SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
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Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
TREND MINING COMPANY
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
[ ]
(Name of Person Filing Proxy Statement)
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Rule 14a-6(i)(3).
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to whom transaction applies:
(2) Aggregate number of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11:*
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|_| Fee paid previously with preliminary materials.
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Trend Mining Company
401 Front Avenue, Suite 1, Second Floor
Coeur d'Alene, Idaho 83814
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 23, 2001
To Our Shareholders:
Please join us for the 2001 annual meeting of shareholders of Trend
Mining Company, a Montana corporation. The meeting will be held on Friday,
February 23, 2001, at 9:30 a.m. (Pacific standard time) at the Coeur d'Alene Inn
and Conference Center, 414 W. Appleway, Coeur d'Alene, Idaho 83814.
The purposes of the meeting are:
1. To elect members of the board of directors to hold office
until their terms expire at the annual meeting of shareholders
in 2002 or until their respective successors are elected;
2. To approve the reincorporation of Trend Mining Company in
Delaware, through merger of Trend with and into a wholly owned
Delaware subsidiary of Trend;
3. To adopt the 2000 equity incentive plan; and
4. To transact such other business as may properly come before
the meeting or any postponements or adjournments thereof.
Shareholders are or may be entitled to assert dissenters' rights with
respect to the reincorporation merger under Sections 35-1-826 through 35-1-839
of the Montana Business Corporation Act. Copies of these statutory provisions
are included as Exhibit C to the proxy statement that accompanies this notice.
You must own shares at the close of business on January 19, 2001 to
vote at the annual meeting. This notice of annual meeting and the accompanying
proxy statement and proxy card are being mailed to our shareholders beginning
January 30, 2001.
By order of the Board of Directors
/s/ Kurt J. Hoffman
Kurt J. Hoffman
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Coeur d'Alene, Idaho
January 29, 2001
TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING OF SHAREHOLDERS, PLEASE
SIGN, DATE AND RETURN YOUR PROXY CARD IN THE ENCLOSED ENVELOPE, WHETHER OR NOT
YOU EXPECT TO ATTEND IN PERSON. SHAREHOLDERS WHO ATTEND THE MEETING MAY REVOKE
THEIR PROXIES AND VOTE IN PERSON.
TREND MINING COMPANY
401 FRONT AVENUE, SUITE 1, SECOND FLOOR
COEUR D'ALENE, IDAHO 83814
-----------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 23, 2001
-----------------
GENERAL INFORMATION
This proxy statement and the accompanying proxy card are being
furnished to the shareholders of Trend Mining Company, a Montana corporation, in
connection with the solicitation by our board of directors of proxies to be
voted at our annual meeting of shareholders to be held at 9:30 a.m. (Pacific
standard time) on Friday, February 23, 2001 at the Coeur d'Alene Inn and
Conference Center, 414 W. Appleway, Coeur d'Alene, Idaho. The purposes of the
annual meeting are set forth below and in the accompanying notice of annual
meeting of shareholders. You must own shares of Trend common stock at the close
of business on January 19, 2001 (the record date) to vote at the annual meeting.
This proxy statement and the accompanying proxy card are being mailed to holders
of record on the record date of our common stock on or about January 30, 2001.
In this proxy statement, Trend Mining Company is referred to as "Trend" and with
the pronouns "we," "our" and "us."
PURPOSES OF THE ANNUAL MEETING
At the annual meeting, holders of record as of the record date of Trend
common stock will be asked to consider and vote upon the following matters:
1. To elect members of the board of directors to hold office until
their terms expire at the annual meeting of shareholders in 2002 or until their
respective successors are elected;
2. To approve the reincorporation of Trend Mining Company in Delaware,
through the merger of Trend with and into a wholly owned Delaware subsidiary of
Trend;
3. To approve the adoption of the 2000 equity incentive plan; and
4. To transact such other business as may properly come before the
meeting or any postponements or adjournments thereof.
The board of directors unanimously recommends that the shareholders
vote "FOR" each of the proposals described in this proxy statement. As of the
date of this proxy statement, the board of directors knows of no other business
to come before the annual meeting. If any other matters properly come before the
annual meeting, the persons designated as agents in the enclosed proxy will vote
on such matters in accordance with their best judgment.
RECORD DATE; QUORUM; VOTE REQUIRED
The board of directors has fixed the close of business on January 19,
2000 as the record date for determining the shareholders entitled to notice of,
and to vote at, the annual meeting. As of the record date, 18,394,716 shares of
Common Stock were issued, outstanding and entitled to notice of or to vote at
the annual meeting. The presence, either in person or by properly executed
proxy, of the holders of at least a majority of the votes entitled to be cast is
necessary to constitute a quorum for the conduct of business at the annual
meeting. Any shareholder present at the annual meeting, but who abstains from
voting, shall be counted for purposes of determining whether a quorum exists.
Each share of Trend common stock outstanding on the record date is
entitled to one vote. Voting for directors is cumulative and the seven director
nominees who receive the greatest number of votes cast will be elected as
directors. The affirmative vote of two-thirds (2/3) of the votes entitled to be
cast is necessary to approve the reincorporation proposal. The affirmative vote
of a majority of the votes cast, in person or by properly executed proxy, is
required to approve adoption of our 2000 equity incentive plan. Abstentions and
broker non-votes will have no effect on the election of directors or approval of
the 2000 equity incentive plan and will have the effect of a vote against the
reincorporation proposal. A broker non-vote occurs when a broker holding shares
for a beneficial owner votes on one proposal, but does not vote on another
proposal because the broker does not have discretionary voting power and has not
received instructions from the beneficial owner.
PROXIES
All shares of common stock represented at the annual meeting by
properly executed proxies received at or prior to the annual meeting and not
subsequently revoked will be voted at the annual meeting in accordance with the
instructions indicated on the proxies. If no instructions are indicated, proxies
will be voted FOR the election of each of the nominees for Trend directors, FOR
the reincorporation proposal and FOR the adoption of the 2000 equity incentive
plan. The persons named in the proxies will have discretionary authority to vote
with respect to additional matters that are properly presented for action at the
meeting.
Any shareholder may revoke his proxy at any time before it is voted by
giving written notice to the Trend corporate secretary, signing and delivering a
proxy bearing a later date, or requesting revocation in person at the annual
meeting.
Trend will pay the entire costs of this solicitation of proxies. In
addition to solicitation by mail, our officers, directors and employees may
solicit proxies by telephone, telegram or in person. We may also request banks
and brokers to solicit their customers who have a beneficial interest in our
common stock, and we will reimburse banks and brokers for their reasonable
out-of-pocket expenses. Additional assistance with mailing, distribution,
contacts with banks and brokers regarding requests for and receipt of materials
and other ministerial assistance will be provided by Corporate Stock Transfer at
a cost to Trend of approximately $1500.
ELECTION OF DIRECTORS
Trend's directors are elected at each annual meeting and hold office
until the next annual meeting of shareholders or until their successors are
elected.
2
The board of directors has nominated seven persons for election at the
annual meeting to serve as Trend directors. Each nominee is currently a director
of Trend. Biographical information about each nominee is set forth below.
Voting for directors is cumulative. This means that a shareholder is
entitled to the number of votes for directors equal to the number of shares that
he or she holds multiplied by the number of directors being elected. When using
cumulative voting, the shareholder may, by checking the box that says "FOR all
nominees listed below," choose to cast votes equally among the nominees or may
choose to distribute the available votes among the nominees in such numbers as
the shareholder wishes by showing the number of votes designated for any nominee
in the blank next to the nominee's name on the proxy card. If no direction is
made, this proxy will be voted equally FOR the nominees of the board of
directors. We are not soliciting discretionary authority to cumulate votes.
The seven nominees who receive a plurality of the votes cast by the
shares entitled to vote shall be elected directors. This means that the seven
nominees who receive the greatest number of votes cast will be elected as
directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
THE ELECTION OF THE NOMINEES TO SERVE AS DIRECTORS OF TREND.
Your proxy holder will vote your shares for the nominees listed below
unless you have designated otherwise. Should any nominee become unavailable for
election for any reason now unknown, your proxy holder may vote for a substitute
nominee proposed by the board of directors.
BIOGRAPHICAL INFORMATION
J. MICHAEL SHARRATT, age 71. Mr. Sharratt became a member of our board
of directors and began serving as our Chairman in August 2000. Since 1997, Mr.
Sharratt has been engaged principally in mineral exploration and evaluation
consulting services. Mr. Sharratt served Stillwater Mining Company as Vice
Chairman from 1994 to 1997, and President from 1992 to 1994. Mr. Sharratt
previously served as Vice President and Senior Director of Mining and Minerals
for Manville Corp. and as a Director of the International Precious Metals
Institute, the Canadian Institute of Mining and Metallurgy and the Society of
Mining Engineers. Mr. Sharratt earned a B.A. in geology at McGill University.
FRED W. BRACKEBUSCH, age 55. Mr. Brackebusch has served as a
director since September 1991. Since May 1995, Mr. Brackebusch has been the
owner and President of Mine Systems Design, Inc. a consulting company that
specializes in mine backfill, the new technology paste backfill, and tailings
disposal. He is also a director of New Jersey Mining Company. Mr. Brackebusch
earned a B.S. and M.S. in geological engineering from the University of Idaho.
JEFFREY M. CHRISTIAN, age 45. Mr. Christian was elected to the board of
directors in August 2000. Since 1986, Mr. Christian has owned and acted as
Managing Director of CPM Group, an independent precious metals research and
consulting firm that he founded in 1986. From 1980 until 1986, he headed the
precious metals and commodities market statistics research groups of Goldman,
Sachs & Co. and J. Aron & Company. Mr. Christian is President and a director of
the International Precious Metals Institute. Mr. Christian received a B.A. in
journalism at the University of Missouri and completed post-graduate work in
economics at the University of Missouri, New York University and the University
of Iowa.
3
KURT J. HOFFMAN, age 33. Mr. Hoffman has served as our Chief Executive
Officer, President and a director since June 1998. From March 1995 to June 1998,
Mr. Hoffman was the owner and President of Kurt J. Hoffman Mining & Land
Services, a private mining consulting firm that provided property sales,
acquisitions and land management services for a number of U.S.-based mining and
timber companies. Mr. Hoffman has been a director of New Jersey Mining Company
since 1996 and Atlas Mining Company since 1998. Mr. Hoffman received a B.A. in
economics and political science from the College of Idaho in Caldwell, Idaho.
ARTHUR E. JOHNSON, age 53. Mr. Johnson has served as a director since
June 1998. Since May 1995, Mr. Johnson has been engaged in family-owned timber
and ranching businesses.
BLAZE G. JULUM, age 38. Mr. Julum has served as a director since June
1998, as Vice President, Corporate Development and Acquisitions since December
2000, and as our Vice President since July 1999. He served as our Director of
Corporate Development from November 1998 to June 1999. Since 1995, Mr. Julum has
owned and served as President of Cascade Equipment, an international mining
equipment brokerage that has, from time to time, been involved in equipment
procurement and sales for mining companies in North America, South America, and
Australia. Prior to his involvement in mining, Mr. Julum held various positions
in the management of the Heath Tecna Aerospace Company, British Petroleum -
Advanced Composite Division, and as an industrial engineer for the Boeing
Airplane Company. Mr. Julum earned a B.A. in industrial organization from
Western Washington University in Bellingham, Washington.
ISHIUNG J. WU, age 55. Dr. Wu became a director in August 2000. He is
the co-founder of General Minerals Corporation and since 1994 has been a
director and its Vice President of Acquisitions. Dr. Wu has over 30 years
experience in mineral exploration management. Previously, he was manager of
exploration for Chevron Resources Company in North and South America. Prior to
his service at Chevron, Dr. Wu gained extensive field experience and made
several mineral discoveries through various positions with Exxon Minerals,
Kennecott Exploration, Cerro de Pasco and Compania de Minas Buenaventura. Dr. Wu
holds an M.A. and Ph.D. in economic geology from Harvard University and is a
fellow of the Society of Economic Geologists.
BOARD COMMITTEES AND MEETINGS
Our board of directors held two meetings during the fiscal year ended
September 30, 2000. All of our directors attended at least 75% of these
meetings. Trend had no standing audit, compensation or nominating committees
during the fiscal year ended September 30, 2000.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires that our directors, executive officers and persons who beneficially own
greater than ten percent of a registered class of our equity securities file
initial reports of ownership and changes in ownership with the Securities and
Exchange Commission. Directors, officers and greater than ten percent
shareholders are required by Commission regulation to furnish us with copies of
the Section 16(a) reports filed.
Based solely upon our review of copies of the Forms 3, 4 and 5 provided
to us during the most recent fiscal year, no person failed to file such forms on
a timely basis with the Commission, as required by Section 16(a), during the
most recent fiscal year.
4
DIRECTOR COMPENSATION
On April 11, 2000, we granted to each of our departing directors
options to purchase 1,000 shares of common stock for each year of service that
director had completed. These options are exercisable from April 15, 2000 to
April 15, 2003. The following table sets forth information regarding these
option grants:
YEARS OF
NAME SERVICE OPTIONS GRANTED EXERCISE PRICE
---- ------- --------------- --------------
Lovon Fausett 17 17,000 $0.50
Don Springer 17 17,000 $0.50
Geraldine Shimpf 17 17,000 $0.50
Robert Gee 8 8,000 $0.50
Bill Jacobson 5 5,000 $0.50
Grant Brackebusch 3 3,000 $0.50
Grant Brackebusch is the son of current director Fred Brackebusch.
In August 2000, we awarded J. Michael Sharratt 1,500 shares of Trend
common stock, valued at $1,050, or $0.70 per share, as compensation for board
service in 2000.
We are currently considering additional director compensation
arrangements.
EXECUTIVE COMPENSATION
The following table shows the compensation that we paid to our
President and Chief Executive Officer for the last two completed fiscal years.
No officer received more than $100,000 in compensation during fiscal years 1999
and 2000.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY
- ------------------------------------------------------------ ----------- -------------------------------
Kurt J. Hoffman 2000 $77,458(1)
President and Chief Executive Officer 1999 $37,287(2)
- ------------------------------
(1) In fiscal 2000, Mr. Hoffman received $70,458 of his salary in cash and
$7,000 in shares of common stock, comprised of 26,924 shares with a
fair market value of $0.26 per share.
(2) In fiscal 1999, Mr. Hoffman received $13,287 of his salary in cash and
$24,000 in shares of our common stock, comprised of 257,572 shares with
a fair market value of $0.093 per share.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
No stock options were granted to Mr. Hoffman in the fiscal year ended
September 30, 2000.
OPTION EXERCISES AND VALUES
No options were exercised by Mr. Hoffman in the fiscal year ending
September 30, 2000.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows as of January 19, 2001 the beneficial
ownership of our common stock by each director, each executive officer, all
directors and executive officers as a group, and each person or group of persons
known by us to own beneficially five percent (5%) or more of our common stock.
The percentage of ownership is based on 18,394,716 shares of our common
stock outstanding as of January 19, 2001. All information is taken from or based
on ownership filings made with the Securities and Exchange Commission or on
information provided directly to us. Unless otherwise indicated, the
shareholders listed below have sole voting and investment power with respect to
the shares reported as owned.
NUMBER OF SHARES OF
COMMON STOCK PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER(1) BENEFICIALLY OWNED SHARES
- --------------------------------------- --------------------- ------------
DIRECTORS AND EXECUTIVE OFFICERS:
J. Michael Sharratt 2,500 *
Fred W. Brackebusch 94,475 *
Jeffrey M. Christian(2) 180,000 *
Kurt J. Hoffman 303,996 1.65%
Arthur E. Johnson 146,767 *
Blaze G. Julum 306,102 1.66%
Ishiung J. Wu - -
Thomas K. Mancuso 185,364 1.00%
Brian L. Miller 10,000 *
John Ryan 337,167 1.83%
All executive officers and directors as a 1,566,371 8.52%
group (10 persons)
FIVE PERCENT SHAREHOLDERS:
Thomas S. Kaplan(3) 12,857,349 49.56%
c/o William Natbony, Esq.
Rosenman & Colin LLP
575 Madison Avenue
New York, NY 10022-2585
Asher B. Edelman(4) 4,575,000 23.62%
c/o Edelman Companies
717 Fifth Avenue
New York, NY 10022
6
NUMBER OF SHARES OF
COMMON STOCK PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER(1) BENEFICIALLY OWNED SHARES
- --------------------------------------- --------------------- ------------
DIRECTORS AND EXECUTIVE OFFICERS:
General Minerals Corporation(5) 1,662,895 8.94%
789 Sherman Street, Suite 600A
Denver, Colorado 80203
- ----------------------
* Amounts shown are less than 1 percent.
(1) The address of each such persons, unless otherwise noted, is c/o Trend
Mining Company, 401 Front Avenue, Suite 1, Second Floor, Coeur d'Alene, Idaho
83814.
(2) Mr. Christian has voting and dispositive control with respect to 180,000
shares owned by CPM Group, of which he is the sole shareholder.
(3) Mr. Kaplan has voting and dispositive control with respect to 1,000,000
shares owned by Tigris Financial Group Ltd., of which he is the sole
shareholder. He also, pursuant to a voting trust agreement expiring March 31,
2001, has voting and dispositive control with respect to 4,307,588 shares,
warrants exercisable within 60 days to acquire 6,979,761 shares, and the right
to acquire within 60 days 285,000 shares and warrants exercisable within 60 days
to acquire 285,000 shares, all owned by Electrum LLC.
(4) Mr. Edelman directly owns 900,000 shares and has voting and dispositive
control with respect to an additional 2,700,000 shares and warrants exercisable
within 60 days to acquire 975,000 shares.
(5) These shares include 200,000 shares issuable pursuant to a warrant
exercisable within 60 days.
Mr. Kaplan acquired control of Trend in a series of transactions during
the fiscal year ended September 30, 2000. See "Certain Relationships and Related
Transactions - Tigris Financial Group Ltd. and Electrum LLC.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
GENERAL MINERALS CORPORATION: Effective July 27, 1999, we entered into the Lake
Owen option agreement with General Minerals Corporation, which owns beneficially
approximately 9 percent of our common stock. The agreement provides that we have
the right to acquire a 100% interest in 104 unpatented mining claims upon making
certain payments and incurring certain exploration expenditures. If we exercise
the option, either Chevron Minerals or General Minerals will hold a 4% net
profits interest in ore mined from the property. Pursuant to the option
agreement, we have paid a total of $40,000 and have incurred exploration
expenditures of not less than $150,000. We are required to incur additional
exploration expenditures of at least $650,000 by July 27, 2002. On the effective
date of the agreement, we issued General Minerals 715,996 shares of common
stock, and in May 2000, we issued an additional 129,938 shares, giving General
Minerals approximately 25% of our outstanding common stock at that time.
The Lake Owen option agreement was amended in June 2000. Pursuant to
that amendment, General Minerals agreed to give up certain anti-dilution
protections and the right to participate in future stock offerings. In return,
we issued to General Minerals in June 2000 an additional 200,000 shares of our
common stock valued at $60,000, and warrants to purchase an additional 200,000
shares of our common stock at any time during a two-year period ending in June
2002 at $0.70 per share. In addition, in connection with the amendment of the
Lake Owen option agreement, General Minerals exercised its rights under the
original option agreement to purchase 416,961 shares of our common stock for an
aggregate purchase price of $23,351.
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TIGRIS FINANCIAL GROUP LTD. AND ELECTRUM LLC: On December 29, 1999, we entered
into a stock purchase agreement with Tigris Financial Group Ltd., under which
Tigris purchased 1,000,000 shares of our common stock for $100,000, and was
granted rights to acquire additional common stock and warrants. Tigris is solely
owned by Thomas S. Kaplan, who beneficially owns approximately 50 percent of our
common stock. Tigris has assigned certain of its rights under the stock purchase
agreement to its affiliate, Electrum LLC. The stock purchase agreement was
amended in June 2000. Pursuant to that amendment, Electrum agreed to give up
certain anti-dilution protections in exchange for the right to acquire
additional shares of our common stock and certain preemptive rights. The
preemptive rights were terminated in July 2000.
Pursuant to the stock purchase agreement, Electrum acquired 3,500,000
shares of our common stock for an aggregate purchase price of $490,000 in March
2000, 1,597,588 shares for an aggregate purchase price of $100,000 in June 2000,
and an additional 4,740,174 shares for an aggregate purchase price of $545,020
in August and September 2000. Also pursuant to the stock purchase agreement and
in exchange for a cash payment of $10,000, we issued in June 2000 a warrant to
Electrum to purchase an additional 7,979,761 shares of our common stock for an
aggregate purchase price of $3,191,900, exercisable in whole or in part through
September 30, 2003. Electrum assigned 3,530,174 shares of our common stock in
connection with its acquisition of those shares and 500,000 warrants.
Subsequently, Electrum has assigned an additional 2,000,000 shares and 500,000
warrants. Tigris and Electrum own approximately 29 percent of our outstanding
common stock and, upon exercise of their warrants and assuming we have issued no
other shares, would own approximately 50 percent of our then outstanding common
stock.
In addition, under the stock purchase agreement, Tigris and Electrum
have the right to proportional representation on our board of directors, and we
agreed to retain the CPM Group as financial advisors. Tigris and Electrum have
not exercised their rights to representation on our board of directors. We also
agreed that at the request of Tigris, we would use reasonable efforts to divest
ourselves of our silver exploration properties. Tigris and Electrum have demand
registration rights. In November 2000, Electrum requested that we register all
of the common stock, warrants and common stock underlying the warrants currently
held by Tigris and Electrum and assigned by Electrum to others.
In November 2000, we entered into an agreement with Electrum under
which we have borrowed $135,000 to fund certain expenses. The loan bears
interest at the annual rate of 5% and is due upon the earlier to occur of the
closing of a public or private debt or equity financing or December 1, 2005. In
December 2000, we entered into an agreement with Electrum under which we have
the right to borrow up to $250,000 to fund our operating costs, with our
specific uses of funds to be approved in advance by Electrum. The loan obtained
under this agreement bears interest at the annual rate of 8%, payable
semi-annually in arrears, and is due upon the earlier to occur of the closing of
a public or private debt or equity financing or June 30, 2001.
If both loans are not repaid in full on or before February 1, 2001, we
are required to grant to Electrum or its assigns warrants to purchase 285,000
shares of our common stock at $1.50 per share, exercisable through September 30,
2003. Electrum may also elect to be repaid the total amounts outstanding under
both loans in "units" of Trend securities, at the rate of one unit per each
dollar owed. Each unit would consist of one share of our common stock and a
warrant to purchase one share of our common stock at $1.50 per share,
exercisable through September 30, 2003. Electrum has agreed that at least
$100,000 of the November 2000 loan will be repaid in units.
8
Following our proposed reincorporation in Delaware, we would issue to
Mr. Kaplan in a private placement one share of Series A preferred stock. The
terms of the Series A preferred stock would mean that each issuance by us of
common stock, preferred stock, options, warrants or other equity securities
would require the written consent of Mr. Kaplan or the then current holder of
the Series A preferred stock. See "Reincorporation in Delaware - Effects on the
Rights of Our Shareholders - Series A Preferred Stock." Under certain
circumstances, Electrum LLC, which beneficially owns approximately 23 percent of
our outstanding common stock, and Asher Edelman, who beneficially owns
approximately 20 percent of our outstanding common stock, would be permitted to
acquire the Series A preferred stock to be held initially by Mr. Kaplan.
In exchange for our agreement to issue the Series A preferred stock,
Mr. Kaplan and Mr. Edelman have agreed not to oppose the proposed significant
increase in our authorized capital from 30 million shares of common stock to 100
million shares of common stock and 20 million shares of preferred stock. See
"Reincorporation in Delaware - Effects on the Rights of our Shareholders -
Increase in Number of Authorized Shares and Blank Check Preferred." The increase
in our capital stock and the creation of Series A preferred stock will be
accomplished simultaneously with the merger transaction in which we will
reincorporate in Delaware. The share of Series A preferred stock will be issued
to Mr. Kaplan in a private placement promptly following the reincorporation.
CPM GROUP: CPM Group is managed and wholly owned by Jeffrey M. Christian, a
director of our company. CPM Group performs various services for us, including
public and shareholder relations, research and market intelligence on platinum
group metal markets and financial advisory functions in connection with possible
mergers and acquisitions. CPM Group has not performed services for and is not
affiliated with Tigris or Electrum.
REINCORPORATION IN DELAWARE
Shareholders are being asked to approve Trend's reincorporation in
Delaware and certain changes in Trend's articles of incorporation. The
reincorporation will be accomplished through the merger of Trend with and into
New Trend of Montana Company, a Delaware corporation ("New Trend"), pursuant to
an Agreement and Plan of Merger, dated as of January 26, 2001 between Trend and
New Trend. Following the merger, New Trend will change its name to "Trend Mining
Company." Our certificate of incorporation following our reincorporation in
Delaware will differ in many respects from our current articles of
incorporation, including the following:
- Our authorized common stock will be increased from 30,000,000
shares, no par value, to 100,000,000 shares, $.01 par value.
- Our authorized stock will include 20,000,000 shares of "blank
check" preferred stock, $.01 par value, with designations,
rights and preferences as may be determined from time to time
by the board of directors, without shareholder approval.
- One share of Series A preferred stock will be created. The
terms of the Series A preferred stock require the written
consent of the holder of the Series A preferred stock for any
issuance by us of common stock, preferred stock, options,
warrants or other equity securities.
- Shareholder approval will no longer be required to change the
number of directors on our board of directors.
- Shareholders will no longer have the right to cumulative
voting for directors.
9
See " - Effects on the Rights of Shareholders."
New Trend is currently a non-operating, wholly owned subsidiary of
Trend formed for the purpose of completing the reincorporation. Upon completion
of the reincorporation, New Trend will own all assets presently owned by Trend
and will conduct the business presently conducted by Trend. No material change
in the business, management, operations or financial statements of Trend will
result from the reincorporation. All of Trend's contracts, benefit plans
(including the 2000 equity incentive plan) and other assets will vest in New
Trend. The officers and directors of Trend immediately prior to the transaction
will continue to be the officers and directors of New Trend.
The following discussion summarizes significant aspects of the
reincorporation but may not include everything that is important to you. You
should read the entire Agreement and Plan of Merger attached as Exhibit A to
this proxy statement, and the certificate of incorporation of New Trend, which
is attached as Exhibit B.
The affirmative vote of two-thirds of the votes entitled to be cast at
the annual meeting will be required for approval of this transaction.
Abstentions and broker non-votes will have the effect of a vote against the
proposal. Our directors and officers, Mr. Kaplan and Mr. Edelman have notified
us of their intent to vote in favor of the reincorporation proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT
THE SHAREHOLDERS VOTE "FOR" THE REINCORPORATION.
REASONS FOR THE REINCORPORATION AND RELATED CHANGES IN THE CHARTER
Our board of directors has determined that reincorporation in Delaware
is in the best interests of our shareholders for the following reasons. The
State of Delaware has long been the leader in adopting, construing and
implementing comprehensive, flexible corporation laws that are conducive to the
operational needs and independence of corporations domiciled in that state. The
corporation law of Delaware is widely regarded as the most extensive and
well-defined body of corporate law in the United States. Both the legislature
and the courts in Delaware have demonstrated an ability and a willingness to act
quickly and effectively to meet changing business needs. The Delaware judiciary
has acquired considerable expertise in dealing with complex corporate issues.
Moreover, the Delaware courts have repeatedly shown their willingness to
accelerate the resolution of complex corporate issues to meet the needs of
parties engaged in corporate litigation. It is anticipated that the General
Corporation Law of Delaware will continue to be interpreted and construed in
significant court decisions, thus lending greater predictability and guidance in
managing and structuring the internal affairs of our company and its
relationships and contacts with others.
At the same time as the reincorporation, we will significantly increase
the number of shares of authorized stock and authorize the issuance of preferred
stock by action of the board of directors without stockholder approval. This
will give us needed flexibility for additional equity financings and director,
officer and employee compensation. We also will issue one share of Series A
preferred stock to Mr. Kaplan, who has voting and dispositive control with
respect to 5,307,588 shares, or approximately 29 percent, of our outstanding
common stock, warrants exercisable within 60 days to acquire 6,979,761 shares of
our common stock, and the right to acquire within 60 days 285,000 shares and
warrants exercisable within 60 days to acquire 285,000 shares. The written
consent of the holder of the Series A preferred stock will be required for each
issuance of common stock, preferred stock, options, warrants or other equity
securities.
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REINCORPORATION
The proposed reincorporation would be accomplished by merging Trend
with and into New Trend as provided in the Agreement and Plan of Merger, a copy
of which is attached as Exhibit A. On the effective date of the merger, each
outstanding share of Trend's common stock will automatically be converted into
one share of New Trend common stock, $0.01 par value.
It will not be necessary for Trend shareholders to exchange their
existing stock certificates for stock certificates of New Trend. We intend that,
after reincorporating in Delaware, our common stock will continue trading on the
pink sheets, maintained by Pink Sheets LLC, and that the pink sheets will
consider the delivery of existing Trend common stock certificates to constitute
"good delivery" of shares of the New Trend common stock in transactions
following the merger.
We anticipate that the merger will become effective as soon as
practicable following shareholder approval. Pursuant to the Agreement and Plan
of Merger, however, the merger (and thus the proposed reincorporation) may be
abandoned, even after shareholder approval has been obtained, if circumstances
arise that, in the opinion of our board of directors, make it inadvisable to
proceed with the merger. In addition, the Agreement and Plan of Merger may be
amended at any time before the effective time of the merger, either before or
after shareholder approval, subject to applicable law.
Under applicable Montana law, dissenters' appraisal rights are
available to shareholders in connection with the merger. See "--Rights of
Dissenting Shareholders."
EFFECTS ON THE RIGHTS OF OUR SHAREHOLDERS
Following the reincorporation merger, issues of corporate governance
and control would be governed by the corporate laws of Delaware, rather than
those of Montana. The certificate of incorporation of New Trend differs from the
articles of incorporation (as amended) of Trend. The following is a summary of
significant differences between the corporation laws of Montana and Delaware and
the charters of Trend and New Trend that could affect the rights of Trend's
shareholders. This summary may not include everything that is important to you.
You should read the entire certificate of incorporation of New Trend, which is
attached as Exhibit B to this proxy statement.
INCREASE IN NUMBER OF AUTHORIZED SHARES AND BLANK CHECK PREFERRED. The
New Trend certificate of incorporation authorizes the issuance of 100,000,000
shares of common stock, $.01 par value. This increases the amount of authorized
common stock, which under Trend's articles of incorporation was 30,000,000
shares of common stock, no par value. The issuance of additional shares of stock
could dilute the earnings per share and book value per share of existing shares
of our common stock, and such additional shares could be used to dilute the
percentage ownership of existing stockholders.
The New Trend certificate of incorporation also authorizes the issuance
of 20,000,000 shares of "blank check" preferred stock, $.01 value, with the
designations, rights and preferences as may be determined from time to time by
the board of directors, without shareholder approval. The authorized and
available preferred stock could be issued by New Trend to discourage a change in
control of New Trend and could significantly affect the rights of the holders of
common stock.
As the voting rights of such preferred stock remain to be fixed by New
Trend's board of directors, the board of directors may permit the holders of
preferred stock to vote separately as a class in connection with the approval of
certain corporate transactions in circumstances where Delaware law does
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not ordinarily allow such a class vote, or may provide the holders of preferred
stock with a disproportionately large number of votes. The preferred stock may
also be convertible into a large number of shares of New Trend common stock
under certain circumstances or have other terms that would dilute the ownership
interest of existing stockholders or might make acquisition of a controlling
interest in New Trend more difficult or more costly.
SERIES A PREFERRED STOCK. The New Trend certificate of incorporation
provides for the designation and issuance to Mr. Kaplan of one share of Series A
preferred stock. See "Certain Relationships and Related Transactions - Tigris
Financial Group Ltd. and Electrum LLC." The Series A preferred stock will be
issued to Mr. Kaplan in a private placement following the reincorporation
merger. The Series A preferred stock has no dividend or voting rights, but the
written consent of the holder will be required for any issuance by Trend of
common stock, preferred stock, options, warrants or other equity securities.
This written consent will not be required for common or preferred stock issued
pursuant to the exercise or conversion of options, warrants or other equity
securities outstanding on the date of the reincorporation merger or previously
approved by the holder of the Series A preferred stock.
The Series A preferred stock can be transferred among Mr. Kaplan,
Electrum LLC, and Mr. Edelman. If the then current holder of the Series A
preferred stock ceases to have voting and dispositive control over 20% of
Trend's common stock on a fully diluted basis, the Series A preferred stock will
automatically be transferred to Mr. Kaplan. If Mr. Kaplan does not have voting
and dispositive control over 20% of Trend's common stock, then the Series A
preferred stock will be automatically transferred to Electrum LLC, and if
Electrum LLC does not have voting and dispositive control over 20%, then to Mr.
Edelman. If none of Mr. Kaplan, Electrum LLC and Mr. Edelman have voting and
dispositive control over 20% of Trend's common stock, or if the Series A
preferred stock is transferred to another party, the Series A preferred stock
will automatically be converted into one share of common stock.
Retention of the Series A Preferred Stock will be submitted to
stockholders for approval at each annual meeting of stockholders. If a majority
of stockholders present at the meeting in person or by proxy fails to approve
retention of the Series A preferred stock, the Series A preferred stock will
automatically be converted into one share of common stock.
The Series A preferred stock has a liquidation preference of $1.00. The
holder of the Series A preferred stock will have the right to call for its
redemption at a redemption price of $1.00. Upon its acquisition by New Trend,
the Series A preferred stock will be retired and may not be reissued.
STRUCTURE OF THE BOARD OF DIRECTORS. Trend's articles of incorporation
set the number of directors at nine but provide that the board of directors may
increase or decrease the number of directors by a vote of a majority of the
board, as long as the number of directors in no case exceeds 15 or falls below
five. Stockholder approval is required to change the number of Trend directors.
New Trend's certificate of incorporation provides that the number of directors
shall be set forth in the bylaws, which can be amended by the board of directors
without a stockholder vote.
INDEMNIFICATION. Montana law, under certain circumstances, provides in
general, that any director, officer, employee or agent of a corporation made a
party to a proceeding because he or she serves in that capacity may be
indemnified against expenses, fines, settlements or judgements arising in
connection with the proceeding, if his or her actions were in good faith, were
reasonably believed to be in the corporation's best interest, and were
reasonably believed not to be unlawful. Unless the person seeking
indemnification is successful, upon the merits or otherwise, in such an action,
indemnification may be awarded only after a determination by a majority vote of
a quorum of the corporation's directors not at the time party to the proceeding,
or a specially designated committee if no quorum can be obtained,
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or by special legal counsel, or by a vote of the shareholders, excluding those
shares owned by or voted under control of directors who were at the time party
to the proceedings, that the applicable standard of conduct was met by the
person to be indemnified. Trend's articles of incorporation contain no
indemnification provisions.
Delaware law generally permits indemnification of expenses incurred in
the defense or settlement of a derivative or third-party action, provided there
is a determination that the person seeking indemnification acted in good faith
and in a manner reasonably believed to be in or not opposed to the best
interests of the corporation. That determination is made by either:
- a majority of the disinterested directors, even though less
than a quorum,
- a committee of such directors designated by a majority vote of
such directors, even though less than a quorum,
- independent legal counsel, regardless of whether a
disinterested quorum of directors exists, or
- a majority vote of a quorum of the shareholders.
To the extent a director or officer has been successful on the merits or
otherwise in defending an action, a Delaware corporation is required to
indemnify him or her for related expenses incurred. Without court approval,
however, no indemnification may be made in respect of any derivative action in
which such person is found liable for negligence or misconduct in the
performance of his or her duty to the corporation.
The New Trend certificate of incorporation permits indemnification to
the fullest extent permitted by applicable law of its officers and directors for
all liabilities and expenses incurred by them while acting as directors or
officers or while acting at the direction of New Trend. The New Trend bylaws
strengthen the right to indemnification by requiring New Trend to make
indemnification payments upon receipt of a written request from the officer or
director seeking indemnification, unless a determination is made by a majority
of disinterested directors, or if no quorum can be obtained, by independent
legal counsel, that he or she is not entitled to indemnification.
CUMULATIVE VOTING FOR DIRECTORS. Under Montana law, cumulative voting
rights for the election of directors are presumptively granted to shareholders
and can only be denied to them by an express statement to that effect in the
articles of incorporation. The statement denying cumulative voting must be in
the initial articles or may be in a subsequent amendment unless the number of
votes sufficient to elect one director, if voted on a cumulative basis, was
voted against the amendment. Under Trend's charter, shareholders have cumulative
voting rights for the election of directors. Cumulative voting is not available
under Delaware law unless it is specifically provided in the corporation's
certificate of incorporation. New Trend's certificate of incorporation does not
allow cumulative voting. The elimination of cumulative voting could deter
investors from acquiring a minority block in New Trend with a view toward
obtaining a board seat and influencing board policy. The absence of cumulative
voting might also deter efforts to seek control of New Trend, which efforts some
shareholders might deem favorable.
ANTI-TAKEOVER STATUTES. Delaware law has been widely viewed to permit a
corporation greater flexibility in governing its internal affairs and its
relationships with shareholders and other parties than do the laws of many other
states, including Montana. In particular, Delaware law permits a corporation to
adopt a number of measures designed to reduce a corporation's vulnerability to
hostile takeover attempts. Such measures are either not currently permitted or
are more narrowly drawn under Montana law. Among these measures are the
elimination of the right of shareholders to call special shareholders'
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meetings. In addition, certain types of "poison pill" defenses (such as
shareholder rights plans) have been upheld by Delaware courts, while Montana
courts have yet to decide the validity of such defenses, thus rendering their
effectiveness in Montana more uncertain.
DIVIDENDS. Montana law allows a corporation to pay dividends unless the
corporation is insolvent. Delaware law provides that payment of dividends and
redemption of stock must be out of surplus or out of net profits for the current
and/or immediately preceding fiscal years. Trend has never paid cash dividends
and has no present plans to do so.
ACTION BY WRITTEN CONSENT OF SHAREHOLDERS. Montana law allows action to
be taken by shareholders without a meeting if unanimous written consent is
obtained. Delaware law allows shareholders to take action by written consent in
lieu of a meeting where the number of shareholder consents obtained is not less
than the number of votes that would be needed for approval at a meeting where
all shareholders having the right to vote were present. A company may change
this provision through its certificate of incorporation. The New Trend
certificate of incorporation acknowledges the right of shareholders to take
action by written consent.
RIGHTS OF DISSENTING SHAREHOLDERS
With certain exceptions that do not apply to the reincorporation,
Section 35-1-827 of the Montana Business Corporation Act gives each shareholder
the right to object to a merger and to demand payment of the fair value of his
or her shares calculated as of the day before the vote was taken authorizing the
merger, excluding any appreciation or depreciation in anticipation of the
merger. Trend could choose to abandon the reincorporation for any reason at any
time before the merger becomes effective, and could do so if the holders of a
substantial number of shares of our common stock exercise such dissenters'
rights.
In order to perfect dissenters' rights, a shareholder of Trend must,
before the shareholder vote on the merger, file a written notice with us of
intent to demand payment for his or her shares if the proposed merger is
approved. A shareholder waives his or her dissenters' rights by voting in favor
of the proposal. A shareholder does not waive his or her dissenters' rights by
abstaining or otherwise failing to vote against the proposal. A vote against the
proposal is not sufficient notice of a shareholder's intent to exercise
dissenters' rights. If the notice of intent is properly received, and the
shareholder did not vote in favor of the merger, New Trend must, within ten days
after the merger is completed, deliver or mail to the dissenting shareholder a
written notice that includes:
- where the payment demand must be sent,
- where and when certificates for certified shares must be
deposited,
- a form for the shareholder to use to demand payment that
includes the date of the first announcement to news media or
to shareholders of the terms of the proposed corporate action
and that requires the person asserting dissenters' rights to
certify whether he or she acquired beneficial ownership of the
shares before that date, and
- a date by which New Trend must receive the payment demand,
which may not be fewer than 30 nor more than 60 days after the
date that New Trend first sent the dissenters' notice.
A shareholder sent a dissenters' notice must take the following
actions:
- demand payment,
- certify whether the shareholder acquired beneficial ownership
of the shares before the date required, and
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- deposit his certificates in accordance with the terms of the
notice.
The shareholder who demands payment and deposits his or her
certificates pursuant to the terms of the notice retains all other rights of a
shareholder until these rights are canceled or modified by the taking of the
proposed corporate action. A shareholder who does not demand payment or deposit
his or her certificates where required, each by the dates set forth in the
dissenters' notice, is not entitled to payment for his or her shares.
New Trend will pay each dissenter who complies with the statutory
requirements the amount that New Trend estimates to be the fair value of the
dissenters' shares, plus accrued interest, either as soon as the merger is
effective or upon receipt of the payment demand. New Trend will also send to
each dissenter the documents listed in Section 35-1-834 that provide the
dissenter with information about how the fair value was determined.
The summary set forth above discusses significant provisions related to
the rights of dissenting shareholders under Montana law but may not contain all
of the information which is important to you. Please read in their entirety
Sections 35-1-826 through 35-1-839 of the Montana Business Corporation Act,
which are reproduced in full as Exhibit C to this proxy statement. Sections
35-1-837 through 35-1-839 address the process for a shareholder dissatisfied
with payment.
ACCOUNTING TREATMENT
Under generally accepted accounting principles, the merger and the
reincorporation will not result in any gain or loss to Trend or to New Trend.
The assets, liabilities and shareholders' equity of Trend will become the
assets, liabilities and shareholders' equity of New Trend without any material
changes in amounts or classifications (other than those reflecting the change in
par value).
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The reincorporation provided for in the Agreement and Plan of Merger is
intended to be a tax-free reorganization under the Internal Revenue Code of
1986, as amended. Assuming the reincorporation qualifies as a tax-free
reorganization, no gain or loss will be recognized by the holders of capital
stock of Trend or by Trend or New Trend as a result of consummation of the
reincorporation. Each former holder of capital stock of Trend will have the same
basis in the capital stock of New Trend received pursuant to the reincorporation
as the holder has in the capital stock of Trend at the time of consummation of
the reincorporation. Each shareholder's holding period with respect to New
Trend's capital stock will include the period during which the holder held the
corresponding Trend capital stock, provided the latter was held by the holder as
a capital asset at the time of consummation of the reincorporation. We have not
obtained a ruling from the Internal Revenue Service or an opinion of legal or
tax counsel with respect to the consequences of the reincorporation.
A successful IRS challenge to the tax-free status of the proposed
reincorporation would result in a shareholder recognizing gain or loss with
respect to each share of Trend common stock exchanged in the proposed
reincorporation equal to the difference between the shareholder's basis in such
share and its fair market value, as of the time of the exchange. In this event,
a shareholder's aggregate basis in the shares of New Trend's common stock
received in the exchange would equal their fair market value on such date, and
the shareholder's holding period for such common stock would begin on the date
of such exchange.
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The foregoing is a summary of certain federal income tax consequences.
SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISERS REGARDING THE SPECIFIC TAX
CONSEQUENCES TO THEM OF THE PROPOSED REINCORPORATION, INCLUDING THE
APPLICABILITY OF THE LAWS OF ANY STATE OR OTHER JURISDICTION.
2000 EQUITY INCENTIVE PLAN
Shareholders are being asked to adopt the 2000 equity incentive plan,
which was adopted by our board of directors on January 5, 2001 and is attached
as Exhibit D.
The plan provides for the grant of incentive stock options,
nonstatutory stock options, stock bonuses and restricted stock, all of which are
collectively referred to in this summary as equity awards. Incentive stock
options granted under the plan are intended to qualify as "incentive stock
options" within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended. Nonstatutory stock options granted under the Plan are not intended
to qualify as incentive stock options under the Code. See "- Federal Income Tax
Information" for a discussion of the tax treatment of the equity awards. We have
initially reserved five million shares of our common stock for issuance under
the plan. Based on the average of the high and low prices of our common stock on
January 16, 2001, the market value of the 5,000,000 shares of common stock
available under the plan is $6,150,000. Because the awards under the plan are
discretionary, we are unable to calculate the amount of any awards that may be
granted pursuant to the plan for the fiscal year ending September 30, 2001 or
any subsequent fiscal years.
The purpose of the plan is to promote Trend's interests by aligning the
interests of selected eligible persons under the plan with the interests of our
shareholders. Through the plan, we also seek to attract and retain the services
of directors, officers, other employees and consultants and to provide them with
incentives to contribute maximum efforts for our success.
The affirmative vote of a majority of the votes cast at the annual
meeting will be required to approve the adoption of the 2000 equity incentive
plan. Abstentions and broker non-votes will have no effect on the vote.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
THE ADOPTION OF THE 2000 EQUITY INCENTIVE PLAN.
ADMINISTRATION
The board of directors will administer the plan unless and until it
delegates some or all of the administration to a committee of the board. The
board of directors, or the committee if so delegated, shall have the following
powers:
- to determine the persons to whom and the dates on which equity
awards will be granted,
- to determine how and when each equity award shall be granted,
including the type of equity award and the number of shares
with respect to which an equity award shall be granted,
- to construe and interpret the plan and the equity awards
granted under it,
- to establish, amend and revoke rules and regulations for the
administration of the plan and equity awards, and
- to take all actions authorized by the terms of the plan.
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ELIGIBILITY
Incentive stock options may be granted under the plan only to Trend
employees (including officers). Employees (including officers), directors and
consultants are eligible to receive equity awards other than incentive stock
options under the plan. We estimate that approximately eight employees
(including officers) and seven directors are currently eligible to participate
in the plan.
No incentive stock option may be granted under the plan to any person
who, at the time of the grant, owns (or is deemed to own) stock possessing more
than 10% of the total combined voting power of Trend or any of our affiliates,
unless the option exercise price is at least 110% of the fair market value of
the stock subject to the option on the date of grant, and the term of the option
does not exceed five years from the date of grant. The aggregate fair market
value, determined at the time of grant, of the shares of common stock with
respect to which incentive stock options are exercisable for the first time by
an optionee during any calendar year (under all such Trend and affiliate plans)
may not exceed $100,000.
TERMS OF EQUITY AWARDS
The following is a description of the permissible terms of equity
awards under the plan. Individual equity award grants may be more restrictive as
to any or all of the permissible terms described below.
EXERCISE PRICE: The exercise price of incentive and nonstatutory stock
options under the plan may not be less than the fair market value of the common
stock on the date of the option grant, and in some cases (see "- Eligibility")
may not be less than 110% of such fair market value. The exercise price must be
paid in cash at the time the option is exercised or, at the discretion of the
board of directors or committee administering the plan, by delivery of other
Trend equity securities, by a deferred payment or other arrangement, or any
other form of legal consideration.
VESTING. Options may vest, or become exercisable, in periodic
installments as determined by the board of directors. Any option may be subject
to other terms and conditions on the time or times when it may be exercised
(which may be based on performance or other criteria) as the board of directors
may deem appropriate. Shares of restricted stock awarded under the Plan may, but
need not, be subject to a repurchase option or right of first refusal in our
favor.
TERM. The maximum term of options under the plan is ten years from the
date of grant and in some cases (see "- Eligibility" above) may not be more than
five years from the date of grant. Options terminate ninety days after
termination of the optionee's employment or relationship as a consultant or
director of Trend or any of our affiliates. If, however, termination is due to
the optionee's death, the option may be exercised at any time within the earlier
of 12 months of his or her death and the expiration of the term of the option.
If termination is the result of a disability, the option may be exercised at any
time within the earlier of six months from the date of termination due to
disability and the expiration of the term of the option. Individual options by
their terms may provide for exercise within a shorter or longer period of time
following termination of service, employment or the consulting relationship.
TERMINATION: If equity awards expire or otherwise terminate in whole or
in part without being exercised, the common stock not acquired under the equity
award will again become available for issuance under the plan.
RESTRICTIONS ON TRANSFER: Incentive stock options and rights under a
restricted stock award may not be transferred to any person, except by will or
by the laws of descent and distribution or pursuant to a
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qualified domestic relations order, until any restrictions on transfer set forth
in the equity award agreement lapse. During the lifetime of the optionee,
incentive stock options may be exercised only by the optionee.
DURATION, AMENDMENT AND TERMINATION
Unless sooner terminated, the plan will terminate on January 4, 2011.
The board may at any earlier time terminate, and from time-to-time may amend or
modify, the plan; provided, however, that no amendment or modification may
become effective without approval of the amendment or modification by the
stockholders if stockholder approval is required to enable the plan to satisfy
any applicable statutory or regulatory requirements, or if Trend, on the advice
of counsel, determines that stockholder approval is otherwise necessary or
desirable. No plan amendment may adversely affect any outstanding equity award
without the holder's written consent.
FEDERAL INCOME TAX INFORMATION
INCENTIVE STOCK OPTIONS. Incentive stock options under the plan are
intended to be eligible for the favorable federal income tax treatment accorded
"incentive stock options" under the Internal Revenue Code of 1986, as amended.
There generally are no federal income tax consequences to the optionee or Trend
by reason of the grant or exercise of an incentive stock option. The exercise of
an incentive stock option, however, may create or increase the optionee's
alternative minimum tax liability, if any.
If an optionee holds stock acquired through exercise of an incentive
stock option for at least two years from the date on which the option is granted
and at least one year from the date on which the shares are transferred to the
optionee upon exercise of the option, any gain or loss recognized on a
disposition of such stock will be long-term capital gain or loss. Generally, if
the optionee disposes of the stock for a gain before the expiration of either of
these holding periods (a "disqualifying disposition"), at the time of
disposition, the optionee will realize taxable ordinary income equal to the
lesser of (a) the excess of the stock's fair market value on the date of
exercise over the exercise price, or (b) the optionee's actual gain, if any, on
the purchase and sale. The optionee's additional gain, or any loss, upon the
disqualifying disposition will be a capital gain or loss, which will be
long-term or short-term generally depending on whether the stock was held for
more than one year at the time of the disqualifying disposition. Long-term
capital gains currently are generally subject to lower tax rates than ordinary
income. The maximum long-term capital gains rate for federal income tax purposes
is currently 20% while the maximum ordinary income tax rate is currently 39.6%.
Slightly different rules may apply to optionees who acquire stock subject to
certain repurchase options or who are subject to Section 16(b) of the Securities
Exchange Act of 1934, as amended.
To the extent the optionee recognizes ordinary income by reason of a
disqualifying disposition, Trend will generally be entitled (subject to the
requirement of reasonableness, the provisions of Section 162(m) of the Internal
Revenue Code and the satisfaction of certain tax reporting obligations) to a
corresponding business expense deduction in the tax year in which the
disqualifying disposition occurs.
NONSTATUTORY STOCK OPTIONS. There are no tax consequences to the
optionee or Trend by reason of the grant of a nonstatutory stock option. Upon
exercise of a nonstatutory stock option, the optionee normally will recognize
taxable ordinary income equal to the excess of the stock's fair market value on
the date of exercise over the option exercise price. Generally, with respect to
employees, Trend is required to withhold from regular wages or supplemental wage
payments an amount based on the ordinary income recognized. Trend will generally
be entitled to a deduction equal to the taxable ordinary income realized by the
optionee. Upon disposition of the stock, the optionee will recognize a capital
gain
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or loss equal to the difference between the selling price and the sum of the
amount paid for such stock plus any amount recognized as ordinary income upon
exercise of the option. The gain or loss will be long-term or short-term
depending on whether the stock was held for more than one year at the time of
disposition. Slightly different rules may apply to optionees who acquire stock
subject to certain repurchase options or who are subject to Section 16(b) of the
Securities Exchange Act.
RESTRICTED STOCK. In general, a participant will not recognize taxable
income upon the receipt of restricted stock, if the stock is subject to
restrictions which constitute a "substantial risk of forfeiture" within the
meaning of Section 83 of the Internal Revenue Code (including, for this purpose,
any restriction under Section 16(b) of the Securities Exchange Act). Rather, the
participant will recognize ordinary income at the time when the restrictions no
longer apply, in an amount equal to the fair market value of the stock at that
time over the amount, if any, paid for the stock. However, a participant may
elect to be taxed currently upon receipt of the stock (without regard to such
restrictions) by making an election under Section 83(b) of the Code within 30
days of the participant's receipt of the restricted stock. In this event, the
participant will recognize ordinary income at the time of the receipt of the
stock in an amount equal to the excess, if any, of the fair market value of the
stock at that time over the amount, if any, paid for the stock. If the shares
are later forfeited, the participant will not be entitled to any loss (except
for any amount actually paid for the stock). Following the filing of a timely
83(b) election or the time at which the restricted stock has been taken into
income due to the restrictions no longer applying, any future appreciation in
the stock realized upon the sale or exchange of the stock will be treated as
capital gain, which will be long-term or short-term generally depending on
whether the stock was held for more than one year at the time of the sale or
exchange. Subject to the requirement of reasonableness, the provisions of
Section 162(m) of the Code and the satisfaction of certain tax reporting
obligations, the amount of compensation income recognized by a participant with
respect to restricted stock generally is deductible by Trend. Any dividends paid
to the participant on restricted stock before the stock is taken into income are
ordinary compensation income to a participant and generally are deductible by
Trend.
POTENTIAL LIMITATION ON COMPANY DEDUCTIONS. As part of the Omnibus
Budget Reconciliation Act of 1993, the U.S. Congress amended the Internal
Revenue Code to add Section 162(m), which denies a deduction to any publicly
held corporation for compensation paid to certain employees ("covered
employees") in a taxable year to the extent that compensation exceeds $1,000,000
for a covered employee. It is possible that compensation attributable to
options, when combined with all other types of compensation received by a
covered employee from Trend, may cause this limitation to be exceeded in any
particular year.
Certain kinds of compensation, including qualified "performance-based
compensation," are disregarded for purposes of the deduction limitation. In
accordance with regulations issued under Section 162(m), compensation
attributable to options will qualify as performance-based compensation, provided
that (i) the option is granted by a compensation committee comprised solely of
"outside directors," (ii) the plan contains a per-employee limitation on the
number of shares for which options may be granted during a specified period, and
the amount of compensation the employee could receive is based solely on an
increase in the value of the stock after the date of the grant, and (iii) under
the terms of the plan or the employee's award agreement, the amount of
compensation the employee could receive is based solely on an increase in the
value of the stock after the date of the grant or award.
SHAREHOLDER PROPOSALS
The rules of the Securities and Exchange Commission permit shareholders
to present proposals for shareholder action in the company's proxy statement
where such proposals are consistent with
19
applicable law, pertain to matters appropriate for shareholder action and are
not properly omitted by company action in accordance with the proxy rules. Our
annual meeting of shareholders following the end of fiscal 2001 is expected to
be held on or about February 22, 2002, and proxy materials in connection with
that meeting are expected to be mailed on or about January 22, 2002. We must
receive shareholder proposals prepared in accordance with the proxy rules on or
before September 22, 2001.
INDEPENDENT PUBLIC ACCOUNTANTS
Williams & Webster, P.S. has been selected as our principal accountant
for the fiscal year ended September 30, 2001. Representatives of Williams &
Webster will be present at the annual meeting. They will have an opportunity to
make a statement if they desire to do so and will be available to respond to
appropriate questions.
Our previous accountant, LeMaster and Daniels, PLLC resigned, effective
September 1999. LeMaster and Daniels did not prepare financial statements or an
audit opinion for the fiscal year ended September 30, 1998. There were no
disagreements with LeMaster and Daniels on accounting and financial disclosures.
Williams & Webster, P.S., our current accountants, were appointed in February
2000.
OTHER MATTERS
The board of directors is not aware of any business to be presented at
the annual meeting except the matters set forth in the notice of annual meeting
and described in the proxy statement. If any other matters properly come before
the annual meeting, the persons designated as agents in the enclosed proxy will
vote on such matters in accordance with their best judgment.
THE ANNUAL REPORT ON FORM 10-KSB OF TREND MINING COMPANY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION (WITHOUT EXHIBITS) MAY BE OBTAINED AT NO
CHARGE BY ANY SHAREHOLDER ENTITLED TO VOTE AT THE MEETING WHO WRITES TO:
SECRETARY, TREND MINING COMPANY, 401 FRONT AVENUE, SUITE 1, SECOND FLOOR, COEUR
D'ALENE, ID 83814. EXHIBITS TO THE FORM 10-KSB ALSO ARE AVAILABLE AT A COST OF
TWENTY-FIVE CENTS PER PAGE.
20
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (hereinafter called the "Agreement")
is made as of January 26, 2001 by and between Trend Mining Company, a Montana
corporation ("Trend"), and New Trend of Montana Company, a Delaware corporation
("New Trend"). Trend and New Trend are sometimes referred to herein as the
"Constituent Corporations." The Boards of Directors of each of the Constituent
Corporations deem it advisable and to the advantage of each Constituent
Corporation that Trend merge into New Trend upon the terms and conditions herein
provided.
NOW, THEREFORE, the parties do hereby adopt the plan encompassed by
this Agreement and do hereby agree that Trend shall merge into New Trend on the
following terms, conditions and other provisions:
I. TERMS AND CONDITIONS
1.1 MERGER. Trend shall be merged with and into New Trend, and New
Trend shall be the surviving corporation (the "Surviving Corporation") effective
upon the date and time when this Agreement, or a certificate of merger in lieu
thereof, is filed with the Secretary of State of the State of Delaware and
articles of merger are filed with the Secretary of State of the State of Montana
(the "Effective Date").
1.2 SUCCESSION. On the Effective Date, New Trend shall succeed to all
of the rights, privileges, powers and property, including without limitation all
rights, privileges, franchises, patents, trademarks, licenses, registrations and
other assets of every kind and description, of Trend in the manner of and as
more fully set forth in Section 259 of the Delaware General Corporation Law (the
"DGCL") and in Section 35-1-817 of the Montana Business Corporation Act (the
"MBCA").
1.3 COMMON STOCK OF TREND AND NEW TREND. Upon the Effective Date, by
virtue of the merger and without any further action on the part of the
Constituent Corporations or their stockholders, (i) each share of Common Stock
of Trend, no par value per share ("Trend Common Stock"), issued and outstanding
immediately prior thereto shall be changed and converted into one fully paid and
nonassessable share of Common Stock of New Trend, par value $.01 per share ("New
Trend Common Stock"), (ii) each share of New Trend Common Stock issued and
outstanding immediately prior thereto shall be cancelled and returned to the
status of authorized but unissued shares, and (iii) each share of Trend Common
Stock issued but held in the treasury of Trend shall be cancelled.
1.4 STOCK CERTIFICATES. On and after the Effective Date, all of the
outstanding certificates which prior to that time represented shares of Trend
Common Stock shall be deemed for all purposes to evidence ownership of and to
represent the shares of New Trend Common Stock into which the shares of Trend
Common Stock represented by such certificates have been converted as herein
provided and shall be so registered on the books and records of New Trend or its
transfer agents. The registered owner of any such outstanding stock certificate
shall, until such certificate shall have been surrendered for transfer, or
otherwise accounted for to New Trend or its transfer agent, have and be entitled
to exercise any voting or other right with respect to and to receive any
dividend or other distribution upon the shares of New Trend Common Stock
evidenced by such outstanding certificate as above provided.
1.5 OPTIONS. Upon the Effective Date, New Trend will assume and
continue all of Trend's stock options, warrants or rights to acquire Trend
Common Stock and the outstanding and unexercised portions of all options,
warrants or rights to acquire Trend Common Stock shall become options,
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warrants or rights to acquire the same number of shares of New Trend Common
Stock with no other changes in the terms and conditions of such options,
warrants or rights to acquire, including exercise prices, and effective upon the
Effective Date, New Trend hereby assumes the outstanding and unexercised
portions of such options, warrants or rights to acquire and the obligations of
Trend with respect thereto.
II. CERTIFICATE OF INCORPORATION AND BY-LAWS
2.1 CERTIFICATE OF INCORPORATION. The certificate of incorporation of
New Trend shall be the certificate of incorporation of the Surviving Corporation
(the "New Trend Charter") except that the name of the Surviving Corporation
shall be changed to "Trend Mining Company."
III. DIRECTORS AND OFFICERS
3.1 DIRECTORS. The directors of Trend shall continue as directors of
the Surviving Corporation.
3.2 OFFICERS. The officers of Trend shall become the officers of the
Surviving Corporation to serve at the pleasure of its Board of Directors.
IV. MISCELLANEOUS
4.1 FURTHER ASSURANCES. From time to time, as and when required by New
Trend or by its successors and assigns, there shall be executed and delivered on
behalf of Trend such deeds and other instruments, and there shall be taken or
caused to be taken by it such further and other action, as shall be appropriate
or necessary in order to vest or perfect in or to conform of record or
otherwise, in New Trend the title to and possession of all the property,
interests, assets, rights, privileges, immunities, powers, franchises, and
authority of Trend and otherwise to carry out the purposes of this Agreement,
and the officers and directors of New Trend are fully authorized in the name and
on behalf of Trend or otherwise to take any and all such action and to execute
and deliver any and all such deeds and other instruments.
4.2 AMENDMENT. At any time before or after approval by the stockholders
of the Constituent Corporations, this Agreement may be amended in any manner
(except as otherwise provided by the DGCL) as may be determined in the judgment
of the respective Boards of Directors of New Trend and Trend to be necessary,
desirable or expedient.
4.3 TERMINATION. At any time before the Effective Date, this Agreement
may be terminated and the merger may be terminated by the Board of Directors of
either Trend or New Trend or both, notwithstanding the approval of this
Agreement by the stockholders of Trend and New Trend.
4.4 COUNTERPARTS. In order to facilitate the filing and recording of
this Agreement, the same may be executed in any number of counterparts, each of
which shall be deemed to be an original.
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IN WITNESS WHEREOF, this Agreement, having first been duly approved by
the Board of Directors of Trend and New Trend, is hereby executed on behalf of
each Constituent Corporation by its duly authorized officer.
TREND MINING COMPANY
a Montana corporation
By: /S/ KURT J. HOFFMAN
-----------------------------------------
Kurt J. Hoffman, President and Chief
Executive Officer
NEW TREND OF MONTANA COMPANY
a Delaware corporation
By: /S/ KURT J. HOFFMAN
------------------------------------------
Kurt J. Hoffman, President and Chief
Executive Officer
A-3
EXHIBIT B
CERTIFICATE OF INCORPORATION
OF
NEW TREND OF MONTANA COMPANY
-----------------------
ARTICLE 1
The name of the corporation is New Trend of Montana Company
(hereinafter, the "Company").
ARTICLE 2
The address of the registered office of the Company in the State of
Delaware is 1220 N. Market Street, Suite 606, Wilmington, DE 19801. The name of
the registered agent at such address is Registered Agents, Ltd. The county is
New Castle County.
ARTICLE 3
The purpose of the Company is to engage in any lawful act or activity
for which a Corporation may be organized under the General Corporation Law of
Delaware ("GCL").
ARTICLE 4
4.1. AUTHORIZED SHARES. The total number of shares that the Company is
authorized to issue is 120,000,000, 100,000,000 shares of which shall be Common
Stock, $0.01 par value per share, and 20,000,000 shares of which shall be
Preferred Stock, $0.01 par value per share, one share of which shall be
designated Series A Preferred Stock.
4.2. COMMON STOCK. Each holder of Common Stock shall be entitled to one
vote for each share of Common Stock held on all matters as to which holders of
Common Stock shall be entitled to vote. Except for and subject to those
preferences, rights, and privileges expressly granted to the holders of all
classes of stock at the time outstanding having prior rights, and series of
preferred stock which may from time to time come into existence, and except as
may be provided by the laws of the State of Delaware, the holders of Common
Stock shall have exclusively all other rights of stockholders of the Company,
including, but not limited to, (i) the right to receive dividends when, as and
if declared by the Board of Directors out of assets lawfully available therefor,
and (ii) in the event of any distribution of assets upon the dissolution and
liquidation of the Company, the right to receive ratably and equally all of the
assets of the Company remaining after the payment to the holders of preferred
stock of the specific amounts, if any, which they are entitled to receive as may
be provided herein or pursuant hereto.
4.3. PREFERRED STOCK. The Board of Directors of the Company is
authorized, subject to limitations prescribed by law, to provide by resolution
or resolutions for the issuance of the shares of Preferred Stock (other than the
Series A Preferred Stock) in series, and, by filing a certificate of
designation, pursuant to the GCL, setting forth a copy of such resolution or
resolutions, to establish from time to time the number of shares to be included
in each such series, and to fix the designation, powers, preferences, and rights
of the shares of the class or of each such series, and the qualifications,
limitations,
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and restrictions thereof. The authority of the Board of Directors with respect
to the class or each series shall include, but not be limited to, determination
of the following:
(a) The number of shares constituting any series and the distinctive
designation of that series, which number may (except where otherwise provided by
the Board of Directors in creating such series) be increased or decreased, but
not below the number of shares outstanding from time to time by like action of
the Board of Directors;
(b) The dividend rate on the shares of the class or of any series, the
conditions and times upon which such dividends shall be payable, whether
dividends shall be cumulative, and, if so, from which date or dates, and the
relative rights of priority, if any, of payment of dividends on shares of the
class or of that series;
(c) Whether the class or any series shall have voting rights, in
addition to the voting rights provided by law, and, if so, the terms of such
voting rights;
(d) Whether the shares of the series shall be convertible into or
exchangeable for shares of any other class or classes, with or without par
value, or of any other series of this same class, and, if provision is made for
conversion or exchange, the times, prices, rates, adjustments and other terms
and conditions of such conversion or exchange;
(e) Whether or not the shares of the class or of any series shall be
redeemable, and, if so, the terms and conditions of such redemption, including
the date or dates upon or after which they shall be redeemable and the amount
per share payable in case of redemption, which amount may vary under different
conditions and at different redemption dates;
(f) Whether the class or any series shall have a retirement or sinking
fund for the redemption or purchase of shares of the class or of that series,
and, if so, the terms and amount of such retirement or sinking fund;
(g) The rights of the shares of the class or of any series in the event
of voluntary or involuntary dissolution or winding up of the Company, and the
relative rights of priority, if any, of payment of shares of the class or of
that series; and
(h) Any other powers, preferences, rights, qualifications, limitations,
and restrictions of the class or of any series, as the Board of Directors may
deem advisable and as shall not be inconsistent with the provisions of this
Certificate of Incorporation.
4.4. SERIES A PREFERRED STOCK. There shall be a series of Preferred
Stock designated "Series A Preferred Stock." The number of shares constituting
the Series A Preferred Stock shall be one (1). The rights, preferences,
privileges, restrictions and other matters relating to the Series A Preferred
Stock are as follows:
(a) ELIGIBLE HOLDERS. The Company shall issue the Series A Preferred
Stock to Thomas S. Kaplan ("Mr. Kaplan"), a natural person with an address of
c/o William Natbony, Esq., Rosenman & Colin LLP, 575 Madison Avenue, New York,
NY 10022-2585. Each of Mr. Kaplan, Electrum LLC, a company organized under the
laws of the Cayman Islands with an address of c/o William Natbony, Esq.,
Rosenman & Colin LLP, 575 Madison Avenue, New York, NY 10022-2585, and Asher
Edelman ("Mr. Edelman"), a natural person with an address of c/o Edelman
Companies, 717 Fifth Avenue, New York, NY 10022 is an eligible holder of Series
A Preferred Stock if, at any date of
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determination, such person or entity has voting and dispositive control of 20%
or more of the Common Stock of the Company on a fully diluted basis ("Eligible
Holder"). No person or entity other than Mr. Kaplan, Electrum LLC or Mr. Edelman
may be or become an Eligible Holder. Series A Preferred Stock may be held only
by an Eligible Holder. "Fully diluted" for the purposes of this Section 4.4
shall mean, as of any date of determination, all of the Common Stock of the
Company issued and outstanding on such date plus all of the Common Stock
issuable on the exercise or conversion of securities exercisable for or
convertible into Common Stock outstanding on such date.
(b) DIVIDEND RIGHTS. The holder of Series A Preferred Stock shall have
no right to receive or to be paid dividends on the Series A Preferred Stock,
whether or not the Company has funds legally available therefor.
(c) VOTING RIGHTS.
(1) GENERAL RIGHTS. Except as otherwise provided herein or as
required by law, the Series A Preferred Stock shall have no right to vote at any
annual or special meeting of stockholders of the Company.
(2) CONSENT OF SERIES A PREFERRED STOCK FOR CERTAIN ACTIONS. In
addition to any other vote or consent required herein or by law, the written
consent of the holder of the outstanding Series A Preferred Stock shall be
necessary to effect or validate any issuance of Preferred Stock, Common Stock,
or any equity securities convertible into or exercisable for Preferred Stock or
Common Stock; PROVIDED, HOWEVER, that (x) the issuance of Common Stock or
Preferred Stock pursuant to the exercise or conversion of equity securities
outstanding on the date that Trend Mining Company, a Montana corporation, merged
with and into the Company shall not require the consent of the Series A
Preferred Stock, and (y) if the holder of Series A Preferred Stock has
previously approved the issuance of equity securities exercisable for or
convertible into Preferred Stock or Common Stock, the issuance of Preferred
Stock or Common Stock upon exercise or conversion of such securities, or the
issuance of Common Stock upon conversion of Preferred Stock issued upon such
exercise or conversion, shall not require the further consent of the Series A
Preferred Stock.
(d) LIQUIDATION RIGHTS.
(1) DISTRIBUTION TO SERIES A PREFERRED STOCK. Upon any sale,
liquidation, dissolution, merger or winding up of the Company, whether voluntary
or involuntary, before any distribution or payment shall be made to the holders
of any Common Stock, the holder of Series A Preferred Stock shall be entitled to
be paid out of the assets of the Company an amount equal to One Dollar ($1.00)
(as adjusted for any stock dividends, combinations, splits, recapitalizations
and the like with respect to the Series A Preferred Stock) for the Series A
Preferred Stock held by such holder.
(2) DISTRIBUTION OF REMAINING ASSETS. After the payment of the full
liquidation preference of the Series A Preferred Stock as set forth in Section
4.4(d)(1) above, no holder of Series A Preferred Stock shall be entitled to any
of the remaining assets of the Company legally available for distribution.
(e) TRANSFER RIGHTS. The holder of the Series A Preferred Stock shall
have the right freely to transfer such Stock to another Eligible Holder. If the
holder of the Series A Preferred Stock ceases to be an Eligible Holder, the
Series A Preferred Stock shall be transferred automatically to Mr. Kaplan, if he
is an Eligible Holder; or, if Mr. Kaplan is not an Eligible Holder, then to
Electrum LLC; or, if Electrum LLC is not an Eligible Holder, then to Mr.
Edelman. If none of Mr. Kaplan, Electrum LLC
B-3
or Mr. Edelman is an Eligible Holder, the Series A Preferred Stock shall be
converted automatically to Common Stock pursuant to Section 4.4(g).
In connection with any transfer, the transferring holder shall give
written notice to the Company of such transfer and shall surrender the
certificate for such Series A Preferred Stock, duly endorsed, at the office of
the Company or any transfer agent for such Series A Preferred Stock, with
instructions to issue a new certificate for such Series A Preferred Stock to the
new holder. The Company shall not be obligated to issue a certificate evidencing
the share of Common Stock issuable upon such conversion unless the certificate
evidencing such Series A Preferred Stock is either delivered to the Company or
its transfer agent as provided above, or the holder notifies the Company or its
transfer agent that such certificate has been lost, stolen or destroyed and
executes an agreement reasonably satisfactory to the Company to indemnify the
Company from any loss incurred by it in connection with such certificates.
(f) REDEMPTION RIGHTS. The holder of the Series A Preferred Stock shall
have the following rights with respect to the redemption of the Series A
Preferred Stock (the "Redemption Rights"):
(1) RIGHT OF HOLDER TO CALL SERIES A PREFERRED STOCK FOR
REDEMPTION. Subject to and in compliance with the provisions of this
Section 4.4(f), the holder of the Series A Preferred Stock may make an election
by written notice to the Company at its principal office to cause the Company to
call for redemption of the holder's Series A Preferred Stock at a redemption
price of $1.00 per share (the "Redemption Price") out of funds legally available
therefor. If, on any date on which the Company is obligated to pay the
Redemption Price, the funds of the Company legally available for redemption of
Series A Preferred Stock are insufficient to pay the Redemption Price, those
funds that are legally available will be used to pay the maximum portion of the
Redemption Price then due. At any time thereafter, when additional funds of the
Company are legally available for the redemption of Series A Preferred Stock,
such funds will immediately be used to pay the balance of the Redemption Price
then owed by the Company.
(2) MECHANICS OF REDEMPTION. The holder of the Series A Preferred
Stock called for redemption pursuant to this Section 4.4(f) shall, as a
condition to receiving the Redemption Price, surrender the certificate therefor,
duly endorsed, at the office of the Company or any transfer agent for the
Series A Preferred Stock. If, on the date fixed for redemption, cash necessary
for the redemption shall be available for such purpose and irrecoverably shall
have been deposited or set apart, then, notwithstanding that the certificate
evidencing the Series A Preferred Stock called for redemption shall not have
been surrendered, the Series A Preferred Stock no longer shall be deemed to be
outstanding, the holder thereof shall cease to be a holder of Series A Preferred
Stock, and all rights whatsoever with respect to the shares of Series A
Preferred Stock (except the right of the holder to receive payment of the
Redemption Price as provided herein, without interest, upon surrender of their
certificates therefor) shall terminate.
(g) AUTOMATIC CONVERSION. The share of Series A Preferred Stock shall
automatically be converted into one (1) share of Common Stock, subject to
equitable adjustments, without any further action by the holder of the Series A
Preferred Stock and whether or not the certificate representing such share is
surrendered to the Company or its transfer agent, at such time as (i) none of
Mr. Kaplan, Electrum LLC and Mr. Edelman is an Eligible Holder, (ii) the Series
A Preferred Stock is transferred to a person or entity which is not an Eligible
Holder, or (iii) failure of the stockholders of the Company at any annual
meeting of stockholders to approve the retention of the Series A Preferred
Stock. The Company agrees to submit the retention of the Series A Preferred
Stock to its stockholders for
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approval at each annual meeting of stockholders, unless the Series A Preferred
Stock previously has been converted or redeemed.
Upon the occurrence of such automatic conversion of the Series A
Preferred Stock, the holder of Series A Preferred Stock shall surrender the
certificate representing such Series A Preferred Stock at the office of the
Company or any transfer agent for such stock. Following such surrender, the
Company shall issue and deliver to such holder promptly at such office and in
its name as shown on such surrendered certificate, a certificate for one share
of Common Stock into which the Series A Preferred Stock surrendered was
convertible on the date on which such automatic conversion occurred. The Company
shall not be obligated to issue a certificate evidencing the share of Common
Stock issuable upon such conversion unless the certificate evidencing such
Series A Preferred Stock is either delivered to the Company or its transfer
agent as provided above, or the holder notifies the Company or its transfer
agent that such certificate has been lost, stolen or destroyed and executes an
agreement reasonably satisfactory to the Company to indemnify the Company from
any loss incurred by it in connection with such certificates.
(h) RETIREMENT. Upon the acquisition of the Series A Preferred
Stock by the Company, however acquired, such Series A Preferred Stock shall be
retired and shall not be reissued.
(i) RECORD HOLDERS. For purposes of this Section 4.4, the "holder"
of Series A Preferred Stock shall be deemed to be the holder of record of such
Series A Preferred Stock for all purposes.
ARTICLE 5
5.1. NUMBER AND ELECTION OF DIRECTORS. The number of directors of the
Company shall be fixed from time to time in the manner provided in the bylaws
and may be increased or decreased from time to time in the manner provided in
the bylaws. Election of directors need not be by written ballot except and to
the extent provided in the bylaws of the Company. A director shall hold office
until the annual meeting for the year in which his term expires and until his
successor shall be elected and qualified, subject, however, to such director's
prior death, resignation, retirement, disqualification or removal from office.
5.2. QUORUM. A quorum of the Board of Directors for the transaction of
business shall not consist of less than a majority of the total number of
directors, except as otherwise may be provided in this Certificate of
Incorporation or in the bylaws with respect to filling vacancies.
5.3. NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Except as otherwise
fixed relative to the rights of the holders of any class or series of stock
having a preference over the Common Stock as to dividends or upon liquidation to
elect directors under specified circumstances, newly created directorships
resulting from any increase in the number of directors and any vacancies on the
Board of Directors resulting from death, resignation, disqualification, removal
or other cause shall be filled solely by the affirmative vote of a majority of
the remaining directors then in office, or by a sole remaining director, even
though less than a quorum of the Board of Directors. Any director elected in
accordance with the preceding sentence shall hold office for the remainder of
the full term of the new directorship which was created or in which the vacancy
occurred and until such director's successor shall have been elected and
qualified. No decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.
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ARTICLE 6
Except as otherwise provided in this Certificate of Incorporation, in
furtherance and not in limitation of the powers conferred by statute, the Board
of Directors is expressly authorized to adopt, repeal, alter, amend and rescind
any or all of the bylaws of the Company.
ARTICLE 7
7.1. STOCKHOLDER ACTIONS. Any action required or permitted to be taken
by the stockholders of the Company must be effected at a duly called annual or
special meeting of such stockholders or by appropriate action by written consent
by such stockholders.
7.2. MEETINGS. Meetings of stockholders may be held within or without
the State of Delaware, as the bylaws may provide. Except as otherwise required
by law and subject to the rights of the holders of any class or series of stock
having a preference over the Common Stock, special meetings of the stockholders
may be called only by the chairman of the board, the chief executive officer,
the president, any officer of the Company upon the written request by a majority
of the Board of Directors, or as may be designated in the bylaws of the Company.
7.3. CORPORATE BOOKS. The books of the Company may be kept (subject to
any contrary provision of applicable law) outside the State of Delaware at such
place or places as may be designated from time to time by the Board of Directors
or in the bylaws of the Company.
ARTICLE 8
Notwithstanding any other provisions of this Certificate of
Incorporation of the Company or of the bylaws of the Company, the affirmative
vote of the holders of not less than a majority of the outstanding shares of the
capital stock of the Company entitled to vote generally in the election of
directors, shall be required to amend or repeal or adopt any provision of this
Certificate of Incorporation.
ARTICLE 9
A director or officer of the Company shall not be liable to the Company
or its stockholders for monetary damages for breach of fiduciary duty as a
director or officer, except to the extent such exemption from liability or
limitation thereof is not permitted under the GCL as currently in effect or as
the same may hereafter be amended.
No amendment, modification or repeal of this Article 9 shall adversely
affect any right or protection of a director that exists at the time of such
amendment, modification or repeal.
ARTICLE 10
The Company shall indemnify, to the fullest extent permitted by
applicable law as in effect from time to time, any person against all liability
and expense (including attorneys' fees) incurred by reason of the fact that he
or she is or was a director or officer of the Company or any of its
subsidiaries, or while serving as a director or officer of the Company or any of
its subsidiaries, he or she is or was serving at the request of the Company or
any of its subsidiaries as a director, officer, partner or trustee of, or in any
similar managerial or fiduciary position of, or as an employee or agent of,
another corporation, partnership, joint venture, trust, association, or other
entity (an "Agent").
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Expenses (including attorneys' fees) incurred in defending an action,
suit, or proceeding may be paid by the Company in advance of the final
disposition of such action, suit, or proceeding, to the fullest extent permitted
by Delaware law, upon receipt of an undertaking by the Agent to repay the amount
of expenses so advanced if it shall be determined that the Agent is not entitled
to be indemnified. The Company may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee, fiduciary, or agent of
the Company or any of its subsidiaries against any liability asserted against
and incurred by such person in any such capacity or arising out of such person's
position, whether or not the Company would have the power to indemnify against
such liability under the provisions of this Article 10. The indemnification
provided by this Article 10 shall not be deemed exclusive of any other rights to
which those indemnified may be entitled under this Certificate of Incorporation,
any bylaw, agreement, vote of stockholders or disinterested directors, statute,
or otherwise, and shall inure to the benefit of the heirs, executors, and
administrators of an indemnified party. The provisions of this Article 10 shall
not be deemed to preclude the Company from indemnifying other persons from
similar or other expenses and liabilities as the Board of Directors or the
stockholders may determine.
B-7
EXHIBIT C
MONTANA BUSINESS CORPORATION ACT
SECTION 35-1-826 THROUGH 35-1-839
35-1-826. DEFINITIONS. AS USED IN 35-1-826 THROUGH 35-1-839, THE
FOLLOWING DEFINITIONS APPLY:
(1) "Beneficial shareholder" means the person who is a beneficial owner of
shares held in a voting trust or by a nominee as the record shareholder.
(2) "Corporation" includes the issuer of the shares held by a dissenter before
the corporate action, or the surviving or acquiring corporation by merger or
share exchange of that issuer.
(3) "Dissenter" means a shareholder who is entitled to dissent from corporate
action under 35-1-827 and who exercises that right when and in the manner
required by 35-1-829 through 35-1-837.
(4) "Fair value", with respect to a dissenter's shares, means the value of the
shares immediately before the effectuation of the corporate action to which the
dissenter objects, excluding any appreciation or depreciation in anticipation of
the corporate action unless exclusion would be inequitable.
(5) "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 the corporation has no loans, at a rate that
is fair and equitable under all the circumstances.
(6) "Record shareholder" means the person in whose name shares are registered in
the records of a corporation or the beneficial shareholder to the extent of the
rights granted by a nominee certificate on file with a corporation.
(7) "Shareholder" means the record shareholder or the beneficial shareholder.
History: En. Sec. 133, Ch. 368, L. 1991.
35-1-827. RIGHT TO DISSENT. (1) A SHAREHOLDER IS ENTITLED TO DISSENT
FROM AND OBTAIN PAYMENT OF THE FAIR VALUE OF THE SHAREHOLDER'S SHARES IN THE
EVENT OF ANY OF THE FOLLOWING CORPORATE ACTIONS:
(a) consummation of a plan of merger to which the corporation is a party if:
(i) shareholder approval is required for the merger by 35-1-815 or the articles
of incorporation and the shareholder is entitled to vote on the merger; or
(ii) the corporation is a subsidiary that is merged with its parent corporation
under 35-1-818;
(b) consummation of a plan of share exchange to which the corporation is a party
as the corporation whose shares will be acquired if the shareholder is entitled
to vote on the plan;
(c) consummation of a sale or exchange of all or substantially all of the
property of the corporation other than in the usual and regular course of
business if the shareholder is entitled to vote on the sale or exchange,
including a sale in dissolution but not including a sale pursuant to court order
or a sale for cash pursuant to a plan by which all or substantially all of the
net proceeds of the sale will be distributed to the shareholders within 1 year
after the date of sale;
(d) an amendment of the articles of incorporation that materially and adversely
affects rights in respect of a dissenter's shares because it:
(i) alters or abolishes a preferential right of the shares;
(ii) creates, alters, or abolishes a right in respect of redemption, including a
provision with respect to a sinking fund for the redemption or repurchase of the
shares;
(iii) alters or abolishes a preemptive right of the holder of the shares to
acquire shares or other securities;
(iv) excludes or limits the right of the shares to be voted on any matter or to
cumulate votes, other than a limitation by dilution through issuance of shares
or other securities with similar voting rights; or
(v) reduces the number of shares owned by the shareholder to a fraction of a
share if the fractional share created is to be acquired for cash under 35-1-621;
or
(e) any corporate action taken pursuant to a shareholder vote to the extent the
articles of incorporation, bylaws, or a resolution of the board of directors
provides that voting or nonvoting shareholders are entitled to dissent and to
obtain payment for their shares.
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(2) A shareholder entitled to dissent and to obtain payment for shares under
35-1-826 through 35-1-839 may not challenge the corporate action creating the
shareholder's entitlement unless the action is unlawful or fraudulent with
respect to the shareholder or the corporation.
History: En. Sec. 134, Ch. 368, L. 1991; amd. Sec. 2, Ch. 249, L. 1993.
35-1-828. DISSENT BY NOMINEES AND BENEFICIAL OWNERS. (1) A RECORD
SHAREHOLDER MAY ASSERT DISSENTERS' RIGHTS AS TO FEWER THAN ALL THE SHARES
REGISTERED IN HIS NAME ONLY IF HE DISSENTS WITH RESPECT TO ALL SHARES
BENEFICIALLY OWNED BY ANY ONE PERSON AND NOTIFIES THE CORPORATION IN WRITING OF
THE NAME AND ADDRESS OF EACH PERSON ON WHOSE BEHALF HE ASSERTS DISSENTERS'
RIGHTS. THE RIGHTS OF A PARTIAL DISSENTER UNDER THIS SUBSECTION ARE DETERMINED
AS IF THE SHARES AS TO WHICH HE DISSENTS AND HIS OTHER SHARES WERE REGISTERED IN
THE NAMES OF DIFFERENT SHAREHOLDERS.
(2) A beneficial shareholder may assert dissenters' rights as to shares held on
his behalf only if:
(a) he submits to the corporation the record shareholder's written consent to
the dissent not later than the time the beneficial shareholder asserts
dissenters' rights; and
(b) he does so with respect to all shares of which he is the beneficial
shareholder or over which he has power to direct the vote.
History: En. Sec. 135, Ch. 368, L. 1991.
35-1-829. NOTICE OF DISSENTERS' RIGHTS. (1) IF A PROPOSED CORPORATE
ACTION CREATING DISSENTERS' RIGHTS UNDER 35-1-827 IS SUBMITTED TO A VOTE AT A
SHAREHOLDERS' MEETING, THE MEETING NOTICE MUST STATE THAT SHAREHOLDERS ARE OR
MAY BE ENTITLED TO ASSERT DISSENTERS' RIGHTS UNDER 35-1-826 THROUGH 35-1-839 AND
MUST BE ACCOMPANIED BY A COPY OF 35-1-826 THROUGH 35-1-839.
(2) If a corporate action creating dissenters' rights under 35-1-827 is taken
without a vote of shareholders, the corporation shall give written notification
to all shareholders entitled to assert dissenters' rights that the action was
taken and shall send them the dissenters' notice described in 35-1-831.
History: En. Sec. 136, Ch. 368, L. 1991.
35-1-830. NOTICE OF INTENT TO DEMAND PAYMENT. (1) IF PROPOSED CORPORATE
ACTION CREATING DISSENTERS' RIGHTS UNDER 35-1-827 IS SUBMITTED TO A VOTE AT A
SHAREHOLDERS' MEETING, A SHAREHOLDER WHO WISHES TO ASSERT DISSENTERS' RIGHTS:
(a) shall deliver to the corporation before the vote is taken written notice of
his intent to demand payment for his shares if the proposed action is
effectuated; and
(b) may not vote his shares in favor of the proposed action.
(2) A shareholder who does not satisfy the requirements of subsection (1)(a) is
not entitled to payment for his shares under 35-1-826 through 35-1-839.
35-1-831. DISSENTERS' NOTICE. (1) IF PROPOSED CORPORATE ACTION CREATING
DISSENTERS' RIGHTS UNDER 35-1-827 IS AUTHORIZED AT A SHAREHOLDERS' MEETING, THE
CORPORATION SHALL DELIVER A WRITTEN DISSENTERS' NOTICE TO ALL SHAREHOLDERS WHO
SATISFIED THE REQUIREMENTS OF 35-1-830.
(2) The dissenters' notice must be sent no later than 10 days after the
corporate action was taken and must:
(a) state where the payment demand must be sent and where and when certificates
for certified shares must be deposited;
(b) inform shareholders of uncertificated shares to what extent transfer of the
shares will be restricted after the payment is received;
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(c) supply a form for demanding payment that includes the date of the first
announcement to news media or to shareholders of the terms of the proposed
corporate action and that requires the person asserting dissenters' rights to
certify whether or not he acquired beneficial ownership of the shares before
that date;
(d) set a date by which the corporation must receive the payment demand, which
may not be fewer than 30 nor more than 60 days after the date the required
notice under subsection (1) is delivered; and
(e) be accompanied by a copy of 35-1-826 through 35-1-839.
History: En. Sec. 138, Ch. 368, L. 1991.
35-1-832. DUTY TO DEMAND PAYMENT. (1) A SHAREHOLDER SENT A DISSENTERS'
NOTICE DESCRIBED IN 35-1-831 SHALL DEMAND PAYMENT, CERTIFY WHETHER THE
SHAREHOLDER ACQUIRED BENEFICIAL OWNERSHIP OF THE SHARES BEFORE THE DATE REQUIRED
TO BE SET FORTH IN THE DISSENTERS' NOTICE PURSUANT TO 35-1-831(2)(c), AND
DEPOSIT HIS CERTIFICATES IN ACCORDANCE WITH THE TERMS OF THE NOTICE.
(2) The shareholder who demands payment and deposits his certificates under
subsection (1) retains all other rights of a shareholder until these rights are
canceled or modified by the taking of the proposed corporate action.
(3) A shareholder who does not demand payment or deposit his certificates where
required, each by the date set in the dissenters' notice, is not entitled to
payment for his shares under 35-1-826 through 35-1-839.
History: En. Sec. 139, Ch. 368, L. 1991.
35-1-833. SHARE RESTRICTIONS. (1) THE CORPORATION MAY RESTRICT THE
TRANSFER OF UNCERTIFICATED SHARES FROM THE DATE THE DEMAND FOR THEIR PAYMENT IS
RECEIVED UNTIL THE PROPOSED CORPORATE ACTION IS TAKEN OR THE RESTRICTIONS ARE
RELEASED UNDER 35-1-835.
(2) The person for whom dissenters' rights are asserted as to uncertificated
shares retains all other rights of a shareholder until these rights are canceled
or modified by the taking of the proposed corporate action.
History: En. Sec. 140, Ch. 368, L. 1991.
35-1-834. PAYMENT. (1) EXCEPT AS PROVIDED IN 35-1-836, AS SOON AS THE
PROPOSED CORPORATE ACTION IS TAKEN OR UPON RECEIPT OF A PAYMENT DEMAND, THE
CORPORATION SHALL PAY EACH DISSENTER WHO COMPLIED WITH 35-1-832 THE AMOUNT THE
CORPORATION ESTIMATES TO BE THE FAIR VALUE OF THE DISSENTER'S SHARES PLUS
ACCRUED INTEREST.
(2) The payment must be accompanied by:
(a) the corporation's balance sheet as of the end of a fiscal year ending not
more than 16 months before the date of payment, an income statement for that
year, a statement of changes in shareholders' equity for that year, and the
latest available interim financial statements, if any;
(b) a statement of the corporation's estimate of the fair value of the shares;
(c) an explanation of how the interest was calculated;
(d) a statement of the dissenter's right to demand payment under 35-1-837; and
(e) a copy of 35-1-826 through 35-1-839.
History: En. Sec. 141, Ch. 368, L. 1991.
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35-1-835. FAILURE TO TAKE ACTION. (1) IF THE CORPORATION DOES NOT TAKE
THE PROPOSED ACTION WITHIN 60 DAYS AFTER THE DATE SET FOR DEMANDING PAYMENT AND
DEPOSITING CERTIFICATES, THE CORPORATION SHALL RETURN THE DEPOSITED CERTIFICATES
AND RELEASE THE TRANSFER RESTRICTIONS IMPOSED ON UNCERTIFICATED SHARES.
(2) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it shall send a new
dissenters' notice under 35-1-831 and repeat the payment demand procedure.
History: En. Sec. 142, Ch. 368, L. 1991.
35-1-836. AFTER-ACQUIRED SHARES. (1) A CORPORATION MAY ELECT TO
WITHHOLD PAYMENT REQUIRED BY 35-1-834 FROM A DISSENTER UNLESS THE DISSENTER WAS
THE BENEFICIAL OWNER OF THE SHARES BEFORE THE DATE SET FORTH IN THE DISSENTERS'
NOTICE AS THE DATE OF THE FIRST ANNOUNCEMENT TO NEWS MEDIA OR TO SHAREHOLDERS OF
THE TERMS OF THE PROPOSED CORPORATE ACTION.
(2) To the extent the corporation elects to withhold payment under subsection
(1), after taking the proposed corporate action, the corporation shall estimate
the fair value of the shares plus accrued interest and shall pay this amount to
each dissenter who agrees to accept it in fullsatisfaction of his demand. The
corporation shall send with its offer a statement of its estimate of the fair
value of the shares, an explanation of how the interest was calculated, and a
statement of the dissenter's right to demand payment under 35-1-837.
History: En. Sec. 143, Ch. 368, L. 1991.
35-1-837. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER.
(1) A DISSENTER MAY NOTIFY THE CORPORATION IN WRITING OF THE DISSENTER'S OWN
ESTIMATE OF THE FAIR VALUE OF THE DISSENTER'S SHARES AND THE AMOUNT OF INTEREST
DUE AND MAY DEMAND PAYMENT OF THE DISSENTER'S ESTIMATE, LESS ANY PAYMENT UNDER
35-1-834, OR REJECT THE CORPORATION'S OFFER UNDER 35-1-836 AND DEMAND PAYMENT OF
THE FAIR VALUE OF THE DISSENTER'S SHARES AND THE INTEREST DUE IF:
(a) the dissenter believes that the amount paid under 35-1-834 or offered under
35-1-836 is less than the fair value of the dissenter's shares or that the
interest due is incorrectly calculated;
(b) the corporation fails to make payment under 35-1-834 within 60 days after
the date set for demanding payment; or
(c) the corporation, having failed to take the proposed action, does not return
the deposited certificates or release the transfer restrictions imposed on
uncertificated shares within 60 days after the date set for demanding payment.
(2) A dissenter waives the right to demand payment under this section unless he
notifies the corporation of his demand in writing under subsection (1) within 30
days after the corporation made or offered payment for his shares.
History: En. Sec. 144, Ch. 368, L. 1991.
35-1-838. COURT ACTION. (1) IF A DEMAND FOR PAYMENT UNDER 35-1-837
REMAINS UNSETTLED, THE CORPORATION SHALL COMMENCE A PROCEEDING WITHIN 60 DAYS
AFTER RECEIVING THE PAYMENT DEMAND AND SHALL PETITION THE COURT TO DETERMINE THE
FAIR VALUE OF THE SHARES AND ACCRUED INTEREST. IF THE CORPORATION DOES NOT
COMMENCE THE PROCEEDING WITHIN THE 60-DAY PERIOD, IT SHALL PAY EACH DISSENTER
WHOSE DEMAND REMAINS UNSETTLED THE AMOUNT DEMANDED.
(2) The corporation shall commence the proceeding in the district court of the
county where a corporation's principal office or, if its principal office is not
located in this state, where its registered office is located. If the
corporation is a foreign corporation without a registered office in this state,
it
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shall commence the proceeding in the county in this state where the registered
office of the domestic corporation merged with or whose shares were acquired by
the foreign corporation was located.
(3) The corporation shall make all dissenters whose demands remain unsettled,
whether or not residents of this state, parties to the proceeding as in an
action against their shares, and all parties must be served with a copy of the
petition. Nonresidents may be served by certified mail or by publication as
provided by law.
(4) The jurisdiction of the district court in which the proceeding is commenced
under subsection (2) is plenary and exclusive. The court may appoint one or more
persons as appraisers to receive evidence and recommend decision on the question
of fair value. The appraisers have the powers described in the order appointing
them or in any amendment to it. The dissenters are entitled to the same
discovery rights as parties in other civil proceedings.
(5) Each dissenter made a party to the proceeding is entitled to judgment:
(a) for the amount, if any, by which the court finds the fair value of the
dissenter's shares plus interest exceeds the amount paid by the corporation; or
(b) for the fair value plus accrued interest of his after-acquired shares for
which the corporation elected to withhold payment under 35-1-836.
35-1-839. COURT COSTS AND ATTORNEY FEES. (1) THE COURT IN AN APPRAISAL
PROCEEDING COMMENCED UNDER 35-1-838 SHALL DETERMINE ALL COSTS OF THE PROCEEDING,
INCLUDING THE REASONABLE COMPENSATION AND EXPENSES OF APPRAISERS APPOINTED BY
THE COURT. THE COURT SHALL ASSESS THE COSTS AGAINST THE CORPORATION, EXCEPT THAT
THE COURT MAY ASSESS COSTS AGAINST ALL OR SOME OF THE DISSENTERS, IN AMOUNTS THE
COURT FINDS EQUITABLE, TO THE EXTENT THE COURT FINDS DISSENTERS ACTED
ARBITRARILY, VEXATIOUSLY, OR NOT IN GOOD FAITH IN DEMANDING PAYMENT UNDER
35-1-837.
(2) The court may also assess the fees and expenses of counsel and experts for
the respective parties, in amounts the court finds equitable:
(a) against the corporation and in favor of any or all dissenters if the court
finds the corporation did not substantially comply with the requirements of
35-1-829 through 35-1-837; or
(b) 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 with respect to
the rights provided by 35-1-826 through 35-1-839.
(3) If the court finds that the services of counsel for any dissenter were of
substantial benefit to other dissenters similarly situated and that the fees for
those services should not be assessed against the corporation, the court may
award the counsel reasonable attorney fees to be paid out of the amounts awarded
the dissenters who were benefited.
History: En. Sec. 146, Ch. 368, L. 1991.
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EXHIBIT D
TREND MINING COMPANY
2000 EQUITY INCENTIVE PLAN
ARTICLE I
ESTABLISHMENT AND TERM
SECTION 1.01 ESTABLISHMENT; DEFINITIONS. This Plan was adopted by the
Board on January 5, 2001, subject to the approval by the stockholders of the
Company, to become effective on January 5, 2001. All capitalized terms used in
this Plan are defined in Appendix A attached to the Plan.
SECTION 1.02 TERM. The Board may suspend or terminate the Plan at any
time. Unless sooner terminated, the Plan shall terminate on January 4, 2011,
which shall be within ten (10) years from the date the Plan is adopted by the
Board or approved by the stockholders of the Company, whichever is earlier. No
Equity Awards may be granted under the Plan while the Plan is suspended or after
it is terminated. Rights and obligations under any Equity Award granted while
the Plan is in effect shall not be impaired by suspension or termination of the
Plan, except with the consent of the person to whom the Equity Award was
granted.
ARTICLE II
STRUCTURE AND PURPOSE
SECTION 2.01 STRUCTURE OF PLAN. The Equity Awards issued under the Plan
shall be either, in the discretion of the Board, (a) Options granted pursuant to
Article VI of the Plan, including Incentive Stock Options and Non-statutory
Stock Options, or (b) Stock bonuses or restricted Stock awards granted pursuant
to Article VII of the Plan. All Options shall be designated as Incentive Stock
Options or Non-statutory Stock Options at the time of grant.
SECTION 2.02 PURPOSE. The purpose of the Plan is to promote the
interests of the Company by aligning the interests of selected eligible persons
under the Plan with the interests of the stockholders of the Company and by
providing to such persons an opportunity to obtain the benefits from ownership
of the Company's Stock through the granting to such persons of Equity Awards.
The Company, through the use of the Plan, seeks to attract and retain the
services of Employees, Directors and Consultants, and to provide incentives for
such persons to exert maximum efforts for the success of the Company and its
Affiliates.
ARTICLE III
ADMINISTRATION
SECTION 3.01 BOARD; DELEGATION TO COMMITTEE. The Plan shall be
administered by the Board unless and until the Board delegates administration to
a Committee. The Board may delegate administration of the Plan to a Committee
composed of one or more members of the Board. In the discretion of the Board,
the Committee may consist solely of Outside Directors. If administration is
delegated to a Committee, the Committee shall have, in administering the Plan,
all of the powers that were possessed by the Board prior to such delegation,
subject, however, to such resolutions, not inconsistent with the provisions of
the Plan, as may be adopted from time to time by the Board. If
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administration is delegated to a Committee, all references in this Plan to the
Board shall thereafter be to the Committee. The Board may abolish the Committee
at any time and revest in the Board the administration of the Plan.
SECTION 3.02 ADMINISTRATION. The Board shall have the power, consistent
with the express provisions of the Plan:
(a) To determine from time to time which of the eligible persons under
the Plan shall be granted Equity Awards;
(b) To determine whether an Equity Award shall be an Incentive Stock
Option, a Non-statutory Stock Option, a Stock bonus, a right to purchase
restricted Stock, or a combination of the foregoing;
(c) To determine how and when each Equity Award shall be granted, the
provisions of each Equity Award granted, including the time or times when a
person shall be permitted to receive Stock pursuant to a Equity Award, and the
number of shares with respect to which a Equity Award shall be granted to each
such person;
(d) To construe and interpret the Plan and Equity Awards granted under
it, and to establish, amend and revoke rules and regulations for the
administration of such Plan and Equity Awards;
(e) To correct any defect, omission or inconsistency in the Plan or in
any Equity Award Agreement, in a manner and to the extent it shall deem
necessary or expedient to make the Plan fully effective;
(f) To amend the Plan or an Equity Award as provided in Article XI; and
(g) Generally, to exercise such powers and to perform such acts as the
Board deems necessary or expedient to promote the best interests of the Company
that are not in conflict with the provisions of the Plan.
ARTICLE IV
ELIGIBILITY
SECTION 4.01 PERSONS ELIGIBLE FOR EQUITY AWARDS. Incentive Stock
Options may be granted only to Employees. Equity Awards other than Incentive
Stock Options may be granted only to Employees, Directors or Consultants.
ARTICLE V
SHARES SUBJECT TO THE PLAN
SECTION 5.01 Subject to the provisions of Article VIII relating to
adjustments upon changes in Stock, no more than 5,000,000 shares of Stock may be
issued pursuant to Equity Awards. If any Equity Award shall for any reason
expire or otherwise terminate, in whole or in part, without having been
exercised in full, the Stock not acquired under such Equity Award shall revert
to and again become
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available for issuance under the Plan. The Stock subject to the Plan may be
unissued shares or reacquired shares, bought on the market or otherwise.
ARTICLE VI
TERMS OF OPTIONS.
SECTION 6.01 FORM OF OPTION. Subject to the provisions of the Plan,
each Option shall be in such form and shall contain such terms and conditions as
the Board shall determine. The provisions of separate Options need not be
identical.
SECTION 6.02 TERM. No Option shall be exercisable after the expiration
of ten (10) years from the date it was granted.
SECTION 6.03 EXERCISE PRICE. The exercise price of each Incentive Stock
Option shall be not less than one hundred percent (100%) of the Fair Market
Value of the Stock subject to the Option on the date the Option is granted. The
exercise price of each Non-statutory Stock Option shall be not less than the
Fair Market Value of the Stock subject to the Option on the date the Option is
granted. Notwithstanding the foregoing, an Option (whether an Incentive Stock
Option or a Non-statutory Stock Option) may be granted with an exercise price
lower than that otherwise provided in this Section 6.03 if such Option is
granted pursuant to an assumption or substitution for another option in a manner
satisfying the provisions of Section 424(a) of the Code.
SECTION 6.04 PAYMENT. The purchase price of Stock acquired pursuant to
an Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (a) in cash at the time the Option is exercised, or (b) at
the discretion of the Board or the Committee, determined at the time of the
grant of the Option, (1) by delivery to the Company of other equity securities
of the Company, (2) according to a deferred payment or other arrangement with
the person to whom the Option is granted or to whom the Option is transferred
pursuant to Section 6.05, (3) in any other form of legal consideration that may
be acceptable to the Board, or (4) any combination of the foregoing.
SECTION 6.05 TRANSFERABILITY. An Incentive Stock Option shall not be
transferable except by will or by the laws of descent and distribution, and
shall be exercisable during the lifetime of the person to whom the Incentive
Stock Option is granted only by such person. Unless otherwise provided in the
Equity Award Agreement, a Non-statutory Stock Option shall not be transferable
except by will or by the laws of descent and distribution or pursuant to a
qualified domestic relations order.
SECTION 6.06 VESTING. The total number of shares of Stock subject to an
Option may, but need not, be vested or allotted in periodic installments (which
may, but need not, be equal). The Option may be subject to such other terms and
conditions on the time or times when it may be exercised (which may be based on
performance or other criteria) as the Board may deem appropriate.
SECTION 6.07 TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR
CONSULTANT. Unless otherwise provided in the Equity Award Agreement relating to
an Option, in the event of a Termination (other than upon the Optionee's death
or Disability), the Optionee may exercise his or her Option (to the extent that
the Optionee was entitled to exercise it at the date of Termination) but only
within such period of time ending on the earlier of (a) the date that is ninety
(90) days after the date of Termination, or (b) the expiration of the term of
the Option as set forth in the Equity Award Agreement.
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SECTION 6.08 DISABILITY OF OPTIONEE. Unless otherwise provided in the
Equity Award Agreement relating to an Option, in the event of a Termination as a
result of the Optionee's Disability, the Optionee may exercise his or her Option
(to the extent that the Optionee was entitled to exercise it at the date of
Termination), but only within such period of time ending on the earlier of (a)
the date six (6) months after the date of Termination, or (b) the expiration of
the term of the Option as set forth in the Equity Award Agreement.
SECTION 6.09 DEATH OF OPTIONEE. Unless otherwise provided in the Equity
Award Agreement relating to an Option, in the event of a Termination as a result
of the Optionee's death, the Option may be exercised (to the extent the Optionee
was entitled to exercise it at the date of Termination) by the Optionee's estate
or by a person who acquired the right to exercise the Option by bequest or
inheritance, but only within the period ending on the earlier of (a) the date
twelve (12) months after the date of Termination, or (b) the expiration of the
term of the Option as set forth in the Equity Award Agreement.
SECTION 6.10 INCENTIVE STOCK OPTION LIMITATIONS. The following
limitations shall apply to a grant of an Incentive Stock Option:
(a) If, at the time of the grant of an Incentive Stock Option, the
Optionee owns (or is deemed to own pursuant to Section 424(d) of the Code)
equity securities possessing more than ten percent (10%) of the total combined
voting power of all classes of equity securities of the Company or of any of its
Affiliates, the exercise price of such Incentive Stock Option shall be at least
one-hundred and ten percent (110%) of the Fair Market Value of such Stock on the
date of grant and the Incentive Stock Option shall terminate on the date that is
within five (5) years after the date of grant.
(b) If the aggregate Fair Market Value (determined at the time of
grant) of Stock with respect to which Incentive Stock Options are exercisable
for the first time by the Optionee during any calendar year under all plans of
the Company and its Affiliates exceeds one-hundred thousand dollars ($100,000),
the Options or portions thereof that exceed such limit (according to the order
in which they were granted) shall be treated as Non-statutory Stock Options.
ARTICLE VII
TERMS OF STOCK BONUSES AND RESTRICTED STOCK AWARDS
SECTION 7.01 FORM OF STOCK BONUS OR RESTRICTED STOCK AWARD. Subject to
the provisions of the Plan, each Stock bonus or restricted Stock award shall be
in such form and shall contain such terms and conditions as the Board shall
determine. The provisions of separate stock bonuses or restricted stock awards
need not be identical.
SECTION 7.02 PURCHASE PRICE. The purchase price, if any, for any Stock
granted as a Stock bonus or restricted Stock award shall be such amount as the
Board shall determine and designate in the Equity Award Agreement.
Notwithstanding the foregoing, the Board may determine that eligible
participants in the Plan may be awarded Stock in consideration for past services
rendered to the Company or an Affiliate thereof or for the benefit of the
Company or an Affiliate thereof.
SECTION 7.03 TRANSFERABILITY. Unless otherwise provided in the Equity
Award Agreement, Stock awarded or purchased pursuant to this Article VII may not
be transferred to any person, except by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order, until any
restrictions on transfer set forth in the Equity Award Agreement lapse.
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SECTION 7.04 PAYMENT. The purchase price, if any, of Stock acquired
pursuant to a Stock bonus or restricted Stock award shall be paid, to the extent
permitted by applicable statutes and regulations, either (a) in cash, or (b) at
the discretion of the Board or the Committee, determined at the time of the
grant of the Stock award, (1) by delivery to the Company of other equity
securities of the Company, (2) according to a deferred payment or other
arrangement with the person to whom the Stock award is granted or to whom the
Option is transferred pursuant to Section 7.03, (3) by electing to receive the
Stock in lieu of other compensation payable to the person by the Company or an
Affiliate thereof or for the benefit of the Company or an Affiliate thereof, (4)
in consideration for past services rendered by the person to the Company or for
its benefit, (5) in any other form of legal consideration that may be acceptable
to the Board, or (6) any combination of the foregoing.
SECTION 7.05 VESTING. Shares of Stock sold or awarded under Article VII
of the Plan may, but need not, be subject to a repurchase option or right of
first refusal in favor of the Company.
ARTICLE VIII
ADJUSTMENTS UPON CHANGES IN STOCK
SECTION 8.01 CHANGE IN STOCK. If any change is made in the Stock
subject to the Plan, through a merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of
consideration by the Company, the Plan will be appropriately adjusted in the
class(es) and maximum number of shares subject to the Plan pursuant to Article
V, and the outstanding Equity Awards will be appropriately adjusted in the
class(es) and number of shares subject to and the exercise price of such
outstanding Equity Awards. Such adjustments shall be made by the Board at the
time of the change in the Stock, whether or not specifically provided for in any
outstanding Equity Award. The Board's determination shall be final, binding and
conclusive.
ARTICLE IX
COVENANTS OF THE COMPANY
SECTION 9.01 RESERVATION OF STOCK. The Company shall reserve from its
authorized but unissued Stock the number of shares of Stock issuable pursuant to
outstanding Equity Awards.
SECTION 9.02 REGULATORY AUTHORITY. The Company shall seek to obtain
from each regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to issue and sell shares of Stock upon the exercise
of outstanding Equity Awards, PROVIDED, HOWEVER, that this undertaking shall not
require the Company to register under the Securities Act of 1933, as amended,
either the Plan, any Equity Award or any Stock issued or issuable pursuant to
any such Equity Award. If, after reasonable efforts, the Company is unable to
obtain from any such regulatory commission or agency the authority for the
lawful issuance and sale of Stock under the Plan, the Company shall be relieved
from any liability for failure to issue and sell Stock upon exercise of such
Equity Awards unless and until such authority is obtained.
D-5
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01 ACCELERATION OF VESTING. Notwithstanding any provision in
any Equity Award Agreement, the Board may, in its discretion, accelerate the
time at which an Equity Award may first be exercised or the time during which a
Equity Award or any part thereof will vest.
SECTION 10.02 STOCKHOLDER RIGHTS. Except as set forth in the Equity
Award Agreement, no holder of any Equity Award shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any Stock subject
to such Equity Award unless and until such person has satisfied all requirements
for vesting or exercise of the Equity Award pursuant to its terms.
SECTION 10.03 EMPLOYMENT OR OTHER SERVICES. Nothing in the Plan, any
Equity Award Agreement or any instrument executed pursuant thereto shall (a)
confer upon any Employee or other holder of an Equity Award any right to
continue in the employ of the Company or any Affiliate, (b) confer upon any
Director or Consultant or other holder of an Equity Award any right to continue
acting as a Director or Consultant, (c) affect the right of the Company or any
Affiliate to terminate the employment of any Employee with or without cause, (d)
affect the right of the Company's Board of Directors and/or the Company's
stockholders to remove any Director pursuant to the terms of the Company's
charter documents and the provisions of applicable law, or (e) affect the right
of the Company to terminate the relationship of any Consultant pursuant to the
terms of such Consultant's agreement with the Company or Affiliate.
SECTION 10.04 SECURITIES REQUIREMENTS. The Company may require any
person to whom a Equity Award is granted, or any person to whom a Equity Award
is transferred, as a condition of exercising or acquiring Stock under any Equity
Award, to give written assurances satisfactory to the Company (a) as to such
person's knowledge and experience in financial and business matters, (b) that he
or she is capable of evaluating, alone or together with a purchaser
representative, the merits and risks of exercising the Equity Award, and (c)
that such person is acquiring the Stock subject to the Equity Award for such
person's own account and not with any view to a distribution of the Stock. The
Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of the Stock.
SECTION 10.05 TAX WITHHOLDING. If provided for in an Equity Award
Agreement, the holder of an Equity Award may satisfy any federal, state or local
tax withholding obligation relating to the exercise or acquisition of Stock
under a Equity Award by (a) tendering a cash payment, (b) authorizing the
Company to withhold shares from the shares of the Stock otherwise issuable to
such person as a result of the exercise or acquisition of Stock under the Equity
Award, (c) delivering to the Company unencumbered shares of equity securities of
the Company held by such person by, or (d) any combination of the foregoing.
ARTICLE XI
AMENDMENT OF THE PLAN AND EQUITY AWARDS
SECTION 11.01 AMENDMENT OF PLAN; STOCKHOLDER APPROVAL. The Board may at
any time terminate, and from time-to-time may amend or modify, the Plan;
provided, however, that no amendment
D-6
or modification may become effective without approval of the amendment or
modification by the stockholders if stockholder approval is required to enable
the Plan to satisfy any applicable statutory or regulatory requirements, or if
the Company, on the advice of counsel, determines that stockholder approval is
otherwise necessary or desirable. No such amendment shall adversely affect any
outstanding Equity Award without the holder's written consent.
SECTION 11.02 CHANGES IN LAW. The Board may amend the Plan as it deems
necessary or advisable to provide eligible Employees, Director or Consultants
with the maximum benefits provided or to be provided under the provisions of the
Plan relating to Incentive Stock Options and to bring the Plan or Incentive
Stock Options granted under the Plan into compliance therewith. The Board may
also, in its discretion, amend the Plan to take into account changes in law and
tax and accounting rules (including any pooling-of-interest rules), as well as
other developments, and to grant Equity Awards that qualify for beneficial
treatment under such rules.
D-7
APPENDIX A
DEFINITIONS
"AFFILIATE" means any parent corporation or subsidiary corporation,
whether now or hereafter existing, as those terms are defined in Sections 424(e)
and (f) respectively, of the Code.
"BOARD" means the Board of Directors of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.
"COMMITTEE" means a Committee appointed by the Board in accordance with
Section 3.01 of the Plan.
"COMPANY" means Trend Mining Company, a Montana corporation.
"CONSULTANT" means any person, including an advisor, engaged by the
Company or an Affiliate to render bona fide consulting services (other than
services in connection with the offer or sale of securities in a capital-raising
transaction) and who is compensated for such services, PROVIDED, HOWEVER, that
the term "Consultant" shall not include Directors who are paid only a director's
fee by the Company or who are not compensated by the Company for their services
as Directors.
"DIRECTOR" means a member of the Board.
"DISABILITY" means the physical inability, as determined in good faith
by the Board, to serve in the person's capacity as an Employee, Director or
Consultant, for a period of at least six (6) months.
"EMPLOYEE" means any person, including officers and Directors, employed
by the Company or any Affiliate of the Company. Neither service as a Director
nor payment of a director's fee by the Company shall be sufficient to constitute
"employment" by the Company.
"EQUITY AWARD" means any right granted under the Plan, including any
Option, any Stock bonus or any right to purchase restricted Stock.
"EQUITY AWARD AGREEMENT" means a written agreement between the Company
and a holder of a Equity Award evidencing the terms and conditions of an
individual Equity Award grant. Each Equity Award Agreement shall be subject to
the terms and conditions of the Plan.
"FAIR MARKET VALUE" means, as of any date, the value of the Stock
determined as follows:
- If the Stock is listed on any established stock exchange or a
national market system, including without limitation the
Nasdaq National Market or Nasdaq Small Cap Market, the Fair
Market Value of a share of Stock shall be the last sales price
for the Stock (or the closing bid, if no sales were reported)
as quoted on such system or exchange, as reported in the WALL
STREET JOURNAL or such other source as the Board deems
reliable.
- In the absence of an established market for the Stock, the
Fair Market Value shall be determined in good faith by the
Board.
D-8
"INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
"NON-STATUTORY STOCK OPTION" means an Option not intended to qualify as
an Incentive Stock Option.
"OPTION" means a stock option granted pursuant to the Plan.
"OPTIONEE" means an Employee, Director or Consultant who holds an
outstanding Option.
"OUTSIDE DIRECTOR" means a Director who either (a) is not a current
Employee of the Company or an "affiliated corporation" (within the meaning of
Treasury regulations promulgated under Section 162(m) of the Code), is not a
former Employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time, and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director, or (b) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.
"PLAN" means this Equity Incentive Plan.
"STOCK" means the Company's Common Stock, $0.01 par value.
"TERMINATION" means the termination or interruption of an Employee's,
Director's or Consultant's employment or relationship with the Company. The
Board, in its sole discretion, may determine whether a Termination has occurred
in the case of: any leave of absence approved by the Board, including sick
leave, military leave, or any other personal leave.
D-9
TREND MINING COMPANY
401 FRONT AVENUE, SUITE 1, SECOND FLOOR
COEUR D'ALENE, IDAHO 83814
THIS PROXY IS BEING SOLICITED BY
THE BOARD OF DIRECTORS OF
TREND MINING COMPANY
The undersigned holder of shares of Common Stock of Trend Mining Company
(the "Company") hereby acknowledges receipt of the Notice and Proxy Statement
dated January 29, 2001 in connection with the Annual Meeting of Shareholders to
be held at 9:30 a.m. (Pacific standard time) on February 23, 2001 at the Coeur
d'Alene Inn and Conference Center, 414 W. Appleway, Coeur d'Alene, Idaho 83814
and hereby appoints Kurt J. Hoffman, Blaze G. Julum, and Brian L. Miller or any
of them, with full power of substitution, to vote all shares of the Common Stock
of Trend Mining Company registered in the name provided herein that the
undersigned is entitled to vote at the Annual Meeting of Shareholders, and at
any adjournment or adjournments thereof, with all the powers the undersigned
would have if personally present. Without limiting the general authorization
hereby given, said proxies are, and each of them is, instructed to vote or act
as follows on the proposals set forth in said proxy.
This proxy when executed will be voted in the manner directed herein. If no
direction is made this proxy will be voted FOR the approval of the election of
the seven nominees as directors of the Company, FOR the reincorporation
proposal, and FOR the proposal to adopt the 2000 Equity Incentive Plan. With
respect to the tabulation of proxies for purposes of electing directors, where
voting is cumulative and the seven nominees with the greatest number of votes
will be elected to the Board of Directors, and adopting the 2000 Equity
Incentive Plan, where approval requires the affirmative vote of a majority of
the votes cast, abstentions and broker non-votes will have no effect on the
proposals (except for purposes of determining whether a quorum is present at the
Annual Meeting). With respect to the tabulation of proxies for purposes of the
reincorporation proposal, where approval requires the affirmative vote of
two-thirds of the votes entitled to be cast, abstentions and broker non-votes
will have the effect of a vote against the proposal.
In their discretion the proxies are authorized to vote upon such other
matters as may properly come before the meeting or any adjournments thereof.
SEE REVERSE SIDE FOR THE PROPOSALS. If you wish to vote in accordance with
the Board of Directors' recommendations, just sign on the reverse side. You need
not mark any boxes.
[SEE REVERSE -- CONTINUED AND TO BE SIGNED ON REVERSE SIDE]
1. Election of Seven Directors, each to hold office until his successor shall
have been elected and qualified. Voting for directors is cumulative, which means
that you have the number of votes equal to the number of shares you hold
multiplied by seven, the number of nominees. When using cumulative voting, you
may choose to cast votes equally among the nominees or may choose to distribute
votes among the nominees in such numbers as you elect by writing the number of
votes cast in the blank next to the nominee's name. If no direction is made,
this proxy will be voted equally FOR the nominees of the Board of Directors.
(See "Election of Directors" in the Proxy Statement for a further explanation of
cumulative voting).
/ / FOR all nominees listed / / WITHHOLD authority to / / FOR all nominees listed
below equally, or as set vote for all nominees listed below except .
forth below below
Nominees:
J. Michael Sharratt -------- Kurt J. Hoffman -------- Blaze G. Julum --------
Fred W. Brackebusch -------- Jeffrey M. Christian -------- Arthur E. Johnson --------
Ishiung J. Wu --------
2. To Adopt the Reincorporation Proposal.
For Against Abstain
/ / / / / /
3. To Adopt the 2000 Equity Incentive Plan.
For Against Abstain
/ / / / / /
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any postponements or
adjournments thereof.
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW / /
The proxy should be dated and signed by the shareholder or his attorney
authorized in writing or in any other manner permitted by law. Joint owners
should each sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation, please sign in full
corporate name by the president or authorized officer. If a partnership, please
sign in partnership name by an authorized person.
Dated: _________________________, 2001
______________________________________
Signature of Shareholder
______________________________________
Signature of Shareholder (if held
jointly)
Change of Address: