properly before the meeting.
If your shares are held in "street name" by your broker, a bank, or other
nominee, you will probably receive this proxy statement from them with
instructions for voting your shares. Please respond quickly so that they
may represent you.
If your shares are held in the name of a broker, bank or other nominee,
and you do not tell that person how to vote your shares (so-called "broker
non-votes"), that person can vote them as it sees fit only on matters that
self regulatory organizations determine to be routine. Broker non-votes
will be counted as present to determine if a quorum exists but will not be
counted as present and entitled to vote on any non-routine proposal.
The mailing address of our principal executive office is P. O. Box 1505,
Williston, North Dakota 58802-1505. This Proxy Statement and the
accompanying proxy card were mailed to our shareholders on or about May 1,
2003.
Our Board of Directors fixed April 22, 2003, as the record date for the
determination of shareholders entitled to vote at the meeting. Persons who
were not shareholders on that date will not be allowed to vote at the
meeting.
At the close of business on April 22, 2003, there were issued and
outstanding 3,763,227 shares of our Common Stock, par value $0.01 per
share, our only class of voting securities. A majority of the shares of
Common Stock outstanding must be represented at the meeting in person or by
proxy to constitute a quorum for the four proposals and for the transaction
of any other business that is properly brought before the meeting. On
matters other than the election of directors, holders of the Common Stock
are entitled to one vote per share held as of the record date. With
respect to the election of directors, each holder of Common Stock is
entitled to cumulative voting rights, that is, to cast all of his votes
(determined by multiplying the number of shares owned by the total number
of other directors to be elected) for any one nominee or to distribute his
votes among any two or more nominees. There are no conditions precedent to
the exercise of cumulative voting rights. Discretionary authority to
cumulate votes in the election of directors is solicited in this proxy
statement.
In the election of directors, the five nominees with the highest number
of votes cast in their favor will be elected as directors to our Board of
Directors. With respect to the three proposals to amend our Articles of
Incorporation, each proposal will be approved if it receives the
affirmative vote of a majority of the shares represented in person or by
proxy at the Meeting and entitled to vote thereon.
PROPOSAL NUMBER 1
ELECTION OF DIRECTORS
Our Articles of Incorporation provide that the number of directors shall
not be less than three nor more than ten. Our Bylaws allow the Board to
set the number of directors subject to our Articles of Incorporation's
parameters, and as over the past several years, the Board has set the
number of directors for the ensuing year at five. In the election of
directors, each proxy will be voted for each of the nominees listed in the
table below (with discretionary authority to cumulate votes) unless the
proxy withholds authority to vote for one or more of the nominees. If
elected, each nominee will serve until the next annual meeting of
shareholders and until his successor shall be duly elected and shall
qualify.
If, prior to the meeting, it should become known to the Board of
Directors that any one of the nominees named below will be unable to serve
as a director after the meeting, the proxy will be voted for substitute
nominee(s) selected by the Board of Directors. The Board has no reason to
believe that any of the nominees will be unable to serve. In the election
of directors, the number of nominees equaling the number of directors to be
elected, having the highest number of votes cast in favor of their
election, are elected to the Board of Directors.
The following table provides certain information with respect to our
nominees for directors.
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Current Position(s)
With the Company and
Business Experience Director
Name of Nominee Age During Past Five Years Since
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H. Dennis Hoffelt 62 Director; President and 1967;
Chief Operations Officer except
of Triangle Electric, Inc., for 1986
Williston, North Dakota,
an electrical contracting
firm; from 1975 to 1997.
Jeffrey P. Vickers 50 President and Director 1982
since January 1983 and
June 1982, respectively.
Cathy Kruse 48 Secretary since October 1981; 1996
Treasurer, October 1981 to
May 1985 and June 1990 to June 2000.
Director since June 1996.
Office Manager since May 1981.
Paul A. Krile 75 Director; President and 1997
owner of Ranco Fertiservice,
a manufacturer of dry fertilizer
handling equipment, for over
five years.
Duane Ashley 55 Director; Senior Salesman 1999
for GRACO Fishing and Rental Tool, Inc.,
or Weatherford Enterra, Inc.
for over five years.
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Cathy Kruse is the sister-in-law of Jeffrey P. Vickers. No other family
relationship exists between or among any of the officers or nominees.
There are no arrangements or understandings between any of the directors or
nominees and any other person pursuant to which any person was or is to be
elected as a director or nominee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ABOVE NOMINEES.
BOARD OF DIRECTORS
During the fiscal year ended December 31, 2002, our Board of Directors
held two meetings. All directors attended 100% of the meetings, except Mr.
Krile who missed one meeting. The Board of Directors has a standing Audit
Committee composed of Messrs. Ashley, Hoffelt and Krile. The function of
the Audit Committee is to provide assistance to the Board of Directors in
fulfilling its responsibility to the shareholders, potential shareholders
and the investment community in respect of corporate accounting, our
reporting practices, and the quality and integrity of the financial reports
of the Company. The Audit Committee held one meeting during the fiscal
year ended December 31, 2002. The Board does not have standing nominating
or compensation committees.
Information as to ownership of our securities by the nominees for
director is included under the heading "Security Ownership of Certain
Beneficial Owners and Management."
EXECUTIVE OFFICERS
The Company's executive officers as of April 22, 2003, were as follows:
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POSITION(S) WITH PERIOD OF SERVICE AS
NAME AND AGE THE COMPANY A DIRECTOR OR OFFICER
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Jeffrey P. Vickers President and Since 1982
Age: 50 Director
Jeffrey B. Jennings Vice President Since June 2000
Age: 46 of Land and Finance
Cathy Kruse Secretary Since October 1981 (officer);
Age: 48 and Director and since June 1996 (director)
Connie R. Hval Treasurer Since June 2000
Age: 42
H. Dennis Hoffelt Director From 1967 through June
Age: 62 Member of 1986; and since June 1987
Audit Committee
Paul A. Krile Director Since June 1997
Age: 75 Member of
Audit Committee
Duane Ashley Director Since June 1999
Age: 54 Member of
Audit Committee
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All of the directors' terms expire at the next annual meeting of
shareholders or when their successors have been elected and qualified. Our
executive officers serve at the discretion of the Board of Directors.
Jeffrey P. Vickers received a Bachelor of Science degree in Geological
Engineering with a Petroleum Engineering option from the University of
North Dakota in 1978. Prior to obtaining his degree, Mr. Vickers served
two years overseas with the U.S. Army. In 1979, Mr. Vickers joined Amerada
Hess Corporation as an Associate Petroleum Engineer in the Williston Basin.
In 1981, Mr. Vickers was employed by us as our Drilling and Production
Manager where he was responsible for providing technical assistance and
supervision of drilling and production operations and generated development
drilling programs. He became our President on January 1, 1983. In June
1982, Mr. Vickers became a director.
Jeffrey B. Jennings is Vice President of Land and Finance. Mr. Jennings
received a Bachelor of Science in Geological Engineering in 1980 and a
Master of Science in Mineral Economics in 1992, from the Colorado School of
Mines. He was a consultant for us for two years prior to his employment
with us in January 1996.
Cathy Kruse is our Secretary and business office manager. Ms. Kruse
graduated from the Atlanta College of Business in 1977 and was employed as
a Legal Assistant for four years prior to her employment with us in May
1981. In June 1996, Ms. Kruse became a director.
Connie R. Hval is our Treasurer and comptroller. Ms. Hval graduated
from the University of North Dakota - Williston in December 1980 and became
employed with us in January 1981.
H. Dennis Hoffelt has been President and Chief Operating Officer of
Triangle Electric Inc., Williston, North Dakota, an electrical contracting
firm, from 1975 to 1997. He served as one of our directors from 1967
through June of 1986 and was elected as a director again in 1987.
Paul A. Krile has been one of our directors since June 1997. He has
been the President and owner of Ranco Fertiservice, a manufacturer of dry
fertilizer handling equipment, headquartered in Sioux Rapids, Iowa for more
than the last five years.
Duane Ashley has been one of our directors since June 1999. He has been
a Senior Salesman for GRACO Fishing and Rental Tool, Inc. and Weatherford
Enterra Inc. for the past five years.
Cathy Kruse is the sister-in-law of Jeffrey P. Vickers. No other family
relationship exists between or among any of the officers or nominees.
There are no arrangements or understandings between any of the directors or
nominees and any other person pursuant to which any person was or is to be
elected as a director or nominee.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors and executive officers, and persons who own more than 10% of our
common stock to file with the Securities and Exchange Commission initial
reports of ownership and reports of changes in ownership of our common
stock. Executive officers, directors and greater than 10% shareholders are
required by SEC regulations to furnish us with copies of all Section 16(a)
reports they file. To our knowledge, based solely on review of the copies
of such reports furnished to us or advice that no filings were required
during fiscal year 2002, all executive officers, directors and greater than
10% beneficial owners complied with the Section 16(a) filing requirements.
COMPENSATION AND OTHER MATERIAL TRANSACTIONS
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table presents the aggregate compensation which was earned
by our Chief Executive Officer for each of the past three years. We do not
have an employment contract with any of our executive officers. None of
our employees earned total annual salary and bonus in excess of $100,000.
There has been no compensation awarded to, earned by or paid to any
employee required to be reported in any table or column in any fiscal year
covered by any table, other than what is set forth in the following table.
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Annual Compensation Long Term Compensation
----------------------------- --------------------------------------
Awards Payouts
---------------------- ---------------
All
Other Restricted Securities Other
Name and Annual Stock Underlying LTIP Compen-
Principal Salary Bonus Compen- Award(s) Options Payouts sation
Position Year ($) ($) sation ($) SARs(#) ($) ($)
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Jeffrey 2002 $90,849 -0- -0- N/A -0- N/A $4,542
P. 2001 $90,579 -0- -0- N/A -0- N/A $4,529
Vickers, 2000 $84,978 -0- -0- N/A -0- N/A $6,091
CEO
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In the preceding table, the column titled "All Other Compensation" is
comprised entirely of profit sharing amounts and the 401(k) Company
matching funds discussed below.
If we achieve net income in a fiscal year, our Board of Directors may
determine to contribute an amount based on our profits to the Employees'
Profit Sharing Plan and Trust (the "Profit Sharing Plan"). An eligible
employee may be allocated from 0% to 15% of his other compensation
depending upon the total contribution to the Profit Sharing Plan. A total
of 20% of the amount allocated to an individual vests after three years of
service, 40% after four years, 60% after five years, 80% after six years
and 100% after seven or more years. On retirement, an employee is eligible
to receive the vested amount. On death, 100% of the amount allocated to an
individual is payable to the employee's beneficiary. We made total
contributions to the Profit Sharing Plan, matching and discretionary, for
the years ended December 31, 2002, 2001 and 2000 of $26,019, $24,614, and
$36,474, respectively. As of December 31, 2002, vested amounts in the
Profit Sharing Plan for all officers as a group was approximately $387,378.
Effective July 1, 1997, we executed an Adoption Agreement Nonstandardized
Code 401(k) Profit Sharing Plan that incorporated a 401(k) Plan into the
existing Profit Sharing Plan. Eligible employees are allowed to defer up
to 15% of their compensation and we match up to 5%.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table summarizes for our Chief Executive Officer (i) the
total number of shares received upon exercise of stock options during the
fiscal year ended December 31, 2002, (ii) the aggregate dollar value
realized upon such exercise, (iii) the total number of unexercised options,
if any, held at December 31, 2002, and (iv) the value of unexercised in-the-
money options, if any, held at December 31, 2002.
In-the-money options are options where the fair market value of the
underlying securities exceeds the exercise or base price of the option.
The aggregate value realized upon exercise of a stock option is the
difference between the aggregate exercise price of the option and the fair
market value of the underlying stock on the date of exercise. The value of
unexercised, in-the-money options at fiscal year-end is the difference
between the exercise price of the option and the fair market value of the
underlying stock on December 31, 2002, which was $1.35 per share. With
respect to unexercised, in-the-money options, the underlying options have
not been exercised, and actual gains, if any, on exercise will depend on
the value of our Common Stock on the date of exercise.
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Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
Shares at FY-End(#) at FY-End($)
Acquired on Value Exercisable/ Exercisable
Name Exercise(#) Realized($) Unexercisable Unexercisable
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Jeffrey P.
Vickers, CEO -0- -0- 71,000/0 0/0
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OPTION GRANTS IN LAST FISCAL YEAR
At our 1993 Annual Meeting of Shareholders, a 1993 Employees' Incentive
Stock Option Plan (the "Plan") was approved by shareholders. The purpose
of the Plan is to enable us to attract persons of training, experience and
ability to continue as employees and to furnish additional incentive to
them, upon whose initiative and efforts the successful conduct and
development of our business largely depends, by encouraging them to become
owners of our Common Stock.
The term of the Plan expired on February 17, 2003. If within the
duration of an option, there is a corporate merger consolidation,
acquisition of assets or other reorganization and if this transaction
affects the optioned stock, the optionee will thereafter be entitled to
receive upon exercise of his option those shares or securities that he
would have received had the option been exercised prior to the transaction
and the optionee had been a stockholder with respect to such shares.
Our Board of Directors administers the Plan. The exercise price of the
Common Stock offered to eligible participants under the Plan by grant of an
option to purchase Common Stock may not be less than the fair market value
of the Common Stock at the date of grant; provided, however, that the
exercise price will not be less than 110% of the fair market value of the
Common Stock on the date of grant in the event an optionee owns 10% or more
of the Common Stock. A total of 300,000 shares have been reserved for
issuance pursuant to options to be granted under the Plan. Of the 300,000
reserved shares, options are issued for 175,500 shares at an average
exercise price of $2.34.
No grants of stock options were made by the Company during the fiscal
year ended December 31, 2002.
DIRECTOR COMPENSATION
We pay each director who is not also an employee $200 per month and
reimburse the directors for travel expenses.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
We have no employment contracts in place with any of our executive
officers. We also have no compensatory plan or arrangement with respect to
any executive officer where such plan or arrangement will result in
payments to such officer upon or following his resignation, retirement, or
other termination of employment with us and our subsidiaries, or as a
result of a change-in-control of the Company or a change in the executive
officers' responsibilities following a change-in-control.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth the number of shares of our Common Stock
beneficially owned by each of our officers and directors and by all
directors and officers as a group, as of March 15, 2003. Unless otherwise
indicated, the shareholders listed in the table have sole voting and
investment powers with respect to the shares indicated.
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Class of Name and Address Amount and Nature Percent
Securities of Beneficial Owner of Beneficial Ownership of Class
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Common Stock, Jeffrey P. Vickers, 331,934-Direct and 8.8%
$.01 par value 1814 14th Ave. W. Indirect(a)
Williston, ND 58801
Common Stock, Paul A. Krile, 253,000-Direct 6.7%
$.01 par value P. O. Box 329
Sioux Rapids, IA 50585
Common Stock, Cathy Kruse, 13,700-Direct(c) (b)
$.01 par value 723 W. 14th St.
Williston, ND 58801
Common Stock, H. Dennis Hoffelt, 41,000-Direct and 1.1%
$.01 par value 9421 E. Desert Lake Indirect(d)
Sun Lakes, AZ 85248
Common Stock, Connie R. Hval, 9,500-Direct(e) (b)
$.01 par value 7400 3rd Ave. E.
Williston, ND 58801
Common Stock, Jeffrey B. Jennings, 11,500-Direct(f) (b)
$.01 par value 1410 1st Ave. W.
Williston, ND 58801
Common Stock, Duane Ashley, 0-Direct and (b)
$.01 par value 910 15th St. W. Indirect
Williston, ND 58801
Common Stock, Officers and 660,634-Direct and 17.6%
$.01 par value Directors as Indirect
a Group-
(seven persons)
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- --------------------
(a) Includes 139,634 shares owned directly by Mr. Vickers, 2,500 in a
self-directed individual retirement account, 72,000 shares held jointly
with his wife, Nancy J. Vickers, 25,500 shares held directly by his
wife, 1,300 shares in his wife's self-directed individual retirement
account, and an aggregate 20,000 shares held by him as custodian for his
children. Also included are 71,000 shares that may be purchased by Mr.
Vickers under presently exercisable stock options granted pursuant to
our 1993 Employees' Incentive Stock Option Plan.
(b) Less than 1%.
(c) Included are 9,500 shares which may be purchased by Ms. Kruse under
presently exercisable stock options granted pursuant to our 1993 Employees'
Incentive Stock Option Plan.
(d) Mr. Hoffelt has sole voting and investment power over 11,500 of shares
and has shared voting and investment powers over the remaining 29,500
shares.
(e) Included are 9,500 shares which may be purchased by Ms. Hval under
presently exercisable stock options granted pursuant to our 1993 Employees'
Incentive Stock Option Plan.
(f) Included are 9,500 shares which may be purchased by Mr. Jennings under
presently exercisable stock options granted pursuant to our 1993 Employees'
Incentive Stock Option Plan.
The following table sets forth information concerning persons known to us
to be the beneficial owners of more than 5% of our outstanding Common Stock
as of March 15, 2003.
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Amount of
Class of Name and Shares and Nature of Percent
Securities Address of Person Beneficial Ownership of Class
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Common Stock, Jeffrey P. Vickers 331,934-Direct and 8.8%
$.01 par value 1814 14th Ave. W. Indirect(a)
Williston, ND 58801
Common Stock, Paul A. Krile 253,000-Direct 6.7%
$.01 par value P. O. Box 329
Sioux Rapids, IA 50585
Common Stock, Joseph V. Montalban 344,700-Direct and 9.2%
$.01 par value P. O. Box 200 Indirect(b)(c)
Cut Bank, MT 59427
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(a) See footnote (a) of the immediately preceding table.
(b) This information was obtained from our transfer agent, Wells Fargo
Bank Minnesota, N.A., on March 26, 2003, the Depository Trust Company's non-
objecting beneficial owners' list dated December 31, 2002, and the
Depository Trust Company Monthly Security Position Listing dated February
28, 2003.
(c) Includes 318,700 shares owned by Montalban Oil & Gas Operations (MOGO Inc.)
We are not aware of any arrangements which could, at a subsequent date,
result in a change in control of the company.
BACKGROUND FOR PROPOSAL NUMBERS 2 THROUGH 4
We were incorporated in Colorado in October 1958. Over the years, our
shareholders have approved various amendments to our Articles of
Incorporation, some amendments which have amended earlier amendments.
Because our Articles of Incorporation and amendments thereto date back over
a period of nearly 45 years, it is difficult to determine the content of
our Articles of Incorporation as currently in effect since the whole of the
articles are scattered through multiple filings over the years. The
Colorado Business Corporation Act ("CBCA"), which is the current law that
controls corporations formed in Colorado, allows Colorado corporations to
restate their Articles of Incorporation in order to bring the original
articles and all amendments thereto into one document. We are restating
our Articles of Incorporation for purposes of clarity.
Under the CBCA, a restatement of articles of incorporation does not
require shareholder approval since the action simply combines existing
articles into one document. However, the CBCA also allows Colorado
corporations to amend their articles of incorporation while restating the
articles. The CBCA requires shareholder approval for any amendments to our
Articles of Incorporation. Our Board of Directors is recommending to our
shareholders three separate amendments which are described in the three
proposals which follow. We have attached a copy of our Articles of
Incorporation, restated and as proposed to be amended, as Exhibit A to this
proxy statement.
PROPOSAL NUMBER 2
APPROVAL TO AMEND OUR ARTICLES OF INCORPORATION TO DELETE ARTICLE VIII
REGARDING THE REQUIREMENT THAT OUR STOCK LEDGER BE KEPT IN COLORADO AND IN
THE CHARGE OF AN IDENTIFIED INDIVIDUAL
Our Board of Directors is proposing to delete Article VIII of our current
Articles of Incorporation. Existing Article VIII reads as follows:
"A stock ledger and other books of record of this
corporation shall be kept within the State of Colorado in charge
of the said Rollin C. Vickers whose office address is 1301 Tabor
Street, Denver 15, Colorado."
This article was contained in our original Articles of Incorporation
filed back in October 1958. At that time, as a newly formed corporation,
our stock was not publicly held or traded, we had a limited number of
shareholders, and our base of operations was in Denver. Over the past 45
years, the company has significantly changed and evolved. Our common stock
is publicly traded and quoted on the Nasdaq SmallCap market, and our
principal office is located in Williston, North Dakota. We have
approximately 2,500 beneficial shareholders, and our stock ledger is kept
by Wells Fargo Shareowner Services, a professional transfer agent. Thus,
Article VIII of our Articles of Incorporation is outdated and no longer
relevant. Furthermore, the statement as to who is to keep the stock ledger
and where it is to be kept is not required to be included in a
corporation's articles of incorporation under the Colorado Business
Corporation Act. As a result, our Board of Directors believes that
Article VIII should be deleted from our Articles of Incorporation.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
DELETION OF EXISTING ARTICLE VIII OF OUR ARTICLES OF INCORPORATION.
PROPOSAL NUMBER 3
APPROVAL TO AMEND OUR ARTICLES OF INCORPORATION TO ADOPT A NEW ARTICLE
(ARTICLE XI) WHICH LIMITS THE LIABILITY OF OUR DIRECTORS UNDER CERTAIN
CIRCUMSTANCES
Our Board of Directors is recommending that the Articles of Incorporation
be amended to add the following Article XI:
ARTICLE XI
Elimination of Personal Liability of a Director
"To the fullest extent permitted by Colorado law, as the
same exists or may hereafter be amended, a director of the
Corporation shall not be liable to the Corporation or its
shareholders for monetary damages for breach of fiduciary duty as
a director."
Section 7-108-402 of the Colorado Business Corporation Act permits
Colorado corporations to include in their articles of incorporation a
provision eliminating or limiting the personal liability of directors to
the corporation or its shareholders for monetary damages for certain
breaches of the fiduciary duty of directors. This section is intended,
among other things, to encourage qualified individuals to serve as
directors of Colorado corporations. Proposed Article XI is designed to
take advantage of this section of the CBCA.
In performing their duties, directors of a Colorado corporation owe
fiduciary obligations to the corporation they serve and its shareholders.
These fiduciary obligations include the duty of care and the duty of
loyalty. In simple terms, the duty of care requires that directors exercise
the care that an ordinary prudent person would exercise under similar
circumstances and the duty of loyalty prohibits faithlessness and self-
dealing. The so-called business judgment rule is a specific application of
this directorial standard of conduct to a situation where, after reasonable
investigation, disinterested directors adopt a course of action which, in
good faith, they honestly and reasonably believe will benefit the
corporation.
The business judgment rule was and is designed to protect directors of a
corporation from personal liability to the corporation or its shareholders
if their business decisions are subsequently challenged. This rule shields
corporate decision makers and their decisions where the five elements of
the rule--a business decision, disinterestedness, due care, good faith and
no abuse of discretion are present. However, as a practical matter, due to
the expense of defending lawsuits and the frequency in which unwarranted
litigation is brought against directors and officers of corporations, and
due to the inevitable uncertainties with respect to the application of the
business judgment rule to a particular set of facts and circumstances,
directors of a corporation must either rely upon indemnity from or
insurance procured by the corporation to defend such lawsuits. Therefore,
although the business judgment rule protects directors from personal
liability to the corporation and its shareholders, unless such indemnity
provisions and/or insurance are available, directors could find themselves
faced with the extraordinary expense of defending themselves in litigation
brought by a shareholder who questions a decision of a director based upon
an objective after-the-fact examination of the facts and circumstances.
The Colorado legislature has recognized that insurance and indemnity
provisions are often a condition of an individual's willingness to serve as
a director of a Colorado corporation. However, changes in the market for
directors' liability insurance have resulted in the unavailability for
directors of many corporations from obtaining any meaningful liability
insurance coverage. Additionally, insurance carriers have, in many cases,
increased premiums to such an extent that the cost of obtaining such
insurance becomes extremely prohibitive. Moreover, current policies often
exclude coverage for areas where service of qualified directors is most
needed. The high cost and sometimes unavailability of meaningful directors'
liability insurance is attributable to some degree to a number of factors
which include, among other things, the granting of significant damage
awards.
We have solicited bids from insurance companies for directors' liability
coverage, but we believe that acceptable coverage at this time is too
costly, especially for our company considering our relatively small size.
The proposed addition of Article XI to the Articles of Incorporation is
designed to assure that our current and future directors are protected to
at least a similar extent that they would be if insurance coverage were
made available. Due to the fact that the Company will be acting as a self-
insurer with respect to director liability coverage assuming the Restated
and Amended Articles of Incorporation are adopted by the shareholders in
the form attached hereto as Exhibit A, our assets and equity are at risk if
there should ever be a large damage award for which our directors would be
entitled to indemnification from us.
Proposed Article XI would protect our directors against personal
liability for breach of their certain fiduciary obligations to us,
including their duty of care. Under Colorado law, absent the adoption of
the proposed Article XI, our directors would continue to be liable for
negligent violations of their fiduciary duties. If adopted by the
shareholders, the proposed article would absolve the directors of liability
for negligence in the performance of their duties, including gross
negligence. One of the principal effects of the adoption of the proposed
article would be that our shareholders would be giving up a cause of action
against a director for breach of fiduciary duty, including but not limited
to a breach resulting from making grossly negligent business decision. In
effect, directors would not be required to prove that their decisions are
protected by the business judgment rule. However, directors would remain
liable for breaches of their duty of loyalty, for any act of omission not
in good faith or which involves intentional misconduct or a knowing
violation of law and for any transaction from which the directors derived
an improper personal benefit or for the payment of a dividend in violation
of the CBCA. Furthermore, the proposed article would not eliminate or limit
liability of directors arising in connection with causes of action brought
under the federal securities laws.
While the proposed Article XI provides our directors with protection
from damages for breaches of their duty of care, it does not eliminate the
directors' duty of care. Accordingly, the proposed article would have no
effect on the availability of equitable remedies such as an injunction or
rescission based upon a director's breach of the duty of care. Finally,
the proposed article would apply only to claims against a director arising
out of his or her role as a director of our company and would not apply, if
he or she is also an officer, to his or her role as an officer or in any
other capacity other than that of one of our directors.
There has never been any litigation involving our Board of Directors or
its individual members in their capacities as our directors nor are such
persons aware that any such litigation is threatened.
We believe that without the limitation of liability proposed in Article
XI, our ability to recruit and obtain highly qualified independent
directors would likely be impaired. This has become a significant concern
for our company since recent federal legislation and proposed Nasdaq rules
will, among other things, require that the majority of our Board of
Directors be independent, and that certain members of the Board be
sophisticated in accounting and financial matters. Considering the
relatively small size of our company, and the location of our principal
offices in a low populated community, our Board of Directors believe that
we should take every step available, such as the adoption of Article XI, to
assure that we will be able to attract the best possible directors in the
future. The proposed Article XI protects the liability of our directors to
the fullest extent allowed by Colorado law. However, each member of our
Board of Directors has a personal interest in seeing the limited liability
provisions contained in the proposed Article XI be adopted, and as
explained previously, there is a potential detriment to our shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
ADOPTION OF PROPOSED ARTICLE XI TO OUR ARTICLES OF INCORPORATION.
PROPOSAL NUMBER 4
APPROVAL TO AMEND OUR ARTICLES OF INCORPORATION TO ADOPT A NEW ARTICLE
(ARTICLE XII) WHICH REQUIRES US TO INDEMNIFY OUR DIRECTORS TO THE FULLEST
EXTENT ALLOWED BY COLORADO LAW
Our Board of Directors is recommending that the Articles of Incorporation
be amended to add the following Article XII:
ARTICLE XII
Indemnification of Directors
"The Corporation shall indemnify and advance expenses to a
director of the Corporation to the fullest extent permitted by
Colorado law, as the same exists or may hereafter be amended."
Sections 7-109-101 through 7-109-110 of the Colorado Business Corporation
Act provide for both permissive and mandatory indemnification of directors
depending on the circumstances.
Unless limited by its articles of incorporation, a corporation must
indemnify a director who was wholly successful, on the merits or otherwise,
in the defense of any proceeding in which person is or was a director,
against reasonable expenses incurred by him or her in connection with the
proceeding. Our Articles of Incorporation do not limit mandatory
indemnification.
The CBCA permits, but does not require, a Colorado corporation to
indemnify its directors against liabilities, damages, costs and expenses
for which they are liable if:
(i) the person acted in good faith, and
(ii) the person reasonably believed:
* in their official capacity as a director with the corporation,
that his or her conduct was in the best interests of the
corporation, and
* in all other cases, that his or her conduct was at least not
opposed to the company's best interests; and
(iii) in the case of any criminal proceeding, they had no reasonable
cause to believe their conduct was unlawful.
A corporation may not indemnify a director (i) in connection with
a proceeding by or in the right of the corporation in which the
director was adjudged liable to the corporation, (ii) in connection
with any other proceeding in which the director was adjudged liable on
the basis that he or she derived an improper personal benefit.
Indemnification is limited to reasonable expenses incurred in
connection with the proceeding.
The CBCA also permits advancement or reimbursement of expenses to
directors prior to final disposition of the proceeding. In order to
advance or reimburse expenses,
(i) the director must furnish to the corporation a written affirmation
of the director's good faith belief that he or she has met the
standard for permissible indemnification,
(ii) the director agrees in writing to repay the advance if it is
ultimately determined that he or she did not meet the standard of
conduct, and
(iii) a determination is made by the corporation based on the facts
then known that indemnification would not be disallowed.
A corporation may not indemnify or advance expenses to a director unless
a determination has been made that indemnification or advancement of
expenses is permissible under the CBCA. The CBCA provides that the
determination is to be made by
(i) a majority vote of the directors not a party to the proceeding,
(ii) if a quorum of disinterested directors cannot be obtained, then
by a committee of two or more directors not a party to the
proceeding, or
(iii) if determination cannot be made by in the manner noted in (i) or
(ii), then the determination can be made by independent legal
counsel or by the shareholders.
Our Board of Directors is recommending an amendment to our Articles of
Incorporation which would require that we indemnify and advance expenses
when permissible under the CBCA. This addition to our Articles of
Incorporation is intended, among other things, to encourage qualified
individuals to serve as directors of our company.
As noted above, indemnification and advancement of expenses is only
allowed when a director conducted himself or herself in good faith, and
then the person must have reasonably believed his or her conduct was in the
corporation's best interests when the conduct is in their official capacity
for the corporation, and in all other cases, at least not opposed to the
corporation's best interests. In the case of a criminal proceeding, the
director must have had no reasonable cause to believe his or her conduct
was unlawful.
In performing their duties, directors of a Colorado corporation are
protected by the so-called business judgment rule which shields his or her
liability if, after reasonable investigation, disinterested directors adopt
a course of action which, in good faith, they reasonably believe will
benefit the corporation. The business judgment rule was and is designed to
protect directors of a corporation from personal liability to the
corporation or its shareholders if their business decisions are
subsequently challenged. However, as a practical matter, due to the
expense of defending lawsuits and the frequency in which unwarranted
litigation is brought against directors of corporations, and due to the
inevitable uncertainties with respect to the application of the business
judgment rule to a particular set of facts and circumstances, directors of
a corporation must either rely upon indemnity from or insurance procured by
the corporation to defend such lawsuits.
We have solicited bids from insurance companies for directors' liability
coverage, but we believe at this time acceptable coverage is too costly,
especially for our company considering our relatively small size. The
proposed addition of Article XII to the Articles of Incorporation is
designed to assure that our current and future directors are protected to
at least a similar extent that they would be if insurance coverage were
made available. Due to the fact that the Company will be acting as a self-
insurer with respect to director liability coverage assuming the Restated
and Amended Articles of Incorporation are adopted by the shareholders in
the form attached hereto as Exhibit A, our assets and equity are at risk if
there should ever be a large damage award for which our directors would be
entitled to indemnification from us.
Our Board of Directors believes it is only fair to advance expenses to a
director or indemnify a director who is made a party to a proceeding due to
their status as a director of our company as long as he or she has met the
legal thresholds for receiving such a benefit.
We believe that without the indemnification benefits proposed in Article
XII, our ability to recruit and obtain highly qualified independent
directors would likely be impaired. This has become a significant concern
for our company since recent federal legislation and proposed Nasdaq rules,
among other things, will require that the majority of our Board of
Directors be independent, and that certain members of the Board be
sophisticated in accounting and financial matters. Considering the
relatively small size of our company, and the location of our principal
offices in a low populated community, our Board of Directors believe that
we should take every step available, such as the adoption of Article XII,
to assure that we will be able to attract the best possible directors in
the future. The proposed Article XII helps protect our directors from
personal financial ruin to the fullest extent allowed by Colorado law when
they have acted in good faith and at least not opposed to our best
interests. However, each member of our Board of Directors has a personal
interest in seeing the limited liability provisions contained in the
proposed Article XII be adopted, and as company funds will be expended if
advancement of expenses or indemnification is approved, there is a
potential detriment to our shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
ADOPTION OF PROPOSED ARTICLE XII TO OUR ARTICLES OF INCORPORATION.
INDEPENDENT PUBLIC ACCOUNTANTS
Our independent public accounting firm is Richey, May & Co., P. C.,
("Richey"), of Englewood, Colorado. Richey audited our accounts for the
2001 and 2002 fiscal years. Richey is expected to be our independent
auditor for 2003. A representative of Richey may be present at the meeting
and, if present, will respond to approximate questions.
Audit Fees
The aggregate fees billed or estimated to be billed for professional
services rendered by our independent auditors for the audit of our annual
financial statements for the fiscal year ended December 31, 2002, and for
the reviews of the financial statements included in the Company's quarterly
reports on Form 10-QSB for that fiscal year were approximately $25,000.
Financial Information Systems Design and Implementation Fees
Our independent auditors did not perform any financial information
systems design or implementation work for us during the fiscal year ended
December 31, 2002.
All Other Fees
We paid our independent auditors $4,000 in fees for income tax compliance
and related tax services.
AUDIT COMMITTEE REPORT
The Audit Committee reports to and acts on behalf of the Board of
Directors by providing oversight of our financial management, independent
auditors and financial reporting procedures. The Audit Committee's
Charter, which was adopted in 2000, was enclosed with our 2001 proxy
statement. Our management is responsible for preparing our financial
statements, and the independent auditors are responsible for auditing those
financial statements. The Audit Committee is responsible for overseeing
the conduct of these activities by our management and the independent
auditors. In this context, the Audit Committee has met and held
discussions with management and the independent auditors. Management
represented to the Audit Committee that our consolidated financial
statements were prepared in accordance with generally accepted accounting
principles, and the Audit Committee has reviewed and discussed the
consolidated financial statements with management and the independent
auditors.
The members of the Audit Committee are not professionally engaged in the
practice of auditing or accounting and are not financial experts in the
fields of accounting or auditing, including auditor independence. The
members of the Audit Committee rely without independent verification on the
information provided to them and on the representations made by management
and the independent accountants. Accordingly, the Audit Committee's
oversight does not provide an independent basis to determine that
management has maintained appropriate accounting and financial reporting
principles or appropriate internal controls and procedures designed to
assure compliance with accounting standards and applicable laws and
regulations. Furthermore, the Audit Committee's considerations and
discussions referred to above do not assure that the audit of our financial
statements have been carried out in accordance with generally accepted
auditing standards, that the financial statements are presented in
accordance with generally accepted accounting principles, or that the our
auditors are in fact "independent".
The Audit Committee has discussed with the independent auditors matters
required to be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees). In addition, the independent
auditors provided to the Audit Committee the written disclosures required
by Independent Standards Board Standard No. 1 (Independence Discussions
with Audit Committees), and the Audit Committee and the independent
auditors have discussed the auditors' independence from the company and its
management, including the matters in those written disclosures.
Additionally, the Audit Committee considered the fees and costs billed and
expected to be billed by the independent auditors for our audit services.
The Audit Committee has discussed with management the procedures for
selection of consultants and the related competitive bidding practices and
fully considered whether those services provided by the independent
auditors are compatible with maintaining auditor independence.
The Audit Committee has discussed with the independent auditors, with and
without management present, their evaluations of our internal accounting
controls and the overall quality of our financial reporting.
In reliance on the reviews and discussions with management and the
independent auditors referred to above, the Audit Committee recommended to
the Board of Directors and the Board has approved, the inclusion of the
audited financial statements in our Annual Report on Form 10-KSB for the
fiscal year ended December 31, 2002, for filing with the Securities and
Exchange Commission. The Audit Committee also recommended to the Board of
Directors, and the Board has approved the selection of Richey, May & Co.,
P.C. as our independent auditors for 2003.
The Audit Committee
Duane Ashley
H. Dennis Hoffelt
Paul A. Krile
SHAREHOLDER PROPOSALS
Shareholders may present proposals for inclusion in the 2004 Proxy
Statement and form of proxy relating to that meeting provided they are
received by our Secretary no later than January 31, 2004, and are otherwise
in compliance with applicable Securities and Exchange Commission
regulations.
If a Shareholder who wishes to present a proposal at our 2004 Annual
Meeting that will not be included in our proxy statement for such Annual
Meeting fails to notify us of his or her desire to do so by March 31, 2004,
then the proxies that the Board of Directors solicits for the 2004 Annual
Meeting will include discretionary authority to vote on the Shareholder's
proposal, if such proposal is properly brought before the meeting.
OTHER BUSINESS
We know of no other matters to be presented at the meeting. If any other
matter properly comes before the meeting, the appointed proxies will vote
the proxies in accordance with their best judgment.
ANNUAL REPORT TO SHAREHOLDERS
A copy of our Annual Report to Shareholders for the fiscal year ended
December 31, 2002, accompanies this Notice of Annual Meeting of
Shareholders and Proxy Statement. No part of such Annual Report is
incorporated herein and no part thereof is to be considered proxy
soliciting material.
AVAILABILITY OF REPORT ON FORM 10-KSB
We will provide at no charge a copy of our Annual Report on Form 10-KSB
for the Year Ended December 31, 2002, as filed with the Securities and
Exchange Commission, to any beneficial owner of shares entitled to vote at
the meeting. Please address your request to the attention of the
Secretary, GeoResources, Inc., P.O. Box 1505, Williston, North Dakota 58802-
1505.
By order of The Board of Directors
GEORESOURCES, INC.
/s/ Cathy Kruse
CATHY KRUSE
Corporate Secretary
Williston, North Dakota
Dated: May 1, 2003
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
GEORESOURCES, INC. June 10, 2003
The undersigned shareholder of GeoResources, Inc., acknowledges receipt
of the Proxy Statement and Notice of Annual Meeting of Shareholders to be
held on Tuesday, June 10, 2003, at 2:00 p.m. local time in the El Rancho
Motor Hotel, 1623 2nd Ave. W., Williston, North Dakota and hereby appoints
H. Dennis Hoffelt and J.P. Vickers, each with the power of substitution, as
Attorneys and Proxies to vote all the shares of the undersigned at said
Meeting and at all adjournments thereof, hereby ratifying and confirming
all that said Attorneys and Proxies may do or cause to be done by virtue
hereof. The above-named Attorneys and Proxies are instructed to vote all
of the undersigned's shares as follows:
1. Election of Directors:
[ ] FOR all nominees listed below (except as listed to the contrary
below), with discretionary authority to cumulate votes unless a
different distribution of votes is indicated by marking after the
nominee's name.
H. Dennis Hoffelt Jeffrey P. Vickers Duane Ashley
Paul A. Krile Cathy Kruse
INSTRUCTION: To withhold authority to vote for any individual nominee,
write the nominee's name in the line spaces provided.
[ ] WITHHOLD AUTHORITY to vote for all nominees listed above.
------------ ------------ ------------ ------------ ------------
2. Proposal to amend our Articles of Incorporation to delete an article
which requires our stock ledger to be held by a specified person in Denver,
Colorado;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to amend our Articles of Incorporation to adopt a new article
which limits the liability of our directors under certain circumstances;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Proposal to amend our Articles of Incorporation to adopt a new article
to require indemnification of our directors to the fullest extent allowed
by law;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. Transaction of such other matters as may properly come before the
Meeting and any adjournments thereof.
YOU MAY VOTE IN FAVOR OF ALL THE ABOVE PROPOSALS WITHOUT CHECKING ANY OF
THE ABOVE BOXES BY MERELY SIGNING, DATING AND RETURNING THIS PROXY. IF
THIS PROXY IS PROPERLY EXECUTED AND ANY OF THE ABOVE BOXES ARE CHECKED,
THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED BY THE SHAREHOLDER.
PLEASE SIGN, DATE AND RETURN THIS PROXY IMMEDIATELY.
Date:_______________2003 No. of Shares:____________
Sign Here:__________________________________________
Signature(s) of Shareholder(s)
Please sign your name exactly as it appears on your
stock certificate. If shares are held jointly, each
holder should sign. Executors, trustees, and
fiduciaries should so indicate when signing.
Exhibit A
RESTATED AND AMENDED ARTICLES OF INCORPORATION
OF
GEORESOURCES, INC.
GeoResources, Inc., a Colorado corporation (hereinafter referred to as
the "Corporation") pursuant to the provisions of the Colorado Business
Corporation Act, hereby certifies to the Secretary of State of Colorado
that:
FIRST: The Corporation desires to restate and amend its Articles of
Incorporation as currently in effect as hereinafter provided.
SECOND: The provisions set forth in these Restated and Amended Articles
of Incorporation supersede the original Articles of Incorporation and all
amendments thereto. These Restated and Amended Articles of Incorporation
correctly set forth the provisions of the Articles of Incorporation, as
amended, of the Corporation.
THIRD: The Articles of Incorporation of the Corporation are hereby
amended and restated by striking in their entirety all previous articles,
and by substituting in lieu thereof the following:
ARTICLE I
Name
The corporate name of the Corporation shall be: GeoResources, Inc.
ARTICLE II
Purpose
The object for which the Corporation is formed and incorporated is for
the purpose of exploring, developing, and marketing natural resources, and
to do everything necessary and incidental to carrying such object.
ARTICLE III
Duration
The Corporation shall have perpetual existence.
ARTICLE IV
Shares
The authorized capital stock of GeoResources, Inc. is Ten Million
(10,000,000) shares of common stock with a par value of one cent ($.01) per
share. All of the shares when issued are fully paid and nonassessable.
Each share when issued is entitled to one vote for all purposes at all
shareholders meetings and each share is equal to each other with respect to
liquidation and dividend rights.
ARTICLE V
Directors
The affairs and management of the Corporation are to be under the
control of a board of directors consisting of not less than three (3)
members nor more than ten (10) members. Directors may be removed at any
time by a majority vote of the outstanding voting stock, and at that time
other directors may be elected.
ARTICLE VI
Principal Office
The principal office of the Corporation is located at 1407 West Dakota
Parkway, Suite 1-B, Williston, North Dakota 58801.
ARTICLE VII
Powers
The Corporation shall have the power to conduct business in the State of
Colorado, any other state of the United States and in foreign countries and
shall have the power to have one or more offices out of the State of
Colorado. It shall also have power to hold, purchase, mortgage, lease,
claim, convey, and to otherwise acquire and dispose of real and personal
property out of the State of Colorado.
ARTICLE VIII
Bylaws
The directors of the Corporation shall have the power to make such
bylaws as they deem proper for the management of the affairs of the
Corporation.
ARTICLE IX
Cumulative Voting
Cumulative voting shall be allowed.
ARTICLE X
Preemptive Rights
No holder of any stock or other security of the Corporation shall have
any preemptive right to subscribe for or purchase his proportionate share
of any stock or other security of the Corporation now or hereafter
authorized or issued or of treasury shares sold or otherwise disposed of by
the Corporation.
ARTICLE XI
Elimination of Personal Liability of a Director
To the fullest extent permitted by Colorado law, as the same exists or
may hereafter be amended, a director of the Corporation shall not be liable
to the Corporation or its shareholders for monetary damages for breach of
fiduciary duty as a director.
ARTICLE XII
Indemnification of Directors
The Corporation shall indemnify and advance expenses to a director of
the Corporation to the fullest extent permitted by Colorado law, as the
same exists or may hereafter be amended.
FOURTH: By unanimous written action of the Board of Directors of the
Corporation, the Board of Directors duly advised the foregoing Restated and
Amended Articles of Incorporation, and by vote of the stockholders of the
Corporation at a duly called meeting, the stockholders duly approved said
Restated and Amended Articles of Incorporation in compliance with the CBCA.
FIFTH: The number of votes cast for the amendments contained in these
Restated and Amended Articles of Incorporation by each voting group
entitled to vote separately on the amendments was sufficient for approval
by that voting group.
The (a) name or names, and (b) mailing address or addresses, of any one
or more of the individuals who cause this document to be delivered for
filing and to which the Secretary of State may deliver notice if filing of
this document is refused, are: David A. Thayer, Esq., Jones & Keller, P.C.,
1625 Broadway, Suite 1600, Denver, CO 80202, (303) 573-1600.