SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14c INFORMATION STATEMENT PURSUANT
TO SECTION 14c OF THE SECURITIES
EXCHANGE ACT OF 1934
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, Use of the Commission Only
(as permitted by Rule 14c-5(d) (2)) Statement
[X] Definitive Information Statement
[ ] Definitive Additional Materials
KINAM GOLD INC.
-------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
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previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
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NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
May 22, 2001
KINAM GOLD INC.
You are cordially invited to attend a Meeting of Shareholders of Kinam Gold Inc.
(the "Company"), which will be held on May 22, 2001, at 9:30 a.m., at the Main
Boardroom, 52nd Floor, Scotia Plaza, 40 King Street West, Toronto, Ontario, M5H
3Y2 (the "Meeting"), for the following purposes, which are more fully described
in the Information Statement purposes, which are more fully described in the
Information Statement accompanying this Notice:
(i) To elect directors;
(ii) Change of the state of incorporation of the Company from Delaware to
Nevada;
(iii) Appoint Deloitte & Touche LLP as independent auditors; and
(iv) To transact such other business as may properly come before the Meeting
or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on April 18, 2001, as the
record date for the determination of shareholders entitled to receive notice of
and to vote at the Meeting and at any adjournment or postponement thereof.
All shareholders are cordially invited to attend the Meeting in person.
By Order of the Board of Directors
/s/ Shelley M. Riley
--------------------
Shelley M. Riley
Secretary
April 24, 2001
KINAM GOLD INC.
185 SOUTH STATE STREET
SUITE 820
SALT LAKE CITY, UTAH
84111
INFORMATION STATEMENT
Annual and Special Meeting of Shareholders
May 22, 2001
This Information Statement is being furnished by Kinam Gold Inc., a Delaware
corporation (the "Company"), to the holders of the Company's Common shares (the
"Common Stock") and the $3.75 Series B Convertible Preferred Stock (the
"Preferred Stock"), in connection with an Annual and Special Meeting of
Shareholders to:
a) elect directors;
b) change of the state of incorporation of the Company from Delaware to
Nevada; and
c) appoint Deloitte & Touche LLP as independent auditors.
This Information Statement and the Notice of Annual and Special Meeting of
Shareholders are first being mailed to shareholders of the Company on or about
April 27, 2001.
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY
The Company will bear all costs and expenses relating to preparing, printing and
mailing to shareholders this Information Statement and accompanying materials.
Arrangements will be made with brokerage firms and other custodians, nominees
and fiduciaries representing beneficial owners to forward the materials to the
beneficial holders and the Company will reimburse such brokerage firms,
custodians, nominees and fiduciaries for reasonable out-of-pocket expenses
incurred by them in doing so.
Record Date
The Board has fixed the close of business on April 18, 2001 as the record date
for determination of shareholders entitled to notice of and to vote at the
Annual and Special Meeting (the "Record Date"). As of the Record Date, there
were issued and outstanding 92,213,988 shares of Common Stock and 1,840,000
shares of Preferred Stock. The Common Stock and Preferred Stock are voted
together as a single class. The holders of record of the shares of Common Stock
on the Record Date are entitled to cast one vote per share on each matter
submitted to a vote at the Annual and Special Meeting. The holders of record of
the shares of Preferred Stock on the Record Date are entitled to cast 1.4 votes
per share on each matter submitted to a vote at the Annual and Special Meeting.
Accordingly, 92,213,988 Common Stock votes and 2,576,000 Preferred Stock votes
are entitled to be cast on each matter submitted to a vote at the Annual and
Special Meeting if the holders have provided a proxy with respect to their
shares or are in attendance at the meeting.
Required Vote
A majority of the outstanding shares entitled to vote, represented in person or
by properly executed proxy, is required for a quorum at the Annual and Special
Meeting. Abstentions and broker non-votes, which are indications by a broker
that it does not have discretionary authority to vote on a particular matter,
will be
counted as "represented" for the purpose of determining the presence or absence
of a quorum. Under Delaware corporate law and the certificate of incorporation
and bylaws of the Company, once a quorum is established, shareholder approval
with respect to a particular proposal is generally obtained when the votes cast
in favor of the proposal exceed the votes cast against such proposal.
In the election of directors, the five nominees receiving the highest number of
votes will be elected. For approval of the change of the state of incorporation
and the appointment of the independent auditor, the votes cast in favor of each
such proposal must exceed the votes cast against the proposal. Abstentions and
broker non-votes will not be counted for against any matter considered at the
Annual and Special Meeting.
All of the issued and outstanding Common Stock is held by Kinross Gold USA,
Inc., a wholly-owned subsidiary of Kinross Gold Corporation (collectively,
"Kinross"). Kinross has indicated its intent to vote all of its shares in favor
of management's proposals. Accordingly, no further votes are required to approve
these proposals and the Company is not soliciting proxies. All of the
stockholders are invited to attend the Annual and Special Meeting and to vote
their shares in person.
Pursuant to the rules and regulations promulgated by the United States
Securities and Exchange Commission (the "SEC") under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), an information statement must be sent
to the holders of voting shares in connection with the Annual and Special
Meeting, even if proxies are not being solicited. This Information Statement is
provided to the holders of the Preferred Stock in compliance with the
requirements of the Exchange Act.
The Preferred Stock is traded on The New York Stock Exchange (the "NYSE") under
the symbol "KGCPrB".
OTHER THAN DULY AUTHORIZED OFFICERS OF THE COMPANY, NO PERSON IS AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. THE DELIVERY OF THIS INFORMATION STATEMENT SHALL NOT UNDER ANY
CIRCUMSTANCE CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF, OR THAT THE INFORMATION CONTAINED OR
INCORPORATED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
-----------------------------------
THIS INFORMATION STATEMENT DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICIATION OF AN OFFER TO BUY ANY
SECURITIES OF THE COMPANY.
-----------------------------------
The date of this Information Statement is April 24, 2001.
ELECTION OF DIRECTORS
Nominees for Election as Directors
At the Annual and Special Meeting, five directors of the Company (constituting
the entire Board) are to be elected to serve until the next annual meeting of
shareholders and until their successors shall be duly elected and qualified.
Each of the nominees for director identified below is currently a director of
the Company. If any of the nominees should be unavailable to serve, which is not
now anticipated, the shares of Common Stock held by Kinross will be voted for
such other persons as shall be designated by the present Board. The five
nominees receiving the highest number of votes at the Annual and Special Meeting
will be elected.
Name Age Position Director Since
- ------------------------- -------- --------------------- -----------------
John A. Brough 54 Director 1998
Arthur H. Ditto 60 Director, President 1998
John M.H. Huxley 55 Director 1998
Cameron A. Mingay 48 Director 2001
Brian W. Penny 38 Director, Treasurer 1998
Committees and Meetings
The Board has formed a standing Audit Committee, the current members of which
are John A. Brough, Cameron A. Mingay, and John M.H. Huxley. During the year
ended December 31, 2000, the members of the Audit Committee were John A. Brough,
John M.H. Huxley, and John W. Ivany. The Audit Committee held four meetings
during the year ending December 31, 2000. The Audit Committee's functions
include the recommendation of the Company's independent auditor, and the review
of the Company's internal accounting and financial practices and controls and
all services performed by the Company's independent auditor.
The Board also has formed a standing Benefits Committee comprised solely of
directors, the members of which are Arthur H. Ditto, Cameron A. Mingay and Brian
W. Penny. The Benefits Committee did not meet during the year ended December 31,
2000. The Benefits Committee's functions include direction and oversight of the
Company's tax qualified and welfare benefit plans.
During the fiscal year ending December 31, 2000, there was one meeting held by
the Board.
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Directors
John A. Brough has served as a director of the Company since June 1998. Mr.
Brough has been President of Torwest Inc. since February 1998, prior to which he
was Executive Vice-President and Chief Financial Officer of iStar Internet Inc.
From February 1996 to February 1998, Mr. Brough was Senior Vice-President and
Chief Financial Officer of Markborough Properties Inc. Mr. Brough has been a
director of Kinross, the corporate parent of the Company, since January 1994.
Mr. Brough is a director of Torwest Inc. and Windsor Properties Inc. Mr. Brough
resides in Vero Beach, Florida.
Arthur H. Ditto has served as a director of the Company since June 1998. Mr.
Ditto has been the President and Chief Operating Officer of Kinross, the
corporate parent of the Company, since May 1993. Mr. Ditto is also a director of
E-Crete Products, Inc. and Montana Tech Foundation. Mr. Ditto resides in North
York, Ontario.
John M.H. Huxley has served as a director of the Company since June 1998. Mr.
Huxley has been a Principal of Algonquin Power Corporation Inc. since January
1990. Mr. Huxley has been a director of Kinross, the corporate parent of the
Company, since May 1993. Mr. Huxley resides in Toronto, Ontario.
Cameron A. Mingay has served as a director of the Company since March 2001. Mr.
Mingay has been a Partner with Cassels, Brock & Blackwell, outside legal counsel
to Kinross and the Company, since June, 1999. Prior to June, 1999 Mr. Mingay was
a partner with Smith, Lyons. Mr. Mingay resides in Toronto, Ontario.
Brian W. Penny has served as a director of the Company since June 1998. Mr.
Penny has been the Vice-President, Finance and Chief Financial Officer of
Kinross, the corporate parent of the Company, since May 1993. Mr. Penny resides
in Markham, Ontario.
Executive Officers
The Company's executive officers are also officers of the Company's corporate
parent, Kinross, and other Kinross subsidiaries. Consequently, they do not spend
their full business time on the affairs of the Company. The compensation of the
Company's officers is determined and paid by Kinross for all services rendered
to Kinross and its subsidiaries.
The names, ages and position of all executive officers of the Company are as
follows:
Name Age Office
- ------------------------- -------- ------------------
Arthur H. Ditto 60 President
John W. Ivany 56 Vice-President
Robert W. Schafer 47 Vice-President
Brian W. Penny 38 Treasurer
Shelley M. Riley 44 Secretary
Arthur H. Ditto has been the President of the Company since June 1998. Since May
1993, Mr. Ditto has been the President and Chief Operating Officer of Kinross,
the corporate parent of the Company. Prior to joining Kinross, Mr. Ditto was the
President and Chief Executive Officer of Plexus Resources Corporation. Mr. Ditto
is also a director of E-Crete Products, Inc. and Montana Tech Foundation.
John W. Ivany has been Vice President of the Company since March 2001. Mr. Ivany
also served as a director of the Company from June 1998 to March 2001. Mr. Ivany
has been Executive Vice-President of Kinross, the corporate parent of the
Company, since July 1995. Mr. Ivany resides in Toronto, Ontario.
Robert W. Schafer has been the Vice-President of the Company since June 1998.
Since July 1996, Mr. Schafer has been the Vice-President, Exploration of
Kinross, the corporate parent of the Company. Prior to joining Kinross he was
the Regional Manager, Western U.S. Exploration of BHP Minerals International
Exploration Inc., a natural resource Company.
Brian W. Penny has been the Treasurer of the Company since June 1998. Since May
1993, Mr. Penny has been the Vice-President, Finance and Chief Financial Officer
of Kinross, the corporate parent of the Company.
Shelley M. Riley has been the Secretary of the Company since June 1998. Since
June 1993, Ms. Riley has been the Corporate Secretary of Kinross, the corporate
parent of the Company.
Compensation of Directors
The Board of Directors of the Company receives no compensation for acting as
directors of the Company. Each of the directors, other than Mr. Penny, is also a
director of Kinross, which pays each Kinross director who is not a salaried
employee of Kinross, Cdn. $15,000 per annum for his services as a director.
Directors
of Kinross are also entitled to a fee of Cdn. $1,250 for attendance at meetings
of the Board of Directors of Kinross. In addition, directors are reimbursed for
their expenses. Additionally, members of Kinross' Audit Compensation, Corporate
Governance, and Environmental Committees receive a fee of Cdn. $1,250 per
meeting and the Chairman of each of these committees receives Cdn. $2,000 for
acting in this capacity.
Each Kinross director who is not a salaried employee of Kinross also receives
stock options under Kinross Stock Option Plan, the number of such options being
determined by the Board of Directors of Kinross. During the year ended December
31, 2000, Messrs. Brough and Huxley were granted options to acquire 40,000
shares of Kinross common stock each at $2.00 per share and 50,000 shares of
Kinross common stock each at $1.10 per share. These options have a term of five
years. The compensation of directors by Kinross is for the services rendered to
Kinross and its subsidiaries, including the Company.
Executive Compensation
The Company does not compensate its executive officers. Each of the officers of
the Company is also an officer of Kinross, the ultimate corporate parent of the
Company. The compensation of each of these individuals is set by Kinross and is
paid for all services rendered to Kinross and its subsidiaries, including the
Company.
The following table sets forth all annual and long-term compensation for
services in all capacities paid by Kinross, the corporate parent, for the three
fiscal years ended December 31, 2000, in respect of each of the individuals who
were, at December 31, 2000, the Company's Chief Executive Officer and the senior
executive officers whose total salary exceeded $100,000 (the "Named Executive
Officers").
Summary Compensation Table
Annual Compensation Long-Term Compensation Awards
------------------------------------- ------------------------------------------------
Other Restricted Securities
Annual Stock Underlying LTIP All Other
Name and Principal Fiscal Salary Bonus Comp. Awards Options/ Payments Compensation
Position Year ($) ($) ($) ($) Sars (#) $ ($)
- ------------------ ------- ---------- ------- ---------- ---------- ----------- ----------- -------------
Arthur H. Ditto 2000 232,183 - - - 435,000 - 43,380
President 1999 232,164 92,160 - - 250,000 - 44,457
1998 210,636 100,459 - - 150,000 - 38,695
Brian W. Penny 2000 161,553 16,830 - 29,680 110,000 - 13,775
Treasurer 1999 161,540 29,616 - - 100,000 - 15,186
1998 137,672 33,715 - - 100,000 - 12,268
Robert W. Schafer 2000 131,273 12,118 - 10,600 125,000 - 12,676
Vice President 1999 131,251 22,885 - - 75,000 - 12,305
1998 121,657 23,600 - - 100,000 - 11,400
Option/SAR Grants in the Last Fiscal Year
The Company does not grant options to purchase its equity securities to
employees or directors.
The following table sets forth stock options granted by Kinross under its Stock
Option Plan during the year ended December 31, 2000, to the Named Executive
Officers of the Company. The options are to acquire Kinross common stock and are
exercisable with respect to 50% of the shares immediately and 50% on the
anniversary of the date of grant. The exercise price is the market value,
determined in accordance with Kinross' Stock Option Plan, of the Kinross common
stock as of the date of grant.
Option Grants in Last Fiscal Year
Average Market Value
Exercise Price on Grant Date of
Name Number % (Cdn.$/Share) (Cdn. $/Share) Expiry
- -------------------- ---------- ---------- ---------------- ----------------- -----------
Arthur H. Ditto 435,000 12.06% $1.10 $1.10 27/07/05
Brian W. Penny 110,000 3.05% $1.10 $1.10 27/07/05
Robert W. Schafer 125,000 3.32% $1.10 $1.10 27/07/05
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values
There are no outstanding options or other rights to acquire equity stock of the
Company.
The following table sets forth details of options, to acquire Kinross common
stock that were exercised during the year ended December 31, 2000, and that are
held as of December 31, 2000, by each of the Named Executive Officers, including
the fiscal year end value of unexercised options on an aggregate basis.
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year End Option Values
Value of Unexercised
Common In-the-Money Options
Shares Unexercised at Fiscal at Fiscal Year End
Acquired Aggregate Value Year End ($)(2)
Name on Exercise Realized($)(1) Exercisable/Unexercisable Exercisable/Unexercisable
- ------------------- ------------ ----------------- ----------------------- -------------------------
Arthur H. Ditto - - 850,833/434,167 -
Brian W. Penny - - 285,000/155,000 -
Robert W. Schafer - - 324,167/145,833 -
- -------------------------
(1) Calculated using the closing price for a board lot of Common Shares of
Kinross on the Toronto Stock Exchange.
(2) Value of unexercised-in-the-money options calculated using the closing
price of Cdn. $0.81 of the Common Shares of Kinross on the Toronto
Stock Exchange on December 31, 2000, less the exercise price of
in-the-money stock options.
Pension Plans
Canada. In 1997, Kinross, the corporate parent of the Company, established a
deferred profit sharing plan and a registered retirement savings plan covering
all of the Canadian non-unionized employees of Kinross and its subsidiaries. The
deferred profit sharing plan provides for basic contributions by Kinross (which
cannot be less than 4% of the member's compensation). In addition, there is an
annual profit sharing contribution based on Kinross' financial performance.
Kinross contributed an aggregate of $38,474 to the deferred profit sharing plan
on behalf of the Named Executive Officers of the Company during the year ended
December 31, 2000.
The registered retirement savings plan is available to all non-unionized
Canadian employees and allows for the minimum contribution of Cdn. $60 per month
with Kinross matching 100% of this amount with any additional contributions
being matched by 50% up to a maximum of Cdn. $30. Kinross contributed $1,454 to
the registered retirement savings plan on behalf of each of Messrs. Ditto,
Schafer, and Penny during the year ended December 31, 2000.
United States. Kinross' subsidiary, Kinross Gold U.S.A., Inc., has various
pension plans in which one executive officer is eligible to participate. Kinross
is required to make certain contributions to the pension plans on behalf of
Arthur H. Ditto.
Employees are allowed to make contributions to the 401(k) Savings Plan from
salary deductions each year subject to certain limitations. Kinross has in past
years made matching contributions of 50% of each employee's contributions, but
subject to a maximum contribution of 3% of the employee's annual compensation.
Employees are always fully vested in their own salary deferral contributions and
become fully vested (in 33-1/3% increments) in any contribution by Kinross after
three years. Participants are allowed to direct the investment of their account
within a group of designated investment funds. Kinross contributed $4,219 to the
401(k) Savings Plan on behalf of Arthur H. Ditto during the year ended December
31, 2000.
Kinross established a defined contribution money purchase plan (the "Money
Purchase Plan") in which substantially all of the employees in the United States
participate. The Money Purchase Plan is funded entirely by Kinross. Kinross
contributed 5% of the employees' annual wages to this plan. Kinross is required
to make contributions to this plan such that no unfunded pension benefit
obligations exist. Participants are allowed to direct the investment of the
pension plan account balances. Kinross contributed $7,031 to the Money Purchase
Plan on behalf of Arthur H. Ditto during the year ended December 31, 2000.
Employment Contracts
Kinross has entered into a severance agreement with each of the Named Executive
Officers. Each of the severance agreements provides for a severance payment
equal to 2 (in the case of Messrs. Schafer and Penny) or 2.5 (in the case of Mr.
Ditto multiplied by the sum of the Named Executive Officer's annual compensation
(annual base salary and benefits) and target bonus. In the case of Mr. Ditto,
the severance payment is paid to the Named Executive Officer following a change
of control of Kinross, at the option of the Named Executive Officer. In the case
of Messrs. Schafer, and Penny, the severance is paid to the Named Executive
Officer if a triggering event occurs following a change of control. A triggering
event includes: (i) an adverse change in the employment terms of the executive;
(ii) a diminution of the title of the executive; (iii) a change in the person to
whom the executive reports (subject to certain exceptions); and (iv) a change in
the location at which the executive is required to work (subject to certain
exceptions). The severance amount is payable at the option of Messrs. Schafer
and Penny provided the exercise of such option occurs within 18 months following
the change of control and within 6 months of the triggering event.
Other than as described above, Kinross (and its subsidiaries) have no employment
contracts in place with the Named Executive Officers and no compensatory plans
or arrangements with respect to the Named Executive Officers that results or
will result from the resignation, retirement, or any other termination of
employment of such officers' employment with Kinross (and its subsidiaries),
from a change of control of Kinross (and its subsidiaries) or a change in the
Named Executive Officers' responsibilities following a change of control.
Compensation Committee Interlocks and Insider Participation
The Company presently does not have a Compensation Committee.
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
The Securities and Exchange Commission's ("SEC") rules addressing disclosure of
executive compensation in Annual Reports on Form 10-K require the compensation
committee of the board of directors of the Company to include in this Annual
Report on Form 10-K a report from such committee addressing, with respect to the
most recently completed fiscal year, (a) the Company's policies regarding
executive compensation generally, (b) the factors and criteria considered in
setting the compensation of each of the Company's Chief Executive Officer during
such fiscal year, Arthur H. Ditto, and (c) any
relationship between such compensation and the Company's performance, or where
no compensation committee of the board of directors exists, as has been the case
with the Company since June 1, 1999, the rules require that such report come
from the entire board of directors.
Prior to June 1, 1998, the Company's executive compensation program was
administered by the Compensation Committee of the Board of Directors, which was
responsible for establishing the policies governing the Company's compensation
program and the amount of compensation for each of the Company's independent
directors and had oversight responsibility for all executive compensation and
executive benefit programs of the Company.
Current Policy
As of June 1, 1998, the Company ceased paying all forms of compensation and
reimbursement of compensation paid by third parties, including the accrual of
benefits and the granting of awards under employee benefit plans maintained by
the Company, to its executive officers, including the Company's Chief Executive
Officer. The compensation of the Company's officers is fixed by its corporate
parent, Kinross, and is paid to the officers by Kinross for all services they
render to Kinross and its subsidiaries, including those services rendered to the
Company. The Board of Directors does not currently anticipate a change in this
policy.
Respectfully submitted,
JOHN A. BROUGH
ARTHUR H. DITTO
JOHN M.H. HUXLEY
CAMERON A. MINGAY
BRIAN W. PENNY
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Company (the "Audit Committee") was composed of three
directors, two of whom are independent, during fiscal year 2000. It operates
under a written charter adopted by the Board of Directors in June, 2000, a copy
of which is attached as Appendix A. The members of the Audit Committee for
fiscal year 2000 were John A. Brough, John M.H. Huxley, and John W. Ivany. The
Audit Committee recommends to the Board of Directors, subject to stockholder
ratification, the selection of the Company's independent accountants.
Management is responsible for the Company's internal controls and the financial
reporting process. The independent auditors are responsible for performing an
independent audit of the Company's financial statements in accordance with
generally accepted auditing standards and expressing an opinion on the
conformity of those audited financial statements in accordance with generally
accepted accounting principles. The Audit Committee's responsibility is to
monitor and oversee these processes.
Review With Management
The Audit Committee has met and held discussions with management regarding the
audited financial statements. Management has represented to the Audit Committee
that the Company's consolidated financial statements were prepared in accordance
with generally accepted accounting principles.
Review and Discussion with Independent Auditors
The Audit Committee has reviewed and discussed with Deloitte & Touche LLP, the
Company's independent auditors, the matters required to be discussed by
Statement of Auditing Standards No. 61 (SAS 61--Communications with Audit
Committees), as amended, relating to the auditors' judgment about the
quality of the Company's accounting principles, judgments and estimates, as
applied in its financial reporting.
The Audit Committee has received the written disclosures and the letter from the
independent auditors required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees) that relates to the auditors'
independence from the Company, and has discussed with the independent auditors
their independence from management and the Company. The Audit Committee has also
considered the compatibility of non-audit services with the auditors'
independence.
Conclusion
Based on the Audit Committee's discussion with management and the independent
auditors, the Audit Committee's review of the representations of management and
the report of the independent auditors to the Audit Committee, the Audit
Committee recommended that the Board of Directors include the audited
consolidated financial statements in the Company's Annual Report on Form 10-K
for the year ended December 31, 2000, filed with the Securities and Exchange
Commission.
Respectfully submitted,
JOHN A. BROUGH
JOHN M.H. HUXLEY
CAMERON A. MINGAY
PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total shareholder return on
the Common Stock, calculated on a dividend reinvested basis, from December 31,
1996 through May 31, 1998, compared with the S&P 500 Index and the U.S. Gold and
Silver Index (XAU). After May 31, 1998 there was no public market for the Common
Stock.
CUMULATIVE TOTAL RETURN
BASED ON INVESTMENT OF $1.00
FROM DECEMBER 31, 1994 TO MAY 31, 1998
Kinam XAU S&P500
----- --- ------
31-Dec-96 1.06 1.07 1.61
31-Dec-97 0.39 0.68 2.11
31-May-98 0.53 0.68 2.38
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership Of Directors And Executive Officers
As of December 31, 2000, the following table sets forth the amount of all equity
securities of the Company that are beneficially owned by each director of the
Company, each of the executive officers named in the Summary Compensation Table
above, and all directors and executive officers of the Company as a group. The
table segregates shares held from those beneficially owned through ownership of
options to purchase shares of Common Stock. A person is considered to
"beneficially own" any shares (i) over which such person exercises sole or
shared voting or investment power or (ii) of which such person has the right to
acquire beneficial ownership at any time within 60 days (e.g., through the
exercise of stock options). Unless otherwise indicated, each person has sole
voting and investment power with respect to the shares set forth opposite his or
her name.
Number of Shares Number of Shares
of the Company of the Company
Directors Common Stock(1)(2) Series B Preferred Stock
- -------------------------- --------------------- -------------------------
Arthur H. Ditto NIL NIL
Brian W. Penny NIL NIL
John M.H. Huxley NIL NIL
Cameron A. Mingay NIL NIL
John A. Brough NIL NIL
Named Executive Officers
- ------------------------
Arthur H. Ditto NIL NIL
Robert W. Schafer NIL NIL
Brian W. Penny NIL NIL
All directors, executive
officers as a group (7 NIL NIL
persons)(1)
(1) All are directors or officers of Kinross Gold Corporation which holds
100% of the 92,213,988 outstanding common shares of the Company.
Security Ownership Of Certain Beneficial Owners
As of December 31, 2000, the following is, to the knowledge of the Company, the
only person (including any "group" as that term is used in Section 13(d)(3) of
the Securities Exchange Act of 1934) who is a beneficial owner of more than five
percent of the stock of the Company registered under the Securities Exchange Act
of 1934, as amended, and publicly traded, which is the $3.75 Series B
Convertible Preferred Stock:
Name and address Amount and nature Percent
Title of Class of beneficial owner of beneficial ownership of Class
- ------------------ ------------------------------------- -------------------------- ------------
Preferred Franklin Resources Inc.(1) 800,000 43.48%
777 Mariners Island Blvd.
San Mateo, CA 94404
CHANGE OF CORPORATE DOMICILE
The Company intends to effect a change of its state of incorporation from the
state of Delaware to the state of Nevada for the purpose of reducing its
overhead costs and simplifying its corporate administration. The Company
believes that by adopting the same corporate law regime as its parent company,
Kinross Gold U.S.A. Inc., with which the Company shares offices in Salt Lake
City and utilizing the same administrative and legal resources as its parent,
there will be cost savings. In addition, the Company will be able to reduce its
annual state franchise fees since the Company will pay an annual fee of less
than $500 in Nevada compared to an annual fee of $150,000 to which it is
currently subject to in the state of Delaware.
The Company does not propose to change the rights of the holders of either its
common or preferred stock in connection with this change. Holders of the $3.75
Series B Convertible Preferred Stock will receive shares of $3.75 Series B
Convertible Preferred Stock in the Nevada corporation with the same rights,
privileges, and preferences as they currently have.
The change in the state of incorporation will be accomplished by creating a
newly-formed Nevada corporation to merge with the existing Delaware corporation.
The Nevada corporation will be the surviving entity and will have all of the
assets, rights, and liabilities of the old Delaware corporation. The name of the
surviving corporation will be Kinam Gold Inc. and it will be governed by the
articles of incorporation and bylaws of the Nevada corporation. A copy of these
documents is attached as Appendix B and C, respectively. On consummation of the
merger, the rights of the Company's shareholders will be governed by Nevada
corporate law. There are certain differences between Nevada corporate law and
Delaware corporate law, the most material of which are briefly summarized below.
Governing Instruments
Liability and Indemnification of Directors and Officers
The Delaware certificate of incorporation provides that directors shall not be
liable to the corporation, except for a breach of loyalty to the corporation,
acts or omissions not in good faith, involving intentional misconduct, or in
knowing violation of the law, dividends paid in violation of Delaware corporate
law, or for a transaction from which the director derived an improper personal
benefit. Nevada corporate law permits limiting the liability of both directors
and officers to the corporation to those circumstances in which the director or
officer engaged in intentional fraud, misconduct, or a knowing violation of law
or the payment of dividends in violation of the requirements of Nevada corporate
law. Consequently, Nevada will have a broader limitation of liability, with less
parties remaining potentially liable to the Company.
Both the Delaware and Nevada bylaws provide for mandatory indemnification of
directors and officers involved in a threatened or pending proceeding as a
result of their position with the corporation so long as the individual acted in
good faith and in a manner he or she reasonably believed to be in, or not
opposed to, the best interests of the corporation. Further, the governing
instruments both provide for the payment of expenses in advance by the
corporation on receipt of an undertaking from the indemnified individual to
repay the advances in the event he or she is ultimately determined not to be
entitled to indemnification.
Governing Corporate Law
Although the corporate statutes of Nevada and Delaware are substantially
similar, some differences exist. The material differences, in the judgment of
the management of Kinam Gold, are summarized below. This following summary
discusses differences most likely to affect stockholders and is not a complete
discussion of, and is qualified in its entirety by reference to, the Nevada
Revised Business Corporation Act and the Delaware General Corporation Law.
Removal of Directors
Delaware corporate law provides for the removal of directors, with or without
cause, by a vote of a majority of the stock then entitled to vote at an election
of directors, except (i) the stockholders may remove directors only for cause
where the board is classified, unless the certificate of incorporation provides
otherwise; and (ii) where the corporation provides for cumulative voting, if
less than the entire board is to be removed, no director may be removed without
cause if the votes cast against such removal would be sufficient to elect the
director. Nevada corporate law, however, provides that a director can be removed
by a vote of stockholders representing not less than two-thirds of the voting
power of the stock entitled to voting power. Consequently, it will be more
difficult for stockholders to remove a director of the Company.
Restrictions on Business Combinations
Both Delaware and Nevada have provisions restricting the ability of a
corporation to engage in business combinations with an interested stockholder.
Under the Delaware law, a corporation is not permitted to engage in a business
combination with any interested stockholder for a three-year period following
the date such stockholder became an interested stockholder, unless (i) the
transaction resulting in a person becoming an interested stockholder, or the
business combination, is approved by the board of directors of the corporation
before the person becomes an interested stockholder; (ii) the interested
stockholder acquires 85% or more of the outstanding voting stock of the
corporation in the same transaction that makes it an interested stockholder
(excluding shares owned by persons who are both officers and directors of the
corporation, and shares held by employee stock ownership plans); or (iii) on or
after the date the person becomes an interested stockholder, the business
combination is approved by the corporation's board of directors and by the
holders of at least 67% of the corporation's outstanding voting stock at an
annual or special meeting, excluding shares owned by the interested stockholder.
The Delaware law defines "interested stockholder" generally as a person who owns
15% or more of the outstanding shares of a corporation's voting stock. Delaware
corporations may opt-out of these provisions, and the Company had previously
elected to do so.
Nevada law regulates business combinations more stringently. First, an
interested stockholder is defined as a beneficial owner of 10% or more of the
voting power. Second, the three-year moratorium can be lifted only by advance
approval by a corporation's board of directors, as opposed to Delaware's
provision that allows interested stockholder combinations at the time of the
transaction with stockholder approval. Finally, after the three-year period,
combinations remain prohibited unless (i) they are approved by the board of
directors, the disinterested stockholders or a majority of the outstanding
voting power not beneficially owned by the interested party, or (ii) the
interested stockholder satisfies the fair value requirements. As in Delaware, a
Nevada corporation may opt-out of the statute with appropriate provisions in its
articles of incorporation. The Nevada articles of incorporation contain such an
opt-out provision.
Limitation on Personal Liability of Directors
A Delaware corporation is permitted to adopt provisions in its certificate of
incorporation limiting or eliminating the liability of a director to a company
and its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that such liability does not arise from proscribed conduct,
including breach of the duty of loyalty, acts or omissions not in good faith or
which involve intentional misconduct or
a knowing violation of law or liability to the corporation based on unlawful
dividends or distributions or improper personal benefit.
While Nevada has a similar provision permitting the adoption of provisions in
the articles of incorporation limiting personal liability, the Nevada provision
differs in two respects. First, the Nevada provisions applies to both directors
and officers. Second, while the Delaware provisions excepts from limitation on
liability a breach of the duty of loyalty, the Nevada counterpart does not
contain this exception. Thus, the Nevada provision expressly permits a
corporation to limit the liability of officers, as well as directors, and
permits limitation of liability arising from a breach of the duty of loyalty.
The Nevada articles of incorporation limit the liability of directors, officers,
employees, and agents to the fullest extent permitted. Therefore, the Company
will have a broader limitation on liability, and fewer parties will remain
potentially liable to the Company.
Dividends
Delaware is more restrictive than Nevada with respect to when dividends may be
paid. Under the Delaware corporate law, unless otherwise provided in the
certificate of incorporation, a corporation may declare dividends, out of
surplus or, if no surplus exists, out of net profits for the fiscal year in
which the dividend is declared and/or the preceding fiscal year (provided that
the amount of capital of the corporation following the declaration and payment
of the dividend is not less than the aggregate amount of the capital represented
by the issued and outstanding stock of all classes having a preference upon the
distribution of assets). In addition, Delaware law provides that a corporation
may redeem its shares only out of surplus.
Nevada law provides that no distribution (including dividends on, or redemption
or repurchases of, shares of capital stock) may be made if, after giving effect
to such distribution, the corporation would not be able to pay its debts as they
become due in the usual course of business, or the corporation's total assets
would be less than the sum of its total liabilities plus the amount that would
be needed at the time of a liquidation to satisfy the preferential rights of
preferred stockholders. Consequently, the Company will have greater discretion
in making distributions.
Actions by Written Consent of Stockholders
Both Nevada and Delaware law provide that, unless the charter provides
otherwise, any action required or permitted to be taken at a meeting of the
stockholders may be taken without a meeting if the holders of outstanding stock
having at least the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all voting stock was present and voted
consents to the action in writing. Neither the Delaware certificate of
incorporation nor the Nevada articles of incorporation of the combined company
limit stockholder action by written consent. Delaware requires the corporation
to give prompt notice of the taking of corporate action without a meeting by
less than unanimous written consent to those stockholders who did not consent in
writing. Nevada, however, does not require any notice of corporate action
without a meeting to be given to stockholders who did not consent in writing.
Unless the certificate of incorporation provides otherwise, Delaware law allows
stockholders to act by written consent to elect directors. However, if such
consent is less than unanimous, such action by written consent may be in lieu of
holding an annual meeting only if all of the directorships to which directors
could be elected at an annual meeting held at the effective time of such action
are vacant and filled by such action. Nevada only requires the written consent
of holders of outstanding stock having at least the minimum number of votes that
would be necessary to elect the directors at a meeting at which all voting stock
was present. Therefore, there will be fewer restrictions on the ability of
shareholders of the combined company to elect directors by written consent
without a meeting.
Dissenters' Rights
In both jurisdictions, dissenting stockholders of a corporation engaged in
listed major corporate transactions such as mergers and consolidations are
entitled to appraisal rights. Appraisal rights permit a stockholder to receive
cash equal to the fair market value of the stockholder's shares (as determined
by agreement of the parties or by a court), in lieu of the consideration such
stockholder would otherwise receive in any such transaction.
Under Delaware law, appraisal rights are generally available for the shares of
any class or series of stock of a Delaware corporation in a merger or
consolidation; provided that, no appraisal rights are available for the shares
of any class or series of stock, which, at the record date for the meeting held
to approve such transaction, were either: (i) listed on a national security
exchange or designated as a national market system security on an interdealer
quotation system by the National Association of Securities Dealers, Inc. (the
"NASD"); or (ii) held of record by more than 2,000 stockholders. Even if the
shares of any class or series of stock meet the requirements of clause (i) or
(ii) above, appraisal rights are available for such class or series if the
holders thereof receive in the merger or consolidation anything except: (i)
shares of stock of the corporation surviving or resulting from such merger or
consolidation; (ii) shares of stock of any other corporation which at the
effective date of the merger or consolidation is either listed on a national
securities exchange, or designated as a national market system security on an
interdealer quotation system by the NASD or held of record by more than 2,000
stockholders; (iii) cash in lieu of fractional shares; or (iv) any combination
of the foregoing. No appraisal rights are available to stockholders of the
surviving corporation if the merger did not require their approval.
Under Nevada law, a stockholder is entitled to dissent from, and obtain payment
for the fair value of his or her shares in the event of consummation of a plan
of merger or plan of exchange in which the corporation is a party and, to the
extent that the articles of incorporation, bylaws, or a resolution of the board
of directors provides that voting or nonvoting stockholders are entitled to
dissent and obtain payment for their shares any corporate action taken pursuant
to a vote of the stockholders. As with Delaware law, Nevada law provides an
exception to dissenters' rights. Holders of securities (i) listed on a national
securities exchange or designated as a national market system security on an
interdealer quotation system by the NASD; or (ii) held by more than 2,000
stockholders of record are generally not entitled to dissenters' rights.
However, unlike Delaware, Nevada does not have restrictions on the consideration
received by stockholders and therefore the availability of appraisal rights is
more limited under Nevada law.
Stockholder Inspection Rights
Delaware law grants any stockholder the right to inspect and to copy for any
proper purpose the corporation's stock ledger, a list of its stockholders, and
its other records. A proper purpose is one reasonably related to such person's
interest as a stockholder. Directors also have the right to examine the
corporation's stock ledger, a list of its stockholders and its other records for
a purpose reasonably related to their positions as directors.
Nevada law provides the right to inspect the corporation's financial records
only for a stockholder who (i) owns at least 15% of the corporation's issued and
outstanding shares; or (ii) has been authorized in writing by the holders of at
least 15% of the issued and outstanding shares. To inspect the corporation's
stock ledger, the stockholder must have been a stockholder of record for six
months prior to demanding inspection. Consequently, the right of stockholders to
inspect the company records will be considerably more difficult under Nevada
law.
Appointment of Receivers
Both Delaware and Nevada allow for stockholders to apply for the appointment of
a receiver by a court where the corporation is insolvent. Delaware allows any
stockholder, regardless of his or her proportionate stock ownership interest, to
apply for such an appointment where the corporation is insolvent. Nevada
allows stockholders owning at least ten percent (10%) or more of the outstanding
stock entitled to vote to petition for the appointment of a receiver where (i)
the corporation is insolvent, (ii) the corporation suspends its ordinary
business for want of money to carry on the business, or (iii) if its business
has been and is being conducted at a great loss and greatly prejudicial to the
interests of its creditors or stockholders.
In addition, Nevada law allows any shareholder, regardless of his or her
proportionate stock ownership interest, to apply for the appointment of a
custodian or, if the corporation is insolvent, receiver where (i) the business
of the corporation is suffering or is threatened with irreparable injury because
the directors are so divided respecting management of the affairs of the
corporation that a required vote for action by the board of directors cannot be
obtained and the stockholders are unable to terminate this division; or (ii) the
corporation has abandoned its business and has failed within a reasonable time
to take steps to dissolve, liquidate or distribute its assets when required
under Nevada law.
APPOINTMENT OF AUDITOR
The Audit Committee has recommended, and the Board has selected, the firm of
Deloitte & Touche LLP of Toronto, Ontario, independent certified public
accountants, to audit the financial statements of the Company for the fiscal
year ending December 31, 2001, subject to ratification by shareholders. Deloitte
& Touche was appointed as auditors of the Company on June 1, 1998. The Board of
Directors recommends that shareholders vote for the ratification of the
appointment of Deloitte & Touche LLP as the Company's independent auditor.
Audit Fees
Fees billed to the Company by Deloitte & Touche LLP during fiscal year 2000 for
the last annual audit were $27,000. Fees billed to the Company by Price
Waterhouse Coopers during fiscal year 2000 for the last annual audit were
$147,867. All other fees billed to the Company by Price Waterhouse Coopers
during the fiscal year 2000 were $7,124.
OTHER MATTERS
As of the date of this Information Statement, the Board knows of no other
matters to be presented for action at the Annual Meeting. However, if any
proxies in the accompanying from will vote on such business in accordance with
their best judgment.
Proposals by the shareholders of the Company to be presented at the next annual
meeting of shareholders of the Company must be received by the Company at least
120 days prior to the anniversary of the date of this information statement. The
proponent must be a shareholder entitled to vote at the next annual meeting. The
Company may refuse to include any shareholder proposal in the management
information circular for the meeting in the event that: (i) the proposal is not
submitted to the Company within the requisite time specified herein; (ii) the
proposal is submitted primarily for the purpose of enforcing a personal claim or
redressing a personal grievance against the Company or any of its officers,
directors or security holders, or for a purpose not related in any significant
way to the business or affairs of the Company; (iii) The Company, at the
shareholders' request, included a proposal in an information statement relating
to a meeting of shareholders held within two years preceding receipt of the
request, and the shareholder failed to present the proposal at the meeting; or
(iv) substantially the same proposal was submitted to shareholders with respect
to a meeting of shareholders held within three years preceding receipt of the
shareholders' request and the proposal did not receive the level of support
specified in the proxy rules adopted by the SEC was defeated.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 and related rules require
our directors and executive officers to file reports of beneficial ownership and
changes of beneficial ownership with the Securities and Exchange Commission and
with the Company. After reviewing the reports filed by the directors and
executive officers, we believe that the directors and executive officers filed
all of the reports they were required to file in 2000.
ADDITIONAL INFORMATION
The Company will provide without charge to any person receiving this information
statement, upon the written request of such person, a copy of the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2000,
including the financial statements and schedules thereto (as well as exhibits
thereto, if specifically requested), required to be filed with the Securities
and Exchange Commission. Written requests for such information should be
directed to Shelley M. Riley, Secretary of the Company, at 52nd Floor, 40 King
Street West, Toronto, Ontario M5H 3Y2.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Shelley M. Riley
--------------------
Shelley M. Riley
Corporate Secretary
TORONTO, ONTARIO
APRIL 24, 2001
APPENDIX A
Kinam Gold Inc.
Audit Committee Charter
This Audit Committee Charter (Charter) has been adopted by the Board of
Directors (the Board) of Kinam Gold Inc. (the Company). The Audit Committee of
the Board (the Committee) shall review and reassess this charter annually and
recommend any proposed changes to the Board for approval.
Role and Independence: Organization
The Committee assists the Board in fulfilling its responsibility for oversight
of the quality and integrity of the accounting, auditing, internal control and
financial reporting practices of the Company. It may also have such other duties
as may from time to time be assigned to it by the Board. The membership of the
Committee shall consist of at least three directors, who are each free of any
relationship that, in the opinion of the Board, may interfere with such member's
individual exercise of independent judgment. Each Committee member shall also
meet the independence and financial literacy requirements for serving on audit
committees, and at least one member shall have accounting or related financial
management expertise, all as set forth in the applicable rules of the New York
Stock Exchange. The Committee shall maintain free and open communication with
the independent auditors, the internal auditors and Company management. In
discharging its oversight role, the Committee is empowered to investigate any
matter relating to the Company's accounting, auditing, internal control or
financial reporting practices brought to its attention, with full access to all
Company books, records, facilities and personnel. The Committee may retain
outside counsel, auditors or other advisors.
One member of the Committee shall be appointed as chair. The chair shall be
responsible for leadership of the Committee, including scheduling and presiding
over meetings, preparing agendas, and making regular reports to the Board. The
chair will also maintain regular liaison with the CEO, CFO, the lead independent
audit partner.
The Committee shall meet at least four times a year, or more frequently as the
Committee considers necessary. At least once each year the Committee shall have
separate private meetings with the independent auditors and management.
Responsibilities
Although the Committee may wish to consider other duties from time to time, the
general recurring activities of the Committee in carrying out its oversight role
are described below. The Committee shall be responsible for:
* Recommending to the Board the independent auditors to be retained (or
nominated for shareholder approval) to audit the financial statements of
the Company. Such
auditors are ultimately accountable to the Board and the Committee, as
representatives of the shareholders.
* Evaluating, together with the Board and management, the performance of the
independent auditors and, where appropriate, replacing such auditors.
* Obtaining annually from the independent auditors a formal written statement
describing all relationships between the auditors and the Company,
consistent with Independence Standards Board Standard Number 1. The
Committee shall actively engage in a dialogue with the independent auditors
with respect to any relationships that may impact the objectivity and
independence of the auditors and shall take, or recommend that the Board
take, appropriate actions to oversee and satisfy itself as to the auditors'
independence.
* Reviewing the audited financial statements and discussing them with
management and the independent auditors. These discussions shall include
the matters required to be discussed under Statement of Auditing Standards
No. 61 and consideration of the quality of the Company's accounting
principles as applied in its financial reporting, including a review of
particularly sensitive accounting estimates, reserves and accruals,
judgmental areas, audit adjustments (whether or not recorded), and other
such inquiries as the Committee or the independent auditors shall deem
appropriate. Based on such review, the Committee shall make its
recommendation to the Board as to the inclusion of the Company's audited
financial statements in the Company's Annual Report on Form 10-K (or the
Annual Report to Shareholders, if distributed prior to the filing of the
10-K).
* Isssuing annually a report to the included in the Company's proxy statement
as required by the rules of the Securities and Exchange Commission.
* Overseeing the relationship with the independent auditors, including
discussing with the auditors the nature and rigor of the audit process,
receiving and reviewing audit reports, and providing the auditors full
access to the Committee (and the Board) to report on any and all
appropriate matters.
* Discussing with a representative of management and the independent
auditors: (1) the interim financial information contained in the Company's
Quarterly Report prior to its filing, (2) the earnings announcement prior
to its release (if practicable), and (3) the results of the review of such
information by the independent auditors. (These discussions may be held
with the Committee as a whole or with the Committee chair in person or by
telephone.)
* Review and approve audit fees.
* Discussing with management and the independent auditors the quality and
adequacy of and compliance with the Company's internal controls.
* Discussing with management and/or the Company's general counsel any legal
matters (including the status of pending litigation) that may have a
material impact on the Company's financial statements, and any material
reports or inquiries from regulatory or governmental agencies.
The Committee's job is one of oversight. Management is responsible for the
preparation of the Company's financial statements and the independent auditors
are responsible for auditing those financial statements. The Committee and the
Board recognize that management and the independent auditors have more resources
and time, and more detailed knowledge and information regarding the Company's
accounting, auditing, internal control and financial reporting practices than
the Committee does; accordingly the Committee's oversight role does not provide
any expert or special assurance as to the financial statements and other
financial information provided by the Company to its shareholders and others.
APPENDIX B
ARTICLES OF INCORPORATION
OF
KINAM MERGER CORP.
[To be changed to Kinam Gold Inc.
on completion of change of domicile merger]
I, the undersigned natural person of the age of 21 or more, acting as
incorporator of a corporation under the Revised Statutes of Nevada (the
"Statutes"), adopt the following articles of incorporation for such corporation:
ARTICLE 1
The name of the corporation is Kinam Merger Corp. (hereinafter, the
"Corporation").
ARTICLE 2
The address of the Corporation's initial resident office is 6100 Neil
Road, Suite 500, Reno, Nevada 89511. The name of its initial resident agent at
such address is The Corporation Trust Company of Nevada.
ARTICLE 3
The nature of the business or purposes to be conducted or promoted by
the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the Statutes.
ARTICLE 4
The total number of shares of all classes of stock which the
Corporation shall have authority to issue is two hundred ten million
(210,000,000), of which ten million (10,000,000) shares shall be shares of
Preferred Stock (hereinafter referred to as the "Preferred Stock"), par value of
one dollar ($1.00) per share, and two hundred million (200,000,000) shares shall
be shares of Common Stock (hereinafter referred to as the "Common Stock"), par
value of one cent ($0.01) per share.
A statement of the designations of the authorized classes of Preferred
Stock or of any series thereof, and the powers, preferences, and relative,
participating, optional, or other special rights, and qualifications,
limitations, or restrictions thereof, or of the authority of the Board of
Directors to fix by resolution or resolutions such designations and other terms
not fixed by these Articles of Incorporation, is as follows:
A. Preferred Stock.
(1) The Preferred Stock may be issued in one or more series,
from time to time, with each such series to have such designation,
powers, preferences, and relative, participating, optional, or other
special rights, and qualifications, limitations, or restrictions
thereof, as shall be stated and expressed in the resolution or
resolutions providing for the issue of such series adopted by the Board
of Directors of the Corporation, subject to the limitations prescribed
by law and in accordance with the provisions hereof, the Board of
Directors being hereby expressly vested with
authority to adopt any such resolution or resolutions. The authority of
the Board of Directors with respect to each such series shall include,
but not be limited to, the determination or fixing of the following:
(a) The distinctive designation and number of shares
comprising such 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 then outstanding) from time to time by like action of
the Board of Directors;
(b) The dividend rate of such series (which may be a
floating or fixed rate or rates and which may be determined by
formula or formulas), the conditions and times upon which such
dividends shall be payable, the relation which such dividends
shall bear to the dividends payable on any other class or
classes of stock or series thereof, or any other series of the
same class, and whether dividends shall be cumulative or
non-cumulative;
(c) The conditions upon which the shares of such
series shall be subject to redemption by the Corporation and
the times, prices, and other terms and provision upon which
the shares of the series may be redeemed;
(d) Whether or not the shares of the series shall be
subject to the operation of a retirement or sinking fund to be
applied to the purchase or redemption of such shares and, if
such retirement or sinking fund be established, the annual
amount thereof and the terms and provisions relative to the
operation thereof;
(e) Whether or not 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 the 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;
(f) Whether or not the shares of the series shall
have voting rights, in addition to the voting rights provided
by law, and, if so, the terms of such voting rights;
(g) The rights of the shares of the series in the
event of voluntary or involuntary liquidation, dissolution, or
upon the distribution of assets of the Corporation; and
(h) Any other powers, preferences, and relative,
participating, optional, or other special rights, and
qualifications, limitations, or restrictions thereof, of the
shares of such series, as the Board of Directors may deem
advisable and as shall not be inconsistent with the provisions
of these Articles of Incorporation.
(2) The holders of shares of the Preferred Stock of each
series shall be entitled to receive, when and as declared by the Board
of Directors, out of funds legally available for the payment of
dividends, dividends at the rate or rates fixed by the Board of
Directors for such series, or determined in the manner prescribed in
the resolution or resolutions by the Board of Directors creating such
series, and no more, before any dividends, other than dividends payable
in Common Stock, shall be declared and paid, or set apart for payment,
on the Common Stock with respect to the same dividend period.
(3) Whenever, at any time, dividends on the then outstanding
Preferred Stock as may be required with respect to any series
outstanding shall have been paid or declared and set apart for payment
on the then outstanding Preferred Stock, and after complying with
respect to any retirement or sinking fund or funds for any series of
Preferred Stock, the Board of Directors may, subject to the provisions
of the resolution or resolutions creating any series of Preferred
Stock, declare and pay dividends on the Common Stock, and the holders
of shares of the Preferred Stock shall not be entitled to share
therein.
(4) The holders of shares of the Preferred Stock of each
series shall be entitled upon liquidation or dissolution or upon the
distribution of the assets of the Corporation to such preferences as
provided in the resolution or resolutions creating such series of
Preferred Stock, and no more, before any distribution of the assets of
the Corporation shall be made to the holders of shares of the Common
Stock. Whenever the holders of shares of the Preferred Stock shall have
been paid in full amounts to which they shall be entitled, the holders
of shares of the Common Stock shall be entitled to share ratably in all
assets of the Corporation then remaining.
B. Common Stock.
(1) At all meetings of the stockholders of the Corporation,
the holders of shares of the Common Stock shall be entitled to one vote
for each share of Common Stock held by them. Except as otherwise
provided by a resolution or resolutions of the Board of Directors
creating any series of Preferred Stock or by the Statutes, the holders
of shares of the Common Stock issued and outstanding shall have and
possess the exclusive right to notice of stockholders' meeting and the
exclusive power to vote.
C. $3.75 Series B Convertible Preferred Stock. A series of
the Preferred Stock, par value $1.00 per share, of the Corporation is hereby
created, consisting of 1,840,000 shares, with the designations, powers,
preferences, and relative, participating, optional, or other special rights, and
qualifications, limitations, or restrictions thereof, of the shares of such
series as follows:
(1) Designation, Number of Shares, and Rank. The designation
of such series shall be "$3.75 Series B Convertible Preferred Stock"
(hereinafter referred to as the "Series B Convertible Preferred
Stock"). Each share of Series B Convertible Preferred Stock shall be
identical in all respects with the other shares of Series B Convertible
Preferred Stock.
All shares of Series B Convertible Preferred Stock shall rank
prior, both as to payment of dividends and as to distributions of
assets upon liquidation, dissolution, or winding up of the Corporation,
whether voluntary or involuntary, to all of the Corporation's now or
hereafter issued Common Stock.
(2) Dividends. The holders of shares of Series B Convertible
Preferred Stock shall be entitled to receive, when, as, and if declared
by the Board of Directors of the Corporation, but only out of funds
legally available therefore, dividends at the annual rate of $3.75 per
share, and no more, which shall be fully cumulative, shall accrue
without interest from the date of first issuance, and shall be payable
in cash in equal quarterly installments on August 15, November 15,
February 15, and May 15 of each year (except that if any such date is
not a business day, then such dividend shall be payable on the next
succeeding business day) (each, a "Dividend Payment Date"), to
stockholders of record as they appear on the stock transfer books of
the Corporation on such record dates, not more than 60 nor less than 10
days preceding such Dividend Payment Date, as are fixed by the Board of
Directors of the Corporation. For the purposes hereof, the term
"business day" shall mean each Monday, Tuesday, Wednesday, Thursday, or
Friday which is not
a day on which banking institutions are authorized or obligated by law
or executive order to close in New York, New York. Dividends shall
initially accrue on the Series B Convertible Preferred Stock beginning
with the quarterly payment due August 15, 2000. Subject to the next
paragraph of this Section 2, dividends on account of arrears for any
past dividend periods may be declared and paid at any time, without
reference to any Dividend Payment Date, to holders of record on such
date, not exceeding 45 days preceding the payment date thereof, as may
be fixed by the Board of Directors of the Corporation. The amount of
dividends payable per share of Series B Convertible Preferred Stock for
each quarterly dividend period shall be computed by dividing the annual
amount by four. The amount of dividends payable on the Series B
Convertible Preferred Stock for any period less than a full quarterly
dividend period shall be computed on the basis of a 360-day year
consisting of twelve 30-day months. Holders of shares of Series B
Convertible Preferred Stock shall not be entitled to any dividend
whether payable in cash, property, or stock, in excess of the full
cumulative dividends on such shares of Series B Convertible Preferred
Stock.
On each Dividend Payment Date, all dividends which shall have
accrued on each share of Series B Convertible Preferred Stock
outstanding on such Dividend Payment Date shall accumulate and be
deemed to become "due" whether or not declared and whether or not there
shall be funds legally available for the payment thereof. Any dividend
which shall not be paid on the Dividend Payment Date on which it shall
become due shall be deemed to be "past due" until such dividend shall
be paid or until the share of Series B Convertible Preferred Stock with
respect to which such dividend became due shall no longer be
outstanding, whichever is the earlier to occur. No interest or sum of
money or other property or securities in lieu of interest shall be
payable in respect to any dividend payment or payments which are past
due. Dividends paid on shares of Series B Convertible Preferred Stock
in an amount less than the total amount of such dividends at the time
accumulated and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding.
No dividends or other distributions, other than dividends
payable solely in shares of Common Stock, shall be paid, or declared
and set apart for payment in respect of, and no purchase, redemption,
or other acquisition for any consideration shall be made by the
Corporation of and no sinking fund or other analogous fund payments
shall be made in respect of any shares of Common Stock or other capital
stock of the Corporation ranking junior as to dividends or as to
liquidation rights to the Series B Convertible Preferred Stock (the
"Junior Dividend Stock") unless and until all accrued and unpaid
dividends on the Series B Convertible Preferred Stock, including the
full dividend for the then current dividend period, shall have been
paid or declared and set apart for payment and the Corporation is not
in default in respect of the optional redemption of any shares of
Series B Convertible Preferred Stock.
No dividends or other distributions shall be paid or declared
and set apart for payment and no purchase, redemption, or other
acquisition for any consideration shall be made by the Corporation of,
and no sinking fund or other analogous fund payments shall be made in
respect of, any class or series of the Corporation's capital stock
ranking, as to dividends, on a parity with the Series B Convertible
Preferred Stock (the "Parity Dividend Stock"), for any period unless
full cumulative dividends have been, or contemporaneously are, paid or
declared and set apart for such payment on the Series B Convertible
Preferred Stock for all dividend payment periods terminating on or
prior to the date of payment of such full cumulative dividends. No
dividends shall be paid or declared and set apart for payment on the
Series B Convertible Preferred Stock for any period unless full
cumulative dividends have been, or contemporaneously are, paid or
declared and set apart for payment on the Parity Dividend Stock for all
dividend periods terminating on or prior to the date of payment of such
full cumulative dividends. When dividends are not paid in full upon the
Series B Convertible Preferred Stock and the Parity Dividend Stock,
all dividends paid or declared and set apart for payment upon shares of
Series B Convertible Preferred Stock and the Parity Dividend Stock
shall be paid or declared and set apart for payment pro rata so that
the amount of dividends paid or declared and set apart for payment per
share on the Series B Convertible Preferred Stock and the Parity
Dividend Stock shall in all cases bear to each other the same ratio
that accrued and unpaid dividends per share on the shares of Series B
Convertible Preferred Stock and the Parity Dividend Stock bear to each
other.
The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of capital stock of the Corporation or any Parity Dividend Stock
unless the Corporation could, under this Section 2, purchase or
otherwise acquire such shares at such time and in such manner. Any
reference to "distribution" contained in this Section 2 shall not be
deemed to include any distribution made in connection with any
liquidation, dissolution, or winding up of the Corporation, whether
voluntary or involuntary.
(3) Liquidation Preference. In the event of any liquidation,
dissolution, or winding up of the Corporation, whether voluntary or
involuntary, the holders of shares of Series B Convertible Preferred
Stock shall be entitled to receive out of the assets of the
Corporation, whether such assets are stated capital or surplus of any
nature, an amount equal to the dividends accrued and unpaid thereon to
the date of final distribution to such holders, whether or not
declared, without interest, and a sum equal to $50.00 per share, and no
more, before any payment shall be made or any assets distributed to the
holders of Common Stock or any other class or series of the
Corporation's capital stock ranking junior as to liquidation rights to
the Series B Convertible Preferred Stock (the "Junior Liquidation
Stock"). In the event the assets of the Corporation available for
distribution to stockholders upon any liquidation, dissolution, or
winding up of the Corporation, whether voluntary or involuntary, shall
be insufficient to pay in full the amounts payable with respect to the
Series B Convertible Preferred Stock and any other class or series of
the Corporation's capital stock which has been or may hereafter be
created ranking on a parity as to liquidation rights with the Series B
Convertible Preferred Stock (the "Parity Liquidation Stock"), the
holders of the Series B Convertible Preferred Stock and the holders of
the Parity Liquidation Stock shall share ratably in any distribution of
assets of the Corporation in proportion to the full respective
preferential amounts to which they are entitled (but only to the extent
of such preferential amounts). After payment in full of the liquidation
preferences of the shares of Series B Convertible Preferred Stock, the
holders of such shares shall not be entitled to any further
participation in any distribution of assets by the Corporation. Neither
a consolidation, merger, or other business combination of the
Corporation with or into another corporation or other entity nor a sale
or transfer of all or part of the Corporation's assets for cash,
securities, or other property shall be considered a liquidation,
dissolution, or winding up of the Corporation for purposes of this
Section 3 (unless in connection therewith the liquidation of the
Corporation is specifically approved).
The holder of any shares of Series B Convertible Preferred
Stock shall not be entitled to receive any payment owed for such shares
under this Section 3 until such holder shall cause to be delivered to
the Corporation: (i) the certificate(s) representing such shares of
Series B Convertible Preferred Stock, and (ii) transfer instrument(s)
satisfactory to the Corporation and sufficient to transfer such shares
of Series B Convertible Preferred Stock to the Corporation free of any
liens or encumbrances thereon or rights of third parties thereto. As in
the case of the Redemption Price referred to below, no interest shall
accrue on any payment upon liquidation after the due date thereof.
(4) Redemption at the Option of the Corporation.
(a) Right of Redemption. Subject to and upon
compliance with the provisions of this Section 4, the
Corporation, at its option, may at any time redeem the Series
B Convertible Preferred Stock, in whole or from time to time
in part, on any date on or after _______________, 2001, set by
the Board of Directors of the Corporation, at the following
redemption prices per share, if redeemed during the 12-month
period commencing on August 15, of the year indicated:
Years Price Per Share
--------------------------- ---------------------
2000 $51.500
2001 $51.125
2002 $50.750
2003 $50.375
2004 and thereafter $50.000
plus in each case accrued and unpaid dividends to, but
excluding, the date of redemption.
In case of the redemption of less than all of the
then outstanding Series B Convertible Preferred Stock, the
shares of Series B Convertible Preferred Stock to be redeemed
shall be redeemed pro rata or by lot or in such other
equitable manner as the Board of Directors of the Corporation
reasonably may determine. Notwithstanding the foregoing, the
Corporation shall not redeem less than all of the Series B
Convertible Preferred Stock at any time outstanding until all
dividends accrued and in arrears upon all Series B Convertible
Preferred Stock and Parity Dividend Stock then outstanding
shall have been paid for all past dividend periods.
(b) Manner of Exercise of Redemption Option. In order
to exercise its redemption option, the Corporation must give
written notice in person or by first class mail, postage
prepaid, of such redemption to each holder of record of the
shares of Series B Convertible Preferred Stock to be redeemed,
at such holder's address as it shall appear upon the stock
transfer books of the Corporation not more than 60 days nor
less than 30 days prior to the redemption date. Each such
notice of redemption shall state, as appropriate: (1) the date
fixed for redemption; (2) the number of shares of Series B
Convertible Preferred Stock to be redeemed and, if fewer than
all of the shares held by such holder are to be redeemed, the
number of such shares to be redeemed from such holder; (3) the
Redemption Price per share of Series B Convertible Preferred
Stock; (4) the place or places of payment that payment of the
Redemption Price will be made upon presentation and surrender
of the certificate or certificates evidencing the shares of
Series B Convertible Preferred Stock to be redeemed; (5) that
on and after the redemption date, dividends will cease to
accrue on such shares; and (6) the then effective Conversion
Price pursuant to Section 5 and that the right of holders to
convert shall terminate at the close of business on the
redemption date (unless the Corporation defaults in the
payment of the Redemption Price).
Any notice that is delivered or mailed as herein
provided shall be conclusively presumed to have been duly
given, whether or not the holder of the Series B Convertible
Preferred Stock receives such notice; and failure to give such
notice, or any defect in such notice, to the holders of any
shares designated for redemption shall not affect the validity
of the proceedings of the redemption of any other shares of
Series B Convertible Preferred Stock. On or after the date
fixed for redemption as stated in such notice, each holder of
the shares of Series B Convertible Preferred Stock called for
redemption shall surrender the certificate or certificates
evidencing such shares to the Corporation at the place
designated in such notice and shall thereupon be entitled to
receive payment of the Redemption Price as herein provided. If
less than all the shares represented by any such surrendered
certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares. If, on the date fixed for
redemption, cash necessary for the redemption shall be
available for such purpose and irrevocably shall have been
deposited or set apart, then, notwithstanding that the
certificates evidencing any shares so called for redemption
shall not have been surrendered, the dividend with respect to
the shares so called shall cease to accrue after the date
fixed for redemption, the shares no longer shall be deemed
outstanding, the holders thereof shall cease to be holders of
Series B Convertible Preferred Stock, and all rights
whatsoever with respect to the shares so called for redemption
(except the right of the holders to receive payment of the
Redemption Price as herein provided, without interest, upon
surrender of their certificates therefore) shall terminate.
Any cash necessary for the redemption of shares of Series B
Convertible Preferred Stock shall be deemed to be available
therefore for purposes of the preceding sentence and for
purposes of Section 7, if, on or before the date fixed for
redemption, the Company shall deposit with a bank or trust
company that has an office in the Borough of Manhattan, City
of New York, and that has, or is an affiliate of a bank that
has, a capital surplus of at least $50,000,000, the cash
necessary for such redemption, in trust, with irrevocable
instructions that such cash be applied to the redemption of
the shares of the Series B Convertible Preferred Stock and any
Parity Dividend Stock so called for redemption. No interest
shall accrue for the benefit of the holders of shares of
Series B Convertible Preferred Stock to be redeemed on any
cash so set apart by the Corporation. Subject to applicable
escheat laws, any such cash unclaimed at the end of six years
from the redemption date shall revert to the general funds of
the Corporation, after which reversion the holders of such
shares so called for redemption shall look only to the general
funds of the Corporation for the payment of such cash.
The holder of any shares of Series B Convertible
Preferred Stock redeemed upon any exercise of the
Corporation's redemption right shall not be entitled to
receive payment of the Redemption Price for such shares until
such holder shall cause to be delivered to the place specified
in the notice given with respect to such redemption (i) the
certificate or certificates representing such shares of Series
B Convertible Preferred Stock redeemed and (ii) transfer
instruments satisfactory to the Corporation and sufficient to
transfer such shares of Series B Convertible Preferred Stock
to the Corporation free of any adverse interest. No interest
shall accrue on the Redemption Price of any share of Series B
Convertible Preferred Stock after its redemption date.
In the event that any shares of Series B Convertible
Preferred Stock shall be converted into shares of the Common
Stock (the "Kinross Stock") of Kinross Gold Corporation, a
Canadian corporation ("Kinross"), pursuant to Section 5, then
(i) the Corporation shall not have the right to redeem such
shares and (ii) any funds which shall have been deposited for
the payment of the Redemption Price for such shares of Series
B Convertible Preferred Stock shall be returned to the
Corporation immediately after such conversion (subject to
declared dividends payable to holders of shares of Series B
Convertible Preferred Stock on the record date for such
dividends, to the extent set forth in Section 5 hereof,
regardless of whether such shares are converted subsequent to
such record date and prior to the related Dividend Payment
Date).
(c) Cash Payments in Lieu of Fractional Shares. No
fractional shares of Series B Convertible Preferred Stock
shall be issued upon any redemption of Series B Convertible
Preferred Stock, but, in lieu thereof, the Corporation shall
pay to the holder of such shares an appropriate amount in cash
(computed to the nearest cent) based on the value of the
shares of Series B Convertible Preferred Stock as determined
in good faith by the Corporation's Board of Directors.
(5) Conversion.
(a) Right of Conversion. Subject to and upon
compliance with the provisions of this Section 5, each share
of Series B Convertible Preferred Stock shall, at the option
of the holder thereof, be convertible at any time (unless such
share is called for redemption, then to and including but not
after 5:00 p.m. (New York City time) on the date fixed for
such redemption, unless the Corporation shall default in
payment due upon redemption thereof), into that number of
fully paid and nonassessable shares of Kinross Stock
(calculated as to each conversion to the nearest 1/100th of a
share) obtained by dividing $50.00 by the Conversion Price (as
defined in Section 5(d)) in effect at such time and
multiplying the result by .8004. The certificate representing
such share so to be converted must be surrendered in the
manner provided in Section 5(b).
(b) Manner of Exercise of Conversion Privilege. In
order to exercise the conversion privilege, the holder of one
or more shares of Series B Convertible Preferred Stock to be
converted shall surrender such shares at any of the offices or
agencies to be maintained for such purpose by the Corporation
accompanied by the funds, if any, required by the last
paragraph of this Section 5(b) and shall give written notice
of conversion in the form provided on such shares of Series B
Convertible Preferred Stock (or such other notice as is
reasonably acceptable to the Corporation) to the Corporation
at such office or agency that the holder elects to convert the
shares of Series B Convertible Preferred Stock specified in
said notice. Such notice shall also state the name or names,
together with address or addresses, in which the certificate
or certificates for shares of Kinross Stock which shall be
issuable on such conversion shall be issued. Each share of
Series B Convertible Preferred Stock surrendered for
conversion, unless the shares issuable on conversion are to be
issued in the same name as the name in which such share of
Series B Convertible Preferred stock is registered, shall be
accompanied by instruments of transfer, in form satisfactory
to the Corporation, duly executed by the holder or such
holder's duly authorized attorney. As promptly as practicable
after the surrender of such shares of Series B Convertible
Preferred Stock and the receipt of such notice, instruments of
transfer and funds, if any, as aforesaid, the Corporation
shall issue and shall deliver at such office or agency to such
holder, or on his written order, a certificate or certificates
for the number of full shares of Kinross Stock issuable upon
the conversion of such shares of Series B Convertible
Preferred Stock in accordance with the provisions of this
Section 5 and a check or cash in respect of any fractional
interest in a share of Kinross Stock arising upon such
conversion, as provided in Section 5(c).
Each conversion shall be deemed to have been effected
immediately prior to the close of business on the business day
following the date on which such shares of Series B
Convertible Preferred Stock shall have been surrendered and
such notice (and any applicable instruments of transfer and
any required taxes) received by the Corporation as aforesaid,
and the person or persons in whose name or names any
certificate or certificates for shares of Kinross Stock shall
be issuable upon such conversion shall be
deemed to have become the holder or holders of record of the
shares represented thereby at such time on such date, and such
conversion shall be at the Conversion Price in effect at such
time on such date, unless the stock transfer books of the
Corporation shall be closed on that date, in which event such
person or persons shall be deemed to have become such holder
or holders of record at the close of business on the next
succeeding day on which such stock transfer books are open,
and such conversion shall be at the Conversion Price in effect
on the close of business on such next succeeding business day
upon which such shares of Series B Convertible Preferred Stock
shall have been surrendered and such notice received by the
Corporation.
Any shares of Series B Convertible Preferred Stock
surrendered by conversion during the period from the close of
business on the record date for any dividend payment to the
opening of business on the related Dividend Payment Date
(unless such shares of Series B Convertible Preferred Stock
shall have been called for redemption on a date in such
period) shall be accompanied by payment, in funds acceptable
to the Corporation, of an amount equal to the dividend
otherwise payable on such Dividend Payment Date. Except as
provided for above in this Section, no adjustment shall be
made for dividends accrued on any shares of Series B
Convertible Preferred Stock converted or for dividends on any
shares issued upon the conversion of such shares as provided
in this Section.
(c) Cash Payments in Lieu of Fractional Shares. No
fractional shares or scrip representing fractions of shares of
Kinross Stock shall be issued upon conversion of Series B
Convertible Preferred Stock. If more than one share of Series
B Convertible Preferred Stock shall be surrendered for
conversion at one time by the same holder, the number of full
shares of Kinross Stock issuable upon conversion thereof shall
be computed on the basis of the aggregate of $50.00 for each
such share so surrendered. In lieu of any fractional interest
in a share of Kinross Stock which would otherwise be
deliverable upon the conversion of any share of Series B
Convertible Preferred Stock, the Corporation shall pay to the
holder of such shares an amount in cash (computed to the
nearest cent) equal to the average Closing Price per share of
Kinross Stock as calculated for the ten day trading period
ending on the fifth trading day prior to the day of conversion
multiplied by the fractional interests in a share of Kinross
Stock that otherwise would have been deliverable upon
conversion of such share.
(d) Adjustment of Conversion Price. The "Conversion
Price" shall mean and be $8.25, subject to adjustment from
time to time by the Corporation as follows:
(i) In case Kinross shall (A) pay a dividend
or make a distribution on the Kinross Stock in shares
of Kinross Stock (other than pursuant to a dividend
reinvestment or similar plan), (B) subdivide the
outstanding shares of Kinross Stock into a greater
number of shares, (C) combine the outstanding shares
of Kinross Stock into a smaller number of shares, or
(D) issue by reclassification of the Kinross Stock
any shares of capital stock of Kinross, then in each
such case the Conversion Price in effect immediately
prior to such action shall be adjusted so that the
holder of any share of Series B Convertible Preferred
Stock thereafter surrendered for conversion shall be
entitled to receive the number of shares of Kinross
Stock which he would have owned or been entitled to
receive immediately following such action had such
share been converted immediately prior to the
occurrence of such event. An adjustment made pursuant
to this subsection (i) shall become effective
immediately after the record date, in
the case of a dividend or distribution, or
immediately after the effective date, in the case of
a subdivision, combination, or reclassification.
(ii) In case Kinross shall issue rights,
options, or warrants to all holders of the
outstanding shares of Kinross Stock entitling them to
subscribe for or purchase shares of Kinross Stock at
a price per share less than the current market price
per share (as determined pursuant to subsection (iv)
of this Section 5(d)) of the Kinross Stock (other
than pursuant to any stock option, restricted stock,
or other incentive or benefit plan or stock ownership
or purchase plan for the benefit of employees,
directors, or officers or any dividend reinvestment
plan of Kinross in effect at the time hereof or any
other similar plan adopted or implemented hereafter),
then with respect to any conversion prior to the
expiration of such rights, options, or warrants, the
Conversion Price in effect immediately prior thereto
shall be adjusted so that it shall equal the price
determined by multiplying the Conversion Price in
effect immediately prior to the date of issuance of
such rights, options, or warrants by a fraction of
which the numerator shall be the number of shares of
Kinross Stock outstanding on the date of issuance of
such rights, options, or warrants (immediately prior
to such issuance) plus the number of shares which the
aggregate offering price of the total number of
shares so offered would purchase at such current
market price, and of which the denominator shall be
the number of shares of Kinross Stock outstanding on
the date of issuance of such rights, options, or
warrants (immediately prior to such issuance) plus
the number of additional shares of Kinross Stock
offered for subscription or purchase. Such adjustment
shall be made successively whenever any rights,
options, or warrants are issued, and shall become
effective immediately after the record date for the
determination of stockholders entitled to receive
such rights, options, or warrants; provided, however,
in the event that all the shares of Kinross Stock
offered for subscription or purchase are not
delivered upon the exercise of such rights, options,
or warrants, upon the expiration of such rights,
options, or warrants the Conversion Price shall be
readjusted to the Conversion Price which would have
been in effect had the numerator and the denominator
of the foregoing fraction and the resulting
adjustment been made based upon the number of shares
of Kinross Stock actually delivered upon the exercise
of such rights, options, or warrants rather than upon
the number of shares of Kinross Stock offered for
subscription or purchase. In determining whether any
rights, options, or warrants entitled the holders to
subscribe for or purchase shares of Kinross Stock at
less than such current market price, and in
determining the aggregate offering price of such
shares of Kinross Stock, there shall be taken into
account any consideration received by Kinross for
such rights, options, or warrants, the value of such
consideration, if other than cash, to be determined
by the Audit Committee of the Board of Directors of
Kinross (whose reasonable determination shall be
conclusive, except for arithmetic errors, and shall
be described in a statement filed by Kinross with its
stock transfer agent).
(iii) In case Kinross shall, by dividend or
otherwise, distribute to all holders of the
outstanding Kinross Stock, evidences of its
indebtedness or assets (including securities and
cash, but excluding any cash dividend of Kinross paid
out of retained earnings and dividends or
distributions payable in stock pursuant to a dividend
reinvestment or similar plan or for which adjustment
is made pursuant to subsection (i) of this Section
5(d)) or rights, options, or warrants to
subscribe for or purchase securities of Kinross
(excluding those referred to in subsection (ii) of
this Section 5(d)), then in each such case, the
Conversion Price shall be adjusted so that the same
shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the
record date of such distribution by a fraction of
which the numerator shall be the current market price
per share of the Kinross Stock as determined pursuant
to subsection (iv) of this Section 5(d) less the fair
market value on such record date (as determined by
the Audit Committee of the Board of Directors of
Kinross, whose reasonable determination shall be
conclusive, except for arithmetic errors, and shall
be described in a statement filed by Kinross with its
stock transfer agent) of the portion of the capital
stock or assets or the evidences of indebtedness or
assets so distributed to the holder of one share of
Kinross Stock or of such subscription rights,
options, or warrants applicable to one share of
Kinross Stock, and of which the denominator shall be
such current market price per share of Kinross Stock.
Such adjustment shall become effective immediately
after the record date for the determination of
stockholders entitled to receive such distribution.
(iv) For the purpose of any computation
under subsections (ii) and (iii) of this Section
5(d), the current market price per share of Kinross
Stock on any date shall be deemed to be the average
of the Closing Price for the shorter of (a) 30
consecutive trading days ending on the last full
trading day prior to the Time of Determination or (b)
the period commencing on the date next succeeding the
first public announcement of the issuance of such
rights, options, or warrants or such distribution
through such last full trading day prior to the Time
of Determination. For purposes of the foregoing, the
term "Time of Determination" shall mean the time and
date of the earlier of (I) the record date for
determining stockholders entitled to receive the
rights, options, warrants, or distributions referred
to in Section 5(d)(ii) and (iii) or (II) the
commencement of "ex-dividend" trading on the New York
Stock Exchange or such other United States exchange
or market on which the Kinross Stock is then listed
or admitted for trading.
(v) In any case in which this Section 5(d)
shall require that any adjustment be made immediately
following a record date or an effective date, the
Corporation may elect to defer (but only until the
filing by Kinross with its stock transfer agent of
the certificate required by subsection (vii) of this
Section 5(d)) issuing to the holder of any share of
Series B Convertible Preferred Stock converted after
such record date or effective date the shares of
Kinross Stock issuable upon such conversion over and
above the shares of Kinross Stock issuable upon such
conversion on the basis of the Conversion Price prior
to adjustment, and paying to such holder any amount
of cash in lieu of a fractional share.
(vi) No adjustment in the Conversion Price
shall be required to be made unless such adjustment
would require an increase or decrease of at least 1%
of such price; provided, however, that any
adjustments which by reason of this subsection (vi)
are not required to be made shall be carried forward
and taken into account in any subsequent adjustment.
All calculations under this Section 5(d) shall be
made to the nearest cent or to the nearest 1/100th of
a share, as the case may be. Anything in this Section
5(d) to the contrary notwithstanding, the Corporation
shall be entitled to make such reduction in the
Conversion Price, in addition to those required by
this Section 5(d), as it in its discretion shall
determine to be advisable in order that any stock
dividend, subdivision of shares, distribution or
rights to purchase stock or securities, or
distribution of securities convertible into or
exchangeable for stock hereafter made by the
Corporation to its stockholders shall not be taxable
to the recipients. Except as set forth in subsections
(i), (ii), and (iii) above, the Conversion Price
shall not be adjusted for any such event, including,
without limitation, the issuance of Kinross Stock, or
any securities convertible into or exchangeable for
Kinross Stock or carrying the right to purchase any
of the foregoing, in exchange for cash, property, or
services.
(vii) Whenever the Conversion Price is
adjusted as herein provided, (A) the Corporation
promptly shall file with its stock transfer agent a
certificate setting forth the Conversion Price after
such adjustment and a brief statement of the facts
requiring such adjustment and the manner of computing
the same, which certificate shall be conclusive
evidence of the correctness of such adjustment,
except for arithmetic errors, and (B) the Corporation
also shall deliver or mail, or cause to be delivered
or mailed by first class mail, postage prepaid, as
soon as practicable to each holder of record of
shares of Series B Convertible Preferred Stock a
notice stating that the Conversion Price has been
adjusted and setting forth the adjusted Conversion
Price. The stock transfer agent shall not be under
any duty or responsibility with respect to the
certificate required by this subsection (vii) except
to exhibit the same to any holder of shares of Series
B Convertible Preferred Stock who requests to inspect
it.
(viii) In the event that at any time, as a
result of an adjustment made pursuant to subsection
(i) of this Section 5(d), the holder of any share of
Series B Convertible Preferred Stock thereafter
surrendered for conversion shall become entitled to
receive any shares other than shares of Kinross
Stock, thereafter the Conversion Price of such other
shares so receivable upon conversion of any share of
Series B Convertible Preferred Stock shall be subject
to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the
provisions with respect to Kinross Stock contained in
this Section.
(ix) The Corporation from time to time may
decrease the Conversion Price by any amount for any
period of time if the period is at least 20 days and
if the decrease is irrevocable during the period.
Whenever the Conversion Price is so decreased, the
Corporation shall deliver or mail to holders of
record of shares of Series B Convertible Preferred
Stock a notice of the decrease at least 15 days
before the date the decreased Conversion Price takes
effect, and such notice shall state the decreased
Conversion Price and the period it will be in effect.
(e) Notice to Holders Prior to Certain Corporate Actions. In
case:
(i) the Corporation shall take any action
which would require an adjustment in the Conversion
Price pursuant to Section 5(d)(iii); or
(ii) Kinross shall authorize the granting to
the holders of the Kinross Stock generally of rights,
options, or warrants to subscribe for or purchase any
shares of stock of any class or of any other rights;
or
(iii) there shall be any reorganization or
reclassification of the Kinross Stock (other than a
subdivision or combination of the outstanding Kinross
Stock and other than a change in the par value of the
Kinross Stock), or any consolidation or merger to
which Kinross is a party or any statutory exchange of
securities with another corporation and for which
approval of any stockholders of Kinross is required,
or any sale, lease, or transfer of all or
substantially all of the assets of Kinross; or
(iv) there shall be a voluntary or
involuntary dissolution, liquidation, or winding up
of the Corporation;
then in each such case, the Corporation shall cause to be
delivered or mailed by first class mail, postage prepaid, to
the holders of shares of Series B Convertible Preferred Stock
and its stock transfer agent, as promptly as possible, but in
any event at least 20 days prior to the applicable date
hereinafter specified, a written notice stating (i) the date
on which a record is to be taken for the purpose of such
action or granting of rights, options, or warrants, or, if a
record is not to be taken, the date as of which the holders of
Kinross Stock of record to be entitled to such distribution,
rights, options, or warrants are to be determined, or (ii) the
date on which such reorganization, reclassification,
consolidation, merger, statutory exchange, sale, lease,
transfer, dissolution, liquidation, or winding up is expected
to become effective or occur, and the date as of which it is
expected that holders of Kinross Stock of record shall be
entitled to exchange their shares of Kinross Stock for
securities, cash, or other property deliverable upon such
reorganization, reclassification, consolidation, merger,
statutory exchange, sale, lease, transfer, dissolution,
liquidation, or winding up. Failure to give such notice or any
defect therein shall not affect the legality or validity or
the proceedings described in subsection (i), (ii), (iii), or
(iv) of this Section 5(e).
(f) Transfer Taxes, Etc. The Corporation shall pay any and all
documentary stamp, issue, or transfer taxes, and any other similar
taxes payable in respect of the issue or delivery of shares of Kinross
Stock upon conversion of shares of Series B Convertible Preferred Stock
pursuant hereto; provided, however, that the Corporation shall not be
required to pay any tax that may be payable in respect of any transfer
involved in the issue or delivery of shares of Kinross Stock in a name
other than that of the holder of the shares of Series B Convertible
Preferred Stock to be converted and no such issue or delivery shall be
made unless and until the person requesting such issue or delivery has
paid to the Corporation the amount of any such tax or has established,
to the satisfaction of the Corporation, that such tax has been paid.
(g) Consolidation or Merger or Sale of Assets. Notwithstanding
any other provision herein to the contrary, in case of any
consolidation or merger to which Kinross is a party (other than a
merger or consolidation in which Kinross is the continuing
corporation), or in case of any sale, lease, or transfer to another
corporation of the property of Kinross as an entirety or substantially
as an entirety, then lawful provision shall be made by the corporation
formed by such consolidation or the corporation whose securities, cash,
or other property immediately after the merger or consolidation will be
owned, by virtue of the merger of consolidation, by the holders of
Common Stock immediately prior to the merger or consolidation, or the
corporation which shall have acquired such assets or securities of the
Corporation (collectively the "Formed, Surviving, or Acquiring
Corporation"), as the case may be, providing that the holder of each
share of Series B Convertible Preferred Stock then outstanding shall
have the right thereafter to convert such share into the kind and
amount of securities, cash, or other property receivable upon such
consolidation, merger, sale, lease, or transfer by a holder of the
number of shares of Kinross
Stock into which such share of Series B Convertible Preferred Stock
might have been converted immediately prior to such consolidation,
merger, sale, lease, or transfer assuming such holder of Kinross Stock
did not exercise his rights of election, if any, as to the kind or
amount of securities, cash, or other property receivable upon such
consolidation, merger, sale, lease, or transfer (provided that, if the
kind or amount of securities, cash, or other property receivable upon
such consolidation, merger, sale, lease, or transfer is not the same
for each share of Kinross Stock in respect of which such rights of
election shall not have been exercised ("non-electing share"), then for
the purposes of this Section 5(g), the kind and amount of securities,
cash, or other property receivable upon such consolidation, merger,
sale, lease, or transfer for each non-electing share shall be deemed to
be the kind and amount so receivable per share by a plurality of the
non-electing shares). The Formed, Surviving, or Acquiring Corporation,
as the case may be, shall make provision in its certificate or articles
of incorporation or other constituent documents to the end that the
provisions set forth in this Section 5(g) shall thereafter
correspondingly be made applicable, as nearly as may reasonably be, in
relation to any shares of stock or other securities or property
thereafter deliverable on the conversion of the Series B Convertible
Preferred Stock.
The above provisions of this Section 5(g) shall similarly
apply to successive consolidations, mergers, sales, leases, or
transfers.
(h) Covenant as to Kinross Stock. The Corporation covenants
that all shares of Kinross Stock which may be delivered upon
conversions of shares of Series B Convertible Preferred Stock will upon
delivery be duly and validly issued and fully paid and nonassessable,
free of all liens and charges and not subject to any preemptive rights.
(6) Voting Rights.
(a) General. The holders of Series B Convertible Preferred
Stock shall be entitled to 1.4 votes for each share of Series B
Convertible Preferred Stock held of record on each matter on which
holders of the Common Stock or stockholders generally are entitled to
vote. Except as otherwise provided herein or by applicable law, the
holders of shares of Series B Convertible Preferred Stock and the
holders of shares of Common Stock shall vote together as one class for
the election of directors of the Corporation and on all other matters
submitted to a vote of stockholders of the Corporation.
(b) Additional Voting Rights. Whenever dividends on the Series
B Convertible Preferred Stock shall be in arrears in an amount equal to
at least six quarterly dividend payments (whether or not consecutive),
(i) the number of members of the Board of Directors of the Corporation
shall be increased by two, effective as of the time of election of such
directors as hereinafter provided, and (ii) the holders of the Series B
Convertible Preferred Stock (voting as a class together with all other
affected classes or series of the Parity Dividend Stock upon which like
voting rights have been conferred and are exercisable) will have the
exclusive right to vote for and elect such two additional directors of
the Corporation at any meeting of stockholders of the Corporation at
which directors are to be elected held during the period such dividends
remain in arrears. The right of the holders of the Series B Convertible
Preferred Stock to vote for such two additional directors shall
terminate when all accrued and unpaid dividends on the Series B
Convertible Preferred Stock have been declared and paid or set apart
for payment. The term of office of all directors so elected shall
terminate immediately upon the termination of the right of the holders
of the Series B Convertible Preferred Stock and such Parity Dividend
stock to vote for such two additional directors.
The foregoing right of the holders of the Series B Convertible
Preferred Stock with respect to the election of two directors may be
exercised at any annual meeting of stockholders or at any special
meeting of stockholders held for such purpose. If the right to elect
directors shall have accrued to the holders of the Series B Convertible
Preferred Stock more than 90 days preceding the date established for
the next annual meeting of stockholders, the President of the
Corporation shall, within 20 days after the delivery to the Corporation
at its principal office of a written request for a special meeting
signed by the holders of at least ten percent (10%) of the Series B
Convertible Preferred Stock then outstanding, call a special meeting of
the holders of the Series B Convertible Preferred Stock to be held
within 60 days after the delivery of such request for the purpose of
electing such additional directors.
The holders of the Series B Convertible Preferred Stock and
any such Parity Dividend Stock referred to above voting together shall
have the right to remove without cause at any time and replace any
directors such holders have elected pursuant to this Section 6.
(c) Class Voting Rights. So long as the Series B Convertible
Preferred Stock is outstanding, the Corporation shall not, without the
affirmative vote or consent of the holders of at least 66-2/3 percent
of all outstanding shares of Series B Convertible Preferred stock
(unless the vote or consent of a greater percentage is required by
applicable law or these Articles of Incorporation, as amended, of the
Corporation), voting separately as a class, (i) amend, alter, or repeal
(by merger, consolidation, or otherwise) any provision of these
Articles of Incorporation, as amended, or the Bylaws of the
Corporation, as amended, so as to affect adversely the relative rights,
preferences, qualifications, limitations, or restrictions of the Series
B Convertible Preferred Stock, (ii) authorize or issue, or increase the
authorized amount of, any additional class or series of stock, or any
security convertible into stock of such class or series, ranking prior
to the Series B Convertible Preferred Stock in respect of the payment
of dividends or upon liquidation, dissolution, or winding up of the
Corporation or (iii) effect any reclassification of the Series B
Convertible Preferred Stock. A class vote on the part of the Series B
Convertible Preferred Stock, without limitation, specifically shall not
be deemed to be required (except as otherwise required by law or
resolution of the Board of Directors of the Corporation) in connection
with: (a) the authorization, issuance, or increase in the authorized
amount of any shares of any other class or series of stock that ranks
junior to, or on a parity with, the Series B Convertible Preferred
Stock in respect of the payment of dividends and upon liquidation,
dissolution, or winding up of the Corporation; or (b) the
authorization, issuance, or increase in the amount of any notes, bonds,
mortgages, debentures, or other obligations of the Corporation not
convertible into or exchangeable, directly or indirectly, for stock
ranking prior to the Series B Convertible Preferred stock in respect of
the payment of dividends or upon liquidation, dissolution, or winding
up of the Corporation.
(7) Outstanding Shares. For purposes of these Articles of
Incorporation, all shares of Series B Convertible Preferred Stock shall be
deemed outstanding except (i) from the date fixed for redemption pursuant to
Section 4, all shares of Series B Convertible Preferred Stock that have been so
called for redemption under Section 4 if the cash necessary for payment of the
Redemption Price irrevocably has been set aside; (ii) from the date of surrender
of certificates representing shares of Series B Convertible Preferred Stock, all
shares of Series B Convertible Preferred Stock converted into Kinross Stock; and
(iii) from the date of registration of transfer, all shares of Series B
Convertible Preferred Stock held of record by the Corporation or any subsidiary
of the Corporation.
(8) No Other Rights and Powers. The shares of Series B Convertible
Preferred Stock shall not have any relative, participating, optional, or other
special rights and powers other than as set forth herein.
(9) Preemptive Rights. The Series B Convertible Preferred Stock is not
entitled to any preemptive or subscription rights in respect of any securities
of the Corporation.
(10) Severability of Provisions. Whenever possible, each provision
hereof shall be interpreted in a manner as to be effective and valid under
applicable law, but if any provision hereof is held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating or otherwise
adversely affecting the remaining provisions hereof. If a court of competent
jurisdiction should determine that a provision hereof would be valid or
enforceable if a period of time were extended or shortened or a particular
percentage were increased or decreased, then such court may make such changes as
shall be necessary to render the provision in question effective and valid under
applicable law.
ARTICLE 5
The governing board of this Corporation shall be known as directors.
The number of directors constituting the initial Board of Directors is one (1);
thereafter, the number of directors shall be determined by the Bylaws. The name
and address of the initial director who is to serve as such until the first
annual meeting of shareholders, or until his successor is elected and has
qualified, subject, however, to prior death, resignation, retirement,
disqualification, or removal from office is:
Arthur H. Ditto
57th Floor, Scotia Plaza
40 King Street West
Toronto, Ontario M3H 3Y2
Canada
ARTICLE 6
The Board of Directors of the Corporation is expressly authorized to
adopt, amend, or repeal the Bylaws of the Corporation.
ARTICLE 7
A director of the Corporation shall not be liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except to the extent such exemption from liability or limitation
thereof is not permitted under the Statutes as currently in effect or as the
same may hereafter be amended.
No amendment, modification, or repeal of this Article 7 shall adversely
affect any right or protection of a director that exists at the time of such
amendment, modification, or repeal.
ARTICLE 8
The Corporation reserves the right at any time and from time to time to
amend, alter, change, or repeal any provision contained in these Articles of
Incorporation in the manner now or hereafter prescribed by law; and all rights,
preferences, and privileges of whatsoever nature conferred upon stockholders,
directors, or any other persons whomsoever by and pursuant to these Articles of
Incorporation in their present form or as hereafter amended are granted subject
to the rights reserved in this Article 8.
ARTICLE 9
The Corporation elects not to be governed by Sections 78.411 to 78.444
of the Nevada Revised Statutes.
ARTICLE 10
The name and address of the incorporator signing these Articles of
Incorporation is as follows:
Arthur H. Ditto
57th Floor, Scotia Plaza
40 King Street West
Toronto, Ontario M3H 3Y2
Canada
-----------------------------
Arthur H. Ditto, Incorporator
CERTIFICATE OF ACCEPTANCE OF APPOINTMENT OF RESIDENT AGENT
The Corporation Trust Company of Nevada hereby accepts appointment as
Resident Agent for the above-named corporation.
The Corporation Trust Company of Nevada
By:
---------------------------------
Date:
--------------------------------
APPENDIX C
KINAM GOLD INC.
BY-LAWS
ARTICLE I
Stockholders
Section 1.1 Annual Meetings. An annual meeting of stockholders shall be
held for the election of directors at such date, time and place either within or
without the State of Nevada as may be designated by the Board of Directors from
time to time. Any other proper business may be transacted at the annual meeting.
Section 1.2 Special Meetings. Special meetings of stockholders may be
called at any time by the Chairman of the Board, if any; the Vice Chairman of
the Board, if any; the President or the Board of Directors, to be held at such
date, time and place either within or without the State of Nevada as may be
stated in the notice of the meeting. A special meeting of stockholders shall be
called by the Secretary upon the written request of stockholders who together
own of record a majority of the outstanding stock of each class entitled to vote
at such meeting. Such written request must state the purpose of the meeting.
Section 1.3 Notice of Meetings. Whenever stockholders are required or
permitted to take any action at a meeting, a written notice of the meeting shall
be given which shall state the place, date and hour of the meeting, and the
purpose or purposes for which the meeting is called. Unless otherwise provided
by law, the written notice of any meeting shall be given not less than ten nor
more than sixty days before the date of the meeting to each stockholder entitled
to vote at such meeting. If mailed, such notice shall be deemed to be given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the Corporation.
Section 1.4 Adjournments. Any meeting of stockholders, annual or
special, may adjourn from time to time to reconvene at the same or some other
place, and notice need not be given of any such adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting, the Corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
Section 1.5 Quorum. At each meeting of stockholders, except where
otherwise provided by law or the articles of incorporation or these by-laws, the
holders of a majority of the outstanding shares of each class of stock entitled
to vote at the meeting, present in person or represented by proxy, shall
constitute a quorum. For purposes of the foregoing, two or more classes or
series of stock shall be considered a single class if the holders thereof are
entitled to vote together as a single class at the meeting. In the absence of a
quorum, the stockholders so present may, by majority vote, adjourn the meeting
from time to time in the manner provided by Section 1.4 of these by-laws until a
quorum shall attend. Shares of its own capital stock belonging on the record
date for the meeting to the Corporation or to another corporation, if a majority
of the shares entitled to vote in the election of directors of such other
corporation is held, directly or indirectly, by the Corporation, shall neither
be entitled to vote nor be counted for quorum purposes; provided, however, that
the foregoing shall not limit the right of the Corporation to vote stock,
including but not limited to its own stock, held by it in a fiduciary capacity.
Section 1.6 Organization. Meetings of stockholders shall be presided
over by the Chairman of the Board, if any; or in his absence, by the Vice
Chairman of the Board, if any; or in his absence by the President, or in his
absence by the Executive Vice President, if any; or in his absence by a Vice
President; or in the absence of the foregoing persons, by a chairman chosen at
the meeting. The Secretary shall act as secretary of the meeting, but in the
absence of the Secretary, the Chairman of the meeting may appoint any person to
act as secretary of the meeting.
Section 1.7 Voting; Proxies. Unless otherwise provided in the articles
of incorporation, each stockholder entitled to vote at any meeting of
stockholders shall be entitled to one vote for each share of stock held by him
or her which has voting power upon the matter in question. Each stockholder
entitled to vote at a meeting of stockholders or to express consent or dissent
to corporation action in writing without a meeting may authorize another person
or persons to act for him or her by proxy, but no such proxy shall be voted or
acted upon after three years from its date, unless the proxy provides for a
longer period. A duly executed proxy shall be irrevocable if it states that it
is irrevocable and if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A stockholder may revoke any
proxy which is not irrevocable by attending the meeting and voting in person or
by filing an instrument in writing revoking the proxy or another duly executed
proxy bearing a later date with the Secretary of the Corporation. Voting at
meetings of stockholders need not be by written ballot unless the holders of a
majority of the outstanding shares of all classes of stock entitled to vote
thereon present in person or by proxy at such meeting shall so determine. At all
meetings of stockholders for the election of directors, a plurality of the votes
cast shall be sufficient to elect. All other elections and questions shall,
unless otherwise provided by law or by the articles of incorporation or these
by-laws, be decided by the vote of the holders of a majority of the outstanding
shares of all classes of stock entitled to vote thereon present in person or by
proxy at the meeting, provided that (except as otherwise required by law or by
the articles of incorporation) the Board of Directors may require a larger vote
upon any election or question.
Section 1.8 Fixing Date for Determination of Stockholders of Record. In
order that the Corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment thereof, or to
consent to corporate action in writing without a meeting, or entitled to receive
payment of any dividend or other distribution or allotment of any rights or
entitled to exercise any rights in respect of any change, conversion or exchange
of stock, or for the purpose of any other lawful action, the Board of Directors
may fix, in advance, a record date, which shall not be more than sixty nor less
than ten days before the date of such meeting or more than sixty days prior to
any other action, as applicable. If no record date is fixed: (1) the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given; or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held; (2)
the record date for determining stockholders entitled to express consent to
corporate action in writing without a meeting, when no prior action by the Board
is necessary, shall be the day on which the first written consent is expressed;
and (3) the record date for determining stockholders for any other purpose shall
be at the close of business on the day on which the Board adopts the resolution
relating thereto. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board may fix a new record date for the
adjourned meeting.
Section 1.9 List of Stockholders Entitled to Vote. The Secretary shall
prepare and make available, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting; or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof and may be inspected by any stockholder who is
present.
Section 1.10 Consent of Stockholders in Lieu of Meeting. Unless
otherwise provided in the articles of incorporation, any action required by law
to be taken at any annual or special meeting of stockholders of the Corporation,
or any action which may be taken at any annual or special meeting of such
stockholders, may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have not
consented in writing.
Section 1.11 Inspectors of Election. Prior to any meeting of
stockholders, the Board of Directors or the President shall appoint one or more
inspectors to act at such meeting and make a written report thereof and may
designate one or more persons as alternate inspectors to replace any inspector
who fails to act. If no such inspector or alternate is able to act at the
meeting of stockholders, the person presiding at the meeting shall appoint one
or more inspectors to act at the meeting. Each inspector, before entering upon
the discharge of his or her duties, shall take and sign an oath faithfully to
execute the duties of inspector with strict impartiality and according to the
best of his or her ability. The inspectors shall ascertain the number of shares
outstanding and the voting power of each, determine the shares represented at
the meeting and the validity of proxies and ballots, count all votes and
ballots, determine and retain for a reasonable period a record of the
disposition of any challenges made to any determination by the inspectors and
certify their determination of the number of shares represented at the meeting
and their count of all votes and ballots. The inspectors may appoint or retain
other persons to assist them in the performance of their duties. The date and
time of the opening and closing of the polls for each matter upon which the
stockholders will vote at a meeting shall be announced at the meeting. No
ballot, proxy or vote, nor any revocation thereof or change thereto, shall be
accepted by the inspectors after the closing of the polls. In determining the
validity and counting of proxies and ballots, the inspectors shall be limited
to an examination of the proxies, any envelopes submitted therewith, any
information provided by a stockholder who submits a proxy by telegram, cablegram
or other electronic transmission from which it can be determined that the proxy
was authorized by the stockholder, ballots and the regular books and records of
the Corporation; and, they may also consider other reliable information for the
limited purpose of reconciling proxies and ballots submitted by or on behalf of
banks, brokers, their nominees or similar persons which represent more votes
than the holder of a proxy is authorized by the record owner to cast or more
votes than the stockholder holds of record. If the inspectors consider other
reliable information for such purpose, they shall, at the time they make their
certification, specify the precise information considered by them, including the
person or persons from whom they obtained the information, when the information
was obtained, the means by which the information was obtained and the basis for
the inspectors' belief that such information is accurate and reliable.
ARTICLE II
Board of Directors
Section 2.1 Powers; Number; Qualifications. The business and affairs of
the Corporation shall be managed by the Board of Directors, except as may be
otherwise provided by law or in the articles of incorporation. The Board shall
consist of one or more members, the number thereof to be determined from time to
time by the Board or by the stockholders. Directors need not be stockholders.
Section 2.2 Election; Term of Office; Resignation; Removal; Vacancies.
Each director shall hold office until the annual meeting of stockholders next
succeeding his election and until his successor is elected and qualified or
until his earlier resignation or removal. Subject to the rights of holders of
any class or series of stock having a preference over the Common Stock of the
Corporation as to dividends or upon liquidation, nominations for the election of
directors may be made by the Board of Directors or the Nominating Committee of
the Board of Directors or by any stockholder entitled to vote in the election of
directors generally. However, any stockholder entitled to vote in the election
of directors generally may nominate one or more persons for election as director
at a meeting only if written notice of such stockholder's intent to make such
nomination or nominations has been timely given to the Secretary of the
Corporation. To be timely, a stockholder's notice must be received at the
principal executive office of the Corporation not later than (i) with respect to
an election to be held at an annual meeting of stockholders, ninety days prior
to the anniversary date of the immediately preceding annual meeting, and (ii)
with respect to an election to be held at a special meeting of stockholders for
the election of directors, the close of business on the tenth day following the
date on which notice of such meeting is first given to stockholders. Each such
notice shall set forth: (a) the name and address of the stockholder who intends
to make the nomination and of the person or persons to be nominated; (b) a
representation that the stockholder is a holder of record of stock of the
Corporation entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to nominate the person or persons specified in the
notice; (c) the number of shares of the Corporation owned of record and
beneficially by the stockholder; (d) a description of all arrangements or
understandings between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder; (e) such other information
regarding each nominee proposed by such stockholder as would be required to be
included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission; and (f)
the consent of each nominee to serve as a director of the Corporation if so
elected. The presiding officer of the meeting may refuse to acknowledge the
nomination of any person not made in compliance with the foregoing procedure.
Any director may resign at any time upon written notice to the Board of
Directors or to the President or Secretary of the Corporation. Such resignation
shall take effect at the time specified therein, and unless otherwise specified
therein, no acceptance of such resignation shall be necessary to make it
effective. The stockholders may remove any director with or without cause at any
time. Unless otherwise provided in the articles of incorporation or these
by-laws, vacancies and newly created directorships resulting from any increase
in the authorized number of directors or from any other cause may be filled by a
majority of the directors then in office, although less than a quorum, or by the
sole remaining director.
Section 2.3 Regular Meetings. Regular meetings of the Board of
Directors may be held at such places within or without the State of Nevada and
at such times as the Board may from time to time determine, and if so
determined, notice thereof need not be given.
Section 2.4 Special Meetings. Special meetings of the Board of
Directors may be held at any time or place within or without the State of Nevada
whenever called by the Chairman of the Board, if any; by the President or by any
two directors. Reasonable notice thereof shall be given by the person or persons
calling the meeting.
Section 2.5 Telephonic Meetings Permitted. Unless otherwise restricted
by the articles of incorporation or these by-laws, members of the Board of
Directors, or any committee designated by the Board, may participate in a
meeting of the Board or of such committee, as the case may be, by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in a
meeting pursuant to this by-law shall constitute presence in person at such
meeting.
Section 2.6 Quorum; Vote Required for Action. At all meetings of the
Board of Directors, one-third of the entire Board shall constitute a quorum for
the transaction of business. The vote of a majority of the directors present at
a meeting at which a quorum is present shall be the act of the Board unless the
articles of incorporation or these by-laws shall require a vote of a greater
number. In case at any meeting of the Board a quorum shall not be present, the
members of the Board present may adjourn the meeting from time to time until a
quorum shall attend.
Section 2.7 Organization. Meetings of the Board of Directors shall be
presided over by the Chairman of the Board, if any; or in his absence by the
Vice Chairman of the Board, if any; or in his absence by the President, or in
his absence, by the Executive Vice President, if any; or in their absence by a
chairman chosen at the meeting. The Secretary shall act as secretary of the
meeting, but in the absence of the Secretary, the chairman of the meeting may
appoint any person to act as secretary of the meeting.
Section 2.8 Informal Action by Directors. Unless otherwise restricted
by the articles of incorporation or these by-laws, any action required or
permitted to be taken at any meeting of the
Board of Directors, or of any committee thereof, may be taken without a meeting
if all members of the Board or of such committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the Board or committee.
Section 2.9 Powers of Attorney. The Board of Directors may authorize
any officer or officers of the Corporation to confer all kinds of powers of
attorney upon any person, persons or entities (including power of attorney in
favor of lawyers, solicitors or judicial agents, in order to enable them to
carry on and perform the legal representation of the Corporation or any of its
subsidiaries in connection with any judicial process), with all the faculties
and powers that he, she or they may deem necessary or advisable, and also to
revoke the same in whole or in part.
ARTICLE III
Committees
Section 3.1 Committees. The Board of Directors may, by resolution
passed by a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the directors of the Corporation. The
Board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he, she or they constitute a quorum, may (but are not
required to) unanimously appoint another member of the Board to act at the
meeting in place of any such absent or disqualified member. Any such committee,
to the extent provided in the resolution of the Board, shall have and may
exercise all the powers and authority of the Board in the management of the
business and affairs of the Corporation, and may authorize the seal of the
Corporation to be affixed to all papers which may require it; but no such
committees shall have power or authority in reference to amending the articles
of incorporation, adopting an agreement of merger or consolidation, recommending
to the stockholders the sale, lease or exchange of all or substantially all of
the Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or a revocation of dissolution, removing or
indemnifying directors or amending these by-laws; and, unless the resolution
expressly so provides, no such committee shall have the power or authority to
declare a dividend or to authorize the issuance of stock.
Section 3.2 Committee Rules. Unless the Board of Directors otherwise
provides, each committee designated by the Board may make, alter and repeal
rules for the conduct of its business. In the absence of a provision by the
Board or a provision in the rules of such committee to the contrary, a majority
of the entire authorized number of members of such committee shall constitute a
quorum for the transaction of business, the vote of a majority of the members
present at a meeting at the time of such vote if a quorum is then present shall
be the act of such committee, and in other respects each committee shall conduct
its business in the same manner as the Board conducts its business pursuant to
Article II of these by-laws.
Section 3.3 Audit Committee. The Board of Directors shall, by
resolution passed by a majority of the entire Board of Directors, designate an
Audit Committee to consist of not less than two nor more than five Directors.
The Audit Committee shall be comprised solely of directors of the Corporation
who are independent of management and free from any relationship that, in the
opinion
of the Corporation's Board of Directors, would interfere with the exercise of
independent judgment as a committee member. No director who is also an officer
or employee of the Corporation or of any direct or indirect subsidiary of the
Corporation, shall be a member of the Audit Committee. The Board of Directors
shall designate one of the members of the Audit Committee as Chairman of the
Audit Committee. The Audit Committee shall recommend to the Board the firm of
independent public accountants which shall conduct the annual audit of the
accounts of the Corporation and the nature and scope of the audit, which shall
be in accordance with generally accepted auditing practices; and it shall
furnish the Board of Directors with a written report at least annually
containing its recommendations and any comments it may desire to make about the
financial organization or accounting practices of the Corporation and the
qualifications or performance of its past or proposed auditing firm. The Board
of Directors shall have power at any time to fill vacancies in, to change the
membership of, or to dissolve the Audit Committee and the Audit Committee shall
not have power to fill any vacancies in such Committee. The Audit Committee
shall elect its secretary and may designate such other assistants as it shall
from time to time deem necessary. Two members of the Audit Committee shall
constitute a quorum for meetings. The Audit Committee shall keep minutes of its
meetings, in which minutes shall be recorded all action taken, and such action
shall be reported to the Board at the meeting next succeeding such action.
Section 3.4 Nominating Committee. The Board of Directors shall, by
resolution passed by a majority of the entire Board, designate a Nominating
Committee to consist of two or more Directors. The Board of Directors shall
designate one of the members of the Nominating Committee as Chairman of the
Committee. The Nominating Committee shall recommend to the Board prospective
members of the Board of Directors. The Board shall have the power at any time to
fill vacancies in, to change the membership of, or to dissolve the Nominating
Committee and the Nominating Committee shall not have the power to fill any
vacancies in such Committee. The Nominating Committee shall elect its secretary
and may designate such other assistants as it may from time to time deem
necessary. A majority of the members of the Nominating Committee shall
constitute a quorum. The Nominating Committee shall keep minutes of its
meetings, in which shall be recorded all action taken, and all action of the
Nominating Committee shall be reported to the Board at the meeting next
succeeding such action.
ARTICLE IV
Officers
Section 4.1 Officers; Election; Qualification; Term of Office;
Resignation; Removal; Vacancies. As soon as practicable after the annual meeting
of stockholders in each year, the Board of Directors shall elect a President, a
Secretary and a Treasurer, and it may, if it so determines, elect from among its
members a Chairman of the Board and a vice Chairman of the Board. The Board may
also elect a Chief Executive Officer, a Chief Financial Officer, an Executive
Vice President, one or more Vice Presidents, one or more Assistant Treasurers, a
Controller and one or more Assistant Controllers, and may give any of them such
further designations or alternate titles as it considers desirable. Each such
officer shall hold office until the first meeting of the Board after the annual
meeting of stockholders next succeeding his or her election, and until his or
her successor is elected and qualified or until his or her earlier resignation
or removal. Any officer may resign at any time upon written notice to the Board
or to the President or the Secretary of the Corporation. Such resignation shall
take effect at the time specified therein, and unless otherwise specified
therein, no
acceptance of such resignation shall be necessary or without cause at any time.
Any such removal shall be without prejudice to the contractual rights of such
officer, if any, with the Corporation, but the election or appointment of an
officer shall not of itself create contractual rights. Any number of offices may
be held by the same person. Any vacancy occurring in any office of the
Corporation by death, resignation, removal or otherwise may be filled for the
unexpired portion of the term by the Board at any regular or special meeting.
Section 4.2 Chairman of the Board. The Chairman of the Board, if any,
shall preside at all meetings of the Board of Directors and of the stockholders
at which time he or she shall be present and shall have and may exercise such
powers as are, from time to time, assigned by the Board and as may be provided
by law.
Section 4.3 Vice Chairman of the Board. In the absence of the Chairman
of the Board, the Vice Chairman of the Board, if any, shall preside at all
meetings of the Board of Directors and of the stockholders at which he or she
shall be present. He or she shall have and may exercise such powers as are, from
time to time, assigned by the Board and as may be provided by law.
Section 4.4 President. In the absence of the Chairman of the Board and
Vice Chairman of the Board, the President shall preside at all meetings of the
Board of Directors and of the stockholders at which he or she shall be present.
The President shall have general charge and supervision of the business of the
Corporation and, in general, shall perform all duties incident to the office of
president of a corporation, and such other duties as, from time to time, may be
assigned by the Board or as may be provided by law.
Section 4.5 Executive Vice President. The Executive Vice President, if
any, shall, under the direction of the President, share the general charge of
the operations of the Corporation. In the absence or inability to act of the
President, the Executive Vice President shall act in place of and instead of the
President during such absence or inability.
Section 4.6 Vice Presidents. The Vice President or Vice Presidents, at
the request of the President or in the absence of the President and the
Executive Vice President (if any) or during their inability to act, shall
perform the duties of the President, and when so acting shall have the powers of
the President. If there be more than one Vice President, the Board of Directors
may determine which one or more of the Vice Presidents shall perform any of such
duties; or, if such determination is not made by the Board, the President may
make such determination; otherwise, any of the Vice Presidents may perform any
of such duties. The Vice President or Vice Presidents shall have such other
powers and perform such other duties as may be assigned by the Board or the
President, or as may be provided by law.
Section 4.7 Secretary. The Secretary shall record all the proceedings
of the meetings of the stockholders and the Board of Directors and of any
committees in a book to be kept for that purpose; shall see that all notices are
duly given in accordance with the provisions of these by-laws or as required by
law; shall be custodian of the records of the Corporation; may affix the
corporate seal to any document the execution of which, on behalf of the
Corporation, is duly authorized, and when so affixed may attest the same; and,
in general, shall perform all duties incident to the office of
secretary of a corporation, and such other duties as, from time to time, may be
assigned by the Board or the President, or as may be provided by law.
Section 4.8 Assistant Secretaries. Any one of the Assistant Secretaries
may, in the absence or disability of the Secretary, perform the duties and
exercise the powers of the Secretary. Each Assistant Secretary shall perform
such other duties as the Board of Directors may prescribe or as the President
may delegate.
Section 4.9 Treasurer. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit or cause to be deposited, in the name of the
Corporation, all moneys or other valuable effects in such banks, trust companies
or other depositories as shall, from time to time, be selected by or under
authority of the Board of Directors. If required by the Board, the Treasurer
shall give a bond for the faithful discharge of his duties, with such surety or
sureties as the Board may determine; shall keep or cause to be kept full and
accurate records of all receipts and disbursements in books of the Corporation
and shall render to the President and to the Board, whenever requested, an
account of the financial condition of the Corporation; and, in general, shall
perform all the duties incident to the office of treasurer of a corporation, and
such other duties as may be assigned by the Board or the President, or as may be
provided by law.
Section 4.10 Assistant Treasurers. Any one of the Assistant Treasurers
may, in the absence or disability of the Treasurer, perform the duties and
exercise the powers of the Treasurer. Each Assistant Treasurer shall perform
such other duties as the Board of Directors may prescribe or as the President
may delegate.
Section 4.11 Controller. The Controller shall be the chief accounting
officer of the Corporation. The Controller shall keep adequate records of all
assets, liabilities and transactions of the Corporation and shall have adequate
audits thereof currently and regularly made. In conjunction with other officers,
the Controller shall initiate and enforce measures and procedures whereby the
business of the Corporation shall be conducted with maximum safety, efficiency
and economy. The Controller shall perform all duties incident to the office of
controller and such other duties as the Board of Directors may prescribe or as
the President may delegate.
Section 4.12 Assistant Controllers. Any one of the Assistant
Controllers may, in the absence or disability of the Controller, perform the
duties and exercise the power of the Controller. Each Assistant Controller shall
perform such other duties as the Board of Directors may prescribe or as the
President may delegate to him.
Section 4.13 Other Officers. The Board of Directors may from time to
time elect such other officers, agents or employees, and may delegate to them
such powers and duties as it may deem desirable.
ARTICLE V
Stock
Section 5.1 Certificates. Every holder of stock in the Corporation
shall be entitled to have a certificate signed by or in the name of the
Corporation by the Chairman or Vice Chairman of the Board of Directors, if any;
or the President or a Vice President, and by the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary of the Corporation,
certifying the number of shares owned by the holder in the Corporation. If such
certificate is manually signed by one officer or manually countersigned by a
transfer agent or by a registrar, any other signature on the certificate may be
a facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if he or she
were such officer, transfer agent or registrar at the date of issue.
Section 5.2 Lost, Stolen or Destroyed Stock Certificates; Issuance of
New Certificates. The Corporation may issue a new certificate of stock in the
place of any certificate theretofore issued by it, alleged to have been lost,
stolen or destroyed, and the Corporation may require the owner of the lost,
stolen or destroyed certificate, or the legal representative of the owner, to
give the Corporation a bond sufficient to indemnify it against any claim that
may be made against it on account of the alleged loss, theft or destruction of
any such certificate or the issuance of such new certificate.
ARTICLE VI
Indemnification and Insurance
Section 6.1 Right to Indemnification. Each person who was or is a party
or is threatened to be made a party to or is involved in any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (hereinafter a "proceeding"), by reason of the fact that he or
she, or a person of whom he or she is the legal representative, is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
the basis of such proceeding is alleged action or inaction in an official
capacity or in any other capacity while serving as a director, officer, employee
or agent, shall be indemnified and held harmless by the Corporation to the
fullest extent permitted by the laws of Nevada, as the same exist or may
hereafter be amended, against all costs, charges, expenses, liabilities and
losses (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) actually and reasonably
incurred or suffered by such person in connection therewith, and such
indemnification shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators; provided, however, that except as provided in
Section 6.2 hereof, the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
Board of Directors of the Corporation. The right to indemnification conferred in
this Article shall be a contract right and shall include the right to be paid by
the Corporation the expenses incurred in defending any such proceeding in
advance of its final disposition; provided, however, that, if the Nevada Revised
Statutes require, the payment of such expenses incurred by a director, officer
or employee in his or her capacity as a director or officer (and not in any
other capacity in which service was or is rendered by such person while a
director or officer, including, without limitation, service to an employee
benefit plan) in advance of the final disposition of a proceeding, shall be made
only upon delivery to the Corporation of an undertaking by or on behalf of such
director, officer or employee to repay all amounts so advanced if it shall
ultimately be determined that such director, officer or employee is not entitled
to be indemnified under this Section or otherwise. The Corporation may, by
action of its Board of Directors, provide indemnification to agents of the
Corporation with the same scope and effect as the foregoing indemnification of
directors, officers and employees. For purposes of this Article VI, the term
"Corporation" shall include any predecessor of the Corporation and any
constituent corporation (including any constituent of a constituent) absorbed by
the Corporation in a consolidation or merger.
Section 6.2 Right of Claimant to Bring Suit. If a claim under Section
6.1 of this Article is not paid in full by the Corporation within thirty days
after written claim has been received by the Corporation, the claimant may at
any time thereafter bring suit against the Corporation to recover the unpaid
amount of the claim; and, if successful in whole or in part, the claimant shall
be entitled to be paid also the expense of prosecuting such claim. It shall be a
defense to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has failed to meet a standard of
conduct which makes it permissible under Nevada law for the Corporation to
indemnify the claimant for the amount claimed. Neither the failure of the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is permissible in the circumstances
because he or she has met such standard of conduct, nor an actual determination
by the Corporation (including its Board of Directors, independent legal counsel,
or its stockholders) that the claimant has not met such standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
failed to meet such standard of conduct.
Section 6.3 Non-Exclusivity of Rights. The right to indemnification and
the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Article shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the articles of incorporation, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
Section 6.4 Insurance. The Corporation may purchase and maintain
insurance, at its expense, to protect itself, any director, officer, employee or
agent of the Corporation and any person serving at the request of the
Corporation as a director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust or other enterprise against any such
expense, liability or loss, whether or not the Corporation would have the power
to indemnify such person against such expense, liability or loss under the
Nevada Revised Statutes.
Section 6.5 Expenses as a Witness. To the extent that any director,
officer, employee or agent of the Corporation is by reason of such position, or
a position with another entity at the request of the Corporation, a witness in
any action, suit or proceeding, he or she shall be indemnified against all costs
and expenses actually and reasonably incurred by him or her or on his or her
behalf in connection therewith.
Section 6.6 Indemnity Agreements. The Corporation may enter into
agreements with any director, officer, employee or agent of the Corporation
providing for indemnification to the full extent permitted by the laws of
Nevada.
ARTICLE VII
Miscellaneous
Section 7.1 Fiscal Year. The fiscal year of the Corporation shall be
determined by the Board of Directors.
Section 7.2 Seal. The Corporation may have a corporate seal which shall
have the name of the Corporation inscribed thereon and shall be in such form as
may be approved from time to time by the Board of Directors. The corporate seal
may be used by causing it or a facsimile thereof to be impressed or affixed or
in any other manner reproduced.
Section 7.3 Waiver of Notice of Meetings of Stockholders, Directors and
Committees. Whenever notice is required to be given by law or under any
provision of the articles of incorporation or these by-laws, a written waiver
thereof, signed by the person entitled to notice, whether before or after the
time stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the stockholders,
directors, or members of a committee of directors need be specified in any
written waiver of notice unless so required by the articles of incorporation or
these by-laws.
Section 7.4 Interested Directors; Quorum. No contract or transaction
between the Corporation and one or more of its directors or officers, or between
the Corporation and any other corporation, partnership, association or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or their votes are
counted for such purpose, if: (1) the material facts as to his relationship or
interest and as to the contract or transaction are disclosed or are known to the
Board or the committee, and the Board or committee in good faith authorizes the
contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or (2) the material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or (3) the contract or
transaction is fair as to the Corporation as of the time it is authorized,
approved or ratified, by the Board, a committee thereof or the stockholders.
Common or interested directors may be counted in determining the presence of a
quorum at a meeting of the Board or of a committee which authorizes the contract
or transaction.
Section 7.5 Form of Records. Any records maintained by the Corporation
in the regular course of its business, including its stock ledger, books of
account and minute books, may be kept
on, or be in the form of, punch cards, magnetic tape, photographs,
microphotographs or any other information storage device, provided that the
records so kept can be converted into clearly legible form within a reasonable
time. The Corporation shall so convert any records so kept upon the request of
any person entitled to inspect the same.
Section 7.6 Voting Other Stocks. Unless otherwise directed by the Board
of Directors, the President or the Executive Vice President or any Vice
President or the Secretary or Treasurer may vote any shares of stock issued by
another corporation and owned by the Corporation at any stockholders' meeting of
such other corporation and the President, the Executive Vice President, any Vice
President or the Secretary or Treasurer shall have the authority in behalf of
the Corporation to execute and deliver a proxy or proxies for any stockholders'
meeting or give any stockholders' consent in respect of the shares of stock of
such other corporation owned by the Corporation.
Section 7.7 Amendment of By-Laws. These by-laws may be altered or
repealed and new by-laws made by the Board of Directors, but the stockholders
may make additional by-laws and may alter or repeal any by-law whether or not
adopted by them.