PRINCETON MINING COMPANY
Wallace, Idaho
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR A
SPECIAL MEETING OF SHAREHOLDERS ON FEBRUARY 20, 1997
at 1:00 p.m., PST
Wallace, Idaho
The undersigned appoints H. JAMES MAGNUSON, proxy of the
undersigned, with full power of substitution, to vote all shares of
PRINCETON MINING COMPANY. The undersigned is entitled to vote at
a Special Meeting of Shareholders to be held February 20, 1997,
or at any adjournment thereof, with all powers the undersigned
would have if personally present.
THE SHARES WILL BE VOTED AS DIRECTED ON THE REVERSE SIDE WITH
RESPECT TO OTHER MATTERS OF BUSINESS PROPERLY BEFORE THE MEETING AS
THE PROXIES SHALL DECIDE, IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1, 2, 3, and 4.
1. TO ELECT DIRECTORS:
[ ] FOR all nominees listed below, (except as marked to
the contrary)
H. JAMES MAGNUSON, R. M. MACPHEE, DONALD H. GRISMER, DALE
B. LAVIGNE, and DENNIS O' BRIEN
To withhold authority for any individual nominee, write
that nominee's name on the space provided below:
____________________________________________________
[ ] WITHHOLD AUTHORITY to vote for all nominees listed above
2. TO AMEND THE ARTICLES OF INCORPORATION TO INCREASE THE
AUTHORIZED CAPITAL OF THE COMPANY.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. TO APPROVE AN AMENDMENT TO THE ARTICLES OF INCORPORATION AND
BYLAWS REGARDING LIABILITY AND INDEMNIFICATION OF DIRECTORS
AND OFFICERS.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. In their discretion, the proxies are authorized to vote upon
such other business as properly may come before the meeting.
Sign exactly as your name appears hereon. When signing in a
representative or fiduciary capacity, indicate title. If shares
are held jointly, each holder should sign. For a corporation, the
full corporation name should be signed by a duly authorized officer
who should state his title. For a partnership, an authorized
person should sign in the partnership name.
Date ___________________ , 1997.
____________________________ ___________________________
Signature of Shareholder Signature of Shareholder
____________________________
Please print name
1
PRINCETON MINING COMPANY
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
February 20, 1997
Wallace, Idaho
1/02/96
TO THE STOCKHOLDERS OF PRINCETON MINING COMPANY:
NOTICE IS HEREBY GIVEN that a special meeting of the
stockholders of PRINCETON MINING COMPANY, will be held at the
Silver Room, Wallace Inn, Wallace, Idaho, at 1:00 p.m. on February
20, 1996, for the following purposes:
1. To elect a Board of Directors.
2. To approve an amendment to the Company's Articles of
Incorporation to increase the authorized capital of the
Company.
3. To approve amendments to the Articles of Incorporation and
Bylaws regarding liability of directors and indemnification
of officers and directors.
4. To transact such business as may properly come before the
meeting or any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF THE PROPOSALS.
Stockholders of record at the close of business on
January 2, 1997, as fixed by action of the Board of Directors,
will be entitled to notice of and to vote at a Special Meeting or
any adjournment thereof.
Stockholders are cordially invited to attend the meeting in
person. Those who will not attend and who wish their stock voted
are requested to sign, date, and mail promptly the enclosed proxy
for which a stamped return envelope is provided.
By Order of the Board of Directors,
__________________________________
H. JAMES MAGNUSON, President
Wallace, Idaho
January 2, 1997 /Date of mailing to stockholders
IMPORTANT
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE SPECIAL
MEETING. WHETHER OR NOT YOU PLAN TO ATTEND IN PERSON, YOU ARE URGED
TO DATE AND SIGN THE PROXY ENCLOSED AND RETURN IT PROMPTLY IN THE
ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES. THIS WILL ASSURE YOUR REPRESENTATION IN THE QUORUM
FOR THE TRANSACTION OF BUSINESS AT THE SPECIAL MEETING. YOUR PROXY
WILL BE REVOCABLE, EITHER IN WRITING OR BY VOTING IN PERSON AT THE
SPECIAL MEETING, AT ANY TIME PRIOR TO ITS EXERCISE.
1
PRINCETON MINING COMPANY
Scott Building, 413 Cedar. P.O. Box 469
Wallace, Idaho
PROXY STATEMENT
SPECIAL MEETING OF STOCKHOLDERS
February 20, 1997
INTRODUCTION
This Proxy Statement is furnished in connection with a
solicitation of proxies by the management of PRINCETON MINING
COMPANY, (hereinafter called "Princeton Mining Company", the
"Company", or the "Corporation) for use at the SPECIAL meeting of
stockholders to be held on February 20, 1997, and at any
adjournment thereof, to consider and act on the matters stated in
the Company notice. Each proxy will be voted in accordance with the
specifications thereon. If no specification is made, it will be
voted for the management nominees for the Board of Directors named
herein and in favor of the proposals specified in the proxy. A
stockholder may revoke his proxy by written notice received by
Princeton Mining Company at any time before it is voted. A proxy is
not revoked by the death or incompetency of the maker unless,
before the authority granted thereunder is exercised, written
notice of such death of incompetency is received by the Company
from the executor or administrator of the estate or from a
fiduciary having control of the shares represented by such proxy.
The expense of solicitation of proxies will be borne by the
Company. Solicitation will be made only by mail, except that, if
necessary, regular employees of the Company without additional
compensation therefore, may make solicitation by telephone,
telegram, or personal interview.
At the close of business on January 2, 1997, there were
outstanding 3,000,000 common shares of the Company, which is the
only class of stock outstanding and entitled to vote at the
meeting. Only shareholders of record on January 2, 1997, will
be eligible to vote at the special meeting or any adjournment
thereof. The holders of such shares will be entitled to cast one
vote for each share held of record as of the record date.
Management of the Company beneficially owns [1] 51,692 shares
of stock, representing approximately 1.72% of the issued and
outstanding shares of stock at such date. There are approximately
1,135 shareholders of record.
(1) ELECTION OF DIRECTORS
NOMINEES
Unless contrary instructions are set forth on the proxies,
Management intends to vote all shares represented by proxies for
the election of the five nominees for directors listed below. The
Bylaws of the Company provide that all directors of the Company
serve until the next special meeting or until their successors are
elected and qualified. Should any nominee herein for the office of
director become unable or unwilling to accept nomination or
election, it is intended that the persons acting under the proxy
will vote for the election, in his stead, of such other person as
the management of the Company may recommend. The management of the
Company has no reason to believe that any of the said nominees will
be unable or unwilling to serve if elected to the office.
H. JAMES MAGNUSON:
_________________
Mr. Magnuson, age 42, is the President and a director of the
Company and has continuously served as an officer and director of
the Company since 1984. His primary occupation is an attorney-at-
law, with offices in Coeur d'Alene, Idaho . Mr. Magnuson owns,
beneficially[1] and of record,1,000 shares of the stock of the
Company, representing approximately less than 1% of the issued and
outstanding shares of stock of the Company. During the fiscal year
ended December 31, 1995, Mr. Magnuson received no compensation for
services rendered on behalf of the Company in his capacity as
president and a director.
2
R. M. MACPHEE:
_____________
Mr. MacPhee, age 64, is the Secretary-Treasurer and a director of
the Company and has continuously served in such capacity since
1989. Mr. MacPhee's principal occupation is as a certified public
accountant with offices in Kellogg, Idaho. Mr. MacPhee owns,
beneficially[1] and of record, 500 shares of stock of the Company,
representing approximately less than 1% of the issued and
outstanding shares of stock of the Company. During the fiscal year
ended December 31, 1995, Mr. MacPhee received no compensation for
services rendered on behalf of the Company in his capacity as an
officer or director. Mr. MacPhee serves as a director of
Independence Lead Company and Western Silver-Lead Corporation.
DONALD H. GRISMER:
_________________
Mr. Grismer, age 64, is a director of the Company and has
continuously served in such capacity since 1960. Mr. Grismer is a
retired miner. Mr. Grismer owns, beneficially[1] and of record,
50,000 shares of stock of the Company, representing approximately
1.67% of the issued and outstanding shares of stock of the Company.
During the fiscal year ended December 31, 1995, Mr. Grismer
received no compensation for services rendered on behalf of the
Company in his capacity as an officer or director.
DALE B. LAVIGNE:
_______________
Mr. Lavigne, age 65, is a director of the Company and has
continuously served in such capacity since 1989. Mr. Lavigne's
principal occupation is serving as President of Osburn Drug
Company, Osburn, Idaho. Mr. Lavigne owns, beneficially[1] and of
record, -0- shares of stock of the Company. During the fiscal year
ended December 31, 1995, Mr. Lavigne received no compensation for
services rendered on behalf of the Company in his capacity as an
officer or director. Mr. Lavigne serves as a director of Western
Silver-Lead Company.
DENNIS O'BRIEN:
______________
Mr. O'Brien, age 35, is a director of the Company and has
continuously served in such capacity since September 10, 1996. Mr.
O'Brien's principal occupation is a certified public accountant
with offices in Wallace, Idaho. Mr. O'Brien owns, beneficially[1]
and of record, -0- shares of stock of the Company. During the
fiscal year ended December 31, 1995, Mr. O'Brien received no
compensation for services rendered on behalf of the Company in his
capacity as an officer or director.
______________________________
[1] Under Rule 13d-3, issued by the Securities and Exchange
Commission, a person is, in general, deemed to "Beneficially own"
any shares if such persons directly or indirectly, through any
contract, arrangement, understanding, relationship or otherwise,
has or shares (a) voting power, which includes the power to vote or
to direct the voting of those shares and/or (b) investment power,
which includes the power to dispose, or to direct the disposition
of those securities. The foregoing information gives effect to
shares deemed beneficially owned under Rule 13d-3 based on the
information supplied to the Company.
MANAGEMENT RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
NOMINEES TO THE BOARD OF DIRECTORS OF THE COMPANY.
(2) AUTHORIZATION FOR AN INCREASE IN THE AUTHORIZED CAPITAL
The Company is considering future issuances of debt and/or
equity securities (which may include shares of common stock or
securities convertible into or exercisable for shares of common
stock) in order to make a public or private offering of stock,
increase the Company's available cash, to retire debt and to
improve the Company's financial condition. Such securities would be
sold or issued by the Company upon such terms and conditions as the
Board of Directors may subsequently determine.
The Board of Directors of the Company has adopted an
amendment to the Articles of Incorporation whereby, if approved by
the shareholders, the unauthorized capital stock of the Company
would be changed from 3,000,000 shares of stock, par value $0.10
per share, to 30,000,000 shares of stock of which 29,000,000 shares
of common stock, par value $0.10 per share, and 1,000,000 shares
of preferred stock, par value $0.10 per share. The Company's stock
would also become nonassessable.
3
In the considered unanimous opinion of the Board of Directors,
the proposed plan will place the Company in a more favorable
position to attract and properly structure the terms of additional
financing, if needed. The common stock to be authorized under the
plan will possess the rights and characteristics as stipulated by
the Board of Directors, subject to the rights, limitations or
preferences (including by way of illustration, dividend, voting or
liquidation preferences, dividend rates, or the establishment of
sinking funds for the payment of dividends) that may be attendant
to any shares of preferred stock issued with the approval of the
Board of Directors. The Board of Directors currently has no plans
to issue any shares of preferred stock, but may from time to time
in the future enter negotiations with private and institutional
investors, or others with respect to additional financing, the
terms of which, in all likelihood, may involve the issuance of
shares of preferred stock having such rights, preferences and
limitations as the Board of Directors may approve.
If approved by the stockholders, such additional authorized
shares would be available for issuance at the discretion of the
Board of Directors without further stockholder approval (subject to
applicable Federal and State Securities Laws and State Corporate
law) to take advantage of future opportunities for equity financing
to improve the Company's capital structure, and for other corporate
purposes, without the delay and expense incident to the holding of
a special meeting of stockholders to consider the specific
issuances.
Upon the filing of articles of amendment to the articles of
incorporation of the Company reflecting the change in authorized
capital (from 3,000,000 shares of stock, par value $0.10 per share,
to 30,000,000 shares of stock, of which 29,000,000 shares of
common stock, par value $0.10 per share, and 1,000,000 shares of
preferred stock, par value $0.10 per share),there will still be
3,000,000 shares of $0.10 par value stock and without the
necessity of making any exchange of certificates. Expenses incurred
in carrying out the plan will be borne and paid for by the Company.
The Board of Directors also proposes to eliminate any
preemptive rights of Shareholders. Under Idaho Law, the
Shareholders of a corporation have a preemptive right to acquire
proportional amounts of the Company's unissued shares upon the
decision of the Board of Directors to issue them. There are certain
exceptions to preemptive rights (Section 30-1-26). The proposed
amendments, which have been recommended by the Board of Directors,
may thus operate to the disadvantage of minority shareholders with
respect to any future issuances of stock, in that Shareholders can
be excluded from all rights of participation in such issuance.
PROPOSED TEXT OF AMENDMENT TO ARTICLES OF INCORPORATION
It is proposed that Article 5 of the Articles of Incorporation be
amended regarding capitalization as follows:
ARTICLE V
Section 1: Aggregate Number of Shares
The total number of shares which the Corporation shall have
authority to issue is 30,000,000 of which (a) 1,000,000 shares
shall be Preferred Stock of par value $0.10 per share, (b)
29,000,000 shares shall be Common Stock of the par value of
$0.10 per share.
Section 2: Rights of Preferred Stock
The Preferred Stock may be issued from time to time in one or
more series and with such designation for each such series as
shall be stated and expressed in the resolution or resolutions
providing for the issue of each such series adopted by the
Board of Directors. The Board of Directors in any such
resolution or resolutions is expressly authorized to state and
express for each such series:
(i) The voting powers, if any, of the holders of stock of
such series;
(ii) The rate per annum and the times at and conditions
upon which the holders of stock of such series shall
be entitled to receive dividends, and whether such
dividends shall be cumulative or noncumulative and if
cumulative the terms upon which such dividends shall
be cumulative;
4
(iii) The price or prices and the time or times at and the
manner in which the stock of such series shall be
redeemable and the terms and amount of any sinking
fund provided for the purchase or redemption of
shares.
(iv) The rights to which the holders of the shares of stock
of such series shall be entitled upon any voluntary or
involuntary liquidation, dissolution or winding up of
the Corporation;
(v) The terms, if any, upon which shares of stock of such
series shall be convertible into, or exchangeable for,
shares of stock of any other class or classes or of
any other series of the same or any other class or
classes, including the price or prices or the rate or
rates of conversion or exchange and the terms of
adjustment, if any; and
(vi) Any other designations, preferences, and relative
participating, optimal or other special rights, and
qualifications, limitations or restrictions thereof so
far as they are not inconsistent with the provisions
of the Articles of Incorporation, as amended, and to
the full extent now or hereafter permitted by the laws
of Idaho.
Section 3: Rights of Common Stock
The Common Stock may be issued from time to time in one or
more Classes and with such designation for each such Classes
as shall be stated and expressed in the resolution or
resolutions providing for the issue of each such Classes
adopted by the Board of Directors. The Board of Directors in
any such resolution or resolutions is expressly authorized to
state and express for each such Class:
(i) The voting powers, if any, of the holders of stock of
such Class;
(ii) The rate per annum and the times at and conditions
upon which the holders of stock of such Class shall be
entitled to receive dividends, and whether such
dividends shall be cumulative or noncumulative and if
cumulative the terms upon which such dividends shall
be cumulative;
(iii) The terms, if any, upon which shares of stock of such
series shall be convertible into, or exchangeable for,
shares of stock of any other class or classes or of
any other series of the same or any other class or
classes, including the price or prices or the rate or
rates of conversion or exchange and the terms of
adjustment, if any; and
(iv) Any other designations, preferences,and relative
participating, optimal or other special rights, and
qualifications, limitations or restrictions thereof so
far as they are not inconsistent with the provisions
of the Articles of Incorporation, as amended, and to
the full extent now or hereafter permitted by the laws
of Idaho.
Section 4: Payment for Stock
Capital stock shall be paid in at such times and upon such
conditions as the Board of Directors may by resolution direct,
either in cash or by services rendered to the Corporation or
by real or personal property transferred to it. Capital stock
issued in exchange for services or property pursuant to
resolution by the Board of Directors, shall thereupon become
and shall be fully paid as if paid for in cash and shall be
nonassessable, and the determination of the Board of Directors
as to the value of any property or services received by the
Corporation in exchange for stock shall be conclusive.
Section 5: Preemptive Rights
The owners of shares of stock of the 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.
NOTICE OF DISSENTERS' RIGHTS
Under Section 30-1-80 of the Idaho Code (the "Idaho Statute"),
shareholders of Princeton Mining Company are entitled to assert
dissenters' rights in connection with the merger and obtain payment
in cash for their shares. Sections 30-1-80 and 30-1-81 of the
Idaho Statute are reprinted in their entirety as Appendix "A" to
this Proxy Statement. Appendix "A" should be reviewed
5
carefully by shareholders who wish to assert their dissenters'
rights, or who wish to preserve the right to do so, since failure
to comply with the procedures set forth below will result in the
loss of such dissenters' rights. Because of the complexity of the
Idaho Statute, it is recommended that any shareholder considering
asserting his or her dissenters' rights consult with his or her
legal advisor.
Shareholders who wish to dissent and demand payment for their
shares must refrain from voting their shares in favor of the
proposed amendment.
A shareholder's failure to vote against this proposal will not
constitute a waiver of appraisal or similar rights, and a vote
against the proposal will be deemed to satisfy notice requirements
pursuant to Idaho law. A further notice of Dissenter's Rights and
form for Demand of Payment will be sent to all Shareholders who
refrained from voting in favor of the proposed sale.
A copy of Idaho Code Sections 30-1-80 and 30-1-81 is annexed to
this Proxy Statement as Appendix A.
DISSENTING SHAREHOLDERS ARE ENTITLED TO CERTAIN RIGHTS UNDER IDAHO
LAW. ANY SHAREHOLDER WHO WISHES TO DISSENT MUST REFRAIN FROM VOTING
HIS SHARES IN FAVOR OF THE PROPOSAL TO APPROVE THE AMENDMENT. A
SHAREHOLDER WHO VOTES IN FAVOR OF APPROVAL OF THE AMENDMENT WILL
HAVE NO RIGHT TO DISSENT UNDER SECTION 30-1-80 OF THE IDAHO CODE.
BOARD OF DIRECTORS RECOMMENDATION
The Board of Directors recommends adoption of all of the
proposed amendments. Adoption of the amendments requires the
affirmative vote of the majority of the outstanding voting stock of
the Company, voting as a single class.
(3) AMENDMENTS TO THE ARTICLES OF INCORPORATION AND BYLAWS
REGARDING LIABILITY AND INDEMNIFICATION OF DIRECTORS
BACKGROUND
Directors of companies may be personally liable for actions
taken or not taken as directors, as well as for the legal costs of
defending their conduct. As a result of legislation adopted by the
Idaho legislature, the Idaho Business Corporation Act (Section 30-1-
54(2)) (the "Act") now permits corporations to limit or eliminate
personal liability of directors for monetary damages for conduct as
a director under certain circumstances.
This legislation is a response to the increasing number of
lawsuits against directors and to the inability of many companies
to obtain, or to obtain only at prohibitive rates, insurance to
protect their directors against liability that may result from the
performance of their duties as directors. The Idaho legislature
believed these developments threatened the quality and stability of
corporate governance in Idaho. Many directors have become unwilling
to serve without insurance protection, and those who do serve may
be inhibited, by the unavailability of insurance, from making
business decisions that may be in the best interest of the
corporation.
The Idaho Act provides that a corporation and its stockholders
may amend the corporation's Articles of Incorporation to limit
directors' liability and thereby provide additional protection to
directors. The Board of Directors adopted the amendment being
proposed to the stockholders (the "Certificate Amendment"), in an
effort to limit the directors' liability to the extent permitted by
the Idaho Act. The Certificate Amendment is also drafted so that
any subsequent statutory amendments that further limit the
liability of directors inure to the benefit of the directors,
without a stockholder vote; likewise any subsequent narrowing of
the statute will have the effect of limiting or narrowing the
indemnification available to the directors, also without a
stockholder vote.
REASONS FOR THE AMENDMENT TO THE ARTICLES OF INCORPORATION
The Company believes that the Amendments are in the best interests
of the Stockholders as well as the Company and that by adopting the
Amendments it will be better able to attract and retain qualified
individuals to serve as directors. The Company also believes
adoption of the Amendments will allow directors to perform their
duties in good faith without concern about monetary
6
liability if a court later determines their conduct in hindsight
to be grossly negligent. On the other hand, the potential remedies
available to a Company stockholder would be limited by the Amendment
and it is possible, although unlikely, that directors may not
demonstrate the same level of diligence or care if they are protected
by the existence of this provision.
Although the Company has not directly experienced the problem of
attracting and retaining qualified directors, the Board of
Directors believes that the Company should take every possible step
to ensure that the Company will continue to be able to attract
individuals who are the best possible candidates to serve as
directors.
EFFECTS OF THE AMENDMENT TO ARTICLES OF INCORPORATION
The Amendment to the Articles of Incorporation eliminates director
liability for monetary damages to stockholders for conduct as a
director. However, a director remains liable generally for: (i)
intentional misconduct by a director or a knowing violation of law
by a director, (ii) for conduct violating Idaho Code Section 30-1-48,
(iii) for any transaction from which the director derived an
improper personal benefit, or (iv) breach of duty of loyalty.
The Amendment further provides that any repeal or modification of
the Certificate Amendment by the stockholders of the Company shall
not adversely affect any right or protection of a director existing
at the time of the repeal or modification.
The Amendment does not eliminate the duty of care; it only
eliminates monetary damage awards for directors' decisions,
including negligent, grossly negligent and reckless decisions, that
constitute a breach of that duty, including such decisions made in
connection with a merger or other business combination involving
the Company. Equitable remedies such as injunctive relief or
rescission remain available, although in certain instances these
remedies may not be available as a practical matter. The provision
only has a prospective effect and would not eliminate the liability
of a director for any acts occurring prior to November _____, 1996,
the proposed date of enactment of the Amendment. It also pertains
only to claims against a director arising out of his role as a
director and would not apply, if he is also an officer, to his role
as an officer or in any capacity other than that of a director of
to his responsibilities under any other law, such as the federal
securities laws.
PROPOSED AMENDMENT TO ARTICLES OF INCORPORATION
It is proposed that new Article X be added to the Articles of
Incorporation regarding liability of directors as follows:
X
To the fullest extent permitted by the Idaho Business
Corporation Act, as it now exists or may hereafter be amended,
a Director of the corporation shall not be liable to the
Corporation or its stockholders for monetary damages for
conduct as a director, except to the extent that such
exemption from liability or limitation thereof is not
permitted under the Idaho Business Corporation Act as the same
exists or may hereafter by amended. Any repeal or modification
of this paragraph by the stockholders of the Corporation shall
be prospective only and shall not adversely affect any
limitation on the personal liability of a director of the
Corporation existing at the time of such repeal or
modification.
PROPOSED AMENDMENT TO BYLAWS
The Board of Directors has proposed an amendment to the Company's
bylaws which, if approved, would allow the Company, under certain
circumstances, to indemnify directors and the Company's officers
against liabilities for acts undertaken in such capacities, as well
as any trustee, officer, employee or agent acting on behalf of the
Company in certain circumstances. In the considered opinion of the
Board of Directors, the proposed amendment is necessary to retain
qualified personnel to operate and manage the Company properly. In
recent years, investigations, claims, actions, suits or proceedings
(including derivative actions) seeking to impose liability on, or
involving as directors, officers, and employees of companies have
become increasingly common. Such proceedings are typically
extremely expensive, whatever their eventual outcome. The proposed
amendment to the Company's Bylaws will provide indemnification to
directors, officers as well as other employees and individuals
against expenses (including attorney's fees) judgments, fines, and
amounts paid in settlement in connection with specified actions,
suits, or proceedings, whether civil, criminal, administrative, or
investigative), if they acted in good faith and a manner they
reasonably believed to be in or not opposed to the best interests
of the corporation, and with respect to any criminal action or
proceeding, had no reasonable cause
7
to believe their conduct was unlawful. The indemnification is not
exclusive of other indemnification that may be granted by the Articles
of Incorporation, By-Laws, agreement, insurance, or otherwise.
Specifically, the Board of Directors proposes to add a new Article
V to the Company's bylaws, reading in its entirety as follows:
ARTICLE V
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Each Director or officer now or hereafter serving the
Corporation, and each person who at the request of or on
behalf of the Corporation is now serving or hereafter serves
as a Director or officer of any other corporation and the
respective heirs, executors, and administrators of each of
them shall be indemnified by the Corporation to the fullest
extent provided by law against all costs, expenses, judgments,
and liabilities, including attorneys' fees, reasonably
incurred by or imposed upon him in connection with or
resulting from any claim, action, suit, or proceeding, civil,
criminal, administrative, or investigative, in which he/she is
or may be made a party by reason of his/her being or having
been such Director or officer by reason of any action alleged
to have been taken or omitted by him/her as such Director or
officer, whether or not he/she is a Director or officer at the
time of incurring such costs, expenses, judgments, and
liabilities, provided that he acted in good faith and in a
manner he/she reasonably believed to be in or not opposed to
the best interests of the Corporation. The termination of any
action, suit, or proceeding by judgment, order, settlement, or
conviction or upon a plea of nolo contendere or its equivalent
shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the
Corporation. The foregoing right of indemnification shall not
be exclusive of other rights to which such Director or officer
may be entitled as a matter of law. The Board of Directors
may obtain insurance on behalf of any person who is or was a
director, officer, employee, or agent against any liability
arising out of his/her status and such, whether or not the
Corporation would have power to indemnify him/her against such
liability. Any amendment to or repeal of this Article shall
not adversely affect any right or protection of a director or
officer of this Corporation for or with respect to any acts or
omissions of such director or officer occurring prior to such
amendment or repeal.
Section 1. Third Party Actions
The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened,
pending, or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than
an action by or in the right of the Corporation) by reason of
the fact that such person is or was a director, trustee,
officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director,
trustee, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by
such person in connection with such action, suit or proceeding
if such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best
interests of the Corporation, and with respect to any criminal
action or proceeding by judgment, order, settlement,
conviction, or under a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which
such person reasonably believed to be in or not, of itself,
create a presumption that the person did not act in good faith
and in a manner which such person reasonably believed to in or
not opposed to the best interests of the Corporation, and with
respect to any criminal action proceeding, had reasonable
cause to believe that such person's conduct was unlawful.
Section 2. Derivative Actions
The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the
Corporation to procure a judgment in the Corporation's favor
by reason of the fact that such person is or was a director,
trustee, officer, employee or agent of the Corporation, or is
or was serving at the request of the Corporation as a
director, trustee, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorney's fees) and
amount paid in settlement actually and reasonably incurred by
such person in connection with the or settlement of such
action or suit if reasonably believed to be in or not opposed
to the best interests of the Corporation, and, with respect to
amounts paid in
8
settlement, the settlement of the suit or actions was in the best
interests of the Corporation; provided, however, that no
indemnification shall be made in respect to any claim, issue or
matter as to which such person shall have been adjusted to be
liable for gross negligence or willful misconduct in the
performance of such person's duty to the Corporation unless and
only to the extent that, the court in which such action or suit
was brought shall determine upon application that, despite the
adjudication of such liability, but in view of all the
circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses as such court shall deem
proper. The termination of any action or suit by judgment or
settlement shall not, of itself, create a presumption that the
person did not act in good faith and in a manner which such person
reasonably believed to be in or not opposed to the best interests
of the Corporation.
Section 3. Successful Defense
To the extent that a director, trustee, officer, employee or
agent of the Corporation has been successful on the merits or
otherwise, in whole or in part in defense of any action, suit
or proceeding referred to in Sections 1 and 2 of this Article
V, or in defense of any claim, issue or matter therein, such
person shall be indemnified against expenses (including
attorneys' fees and costs) actually and reasonably incurred by
such person in connection therewith.
Section 4. Authorization
Any indemnification under Sections 1 and 2 of this Article V
(unless ordered by a Court) shall be made by the Corporation
only as authorized in the specific case upon a determination
that indemnification of the director, trustee, officer,
employee or agent is proper in the circumstances because such
person has met the applicable standard of conduct set forth
above in Sections 1 and 2 of this Article V. Such
determination shall be made (a) by the Board of Directors of
the Corporation by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or
proceeding, or (b) if such quorum is not obtainable, by a
majority vote of the directors who were not parties to such
action, suit or proceeding, or (c) by independent legal
counsel (selected by one or more of the directors, whether or
not a quorum and whether of not disinterested) in a written
opinion, or (d) by the Shareholders. Anyone making such
determination under this Section 4 may determine that a person
has met the standard therein set forth as to some claims,
issues or matters but not as to others, and may reasonably
prorate amounts to be paid as indemnification.
Section 5. Advances
Expenses incurred in defending a civil action, criminal
action, investigative, or administrative, specified action,
suits or proceedings shall be paid by the Corporation, at any
time or from time to time in advance of the final disposition
or such action, suit or proceeding as authorized in the manner
provided in Section 4 of this Article V upon receipt of an
undertaking by or on behalf of the director, trustee, officer,
employee or agent to repay such amount unless it shall
ultimately be determined that such person is entitled to be
indemnified by the Corporation in this Article V. Such
undertaking to advance expenses and litigation costs can be
made without making any determination of the director,
trustee, officer, employee or agent's good faith or reasonable
beliefs with regard to the lawfulness of his or her activity.
Section 6. Non-Exclusivity
The indemnification provided in this Article V shall not be
deemed exclusive of any other rights to which those
indemnified may be entitled under any law, bylaw, agreement,
vote of shareholders or disinterested directors or otherwise,
both as to action in such person's official capacity and as to
action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director,
trustee, officer, employee or agent and shall inure to the
benefit of the heirs, executors, and administrators of such a
person.
9
Section 7. Insurance
The Corporation shall have the power to purchase and maintain
insurance on behalf of any person who is or was a director,
trustee, officer, employee or agent of the Corporation, or is
or was serving at the request of the corporation, partnership,
joint venture, trust or other enterprise, against any
liability asserted against such person and incurred by such
person in any such capacity or arising out of such person's
status as such, whether or not the Corporation would have the
power to indemnify such person against such liability.
Section 8. "Corporation" Defined
For purposes of this Article V, references to the
"Corporation" shall include, in addition to the Corporation,
any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if
its separate existence had continued, would have had power and
authority to indemnify its directors, trustees, officers,
employees or agents, so that any person who is or was a
director, trustee, officer, employee or agent of such
constituent corporation or of any entity a majority of the
voting stock of which is owned by such constituent corporation
or is or was serving at the request of such constituent
corporation as director, trustee, officer, employee or agent
of the corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under the
provisions of this Article V with respect to the resulting or
surviving corporation as such person would have with respect
to such constituent corporation if its separate existence had
continued.
INASMUCH AS THE BOARD OF DIRECTORS MAY BENEFIT FROM ADOPTION OF THE
AMENDMENTS TO THE ARTICLES OF INCORPORATION AND TO THE BYLAWS, AN
INHERENT CONFLICT OF INTEREST MAY EXIST IN THEIR RECOMMENDATION TO
VOTE FOR THE AMENDMENTS. THE BOARD OF DIRECTORS BELIEVE THAT THE
DILIGENCE EXERCISED BY DIRECTORS STEMS PRIMARILY FROM THEIR DESIRE
TO ACT IN THE BEST INTERESTS OF THE COMPANY AND NOT FROM A FEAR OF
MONETARY DAMAGE AWARDS. Consequently, the Board of Directors
believes that the level of scrutiny and care exercised by directors
will not be lessened by the adoption of the Certificate Amendment
or the Amendments to the Bylaws providing for indemnification of
officers and directors.
VOTE REQUIRED
The Amendment to the Articles of Incorporation requires the
affirmative vote of the majority of the Common Shares entitled to
vote at the meeting is required for approval of the above-described
amendment to the Amended Articles of Incorporation as set forth in
this proposal, voting as a single class. The Board of Directors
recommends a vote FOR approval of this proposal.
THE BOARD OF DIRECTORS RECOMMEND A VOTE FOR APPROVAL OF THE
AMENDMENTS TO THE ARTICLES OF INCORPORATION AND BYLAWS.
(4) TO TRANSACT SUCH BUSINESS AS MAY PROPERLY COME BEFORE THE
SPECIAL MEETING OR ANY ADJOURNMENT THEREOF.
At the date of this proxy statement, the Board of Directors
know of no other matters which will be presented for consideration
at the Special Meeting. However, if any such other matters are
properly presented for action at the Special Meeting; it is the
intention of the persons named in the accompanying form of proxy to
vote the shares represented by the proxy in accordance with their
judgment on such matters, and discretionary authority to do so is
granted in the Proxy.
A COPY OF THE CORPORATION'S FORM 10-K REPORT FOR FISCAL YEAR 1995
CONTAINING INFORMATION ON OPERATIONS, WHICH WILL BE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, WILL BE AVAILABLE UPON REQUEST.
PLEASE WRITE TO:
R. M. MacPhee
PRINCETON MINING, INC.
P.O. Box 469
Scott Building
Wallace, Idaho
BY ORDER OF THE BOARD OF DIRECTORS.
/s/ H. James Magnuson
________________________________
H. JAMES MAGNUSON, President
10
APPENDIX "A"
Idaho Code Section 30-1-80. Right of shareholders to dissent and
obtain payment for shares.
(a) Any shareholder of a corporation shall have the right to
dissent from and to obtain payment for his shares in the
event of any of the following corporate actions:
(1) Any plan of merger or consolidation to which the
corporation is a party, except as provided in
subsection (c) of this section;
(2) Any sale, lease, exchange, or other disposition of all
or substantially all of the property and assets of the
corporation not made in the usual or regular course of
its business, including a sale in dissolution, but not
including a sale pursuant to an order of a court
having jurisdiction in the premises or a sale for cash
on terms requiring that all or substantially all of
the net proceeds of sale be distributed to the
shareholders in accordance with their respective
interests within one (1) year after the date of sale;
(3) Any plan of exchange to which the corporation is a
party, as the corporation the shares of which are to
be acquired;
(4) Any amendment of the articles of incorporation which
materially and adversely affects the rights
appurtenant to the shares of the dissenting
shareholder in that it: (i) Alters or abolishes a
preferential right of such shares; (ii) Creates,
alters or abolishes a right in respect of the
redemption of such shares, including a provision
respecting a sinking fund for the redemption or
repurchase of such shares; (iii) Alters or abolishes
a preemptive right of the holder of such shares to
acquire shares or other securities; (iv) Excludes or
limits the right of the holder of such shares to vote
on any matter, or to cumulate his votes, except as
such right may be limited by dilution through the
issuance of shares or other securities with similar
voting rights; or
(5) Any other corporate action taken pursuant to a
shareholder vote with respect to which the articles of
incorporation, the bylaws, or a resolution of the
board of directors directs that dissenting
shareholders shall have a right to obtain payment of
their shares.
(b) (1) A record holder of shares may assert dissenter's
rights as to less than all of the shares registered in
his name only if he dissents with respect to all the
shares beneficially owned by any one (1) person, and
discloses the name and address of the persons on whose
behalf he dissents. In that event, his rights shall
be determined as if the shares as to which he has
dissented and his other shares were registered in the
names of different shareholders.
(2) A beneficial owner of shares who is not the record
holder may assert dissenter's rights with respect to
shares held on his behalf, and shall be treated as a
dissenting shareholder under the terms of this section
and section 30-1-31, Idaho Code, if he submits to the
corporation at the time of or before the assertion of
these rights a written consent of the record holder.
(c) The right to obtain payment under this section shall not
apply to the shareholders of the surviving corporation in a
merger if a vote of the shareholders of such corporation is
not necessary to authorize such merger.
(d) A shareholder of a corporation who has a right under this
section to obtain payment for his shares shall have no right
at law or in equity to attack the validity of the corporate
action that gives rise to his right to obtain payment, nor
to have the action set aside or rescinded, except when the
corporate action is unlawful or fraudulent with regard to
the complaining shareholder or to the corporation.
Section 30-1-81. Procedures for protection of dissenters' rights.
(a) As used in this section:
12
(1) "Dissenter" means a shareholder or beneficial owner
who is entitled to and does assert dissenters' rights
under section 30-1-80, Idaho Code, and who has
performed every act required up to the time involved
for the assertion of such rights.
(2) "Corporation" means the issuer of the shares held by
the dissenter before the corporate action or the
successor by merger or consolidation of that issuer.
(3) "Fair value" of shares means their value immediately
before the effectuation of the corporate action to
which the dissenter objects, excluding any
appreciation of depreciation in anticipation of such
corporate action unless such exclusion would be
inequitable.
(4) "Interest" means interest from the effective date of
the corporate action until the date of payment at the
average rate currently paid by the corporation on its
principal bank loans, or, if none, at such rate as is
fair and equitable under all the circumstances.
(b) If a proposed corporate action which would give rise to
dissenters' rights under subsection (a) of section 30-1-80,
Idaho Code, is submitted to a vote at a meeting of
shareholders, the notice of meeting shall notify all
shareholders that they have or may have a right to dissent
and obtain payment for their shares by complying with the
terms of this section, and shall be accompanied by a copy of
sections 30-1-80 and 30-1-81, Idaho Code.
(c) If the proposed corporate action is submitted to a vote at
a meeting of shareholders, any shareholder who wishes to
dissent and obtain payment for his shares shall refrain from
voting his shares in approval of such action. A shareholder
who votes in favor of such action shall acquire no right to
payment for his shares under this section or section
30-1-80, Idaho Code.
(d) If the proposed corporate action is approved by the required
vote at a meeting of shareholders, the corporation shall
mail a further notice to all shareholders who refrained from
voting in favor of the proposed action. If the proposed
corporate action is to be taken without a vote of
shareholders, the corporation shall send to all shareholders
who are entitled to dissent and demand payment for their
shares a notice of the adoption of the plan of corporate
action. The notice shall:
(1) State where and when a demand for payment must be
sent and certificates of certificated shares must be
deposited in order to obtain payment;
(2) Inform holders of uncertificated shares to what
extent transfer of shares will be restricted from the
time that demand for payment is received;
(3) Supply a form for demanding payment which includes a
request for certification of the date on which the
shareholder, or the person on whose behalf the
shareholder dissents, acquired beneficial ownership
of the shares; and
(4) Be accompanied by a copy of section 30-1-80 and
30-1-81, Idaho Code. The time set for the demand and
deposit shall be not less than (30) days from the
mailing of the notice.
(e) A shareholder who fails to demand payment, or fails (in the
case of certificated shares) to deposit certificates, as
required by a notice pursuant to subsection (d) of this
section shall have no right under this section or section
30-1-80, Idaho Code, to receive payment of his shares. If
the shares are not represented by certificates, the
corporation my restrict their transfer from the time of
receipt of demand for payment until effectuation of the
proposed corporate action, or the release of restrictions
under the terms of subsection (f) of this section. The
dissenter shall retain all other rights of a shareholder
until these rights are modified by effectuation of the
proposed corporate action.
(f) (1) Within sixty (60) days after the date set for
demanding payment and depositing certificates, if
the corporation has not effectuated the proposed
corporate action and remitted payment for shares
pursuant to paragraph (3) of this subsection, it
shall return any certificates that have been
deposited, and release uncertificated shares from
any transfer restrictions imposed by reason of the
demand for payment.
13
(2) When uncertificated shares have been released from
transfer restrictions, and deposited certificates
have been returned, the corporation may at any later
time send a new notice conforming to the
requirements of subsection (d) of this section, with
like effect.
(3) Immediately upon effectuation of the proposed
corporate action, or upon receipt of demand for
payment if the corporate action has already been
effectuated, the corporation shall remit to
dissenters who have made demand and (if their shares
are certificated) have deposited their certificates,
the amount which the corporation estimates to be the
fair value of the shares, with interest if any has
accrued. The remittance shall be accompanied by:
(i) The corporation's closing balance sheet and
statement of income for a fiscal year ending not
more than sixteen (16) months before the date of
remittance, together with the latest available
interim financial statements; (ii) A statement of
the corporation's estimate of fair value of the
shares; and (iii) A notice of the dissenter's right
to demand supplemental payment.
(g) (1) If the corporation fails to remit as required by
subsection (f) hereof, or if the dissenter believes
that the amount remitted is less than the fair value
of his shares, or that the interest is not correctly
determined, he may send the corporation his own
estimate of the value of the shares or of the
interest and demand payment of the deficiency.
(2) If the dissenter does not file such an estimate
within thirty (3) days after the corporation's
mailing of its remittance, he shall be entitled to
no more than the amount remitted.
(h) (1) Within sixty (60) days after receiving a demand for
payment pursuant to subsection (g) hereof, if any
such demands for payment remain unsettled, the
corporation shall file in an appropriate court a
petition requesting that the fair value of the
shares and interest thereon be determined by the
court.
(2) An appropriate court shall be the district court in
the county of this state where the registered office
of the corporation is located. If, in the case of
a merger or consolidation or exchange of shares,
the corporation is a foreign corporation without a
registered office in this state, the petition shall
be filed in the county where the registered office
of the foreign corporation was last located. If
there is no known registered office, the petition
may be filed in Ada County, Idaho.
(3) All dissenters, wherever residing, whose demands
have not been settled shall be made parties to the
proceeding as in an action against their shares. A
copy of the petition shall be served on each such
dissenter. If a dissenter is a nonresident, the
copy may be served on him by registered or certified
mail or by publication as provided by law.
(4) The jurisdiction of the court shall be plenary and
exclusive. The court may appoint one (1) or more
persons as appraisers to receive evidence and
recommend a decision on the question of fair value.
The appraisers shall have such power and authority
as shall be specified in the order of their
appointment or in any amendment thereof. The
dissenters shall be entitled to discovery in the
same manner as parties in other civil suits.
(5) All dissenters who are made parties shall be
entitled to judgment for the amount by which the
fair value of their shares is found to exceed the
amount previously remitted, with interest.
(6) If the corporation fails to file a petition as
provided in paragraph (1) of this subsection (h),
each dissenter who made a demand and who has not
already settled his claim against the corporation
shall be paid by the corporation the amount demanded
by him, with interest, and may sue therefor in an
appropriate court.
14
(i) (1) The costs and expenses of any proceeding under
subsection (h) of this section, including the
reasonable compensation and expenses of appraisers
appointed by the court, shall be determined by the
court and assessed against the corporation, except
that any part of the costs and expenses may be
apportioned and assessed as the court may deem
equitable against all or some of the dissenters who
are parties and whose action in demanding
supplemental payment the court finds to be
arbitrary, vexatious, or not in good faith.
(2) Fees and expenses of counsel and of experts for the
respective parties may be assessed as the court may
deem equitable against the corporation and in favor
of any or all dissenters if the corporation failed to
comply substantially with the requirements of this
section, and may be assessed against either the
corporation or a dissenter, in favor of any other
party, if the court finds that the party against whom
the fees and expenses are assessed acted arbitrarily,
vexatiously, or not in good faith in respect to the
rights provided by this section and section 30-1-80,
Idaho Code.
(3) If the court finds that the services of counsel for
any dissenter were of substantial benefit to other
dissenters similarly situated and should not be
assessed against the corporation, it may award to
counsel reasonable fees to be paid out of the amounts
awarded to the dissenters who were benefited.
(j) (1) Notwithstanding the foregoing provisions of this
section, the corporation may elect to withhold the
remittance required by subsection (f) of this section
from any dissenter with respect to shares of which
the dissenter (or the person on whose behalf the
dissenter acts) was not the beneficial owner on the
date of the first announcement to news media or to
shareholders of the terms of the proposed corporate
action. With respect to such shares, the
corporation shall, upon effectuating the corporate
action, state to each dissenter, its estimate of the
fair value of the shares, state the rate of interest
to be used (explaining the basis thereof), and offer
to pay the resulting amounts on receiving the
dissenter's agreement to accept them in full
satisfaction.
(2) If the dissenter believes that the amount offered is
less than the fair value of the shares and interest
determined according to this section, he may within
thirty (30) days after the date of mailing of the
corporation's offer, mail the corporation his own
estimate of fair value and interest, and demand their
payment. If the dissenter fails to do so, he shall
be entitled to no more than the corporation's offer.
(3) If the dissenter makes a demand as provided in
paragraph (2) of this subsection (j), the provisions
of subsections (h) and (i) of this section apply to
further proceedings on the dissenter's demand.
14