<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended DECEMBER 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________________ to ______________________
Commission File No. 0-4846-3
-----------------------------------------------------------
CONSIL CORP.
-------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Idaho 82-0288840
- ------------------------------- ------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Suite 500, 625 Howe Street
Vancouver, B.C., Canada V6C 2T6
- ------------------------------------------- ------------------------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) 604-331-0844
-------------------------
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
------------------------------------------
Common stock, par value 10 cents per share
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months, and (2) has been subject to such
filing requirements for at least the past 90 days. Yes XX No
-------- ------
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
The aggregate market value of the registrant's voting common stock
held by nonaffiliates was $2,281,869 as of March 1, 1996. As of March 1, 1996,
there were 9,455,683 shares of the registrant's common stock outstanding.
<PAGE> 2
PART I
------
Item 1. Business
--------
(a) ConSil Corp., formerly Consolidated Silver Corporation
(the Company or ConSil), held mineral properties in Shoshone
County, Idaho known as the Silver Summit mine which were leased
effective August 1, 1980, to a joint venture composed of certain
substantial stockholders of the Company. This lease was terminated
by the lessees effective February 11, 1988. On November 1, 1988,
the Company entered into a new Mining Lease and Agreement and a
Participation Agreement (collectively, the Agreement) of its
properties to ASARCO Incorporated (ASARCO). Due to continued
depressed metals prices, the Agreement between the Company and
ASARCO was terminated effective August 17, 1992. From 1992 to
1994, management of the Company endeavored to interest other
companies in further exploration and development of the Company's
property without success.
On November 14, 1995, the Company's stockholders approved the
sale of its interest in the Silver Summit mine and adjacent mining
properties located in Shoshone County, Idaho to Sunshine Precious
Metals, Inc. for a cash payment of $750,000, plus a variable
production royalty tied to the price of silver.
In December 1995, the Company purchased from Hecla Mining
Company (Hecla), the majority stockholder of the Company, its
interest in the Ojo Caliente exploration project for $706,822. The
project is located near the town of Zacatecas, Mexico. The Company
also entered into an agreement with Minera Hecla, S.A. de C.V.
(Minera Hecla), a wholly owned subsidiary of Hecla, whereby Minera
Hecla will conduct exploration work on the Ojo Caliente property
and the Company will reimburse Minera Hecla (See Item 2.
Properties) for actual costs incurred for exploration.
Management continues to evaluate other potential mineral
exploration projects and business opportunities with particular
emphasis on properties in Mexico.
At the annual meeting of the Company's stockholders held
November 14, 1995, the stockholders adopted certain amendments to
the Company's Articles of Incorporation, including changing the
name of the Company to ConSil Corp. (See Item 4. Matters Voted on
by Security Holders). In February 1996, the Company relocated its
headquarters from Coeur d'Alene, Idaho to Vancouver, British
Columbia, Canada.
On February 13, 1996, the Company announced it had entered
into a letter agreement for a three-month pre-option period to
purchase a 100% interest in the Sombrerete silver mine in the state
of Zacatecas, Mexico. The letter agreement calls for the Company
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<PAGE> 3
to make three payments of $5,000 per month during the pre-option
period to Grupo Catorce, S.A. de C.V. During this period, the
Company will perform an investigation of the property, and at the
end of the period, the Company can elect to enter into an option to
purchase 100% of the property, subject to certain royalties defined
therein.
(b) No information is presented as to Industry Segments.
(c) The Company holds interests in mining and mineral-bearing
exploration properties which, depending upon prices for the
products (primarily silver), vary considerably in economic
viability. The Company has no patents, licenses, franchises or
concessions which are considered by the Company to be of
importance. The business is not of a seasonal nature. Since the
potential products (primarily silver) are traded on the open
market, the Company has no control over the competitive conditions
in the industry. There is no backlog of orders.
The Company has spent no funds during the past three fiscal
years on mineral research activities relating to the development of
new products or services or the improvement of existing products or
services.
There are numerous federal, state and local laws and
regulations in the United States and Mexico related to
environmental protection which have direct application to mining
and milling activities. The more significant of these laws deal
with mined land reclamation and wastewater discharge from mines and
milling operations. The Company does not believe that these laws
and regulations as presently enacted will have a direct material
adverse effect on its results of operations or financial condition.
Further, the Company believes that adequate provision has been made
for disposal of mine waste and mill tailings in a manner which
complies with current federal and state environmental requirements.
The Company currently has two employees. Accounting and
administrative services are provided by employees of Hecla, the
majority stockholder of the Company, for which a charge is made by
Hecla.
(d) The Company is primarily engaged in a mineral exploration
project in Mexico, held through the Company's wholly owned Mexican
subsidiary, Minera ConSil, S.A. de C.V.
Item 2. Properties
----------
On November 14, 1995, at the annual meeting of the Company,
stockholders approved the sale of all of the Company's interest in
the Silver Summit mine, plant, equipment and all patented and
unpatented mining properties located in Shoshone County, Idaho, to
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<PAGE> 4
Sunshine Precious Metals, Inc. for a cash payment of $750,000 plus
a variable production royalty tied to the price of silver. A gain
on this sale of $750,000 was recognized in 1995.
On December 22, 1995, the Company acquired Hecla's right to
earn a 50 percent interest in Minera El Morro, S.A. de C.V., which
holds the Ojo Caliente silver exploration project in Zacatecas,
Mexico. The other investor in the project is Minera Portree de
Zacatecas, S.A. de C.V., a Mexican exploration company. The
Company acquired Hecla's interest in the project by reimbursing
Hecla $706,822 for all expenditures incurred by Hecla in its
acquisition and for exploration costs related to the Ojo Caliente
project. In addition, should the Company decide to seek a partner
to assist in developing the Ojo Caliente project or putting it into
production, Hecla will have the first opportunity to provide that
assistance. Minera Hecla, Hecla's wholly owned Mexican subsidiary,
is conducting the exploration under ConSil's direction.
The Ojo Caliente project includes at least four zones of
mineralization that have never been systematically explored. The
main veins have been mapped and sampled recently by Hecla. The
geology is similar to veins in the nearby Zacatecas District, which
has produced more than 600 million ounces of silver. Past
underground silver production in the Ojo Caliente area occurred in
the seventeenth century. Hecla's exploration activity during 1995
consisted of seven drill holes which tested two of the four vein
systems. Results of the 1995 drilling confirmed the presence of
the target veins at depth. The Company plans to continue the
drilling program during 1996 to explore the previously drilled vein
systems at further depth and to explore the additional two vein
systems.
Item 3. Legal Proceedings
-----------------
There are no pending legal proceedings.
Item 4. Matters Voted on by Security Holders
------------------------------------
The Company sent out a notice and proxy statement to each of
the Company's security holders on October 16, 1995 advising that
the Company would hold its annual meeting on November 14, 1995. At
the meeting, security holders voted and passed the following
resolutions:
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<PAGE> 5
REPORT OF INSPECTORS OF ELECTION:
1. WITH RESPECT TO THE SALE OF THE SILVER SUMMIT MINE TO SUNSHINE:
<TABLE>
<CAPTION>
Percentage of Percentage of
Outstanding Shares Shares Present
Shares Entitled to Vote at Meeting
---------- ------------------ --------------
<S> <C> <C> <C>
Number of shares voted
"For" the approval 8,627,663 91.2% 99.7%
Number of shares voted
"Against" the approval 9,115 0.1% 0.1%
Number of shares
"Abstaining" from voting 23,949 0.2% 0.2%
</TABLE>
2. WITH RESPECT TO THE NOMINATION AND ELECTION OF DIRECTORS:
<TABLE>
<CAPTION>
Percentage of Percentage of
Outstanding Shares Shares Present
Shares Entitled to Vote at Meeting
---------- ------------------ --------------
<S> <S> <C> <C>
Ralph R. Noyes 8,640,594 91.4% 99.8%
Michael B. White 8,641,236 91.4% 99.8%
Gerald G. Carlson 8,641,215 91.4% 99.8%
Robert Stuart Angus 8,641,051 91.4% 99.8%
William Weymark 8,641,141 91.4% 99.8%
Charles F. Asher 8,638,218 91.3% 99.8%
</TABLE>
3. WITH RESPECT TO THE APPROVAL OF ADOPTION OF CERTAIN
AMENDMENTS TO THE COMPANY'S AMENDED ARTICLES OF
INCORPORATION:
<TABLE>
<CAPTION>
Percentage of Percentage of
Outstanding Shares Shares Present
Shares Entitled to Vote at Meeting
---------- ------------------ --------------
<S> <C> <C> <C>
Number of shares voted
"For" the approval 8,620,149 91.2% 99.6%
Number of shares voted
"Against" the approval 11,053 0.1% 0.1%
Number of shares
"Abstaining" from voting 23,949 0.2% 0.3%
</TABLE>
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<PAGE> 6
4. WITH RESPECT TO THE APPROVAL OF AN AMENDMENT TO THE
COMPANY'S AMENDED ARTICLES OF INCORPORATION TO INCREASE
AUTHORIZED COMMON STOCK AND ALTER THE TERMS OF THE COMPANY'S
PREFERRED STOCK:
<TABLE>
<CAPTION>
Percentage of Percentage of
Outstanding Shares Shares Present
Shares Entitled to Vote at Meeting
---------- ------------------ --------------
<S> <C> <C> <C>
Number of shares voted
"For" the approval 8,622,922 91.2% 99.6%
Number of shares voted
"Against" the approval 19,479 0.2% 0.2%
Number of shares
"Abstaining" from voting 12,750 0.1% 0.2%
</TABLE>
5. WITH RESPECT TO THE APPROVAL OF AN AMENDMENT TO THE
COMPANY'S AMENDED ARTICLES OF INCORPORATION TO ELIMINATE THE
RIGHT OF CERTAIN STOCKHOLDERS TO A POSITION ON THE COMPANY'S
BOARD OF DIRECTORS:
<TABLE>
<CAPTION>
Percentage of Percentage of
Outstanding Shares Shares Present
Shares Entitled to Vote at Meeting
---------- ------------------ --------------
<S> <C> <C> <C>
Number of shares voted
"For" the approval 8,628,224 91.2% 99.7%
Number of shares voted
"Against" the approval 14,950 0.1% 0.2%
Number of shares
"Abstaining" from voting 11,977 0.1% 0.1%
</TABLE>
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<PAGE> 7
6. WITH RESPECT TO THE APPROVAL OF AN AMENDMENT TO THE COMPANY'S AMENDED
ARTICLES OF INCORPORATION TO ADD A PROVISION WITH REGARD TO
INDEMNIFICATION AND LIABILITY OF DIRECTORS, OFFICERS AND EMPLOYEES:
<TABLE>
<CAPTION>
Percentage of Percentage of
Outstanding Shares Shares Present
Shares Entitled to Vote at Meeting
---------- ------------------ --------------
<S> <C> <C> <C>
Number of shares voted
"For" the approval 8,616,181 91.1% 99.6%
Number of shares voted
"Against" the approval 17,791 0.2% 0.2%
Number of shares
"Abstaining" from voting 21,179 0.2% 0.2%
</TABLE>
7. WITH RESPECT TO THE APPROVAL OF AN AMENDMENT TO THE
COMPANY'S AMENDED ARTICLES OF INCORPORATION ADDING A
PROVISION ELIMINATING CUMULATIVE VOTING RIGHTS OF COMMON
SHARES IN THE ELECTION OF DIRECTORS TO THE COMPANY'S BOARD
OF DIRECTORS:
<TABLE>
<CAPTION>
Percentage of Percentage of
Outstanding Shares Shares Present
Shares Entitled to Vote at Meeting
---------- ------------------ --------------
<S> <C> <C> <C>
Number of shares voted
"For" the approval 8,607,268 91.0% 99.5%
Number of shares voted
"Against" the approval 17,969 0.2% 0.2%
Number of shares
"Abstaining" from voting 29,914 0.3% 0.3%
</TABLE>
8. WITH RESPECT TO THE APPROVAL OF AUDITORS:
<TABLE>
<CAPTION>
Percentage of Percentage of
Outstanding Shares Shares Present
Shares Entitled to Vote at Meeting
---------- ------------------ --------------
<S> <C> <C> <C>
Number of shares voted
"For" the approval 8,629,276 91.3% 99.7%
Number of shares voted
"Against" the approval 1,496 0.0% 0.0%
Number of shares
"Abstaining" from voting 24,379 0.2% 0.3%
</TABLE>
-7-
<PAGE> 8
PART II
-------
Item 5. Market for the Registrant's Common Equity and Related
-----------------------------------------------------
Stockholder Matters
-------------------
The common stock of the Company has been traded since June 28,
1991, on the over-the-counter market and quotations are published
on the National Association of Securities Dealers Automated
Quotation (NASDAQ) Bulletin Board and in the National Quotation
Bureau "pink sheets" under the symbol CSLV. There has not been an
established trading market for the common stock and the below-
described quotations, when available, do not constitute a reliable
indication of the price that a holder of the common stock could
expect to receive upon sale of any particular quantity thereof.
The following table sets forth the high and low bid prices for
the Company's common stock, as reported by the National Quotation
Bureau and the Spokane Quotation Service for the quarterly periods
indicated. The prices reported by the National Quotation Bureau
and the Spokane Quotation Service represent prices between dealers,
do not include retail markups, markdowns or commissions and do not
necessarily represent actual transactions.
<TABLE>
<CAPTION>
Bid
---
High Low
------ ------
<S> <C> <C>
1995
First Quarter $ .62 $ .45
Second Quarter .76 .55
Third Quarter 1.21 .72
Fourth Quarter 1.27 .92
1994
First Quarter $ .78 $ .68
Second Quarter .77 .58
Third Quarter .75 .55
Fourth Quarter .75 .53
</TABLE>
The approximate number of holders of record of the Company's
common stock as of March 1, 1996 was 3,479.
There have been no dividends declared or paid since the
Company's inception in 1969.
In August 1995, Hecla, the majority stockholder of the
Company, acquired Coeur d'Alene Mines Corporation's 630,888 shares
of the Company's outstanding common stock which increased Hecla's
holdings of the Company's outstanding common stock to 6,168,300
shares or 75.171% of the outstanding common stock. In September
1995, the Company issued Hecla 1,250,000 shares of common stock in
exchange for Hecla's 12,500 shares of the Company's preferred stock
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<PAGE> 9
which represented the total preferred stock outstanding. The
preferred stock, formerly held by Hecla, was subsequently canceled.
At December 31, 1995, Hecla held 7,418,300, or 78.453%, shares of
the Company's outstanding common stock.
In January 1996, the Company applied to the Vancouver Stock
Exchange, Vancouver, British Columbia, to list and trade the
Company's stock on the exchange. Approval of the listing is still
pending.
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<PAGE> 10
Item 6. Selected Financial Data
-----------------------
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
--------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Revenues:
Royalties $ - - $ - - $ - - $ 7,516 $ 12,000
Other 794,319 30,808 31,164 158,603 18,677
--------- ---------- ---------- ---------- ----------
794,319 30,808 31,164 166,119 30,677
========= ========== ========== ========== ==========
Net income (loss) $(514,731) $ (30,179) $ (35,167) $ 81,440 $ 13,360
========= ========== ========== ========== ==========
Net income (loss)
per common share $ (0.06) $ - - $ - - $ 0.01 $ - -
========= ========== ========== ========== ==========
Total assets $ 748,438 $ 768,022 $ 805,792 $ 820,694 $ 737,404
========= ========== ========== ========== ==========
Working capital $ 394,831 $ 751,702 $ 781,881 $ 817,048 $ 337,420
========= ========== ========== ========== ==========
Redeemable preferred
stock $ - - $1,250,000 $1,250,000 $1,250,000 $1,250,000
========= ========== ========== ========== ==========
Cash dividends - - - - - - - - - -
========= ========== ========== ========== ==========
</TABLE>
Item 7. Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations
-----------------------------------
1995 vs 1994
- ------------
The Company's general financial condition declined during the
year ended December 31, 1995. Cash and cash equivalents decreased
from $753,486 in 1994 to $588,787 in 1995. The decline was due
principally to cash requirements for the purchase of the Company's
interest in the Ojo Caliente project, an income tax payment on the
gain on the sale of the Silver Summit mine and adjacent mining
properties and increased general and administrative expenses, which
were partially offset by the proceeds from the sale of the Silver
Summit mine. Working capital also decreased, from $751,702 in 1994
to $394,831 in 1995. The decrease in working capital was primarily
due to the net decrease in cash and cash equivalents as previously
discussed and an increase in accounts payable for amounts due on
the purchase of the Company's interest in the Ojo Caliente
exploration project.
The net loss increased from $30,179 in 1994 to $514,731 in
1995. The increase in the net loss was due to exploration
expenses, primarily the result of the purchase of the Company's
interest in the Ojo Caliente exploration project for $706,822,
noncash compensation expense totaling $228,800 related to common
stock options granted by Hecla for the Company's common stock owned
by Hecla, a $104,125 income tax provision primarily due to the sale
of the Silver Summit mine and adjacent mining properties, and a
$115,742 increase in general and administrative expenses other than
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<PAGE> 11
noncash compensation related to stock options; all of which were
partially offset by $750,000 in proceeds from the sale of the
Silver Summit mine and related properties.
On September 21, 1995, the Company issued 1,250,000 shares of
common stock to Hecla in exchange for 12,500 shares of the
Company's preferred stock held by Hecla which represented the total
outstanding shares of the Company's preferred stock. The preferred
stock previously held by Hecla was canceled. Common stock held by
Hecla at December 31, 1995 totaled 7,418,300 shares which is
approximately 78.453% of the Company's total outstanding common
stock.
The Company used the proceeds from the sale of the Silver
Summit mine and other available cash to invest in silver
exploration projects. In this regard, the Company acquired Hecla's
right to earn a 50 percent interest in Minera El Morro, S.A. de
C.V., which holds the Ojo Caliente silver exploration project in
Zacatecas, Mexico. The other investor in the project is Minera
Portree de Zacatecas, S.A. de C.V., a Mexican exploration company.
The Company acquired Hecla's interest in the project by reimbursing
Hecla $706,822 for all expenditures incurred by Hecla in its
acquisition and for exploration costs related to the Ojo Caliente
project. In addition, should the Company decide to seek a partner
to assist in developing the Ojo Caliente project or putting it into
production, Hecla will have the first opportunity to provide that
assistance. Minera Hecla, Hecla's wholly owned Mexican subsidiary,
is conducting the exploration under ConSil's direction.
The Ojo Caliente project includes at least four zones of
mineralization that have never been systematically explored. The
main veins have been mapped and sampled recently by Hecla. The
geology is similar to veins in the nearby Zacatecas District, which
has produced more than 600 million ounces of silver. Past
underground silver production in the Ojo Caliente area occurred in
the seventeenth century. Hecla's exploration activity during 1995
consisted of seven drill holes which tested two of the four vein
systems. Results of the 1995 drilling confirmed the presence of
the target veins at depth. The Company plans to continue the
drilling program during 1996 to explore the previously drilled vein
systems at further depth and to explore the additional two vein
systems.
Minimum exploration and development commitments for the Ojo
Caliente project total $265,000, $1,000,000 and $1,200,000 for the
years ending March 1996, 1997, and 1998, respectively. The
$265,000 requirement for the first period was satisfied by
September 30, 1995. In fiscal 1996, the Company anticipates
spending a minimum of approximately $500,000 on Ojo Caliente
exploration and development to satisfy minimum spending
requirements. However, this amount could increase if the Company
is able to raise funds to accelerate exploration efforts. The
Company anticipates funding the cost of future exploration at the
Ojo Caliente project from a combination of existing cash and cash
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<PAGE> 12
equivalents and future financing arrangements. These financing
arrangements may include the issuance of common or preferred stock
in 1996. However, there can be no assurance that the Company will
be able to complete one or more financing arrangements to raise
additional funds.
On February 13, 1996, the Company announced it had entered
into a letter agreement for a three-month pre-option period to
purchase a 100% interest in the Sombrerete silver mine in the state
of Zacatecas, Mexico. The letter agreement calls for the Company
to make three payments of $5,000 per month during the pre-option
period to Grupo Catorce, S.A. de C.V. During this period, the
Company will perform an investigation of the property, and at the
end of the period, the Company can elect to enter into an option to
purchase 100% of the property, subject to certain royalties defined
therein.
On February 1, 1996, the Company entered into a four-year
noncancellable office space lease for $2,150 (Canadian) per month.
The Company adopted the provisions of Statement of Financial
Accounting Standards, No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
(SFAS No. 121) effective January 1, 1995. The adoption of the
provisions of SFAS No. 121 had no material effect on the results of
operations, financial condition, or cash flows of the Company.
1994 vs 1993
- ------------
The Company's general financial condition declined during
1994. Cash and cash equivalents decreased from $785,987 in 1993 to
$753,486 in 1994, primarily due to the use of cash for the care and
maintenance of the Company's Silver Summit mine property. Working
capital declined from $781,881 to $751,702 in 1994 due to the costs
of maintaining the property and a decrease in income tax refunds
receivable which were partially offset by a decrease in accounts
and property taxes payable.
The net loss decreased $4,988 from $35,167 in 1993 to $30,179
in 1994. The decline in the net loss was primarily due to a
$11,726 decrease in general and administrative costs which was
partially offset by a $6,382 decrease in income tax benefits
resulting from 1994 operating losses carried back to prior years
being less than 1993 losses.
Item 8. Financial Statements and Supplementary Data
-------------------------------------------
See Item 14 for index of Financial Statements and Supplemental
Data filed herewith.
Item 9. Changes in and Disagreements with Accountants on
------------------------------------------------
Accounting and Financial Disclosures
None.
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<PAGE> 13
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
The Board of Directors
and Stockholders
ConSil Corp.
We have audited the consolidated financial statements of ConSil
Corp. (formerly Consolidated Silver Corporation) and subsidiary as
listed in Item 14(a) of this Form 10-K. These financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted au-
diting standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial po-
sition of ConSil Corp. and subsidiary as of December 31, 1995 and
1994, and the consolidated results of their operations and their
cash flows for each of the three years in the period ended December
31, 1995, in conformity with generally accepted accounting
principles.
As discussed in Notes 1 and 3 to the financial statements, the
Company changed its methods of accounting for long-lived assets in
1995 and income taxes in 1993.
/s/ COOPERS & LYBRAND L.L.P.
Spokane, Washington
March 26, 1996
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<PAGE> 14
CONSIL CORP.
CONSOLIDATED BALANCE SHEETS
December 31, 1995 and 1994
----------
ASSETS
<TABLE>
<CAPTION>
1995 1994
----------- ----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 588,787 $ 753,486
Accounts receivable 1,410 500
Income tax refund receivable 46,344 13,439
Deferred income taxes 33,000 - -
Other current assets 7,957 597
----------- ----------
Total current assets 677,498 768,022
----------- ----------
Property, plant and equipment:
Mining properties - - 231,672
Less - Accumulated depletion - - (231,672)
Plant, equipment and facilities 5,434 1,297,686
Less - Accumulated depreciation (494) (1,297,686)
----------- ----------
4,940 - -
Deferred income taxes 66,000 - -
----------- ----------
Total assets $ 748,438 $ 768,022
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable - Hecla Mining Company $ 279,598 $ 1,286
Accounts payable - trade 3,069 3,444
Property taxes payable - - 11,590
----------- ----------
Total current liabilities 282,667 16,320
----------- ----------
Commitments (Notes 2 and 8)
Preferred stock; 1995 - $0.25 par value; authorized,
10,000,000 shares; issued and outstanding, none;
1994 - $100 par value; authorized,
issued and outstanding, 12,500 shares - - 1,250,000
----------- ----------
Common stock; $0.10 par value; 1995 - authorized,
20,000,000 shares; issued 9,455,689 shares; 1994 -
authorized, 10,000,000 shares; issued 8,205,689 shares 945,569 820,569
Discount on common stock (190,709) (190,709)
Capital surplus 1,356,815 3,015
Accumulated deficit (1,645,880) (1,131,149)
Less: Common stock reacquired at cost (6 shares) (24) (24)
----------- ----------
465,771 (498,298)
----------- ----------
Total stockholders' equity 465,771 751,702
----------- ----------
Total liabilities and stockholders' equity $ 748,438 $ 768,022
=========== ==========
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
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<PAGE> 15
CONSIL CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31, 1995, 1994 and 1993
_________
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Revenue:
Interest $ 38,015 $ 28,452 $ 22,438
Transfer fees 844 356 564
Gain on sale of surface and
timber rights - - - - 5,562
Gain on sale of mining property 750,000 - - - -
Other 5,460 2,000 2,600
----------- ----------- -----------
794,319 30,808 31,164
----------- ----------- -----------
Expenses:
General and administrative 419,475 74,933 86,659
Exploration 784,956 - - - -
Depreciation 494 - - - -
----------- ----------- -----------
1,204,925 74,933 86,659
----------- ----------- -----------
Loss before income taxes (410,606) (44,125) (55,495)
Income tax provision (benefit) 104,125 (13,946) (20,328)
----------- ----------- -----------
Net loss $ (514,731) $ (30,179) $ (35,167)
=========== =========== ===========
Net loss per share of common stock $ (0.06) $ - - $ - -
=========== =========== ===========
Weighted average number of
common shares outstanding 8,365,939 8,205,683 8,205,683
=========== =========== ===========
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
-15-
<PAGE> 16
CONSIL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 1995, 1994 and 1993
__________
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ---------
<S> <C> <C> <C>
Operating activities:
Net loss $ (514,731) $ (30,179) $ (35,167)
Adjustments to reconcile net loss
to net cash used by operations:
Gain on sale of surface and timber rights - - - - (5,562)
Gain on sale of mining property (750,000) - - - -
Compensation expense associated with
stock options 228,800 - - - -
Depreciation 494 - - - -
Deferred income tax benefit (99,000) - - - -
Change in:
Accounts receivable (910) (500) - -
Income tax refund receivable (32,905) 6,366 (13,139)
Other current assets (7,360) (597) - -
Accounts payable 277,937 (5,460) 6,544
Property taxes payable (11,590) (2,131) 13,721
---------- ---------- ----------
Net cash used by operating activities (909,265) (32,501) (33,603)
---------- ---------- ----------
Investing activities:
Proceeds from sale of surface and
timber rights - - - - 5,562
Proceeds from sale of mining property 750,000 - - - -
Acquisition of plant, equipment and facilities (5,434) - - - -
--------- ---------- ----------
Net cash provided by investing activities 744,566 - - 5,562
---------- ---------- ----------
Net decrease in cash and cash equivalents (164,699) (32,501) (28,041)
Cash and cash equivalents at beginning
of year 753,486 785,987 814,028
---------- ---------- ----------
Cash and cash equivalents at end of year $ 588,787 $ 753,486 $ 785,987
========== ========== ==========
Supplemental disclosure of cash flow information:
Cash paid for income taxes $ 236,000 $ - - $ - -
========== ========== ==========
</TABLE>
For noncash financing activities see Notes 4 and 5
The accompanying notes are an integral
part of the consolidated financial statements.
-16-
<PAGE> 17
CONSIL CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Years Ended December 31, 1995, 1994 and 1993
_______________
<TABLE>
<CAPTION>
Discount
on
Preferred Stock Common Stock Common Capital Accumulated Treasury
---------------------- ----------------------
Shares Amount Shares Amount Stock Surplus Deficit Stock
------- ----------- ---------- --------- ---------- ---------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1992 12,500 $ 1,250,000 8,205,689 $ 820,569 $(190,709) $ 3,015 $(1,065,803) $ (24)
Net loss (35,167)
-------- ----------- --------- --------- --------- ---------- ----------- ------
Balances, December 31, 1993 12,500 1,250,000 8,205,689 820,569 (190,709) 3,015 (1,100,970) (24)
Net loss (30,179)
-------- ----------- --------- --------- --------- ---------- ----------- ------
Balances, December 31, 1994 12,500 1,250,000 8,205,689 820,569 (190,709) 3,015 (1,131,149) (24)
Net loss (514,731)
Deemed capital contributions
relating to common stock
options granted by Hecla
Mining Company 228,800
Common stock issued to
Hecla Mining Company in
exchange for preferred
stock (12,500 ) (1,250,000) 1,250,000 125,000 1,125,000
-------- ----------- --------- --------- --------- ---------- ----------- ------
Balances, December 31, 1995 - - $ - - 9,455,689 $ 945,569 $(190,709) $1,356,815 $(1,645,880) $ (24)
======== =========== ========= ========= ========= ========== =========== ======
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
-17-
<PAGE> 18
CONSIL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
----------
1. Summary of Significant Accounting Policies
------------------------------------------
Organization
------------
ConSil Corp. (the Company or ConSil), formerly Consolidated
Silver Corporation, and its wholly owned subsidiary Minera
ConSil, S.A. de C.V. (formed on December 20, 1995) currently
hold interests in mining and mineral-bearing properties in
Mexico. Although the Company has no operating properties, its
management continues to evaluate potential mineral exploration
projects and business opportunities with particular emphasis
on properties in Mexico.
The accompanying consolidated financial statements include the
accounts of ConSil and its wholly owned subsidiary. All
significant intercompany transactions and accounts are
eliminated in consolidation. The preparation of consolidated
financial statements in conformity with generally accepted
accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and
liabilities at the dates of the financial statements and the
reported amounts of revenues and expenses during the reporting
periods. Actual results could differ from those estimates.
At December 31, 1995, the Company had 9,455,683 common shares
outstanding of which Hecla Mining Company (Hecla, the majority
stockholder of the Company) owned 7,418,300 shares or 78.453%
of the issued shares.
Property, Plant and Equipment
-----------------------------
Property, plant and equipment are stated at the lower of cost
or estimated net realizable value. Maintenance, repairs and
renewals are charged to operations. Betterments of a major
nature are capitalized. When assets are retired or sold, the
costs and related allowances for depreciation and amortization
are eliminated from the accounts and any resulting gain or
loss is reflected in operations. Depreciation is based on the
estimated useful lives of assets and is computed using the
straight-line method.
The Company adopted the provisions of Statement of Financial
Accounting Standards, No. 121, "Accounting for the Impairment
-18-
<PAGE> 19
of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of" (SFAS No. 121) effective January 1, 1995. The adoption of
the provisions of SFAS No. 121 had no material effect on the
results of operations, financial condition, or cash flows of
the Company.
Exploration
-----------
Exploration costs are charged to operations as incurred. The
purchase of Hecla's interest in the Ojo Caliente exploration
project in 1995, which principally included a reimbursement of
Hecla's exploration costs expended on the property (see Note
2), was charged to operations.
Net Loss Per Share
------------------
Net loss per share of common stock is based on the weighted
average number of common shares outstanding during each
period.
Cash Equivalents
----------------
The Company considers cash equivalents to be highly liquid
investments purchased with a remaining maturity of three
months or less. The Company's financial instruments that are
exposed to concentrations of credit risk consist primarily of
cash and cash equivalents. The Company places its cash and
temporary cash investments with institutions of high credit-
worthiness. At times such investments may be in excess of the
FDIC insurance limit.
Income Taxes
------------
The Company records deferred tax liabilities and assets for
the expected future income tax consequences of events that
have been recognized in its financial statements. Deferred
tax liabilities and assets are determined based on the
temporary differences between the financial statement carrying
amounts and the tax bases of assets and liabilities using
enacted tax rates in effect in the years in which the
temporary differences are expected to reverse.
Reclassifications
-----------------
Certain 1994 and 1993 financial statement amounts have been
reclassified to conform to the 1995 presentation. These
reclassifications had no effect on the net loss or accumulated
deficit as previously reported.
-19-
<PAGE> 20
2. Mineral Rights
--------------
In December 1995, the Company purchased from Hecla its
interest in the Ojo Caliente exploration project located near
the town of Zacatecas in the state of Zacatecas, Mexico, for
$706,822. At December 31, 1995, the Company had made payments
to Hecla totaling $501,646 and recorded a current liability of
$205,176 for the balance due Hecla.
In conjunction with the Ojo Caliente purchase, the Company's
wholly owned Mexican subsidiary, Minera ConSil, entered into
an agreement with Minera Hecla, S.A. de C.V. (Minera Hecla), a
wholly owned subsidiary of Hecla, whereby Minera Hecla would
carry out exploration activities on the Ojo Caliente project
for which the Company would reimburse Minera Hecla for its
costs. During the year ended December 31, 1995, the Company
incurred $78,134 of additional exploration expense under this
agreement. At December 31, 1995, $70,469 of these exploration
services are included in accounts payable.
The Company has a commitment to spend the following minimum
amounts on exploration and development at the Ojo Caliente
exploration project (any amounts spent in excess of any one
year's commitment can be applied to the minimum expenditures
of the following year):
<TABLE>
<CAPTION>
Period Covered Minimum Spending
------------------------ ----------------
<S> <C>
April 1995 to March 1996 $ 265,000
April 1996 to March 1997 1,000,000
April 1997 to March 1998 1,200,000
-----------
$ 2,465,000
===========
</TABLE>
If the Company does not spend the above minimum amounts, the
Company's rights to the property will terminate.
The commitment for April 1995 to March 1996 was satisfied as
of September 30, 1995 by Hecla, prior to the Company's
purchase from Hecla.
On February 13, 1996, the Company announced it had entered
into a letter agreement for a three-month pre-option period to
purchase a 100% interest in the Sombrerete silver mine in the
state of Zacatecas, Mexico. The letter agreement calls for
the Company to make three payments of $5,000 per month during
the pre-option period to Grupo Catorce, S.A. de C.V. During
this period, the Company will perform an investigation of the
property, and at the end of the period, the Company can elect
-20-
<PAGE> 21
to enter into an option to purchase 100% of the property,
subject to certain royalties defined therein.
In November 1995, the Company completed the sale of the Silver
Summit mine property located in Shoshone County, Idaho, to
Sunshine Precious Metals, Inc. (Sunshine). The sales
agreement conveyed all of the Company's subsurface mineral
rights and the mill site in exchange for a cash payment of
$750,000 to the Company. The Company also transferred all on-
site reclamation and environmental liabilities to Sunshine.
All off-site reclamation and environmental liabilities, if
any, related to the Silver Summit mine property were retained
by the Company. In addition, Sunshine shall pay the Company a
variable production royalty, based on the price of silver,
ranging from 2.0% to 4.0% of the net smelter returns. The
assets sold had no net book value; therefore, the Company
recognized the $750,000 as a gain on sale of the mining
property.
3. Income Taxes
------------
The components of the Company's income tax provision (benefit)
for the years ended December 31, 1995, 1994 and 1993 are as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Current:
Federal $164,112 $(11,630) $(13,803)
State 39,013 (2,316) (6,525)
-------- -------- --------
203,125 (13,946) (20,328)
-------- -------- --------
Deferred:
Federal (80,000) - - - -
State (19,000) - - - -
-------- -------- --------
(99,000) - - - -
-------- -------- --------
Total $104,125 $(13,946) $(20,328)
======== ======== ========
</TABLE>
The income tax provision (benefit) for the years ended
December 31, 1995, 1994 and 1993 differs from the amounts
which would be provided by applying the statutory federal
income tax rate to the loss before income taxes. The reasons
for the differences are as follows:
-21-
<PAGE> 22
<TABLE>
<CAPTION>
1995 % 1994 % 1993 %
--------- ----- --------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
Computed "statutory"
benefit $(139,606) (34) $(15,003) (34) $(18,868) (34)
Effect of surtax
exemption - - - - 3,373 7 5,065 9
Effect of nondeductible
compensation 77,792 19 - - - - - -
Valuation allowance due
to uncertainty of
recovery of income
tax assets 197,714 48 - - - - - - - -
Effect of state
income taxes (31,775) (8) (2,316) (5) (6,525) (12)
--------- ---- -------- --- -------- ---
$ 104,125 25% $(13,946) (32)% $(20,328) (37)%
========= ==== ======== ==== ======== ====
</TABLE>
At December 31, 1995, the Company had the following deferred
tax asset:
Capitalized exploration costs $ 296,714
Valuation allowance (197,714)
---------
Net deferred tax asset $ 99,000
=========
The Company has recorded the above valuation allowance to
reflect the estimated amount of the deferred tax asset which
may not be realized principally due to limitation of the
refunds available during the carryback period and the
uncertainty regarding the generation of future taxable income
to utilize reversing deductible items. The realization of the
Company's future deductible items that are not recoverable
through the refund of prior income taxes is dependent upon the
Company's ability to generate future taxable income. If it
becomes more likely than not that the Company will generate
future taxable income, the valuation allowance could be
adjusted in the near term.
4. Common and Preferred Stock
--------------------------
In September 1995, the Company issued 1,250,000 shares of
common stock to Hecla in exchange for 12,500 shares of
preferred stock held by Hecla which represented the total
outstanding shares of preferred stock. The preferred shares
previously held by Hecla were subsequently canceled. The
rights of the authorized preferred stock will be determined by
the Board of Directors, if and when any preferred stock is
issued.
-22-
<PAGE> 23
5. Related Party Transactions
--------------------------
In addition to related party transactions described in Notes 2
and 4, during the years ended December 31, 1995, 1994 and
1993, general and administrative expenses of $88,172, $26,885,
and $28,082, respectively, were charged to the Company by
Hecla.
On November 14, 1995, Hecla granted the Company's President
and Chairman of the Board of Directors the following options
to purchase the Company's common stock which is currently
owned by Hecla:
<TABLE>
<CAPTION>
Option
Price Shares
----------- ---------
<S> <C>
$0.10 400,000
$0.50 600,000(1)
$1.00 600,000(2)
----------- ---------
$0.10-$1.00 1,600,000
</TABLE>
(1) Contingent upon obtaining financing, as defined.
(2) Contingent upon the delivery of a mining feasibility
study.
The non-contingent options are fully vested and expire in
November 1999.
The estimated fair value of the Company's common stock at the
date of grant exceeded the $0.10 option price. Accordingly,
the Company has recorded $228,800 of compensation expense and
a related capital contribution from Hecla relating to these
options. Additional compensation expense may be recorded on
the contingent option grants upon the removal of the
contingency and based upon the fair value of the Company's
common stock at that time.
6. Fair Value of Financial Instruments
-----------------------------------
The following estimated fair value amounts have been
determined using available market information and appropriate
valuation methodologies. However, considerable judgment is
required to interpret market data and to develop the estimates
of fair value. Accordingly, the estimates presented herein
are not necessarily indicative of the amounts the Company
could realize in a current market exchange.
-23-
<PAGE> 24
The estimated fair values of financial instruments are as
follows:
<TABLE>
<CAPTION>
December 31,
-------------------------------------------------
1995 1994
---------------------- ----------------------
Carrying Fair
Carrying Fair
Amounts Value Amounts Value
--------- --------- -------- ----------
<S> <C> <C> <C> <C>
Financial assets:
Cash and cash equivalents $ 588,787 $ 588,787 $ 753,486 $ 753,486
Accounts receivable 1,410 1,410 500 500
Financial liabilities:
Current liabilities 282,667 282,667 16,320 16,320
7. Geographic Segments
-------------------
</TABLE>
<TABLE>
<CAPTION>
United States Mexico Canada Consolidated
------------- -------- ------- ------------
<S> <C> <C> <C> <C>
Depreciation for 1995 $ - - $ - - $ 494 $ 494
========= ======== ======= ==========
Net (income) loss for 1995 $(270,719) $784,956 $ 494 $ 514,731
========= ======== ======= ==========
Identifiable assets at
December 31, 1995(1):
Property, plant and equipment $ - - $ - - $ 4,940 $ 4,940
General corporate assets 743,498 - - - - 743,498
--------- -------- ------- ----------
$ 743,498 $ - - $ 4,940 $ 748,438
========= ======== ======= ==========
</TABLE>
(1) Identifiable assets of each country are those that are directly
identified with those operations. General corporate assets consist
primarily of cash, receivables and deferred income taxes.
As of and for the year ended December 31, 1994 and 1993, there
were no operations or assets outside of the United States.
8. Lease Commitment
----------------
In February 1996, the Company entered into a noncancelable
lease agreement for office space. The lease agreement
requires 48 monthly payments of $2,150 (Canadian).
-24-
<PAGE> 25
PART III
--------
Item 10. Directors and Executive Officers of the Registrant
--------------------------------------------------
The information required by this item is incorporated herein
by reference to Item 12 of this report.
Item 11. Executive Compensation
----------------------
The following table sets forth information regarding the
aggregate compensation for the fiscal year ended December 31, 1995,
paid or accrued for (i) the Chief Executive Officer of the Company
and (ii) the Chairman of the Company. The Company had no other
paid executive officers nor other employees prior to July, 1995.
SUMMARY COMPENSATION TABLE1
<TABLE>
<CAPTION>
Long-term
Annual Compensation
Name and Principal Compensation2 Awards
---------------- ------------
Position Year Salary Bonus3 Options4
- ------------------------ ---- ------ ------ --------
<S> <C> <C> <C> <C>
Ralph R. Noyes: Chairman 1995 $ -0- $-0- 200,000
Gerald G. Carlson:
President5 1995 $36,000 $-0- 200,000
</TABLE>
1. Information for deleted columns is not required because no such
compensation is paid by the Company for any such deleted column.
2. The annual compensation set forth in the table is based upon
the salary actually paid to the President for the period from
July 1, 1995 through December 31, 1995. The Chairman was not paid
any salary, bonus or other compensation during 1995.
3. No bonuses were paid and the Company has no plan for paying bonuses.
4. All stock options to acquire common stock, par value $0.10 per
share, of the Company (Common Stock) referred to in the table above
were granted pursuant to two Stock Option Agreements dated as of
November 14, 1995, between the parties named above and Hecla Mining
Company (Hecla), and such options entitled the holder thereof to
acquire Common Stock owned by Hecla. The terms of both Stock Option
Agreements are substantially identical. Each of the Stock Option
Agreements provides that upon and only upon the occurrence of
certain conditions precedent each of the named parties has the right
to be granted up to an aggregate of 300,000 additional stock options
-25-
<PAGE> 26
at an exercise price of $0.50 per share and an additional 300,000
stock options at an exercise price of $1.00 per share.
5. Mr. Carlson commenced employment as President of the Company in July,
1995.
OPTION GRANTS IN LAST FISCAL YEAR
---------------------------------
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rate of Stock
Price Appreciation
Individual Grants for Option Term2
------------------------------------------- --------------------
% of
Total
Options
Granted
to Exercise
Employees or Base
Options in Fiscal Price: Expiration
Name Granted1 Year $/Share Date 5% 10%
- ----------------- ------- --------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
Ralph R. Noyes 200,000 50% $0.10 11/14/97 $227,000 $251,000
Gerald G. Carlson 200,000 50% $0.10 11/14/97 $227,000 $251,000
</TABLE>
1. All stock options to acquire Common Stock referred to in the table above
were granted pursuant to two Stock Option Agreements dated as of November
14, 1995, between the parties named above and Hecla, and such options
entitled the holder thereof to acquire Common Stock owned by Hecla. The
terms of both Stock Option Agreements are substantially identical. Each
of the Stock Option Agreements provides that upon and only upon the
occurrence of certain conditions precedent each of the named parties has
the right to be granted up to an aggregate of 300,000 additional stock
options at an exercise price of $0.50 per share and an additional 300,000
stock options at an exercise price of $1.00 per share.
2. The Potential Realizable Value shown in the table represents the maximum
gain if held for the full two-year term at each of the assumed annual
appreciation rates. Gains, if any, are dependent upon the actual
performance of the Common Stock and the timing of any sale of the stock.
-26-
<PAGE> 27
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES1
The following table shows information concerning the exercise
of stock options during fiscal year 1995 by each of the named
executive officers and the fiscal year-end value of unexercised
options.
<TABLE>
<CAPTION>
Value of
Shares Unexercised
Acquired Number of In-the-
on Value Unexercised Money
Exercise Realized Options at Options at
Name (#) ($) FY-End (#) FY-End2
- ---------------- -------- -------- ----------- ----------
<S> <S> <S> <S> <S>
Ralph R. Noyes -0- -0- 200,000 $154,000
Gerald G. Carlson -0- -0- 200,000 $154,000
</TABLE>
1. All stock options to acquire Common Stock referred to in the table above
were granted pursuant to two Stock Option Agreements dated as of November
14, 1995, between the parties named above and Hecla, and such options
entitled the holder thereof to acquire Common Stock owned by Hecla. The
terms of both Stock Option Agreements are substantially identical. Each
of the Stock Option Agreements provides that upon and only upon the
occurrence of certain conditions precedent each of the named parties has
the right to be granted up to an aggregate of 300,000 additional stock
options at an exercise price of $0.50 per share and an additional 300,000
stock options at an exercise price of $1.00 per share.
2. The Common Stock is traded in the over-the-counter market and quotations
are published on the National Association of Securities Dealers Automated
Quotation (NASDAQ) Bulletin Board and in the National Quotation Bureau
"pink sheets." The figures presented assume that the Common Stock could
be sold in one transaction without any discount to the market price as
of December 29, 1995. However, because the Common Stock trades only
intermittently and at extremely low volumes, the likelihood of a seller
liquidating the volume of stock indicated in the table above at market
price as of December 29, 1995 is very speculative.
The salary for the President was set by the entire Board of
Directors of the Company based on its familiarity with what
constitutes competitive wages for the president of companies
engaged in the mineral exploration industry. Members of the Board
of Directors included Mr. Ralph R. Noyes, Vice President - Metal
Mining of Hecla, and Mr. Michael B. White, Vice President - General
Counsel and Secretary of Hecla. Mr. Noyes resigned from Hecla
effective January 1, 1996. The Company has no retirement plan.
The Board of Directors did not designate a compensation committee
to set the compensation of the President.
-27-
<PAGE> 28
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
CONSIL CORP., S&P 500, AND PEER GROUP
The following graph illustrates the yearly change in the
cumulative total shareholder return on the Company's common stock,
compared with the cumulative total return on the Standard & Poor's
500 stock index and a custom peer group, for five years ended
December 31, 1995.
<TABLE>
<CAPTION>
-----------------------------------------------------
Date ConSil S&P 500 Peer Group
-----------------------------------------------------
<S> <C> <C> <C>
December 1990 $100.00 $100.00 $100.00
December 1991 $ 75.00 $130.34 $104.30
December 1992 $ 83.00 $140.25 $ 78.93
December 1993 $141.00 $154.32 $ 76.44
December 1994 $125.00 $156.42 $ 50.17
December 1995 $205.00 $214.99 $ 41.77
----------------------------------------------------
*Total return assumes reinvestment of dividends on
a quarterly basis.
</TABLE>
The custom peer group was selected on the basis of market
capitalization as of December 31, 1995. The custom peer group is
comprised of:
<TABLE>
<CAPTION>
<S> <C>
3CI Complete Compliance Corp. Microfluidics International Corporation
3Net System Inc. Midwest Bancshares Inc.
Acrodyne Communications Inc. O C G Technology Inc.
All-Com Media Corp. Palm Springs Savings Bank FSB
B & H Ocean Carriers Ltd. Progroup Inc.
Baltic International USA Inc. Provena Foods Inc.
Biosafety Systems Inc. PS Business Park Inc.
Buffton Corporation RCM Technologies Inc.
Calnetics Corporation Richton International Corporation
Cerbco Inc. Rudy's Restaurant Group, Inc.
Dimensional Visions Group, Ltd. Senior Tour Players Development Inc.
Dynatronics Corporation Servotronics Inc.
Edison Control Corporation Silicom Limited
Elsinore Corporation Somanetics Corporation
Ensys Environmental Products Inc. Southern Mineral Corporation
Excal Enterprises Inc. Square Industries Inc.
Federal Agriculture Staodyne Inc.
Hathaway Corporation Summagraphics Corporation
Hypermedia Communications Sunport Medical Corporation
Imge Inc. Sure Shot International Inc.
Infinite Machs Corporation Technical Communications
Infu-Tech Inc. Tenera Inc.
Ipswich Savings Bank Timber Lodge Steakhouse Inc.
Laboratory Specialists Triton Group Ltd.
Mayflower Co-Operative Bank Valley Fair Corporation
Meris Laboratories Inc. Waxman Industries
Metro Global Media Inc.
</TABLE>
-28-
<PAGE> 29
These companies were selected from all publicly traded
companies on the basis of their market capitalization value ranging
from -3 to +3 percent of the Company's market capitalization.
The graph assumes that the value of the investment in the Company's
Common Stock and each index was $100 at December 31, 1990 and that
all dividends were reinvested quarterly.
Members of the Company's Board of Directors were compensated
during 1995 at the rate of $150 per meeting attended, until the
Board of Directors on November 14, 1995 changed the policy to pay
members of the Board of Directors an annual retainer of $750 and a
meeting fee of $200 per meeting attended. Four directors were
compensated pursuant to the former policy for attending two
meetings; six directors were paid retainers and five directors were
paid for attending one meeting pursuant to the latter policy.
Charges of $88,172 and $26,885 were made to the Company by
Hecla in 1995 and 1994, respectively, for accounting and other
services rendered by employees of Hecla.
Item 12. Security Ownership of Certain Beneficial Owners and
---------------------------------------------------
Management
----------
(A) Security ownership of certain beneficial owners as of
March 1, 1996:
<TABLE>
<CAPTION>
Title Name and Amount and Percent
of Address of Nature of of
Class Beneficial Owner Beneficial Ownership Class
- --------------- -------------------------- -------------------- -------
<S> <C> <C> <C>
Common stock Hecla Mining Company
Coeur d'Alene, Idaho 7,418,300 shares 78.501
</TABLE>
In February 1996, the Company purchased 5,770 shares from
dissenting stockholders which increased the balance of treasury
shares from 6 shares to 5,776 shares and thereby reduced overall
outstanding shares and increased Hecla's percentage ownership of
the Company's outstanding common stock from 78.453% to 78.501%.
-29-
<PAGE> 30
(B) Security ownership of management as of March 1, 1996:
<TABLE>
<CAPTION>
Common
Year in Shares Owned
Which Beneficially
First Directly or
Age Became Indirectly, as of
Years Director March 1, 1996(a)
----- -------- -----------------
<S> <C> <C> <C>
Gerald G. Carlson, President of
the Company since November 14,
1995; Vice President of the
Company June 16, 1995 to
November 14, 1995 . . . . . . . . . . 49 1995 None
Robert Stuart Angus, partner in law
firm Stikeman, Elliott, Vancouver,
British Columbia; Director of
Yamana Resources Inc. . . . . . . . . 46 1995 None
Charles F. Asher, President of Plainview
Mining Company, Silverton, Idaho;
Director of Merger Mines Corpora-
tion and Verna Mae Mining Company
since 1987. . . . . . . . . . . . . . 74 1992 None
Ralph R. Noyes, Chairman of the Company
since 1995; President of the Company
1991 to 1994; Vice President -
Metal Mining and Exploration, Hecla
Mining Company 1988 to 1995; Coeur
d'Alene, Idaho (a). . . . . . . . . . 48 1991 5,000
William J. Weymark, Vice President,
Operations, of Vancouver Wharves,
Vancouver, British Columbia;
Director of Gold City Resources
Limited . . . . . . . . . . . . . . . 42 1995 None
Michael B. White, Vice President of
the Company since 1992; Secretary
of the Company 1982 to 1995; Vice
President - General Counsel and
Secretary of Hecla Mining Company;
Coeur d'Alene, Idaho (a) . . . . . . 45 1989 1,000
</TABLE>
-30-
<PAGE> 31
Notes:
- -----
(a) Mr. Ralph R. Noyes owns 1,000 shares, and Mr. Michael B.
White owns 618 shares of Hecla Mining Company common
stock, which had 51,130,252 common shares outstanding as
of March 1, 1996.
There are no family relationships between any of the executive
officers or directors.
The Registrant has one subsidiary, Minera ConSil, S.A. de
C.V., incorporated under the laws of Mexico.
Item 13. Certain Relationships and Related Transactions
----------------------------------------------
See Notes 2, 4 and 5 to the Consolidated Financial Statements
for description of certain business relations required to be
reported under this item.
-31-
<PAGE> 32
PART IV
-------
Item 14. Exhibits, Financial Statement Schedules, and Reports on
-------------------------------------------------------
Form 8-K
--------
(a) (1) Index to Consolidated Financial Statements:
Page
------
Report of Independent Accountants 13
Consolidated Balance Sheets at December 31, 1995
and 1994 14
Consolidated Statements of Operations for the
Years Ended December 31, 1995, 1994 and 1993 15
Consolidated Statements of Cash Flows for the
Years Ended December 31, 1995, 1994 and 1993 16
Consolidated Statements of Changes in Stockholders'
Equity for Years Ended December 31, 1995,
1994 and 1993 17
Notes to Consolidated Financial Statements 18
(b) Reports on Form 8-K
Report on Form 8-K dated November 15, 1995, related to
press release dated November 15, 1995 describing the
Company's name change and sale of the Silver Summit mine.
(c) Exhibits
The exhibit numbers in the following list correspond to
the numbers assigned to such Exhibits in Item 601 of
Regulation S-K.
-32-
<PAGE> 33
Number and Description of Exhibits
----------------------------------
3.1 Articles of Incorporation of the
Registrant as amended to date
3.2 Bylaws of the Registrant as amended to date
10.1 Purchase and Sale Agreement dated August 23, 1995
between Hecla Mining Company and Consolidated
Silver Corporation, relating to the Ojo Caliente
Project located in Zacatecas, Mexico**
10.2 Purchase Agreement dated July 1, 1995 between
Consolidated Silver Corporation and Sunshine
Precious Metals, Inc. relating to the Company's
sale of the Silver Summit mine property**
22.1 Proxy Materials for Annual Meeting of Stockholders
held November 14, 1995**
27 Financial Data Schedule
__________
** These exhibits were filed in SEC File #0-4846-3 as
indicated below and are incorporated herein by this
reference thereto:
Exhibit in Corresponding Exhibit in Annual Report on
this Report Form 10-K or Quarterly Report on Form 10-Q,
----------- -------------------------------------------
as indicated
------------
10.1 10 (Quarterly Report on Form 10-Q dated
September 30, 1995)
10.2 10.1 (Quarterly Report on Form 10-Q dated June
30, 1995)
22 22 (Quarterly Report on Form 10-Q dated
September 30, 1995)
-33-
<PAGE> 34
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this annual report to be signed on its behalf by the undersigned,
thereunto duly authorized, on March 29, 1996.
CONSIL CORP.
By /s/ Gerald G. Carlson
---------------------------------
Gerald G. Carlson, President
and Director
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
<S> <C>
/s/ Gerald G. Carlson 3/29/96 /s/ Ralph R. Noyes 3/29/96
- -------------------------------- --------------------------------
Gerald G. Carlson Date Ralph R. Noyes Date
President and Director Chairman and Director
(principal executive officer)
/s/ David F. Wolfe 3/29/96 /s/ Stanley E. Hilbert 3/29/96
- -------------------------------- --------------------------------
David F. Wolfe Date Stanley E. Hilbert Date
Treasurer (principal accounting officer)
(principal financial officer)
/s/ Robert Stuart Angus 3/29/96 /s/ Charles F. Asher 3/29/96
- -------------------------------- --------------------------------
Robert Stuart Angus Date Charles F. Asher Date
Director Director
/s/ William J. Weymark 3/29/96 /s/ Michael B. White 3/29/96
- -------------------------------- --------------------------------
Charles F. Asher Date Michael B. White Date
Director Director
</TABLE>
-34-
<PAGE> 1 EXHIBIT 3.1
RESTATED
ARTICLES OF INCORPORATION
OF
CONSIL CORP.
KNOW ALL MEN BY THESE PRESENTS that the undersigned, being officers of the
corporation, citizens of the United States of America and over the age of
eighteen years, do hereby make, sign, acknowledge, and file these Restated
Articles of Incorporation on behalf of ConSil Corp. as follows:
ARTICLE I.
Name
The name of this corporation is and shall be ConSil Corp.
ARTICLE II.
Registered Office
The location and post office address of the corporation's registered office in
the State of Idaho shall be 6500 Mineral Drive, Coeur d'Alene, Idaho 83814-8788.
ARTICLE III.
Duration
The corporate existence of this corporation shall be perpetual.
ARTICLE IV.
Purpose
The purpose of this corporation shall be to transact any and all lawful business
for which corporations may be incorporated under the Idaho Business Corporation
Act, in general, to have and exercise all the powers conferred by the laws of
the Idaho upon corporations formed under the Idaho Business Corporation Act, and
to do any and all things herein set forth to the same extent as natural persons
might or could do.
ARTICLE V.
Shares
The authorized capital stock of the corporation shall consist of two classes of
stock, designated as "Common Stock" and "Preferred Stock."
The total number of shares of Common Stock that the corporation will have
authority to issue is Twenty Million (20,000,000), $.10 per share par value.
All of the Common Stock authorized herein shall have equal voting rights and
powers without restrictions in preference.
-1-
<PAGE> 2
The total number of shares of Preferred Stock that the corporation will have
authority to issue is Ten Million (10,000,000). The Preferred Stock shall have
a par value of $.25 per share. The Preferred Stock shall be entitled to
preference over the Common Stock with respect to the distribution of assets of
the corporation in the event of liquidation, dissolution or winding-up of the
corporation, whether voluntarily or involuntarily, or in the event of any other
distribution of assets of the corporation among its shareholders for the purpose
of winding-up its affairs. The authorized but unissued shares of Preferred
Stock may be divided into and issued in designated series from time to time by
one or more resolutions adopted by the Board of Directors. The Directors in
their sole discretion shall have the power to determine the relative powers,
preferences, and rights of each series of Preferred Stock issued by the
corporation.
ARTICLE VI.
Directors
The number of directors of this corporation, who need not be Shareholders, shall
be not less than three, but in no event shall the number of directors exceed
nine. The number, qualifications, terms of office, manner of elections, time
and place of meeting and the powers and duties of the directors shall be such as
are prescribed by the Bylaws of this corporation.
ARTICLE VII.
A director or officer of the corporation shall not, in the absence of actual
fraud, be disqualified by his office from dealing or contracting with the
corporation, either as vendor, purchaser, or otherwise; and in the absence of
actual fraud, no transaction or contract of the corporation shall be void or
voidable by reason of the fact that any director or officer, or firm of which
any director or officer is a member, or any other corporation of which any
director or officer is a shareholder, officer or director, is in any way
interested in such transaction or contract; provided that such transaction or
contract is, or shall be, authorized, ratified, or approved (1) by a vote of a
majority of a quorum of the Board of Directors, or the Executive Committee, if
any, counting for the purpose of determining the existence of such majority or
quorum, any Director, when present, who is so interested; or (2) at a
stockholders' meeting by a vote of a majority of the outstanding shares of stock
of the corporation represented at such meeting and then entitled to vote, or by
writing or writings signed by a majority of such holders of stock which shall
have the same force and effect as through such authorization, ratification, or
approval were made by the stockholders' and no director or officer shall be
liable to account to the corporation for any profits realized by him through any
transaction or contract of the corporation authorized, ratified, or approved, as
aforesaid, by reason of the fact that he may be, or any firm of which he is a
member, or any corporation of which he is a shareholder, officer, or director,
was interested in such transaction.
Nothing in this paragraph contained shall create any liability in said events
above mentioned, or prevent the authorization, ratification, or approval of such
contracts or transactions in any other manner than permitted by law, or
invalidate or make voidable any contract or transaction which would be valid
without reference to the provisions of this paragraph.
-2-
<PAGE> 3
ARTICLE VIII.
Indemnification and Liability of Directors
A Director of the Company shall not be personally liable to the Company or its
Shareholders for monetary damages as a Director except for liability as
specifically set forth in the Idaho Business Corporations Act. Further, the
Company is authorized to indemnify, agree to indemnify, or obligate itself to
advance or reimburse expenses incurred by its Directors, Officers, employees, or
agents to the full extend of the laws of the State of Idaho as may now or
hereafter exist.
ARTICLE IX.
Bylaws
The Board of Directors shall have the power to modify and alter existing Bylaws
or adopt new Bylaws subject to ratification by the Shareholders at the next
Annual or Special Meeting.
ARTICLE X.
Voting
The holders of any of the Corporation's capital stock shall possess voting power
for the election of Directors and for all other purposes, subject to such
limitations as may be imposed by law and by any provision of the Articles of
Incorporation in the exercise of their voting power. The holders of capital
stock shall be entitled to one vote for each share held. Cumulative voting for
the election of Directors is hereby expressly prohibited.
ARTICLE XI.
Resolution Approving Restated Articles
The Restated Articles of Incorporation herein were approved, ratified and
adopted by the Unanimous Consent of the Board of Directors effective December 1,
1995.
IN WITNESS WHEREOF, the Corporation has caused these Restated Articles of
Amendment to be executed this 1st day of December, 1995.
CONSIL CORP.
BY: /s/ Michael B. White
--------------------------------
MICHAEL B. WHITE, Vice President
ATTEST:
BY: /s/ Nathaniel K. Adams
--------------------------------
NATHANIEL K. ADAMS, Secretary
-3-
<PAGE> 4
VERIFICATION
I, MICHAEL B. WHITE, Vice President of ConSil Corp., hereby verify the foregoing
Restated Articles of Incorporation set forth all of the operative provisions of
the Articles of Incorporation as theretofore amended. The Restated Articles of
Incorporation correctly set forth without change the corresponding provisions of
the Articles of Incorporation as theretofore amended, and these Restated
Articles of Incorporation supersede the original Articles of Incorporation and
all amendments thereto.
/s/ Michael B. White
-----------------------------
MICHAEL B. WHITE, Vice President
STATE OF IDAHO )
)ss
County of Kootenai )
I, LYNDA RUFENER, notary public, do hereby certify that on this 1st day of
December, 1995, personally appeared before me MICHAEL B. WHITE and NATHANIEL K.
ADAMS, who being by me first duly sworn, severally declared that they are the
persons who signed the foregoing document as Vice President and Secretary,
respectively, and that the statements therein contained are true.
/s/ Lynda Rufener
------------------------------------
LYNDA RUFENER
NOTARY PUBLIC in and for the State of
Idaho, residing at Coeur d'Alene.
Appointment expires: October 19, 2000
-4-
<PAGE> 1
EXHIBIT 3.2
BYLAWS
OF
CONSIL CORP.
November 14, 1995
<PAGE> 2
BYLAWS
OF
CONSIL CORP.
CONTENTS
ARTICLE 1: Corporate Offices . . . . . . . . . . . . . . . . . . . . 7
ARTICLE II: Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1 Issuance of Shares . . . . . . . . . . . . . . . . . . . . . . 7
(a) Authorized Shares . . . . . . . . . . . . . . . . . . . 7
(b) Board Authorization for Issuance . . . . . . . . . . . . 7
(c) Shares Subject to Restrictions . . . . . . . . . . . . . 7
(d) When Fully Paid . . . . . . . . . . . . . . . . . . . . 7
(e) Re-acquisition . . . . . . . . . . . . . . . . . . . . . 7
2. Issuance of Rights of Options to Purchase Shares . . . . . . . 7
2.3 Shareholders' Preemptive Rights . . . . . . . . . . . . . . . 7
2.4 Certificates of Stock . . . . . . . . . . . . . . . . . . . . 8
2.5 Lost or Destroyed Certificates . . . . . . . . . . . . . . . . 8
2.6 Stock Records . . . . . . . . . . . . . . . . . . . . . . . . 8
2.7 Record Owners . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III: Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.1 Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . 9
3.2 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . 9
3.3 Adjourned Meetings . . . . . . . . . . . . . . . . . . . . . . 9
3.4 Meeting Place . . . . . . . . . . . . . . . . . . . . . . . . 10
3.5 Chairman of the Meeting . . . . . . . . . . . . . . . . . . . 10
3.6 Notice of Shareholders' Meetings . . . . . . . . . . . . . . . 10
(a) Annual Meetings . . . . . . . . . . . . . . . . . . . . 10
(b) Special Meetings . . . . . . . . . . . . . . . . . . . . 10
(c) Meetings Concerning Extraordinary Acts . . . . . . . . . 10
(d) Adjourned Meetings . . . . . . . . . . . . . . . . . 11
3.7 Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . 11
(a) Written Waiver . . . . . . . . . . . . . . . . . . . . . 11
(b) Waiver by Attendance . . . . . . . . . . . . . . . . . . 11
(c) Waiver of Objection to Particular Matter . . . . . . . . 11
3.8 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(a) Action if Quorum Present . . . . . . . . . . . . . . . . 11
(b) Share Represented for Entire Meeting . . . . . . . . . . 11
3.9 Attendance by Communications Equipment . . . . . . . . . . . . 12
3.10 Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(a) General Rule . . . . . . . . . . . . . . . . . . . . . . 12
(b) Voting on Extraordinary Acts . . . . . . . . . . . . . . 12
(c) Show of Hand . . . . . . . . . . . . . . . . . . . . . . 12
(d) Ballots . . . . . . . . . . . . . . . . . . . . . . . . 12
1
<PAGE> 3
(e) Election of Directors . . . . . . . . . . . . . . . . . 13
(f) Amendments to Quorum Rules . . . . . . . . . . . . . . . 13
3.11 Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(a) Voting by Proxy . . . . . . . . . . . . . . . . . . . . 13
(b) Proxy Appointment . . . . . . . . . . . . . . . . . . . 13
(c) Term of Appointment . . . . . . . . . . . . . . . . . . 13
(d) Death of Incapacity of Shareholder . . . . . . . . . . . 13
(e) Corporation's Power to Accept Proxy's Actions . . . 13
3.12 Corporation's Acceptance of Votes . . . . . . . . . . . . . . 13
(a) Acceptance of Vote . . . . . . . . . . . . . . . . . . . 13
(b) Vote Not by Shareholder . . . . . . . . . . . . . . . . 13
(c) Rejection of Vote . . . . . . . . . . . . . . . . . . . 14
3.13 Shareholders' List for Meeting . . . . . . . . . . . . . . . . 14
(a) Shareholders' List . . . . . . . . . . . . . . . . . . . 14
(b) List Available for Inspection . . . . . . . . . . . . . 14
(c) List at Meeting . . . . . . . . . . . . . . . . . . . . 14
(d) Right to Copy . . . . . . . . . . . . . . . . . . . . . 15
3.14 Fixing the Record Date . . . . . . . . . . . . . . . . . . . . 15
(a) Date for Meetings . . . . . . . . . . . . . . . . . . . 15
(b) Date for Adjourned Meetings . . . . . . . . . . . . . . 15
(c) Date for Dividends and Distributions . . . . . . . . . . 15
(d) Date for Action without Meeting . . . . . . . . . . . . 15
3.15 Action by Shareholders without a Meeting . . . . . . . . . . . 15
(a) Action Agreed to by All Shareholder . . . . . . . . . . 15
(b) Record Date . . . . . . . . . . . . . . . . . . . . . . 15
(c) Withdrawal of Consent . . . . . . . . . . . . . . . . . 15
(d) Effective Date of Action . . . . . . . . . . . . . . . . 16
(e) Action by Consent . . . . . . . . . . . . . . . . . . . 16
3.16 Ratification . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE IV: Board of Directors . . . . . . . . . . . . . . . . . . . 16
4.1 Management Responsibility . . . . . . . . . . . . . . . . . . 16
4.2 Committees . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(a) Creation . . . . . . . . . . . . . . . . . . . . . . . . 16
(b) Approval of Committees . . . . . . . . . . . . . . . . . 16
(c) Audit Committee . . . . . . . . . . . . . . . . . . . . 16
(d) Rules Governing Committees . . . . . . . . . . . . . . . 16
(e) Powers of Committees . . . . . . . . . . . . . . . . . . 16
(f) Limitations on Committee Action . . . . . . . . . . . . 17
(g) Minutes . . . . . . . . . . . . . . . . . . . . . . . . 17
(h) No Relief from Responsibility . . . . . . . . . . . . . 17
4.3 Duties of Directors . . . . . . . . . . . . . . . . . . . . . 17
(a) Due Care and Loyalty . . . . . . . . . . . . . . . . . . 17
(b) Right to Rely on Experts . . . . . . . . . . . . . . . . 18
(c) Failure to Act in Good Faith . . . . . . . . . . . . . . 18
4.4 Number of Directors . . . . . . . . . . . . . . . . . . . . . 18
2
<PAGE> 4
4.5 Election of Directors . . . . . . . . . . . . . . . . . . . . 18
(a) Initial Directors; Annual Elections . . . . . . . . . . 18
(b) Cumulative Voting . . . . . . . . . . . . . . . . . . . 18
(c) Election . . . . . . . . . . . . . . . . . . . . . . . . 18
4.6 Term of Office . . . . . . . . . . . . . . . . . . . . . . . . 18
4.7 Vacancy on Board of Directors . . . . . . . . . . . . . . . . 18
4.8 Resignation . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.9 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(a) Special Meeting . . . . . . . . . . . . . . . . . . . . 19
(b) Voting . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.10 Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(a) Annual Meeting . . . . . . . . . . . . . . . . . . . . . 19
(b) Regular Meetings . . . . . . . . . . . . . . . . . . . . 19
(c) Special Meetings . . . . . . . . . . . . . . . . . . . . 19
(d) Adjourned Meetings . . . . . . . . . . . . . . . . . . . 19
4.11 Quorum and Voting of Directors . . . . . . . . . . . . . . . . 19
(a) Majority Constitutes a Quorum . . . . . . . . . . . . . 19
(b) Action in Absence of a Quorum . . . . . . . . . . . . . 20
(c) Dissent by Director . . . . . . . . . . . . . . . . . . 20
4.12 Attendance by Communications Equipment . . . . . . . . . . . . 20
4.13 Action by Directors without a Meeting . . . . . . . . . . . . 20
4.14 Notice of Meeting . . . . . . . . . . . . . . . . . . . . . . 20
(a) Regular Meetings . . . . . . . . . . . . . . . . . . . . 20
(b) Special Meetings . . . . . . . . . . . . . . . . . . . . 21
(c) Waiver of Notice . . . . . . . . . . . . . . . . . . . . 21
4.15 Chairman of the Meeting . . . . . . . . . . . . . . . . . . 21
4.16 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.17 Liability for Unlawful Distributions . . . . . . . . . . . . . 21
(a) Director's Liability . . . . . . . . . . . . . . . . . . 21
(b) Right to Contribution . . . . . . . . . . . . . . . . . 21
ARTICLE V: Conflicting Interest Transactions . . . . . . . . . . . . 22
5.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.2 Director's Action . . . . . . . . . . . . . . . . . . . . . . 23
(a) Majority Vote . . . . . . . . . . . . . . . . . . . . . 23
(b) Director's Disclosure . . . . . . . . . . . . . . . . . 23
(c) Quorum . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.3 Shareholders' Action . . . . . . . . . . . . . . . . . . . . . 24
(a) Majority Vote . . . . . . . . . . . . . . . . . . . . . 24
(b) Director's Disclosure . . . . . . . . . . . . . . . . . 24
(c) Quorum . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE VI: Indemnification . . . . . . . . . . . . . . . . . . . . . 24
6.1 Indemnification Definitions . . . . . . . . . . . . . . . . . 24
6.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . 25
(a) Right to Indemnification . . . . . . . . . . . . . . . . 25
(b) Conduct Concerning Employee Benefit Plans . . . . . . . 26
3
<PAGE> 5
(c) Legal Proceedings . . . . . . . . . . . . . . . . . . . 26
(d) Limits on Indemnification . . . . . . . . . . . . . . . 26
(e) Coverage of Reasonable Expenses . . . . . . . . . . . . 26
6.3 Advance for Expenses . . . . . . . . . . . . . . . . . . . . . 26
(a) Advances . . . . . . . . . . . . . . . . . . . . . . . . 26
(b) Director's Undertaking . . . . . . . . . . . . . . . . . 27
6.4 Determination and Authorization of Indemnification . . . . . . 27
(a) Determination of Proper Conduct . . . . . . . . . . . . 27
(b) Board Determination . . . . . . . . . . . . . . . . . . 27
(c) Authorization of Indemnification . . . . . . . . . . . . 27
6.5 Shareholder Authorized Indemnification and Advancement of
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.6 Indemnification of Officers, Employees, and Agents . . . . . . 28
6.7 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.8 Report to Shareholders . . . . . . . . . . . . . . . . . . . . 28
ARTICLE VII: Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.1 Officers and Their Duties . . . . . . . . . . . . . . . . . . 29
(a) Chairman of the Board . . . . . . . . . . . . . . . . . 29
(b) President . . . . . . . . . . . . . . . . . . . . . . . 29
(c) Vice Presidents . . . . . . . . . . . . . . . . . . . . 29
(d) Secretary . . . . . . . . . . . . . . . . . . . . . . . 30
(e) Chief Financial Officer . . . . . . . . . . . . . . . . 30
(f) Additional Duties; Other Officers and Agents . . . . . . 31
(g) Authority to Enter Contracts and to Issue
Checks and Drafts . . . . . . . . . . . . . . . . . . . . . . . . 31
7.2 Qualifications . . . . . . . . . . . . . . . . . . . . . . . . 31
7.3 Standards of Conduct for Officers . . . . . . . . . . . . . . 31
(a) Due Care and Loyalty . . . . . . . . . . . . . . . . . . 31
(b) Right to Rely on Experts . . . . . . . . . . . . . . . . 32
(c) Failure to Act in Good Faith . . . . . . . . . . . . . . 32
7.4 Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.5 Delegation . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.6 Election and Term of Office . . . . . . . . . . . . . . . . . 32
7.7 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.8 Resignation . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.9 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.10 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE VIII: Dividends and Distributions . . . . . . . . . . . . . . . . . 33
8.1 Distribution . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.2 Measure of Effect of Distribution . . . . . . . . . . . . . . 33
8.3 Share Dividends . . . . . . . . . . . . . . . . . . . . . . . 34
(a) Issuance to All Shareholders . . . . . . . . . . . . . . 34
(b) Issuance to Class of Shareholders . . . . . . . . . . . 34
8.4 Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE IX: Notices . . . . . . . . . . . . . . . . . . . . . . . . . 35
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9.1 Method of Notice . . . . . . . . . . . . . . . . . . . . . . . 35
(a) General . . . . . . . . . . . . . . . . . . . . . . . . 35
(b) Methods of Communication . . . . . . . . . . . . . . . . 35
(c) Effective Date of Notice to Shareholder . . . . . . . . 35
(d) Notice to the Corporation . . . . . . . . . . . . . . . 35
(e) Effective Date of Notice to Other Parties . . . . . . . 35
9.2 Oral Notice . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.3 Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE X: Corporate Records . . . . . . . . . . . . . . . . . . . . 36
10.1 Maintenance of Corporate Records . . . . . . . . . . . . . . . 36
10.2 Shareholder's Right to Inspect and Copy Records . . . . . . . 36
(a) Inspection of Corporate Records . . . . . . . . . . . . 36
(b) Inspection of Accounting and Shareholders'
Record . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.3 Scope of Inspection Right . . . . . . . . . . . . . . . . . . 37
(a) Shareholder's Agent . . . . . . . . . . . . . . . . . . 37
(b) Copies . . . . . . . . . . . . . . . . . . . . . . . . . 37
(c) Charge for Copying . . . . . . . . . . . . . . . . . . . 37
(d) Record of Shareholders . . . . . . . . . . . . . . . . . 37
10.4 Annual Report . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE XI: Financial Matters . . . . . . . . . . . . . . . . . . . . 37
11.1 Books and Records of Account . . . . . . . . . . . . . . . . . 37
11.2 Balance Sheet and Income Statement . . . . . . . . . . . . . . 38
(a) Annual Balance Sheet and Income Statement . . . . . . . 38
(b) Copies to Shareholders . . . . . . . . . . . . . . . . . 38
11.3 Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.4 Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.5 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE XII: Amendment of Articles and Bylaws . . . . . . . . . . . . . . . 39
12.1 Amendment of Articles by the Board and Shareholders . . . . . 39
12.2 Amendment of Bylaws by the Shareholders . . . . . . . . . . . 39
12.3 Amendment of Bylaws by the Board . . . . . . . . . . . . . . . 39
ARTICLE XIII: Corporate Seal . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE XIV: Miscellany . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.1 Inspector of Elections . . . . . . . . . . . . . . . . . . . . 39
14.2 Duties of Inspector of Elections . . . . . . . . . . . . . . . 39
14.3 Rules of Order . . . . . . . . . . . . . . . . . . . . . . . . 40
(a) Robert's Rules Govern . . . . . . . . . . . . . . . . . 40
(b) Chairman of Meeting . . . . . . . . . . . . . . . . . . 40
(c) Adjournment Due to Disorder . . . . . . . . . . . . . . 40
(d) Removal of Persons Not Shareholders . . . . . . . . . . 40
(e) Matters the Proper Subject of Action . . . . . . . . . . 40
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14.4 Number and Gender . . . . . . . . . . . . . . . . . . . . . . 41
14.5 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE XV: Authentication . . . . . . . . . . . . . . . . . . . . . . . . 41
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BYLAWS
OF
CONSIL CORP.
ARTICLE I
Corporate Offices
The Corporation shall maintain a registered office in the State of Idaho. The
Board may establish other offices in or outside the State of Idaho.
ARTICLE II
Stock
2.1 ISSUANCE OF SHARES
(a) AUTHORIZED SHARES. The corporation may issue the number of shares of
each class or series authorized by the Articles. Shares that are issued
are outstanding shares until they are reacquired, redeemed, converted,
or cancelled.
(b) BOARD AUTHORIZATION FOR ISSUANCE. The Board must authorize any issuance
of shares. The Board may issue shares in exchange for consideration
consisting of any tangible or intangible property or benefit to the
corporation, including cash, promissory notes, services performed,
contracts for services to be performed, or other securities of the
corporation. The Board's authorization must state the maximum number of
shares of each class or series that may be issued and the price for each
share.
(c) WHEN FULLY PAID. When the corporation has received the consideration in
exchange for which the Board has authorized the issuance of shares, the
shares issued will be fully paid and nonassessable.
(d) RE-ACQUISITION. The corporation may acquire its own shares. Shares so
acquired shall constitute authorized but unissued shares.
2.2 ISSUANCE OF RIGHTS OR OPTIONS TO PURCHASE SHARES
The corporation may issue rights, options, or warrants for the purchase of
shares of the corporation. The Board shall determine the terms upon which the
rights, options, or warrants are issued, the form and content, and the
consideration for which the shares are to be issued upon exercise of any such
right, option, or warrant.
2.3 SHAREHOLDERS' PREEMPTIVE RIGHTS
Shareholders shall have no preemptive right to acquire proportional amounts of
the corporation's unissued shares upon a decision by the Board to issue them.
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2.4 CERTIFICATES OF STOCK
The Secretary shall issue stock certificates evidencing ownership of shares in
the corporation. Stock certificates shall be issued in their proper numerical
order. Each shareholder shall be entitled to a certificate which has been
signed either manually or in facsimile by the President or a Vice President and
by the Secretary or an Assistant Secretary of the Company. The Secretary may
issue a certificate bearing the signature of an individual who no longer holds
that office. Such a certificate shall have the same effect as it would if the
person still held office on the date of issue. Every stock certificate shall
state:
(a) The name of the corporation;
(b) That the corporation is incorporated in Idaho;
(c) The name of the person to whom the shares represented by the
certificate are issued;
(d) The number, class, and designation of the series, if any, of the
shares represented by the certificate;
(e) If there is more than one class, a statement that the corporation will
furnish to any shareholder, upon request and without charge, a full
written statement of the designations, preferences, limitations, and
relative rights of the shares of each class authorized by the
corporation, and the variations in rights, preferences, and
limitations determined for each series; and
2.5 LOST OR DESTROYED CERTIFICATES
The Secretary may issue a replacement certificate in place of a lost, mutilated,
or destroyed certificate, upon proof that the certificate was lost, mutilated,
or destroyed, if the holder of the certificate gives a satisfactory bond of
indemnification to the corporation. The Secretary may issue a replacement
certificate without requiring any bond when the Board determines it is proper to
do so.
2.6 STOCK RECORDS
The Secretary shall keep the stock transfer books at the registered office or
principal place of business of the corporation or at the office of the
corporation's transfer agent or registrar. The Secretary, or the transfer agent
or registrar, shall enter on the stock transfer books the name and address of
each shareholder, together with the class, number of shares, and date on which
the shares were issued or transferred to the shareholder. Each shareholder
shall keep the shareholder's current address on file with the Secretary.
2.7 RECORD OWNERS
The corporation shall treat a shareholder of record as the owner of the shares
for all purposes. The corporation shall not be bound to recognize any claim to
or interest in any share on the part of any other person, whether or not it has
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notice of such a claim or interest until that person's name has been entered on
the transfer books as the shareholder of record.
ARTICLE III
Shareholders
3.1 ANNUAL MEETING
The corporation shall hold a meeting of the shareholders annually on a date and
at a time and place set by the Board. The order of business at the annual
meeting of shareholders shall be as follows:
(a) Calling the meeting to order;
(b) Proof of notice of meeting, or filing of waivers of notice;
(c) Reading of minutes of the last annual meeting;
(d) Reports from officers;
(e) Reports from committees;
(f) Election of directors; and
(g) Other business.
3.2 SPECIAL MEETINGS
The corporation shall hold a special meeting of the shareholders:
(a) On call of the Board, the Chairman, or the President; or
(b) If the holders of at least twenty percent (20%) of all the votes
entitled to be cast on any issue proposed to be considered at the
meeting, sign, date, and deliver to the Secretary one or more written
demands for a special meeting which describe the purposes for the
meeting.
Only issues identified in the notice of a special meeting may be conducted at
that meeting. The Secretary shall issue notice of any special meeting as
provided in Paragraph 3.6(b).
3.3 ADJOURNED MEETINGS
The chairman of the meeting may adjourn a shareholders' meeting at any time a
quorum, as that term is defined in Section 3.8, is not present. With the
consent of the holders of a majority of the shares represented in person or by
proxy, and entitled to vote at a shareholders' meeting, the chairman of the
meeting may adjourn the meeting for any reason to a time and place determined by
the chairman
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of the meeting. The chairman of the meeting may adjourn a meeting at which
directors are to be elected only from day to day until the directors are
elected. The shareholders may conduct any business at an adjourned meeting
which they might have conducted at the original meeting.
3.4 MEETING PLACE
Shareholders' meetings may be held either at the corporation's registered Idaho
office or at any other place designated by the Board and identified in, the
notice of the meeting.
3.5 CHAIRMAN OF THE MEETING
The Chairman shall serve as chairman of all shareholders' meetings. In the
absence of the Chairman, the President or any other person appointed by the
Board shall serve as chairman of a shareholders' meeting.
3.6 NOTICE OF SHAREHOLDERS' MEETINGS
(a) ANNUAL MEETINGS. The corporation shall notify the shareholders of
each annual shareholders' meeting. The corporation shall deliver
notice, as provided in Section 9. 1, at least , ten (10), but not more
than fifty (50), days before the meeting date. Notice of an annual
meeting need not include a description of the purposes of the meeting,
except as provided under Paragraph (c) below. The corporation must
deliver notice to all shareholders entitled to vote at the annual
meeting, and must notify certain other shareholders of an annual
meeting as provided in Paragraph (c) below.
(b) SPECIAL MEETINGS. The corporation shall notify the shareholders
entitled to vote on the actions to be considered at any special
meeting called pursuant to Section 3.2. The corporation need not
notify all shareholders unless required to do so as provided in
Paragraph (c) below. The notice must include a description of the
purposes for which the meeting was called, and be accompanied by other
materials described in Paragraph (c) below. The corporation must
deliver the notice at least ten (10), but not more than fifty (50).
days before the meeting date. If the corporation fails to issue the
notice within ten (10) days after shareholders holding twenty percent
(20%) or more of the outstanding shares entitled to vote on a
particular issue have delivered to the Secretary written demand for a
special meeting to consider that issue in accordance with Paragraph
3.2(b), the shareholders requesting the meeting may issue the notice
on behalf and at the expense of the corporation.
(c) MEETINGS CONCERNING EXTRAORDINARY ACTS. If a purpose of a
shareholders' meeting is to consider action on an amendment to the
Articles, a planned merger or share exchange, a proposed sale, lease,
or other disposition of all or substantially all of the property of
the corporation other than in the regular course of business, or the
dissolution of the corporation, the corporation shall notify all
shareholders, whether or not entitled to vote, at least twenty (20),
but not more than fifty (50), days before the date of the meeting.
The notice must describe the proposed action with reasonable clarity
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and must contain or be accompanied by a copy of the proposed
Amendment, the plan of merger or exchange, or the agreement of sale or
lease, as applicable.
(d) ADJOURNED MEETINGS. In general the corporation need not provide
notice to the shareholders of an adjourned meeting if the time, date,
and place for reconvening the meeting is announced before the meeting
is adjourned. However, if the chairman of a meeting adjourns a
meeting for more than one hundred twenty (120) days from the date of
the original meeting the Secretary shall fix a new record date for the
adjourned meeting and shall issue a new notice of the adjourned
meeting to each shareholder of record entitled to notice of or to vote
at the adjourned meeting.
3.7 WAIVER OF NOTICE
(a) WRITTEN WAIVER. A shareholder may waive any notice before or after
the date and time of the meeting that is the subject of the notice.
Except as provided by Paragraphs (b) and (c), the waiver must be in
writing, signed by the shareholder entitled to the notice, and
delivered to the corporation for inclusion in the minutes or filing
with the corporate records.
(b) WAIVER BY ATTENDANCE. A shareholder's attendance at a meeting waives
objection to lack of notice or defective notice of the meeting, unless
the shareholder at the beginning of the meeting objects to holding the
meeting or transacting business at the meeting.
(c) WAIVER OF OBJECTION TO PARTICULAR MATTER. A shareholder waives
objection to consideration of a particular matter at a meeting that is
not within the purposes described in the meeting notice, unless the
shareholder objects to considering the matter when it is presented.
3.8 QUORUM
(a) ACTION IF QUORUM PRESENT. Shares entitled to vote as a separate
voting group may take action on a matter at a meeting only if a quorum
of those shares is present. In general, a quorum shall consist of the
minimum number of shares allowable to vote under the applicable
provision of the Idaho Business Corporation Act.
(b) SHARE REPRESENTED FOR ENTIRE MEETING. Once a share is represented for
any purpose at a meeting other than solely to object to holding the
meeting or to transacting business at the meeting, the share is deemed
present for purposes of establishing a quorum for the remainder of the
meeting and for any adjournment of that meeting unless a new record
date is set for the adjourned meeting in accordance with Paragraph
3.14(b).
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3.9 ATTENDANCE BY COMMUNICATIONS EQUIPMENT
Shareholders may participate in a shareholders' meeting by any means of
communication which enables all persons participating in the meeting to hear
each other simultaneously during the meeting. A shareholder who participates by
means of communications equipment is deemed to be present in person at the
meeting.
3.10 VOTING
(a) GENERAL RULE. In general, if a quorum is present, a matter may be
approved by a voting group if the votes cast within the voting group
favoring the action exceed the votes cast within the voting group
opposing the action.
(b) VOTING ON EXTRAORDINARY ACTS. The holders of more than two-thirds
(2/3) of all shares entitled to vote on an amendment to the Articles,
a plan of merger or share exchange, a sale of assets other than in the
regular course of business, or a proposal to dissolve the corporation,
must vote in favor of the proposed action for the corporation to take
the action, unless applicable law permits a lower percentage for
approval of the contemplated corporate action, in which case the
lowest applicable percentage shall be used.
(c) SHOW OF HANDS. Subject to the provisions of the Articles, any
question at a meeting of Shareholders shall be decided by a show of
hands unless a ballot thereon is directed, required or demanded as
provided below. Whenever a vote by show of hands shall have been
taken upon a question, unless a ballot thereon is so directed,
required or demanded, a declaration by the chairman of the meeting
that the vote upon the question has been carried or carried by a
particular majority or not carried and an entry to that effect in the
minutes of the meeting shall be prima facie evidence of the fact
without proof of the number of proportion of the votes recorded in,
favor of or against any resolution or other proceeding in respect of
the question, and the result of the vote so taken shall be the
decision of the shareholders upon the question.
(d) BALLOTS. On any question proposed for consideration at a meeting of
Shareholders, and whether or not a show of hands has been taken
thereon, any Shareholder or proxy holder entitled to vote at the
meeting may require or demand a ballot. A ballot so required or
demanded shall be taken in such manner as the chairman shall direct.
A requirement or demand for a ballot may be withdrawn at any time
prior to the taking of the ballot. If a ballot is taken, each person
present shall be entitled to the number of votes, in respect of the
shares which he is entitled to vote at the meeting on the question,
provided by the Act or the Articles; and the result of the ballot so
taken shall be the decision of the Shareholders upon the question. A
poll demanded on the election of a Chairman, or on a question of
adjournment, shall be taken forthwith. A poll demanded on any other
question shall be taken at such time as the Chairman of the meeting
directs.
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(e) ELECTION OF DIRECTORS. Directors shall be elected in accordance with
the provisions of Section 4.5.
(f) AMENDMENTS TO QUORUM RULES. An amendment to the Articles adding,
changing, or deleting either:
(1) A quorum for a voting group greater or lesser than specified in
Paragraph 3.8(a); or
(2) A voting requirement for a voting group greater than specified in
Paragraph (a) above must meet the same quorum requirement and be
adopted by the same vote and voting groups required to take
action under the quorum and voting requirements then in effect.
3.11 PROXIES
(a) VOTING BY PROXY. A shareholder may vote the shareholder's shares in
person or by proxy.
(b) PROXY APPOINTMENT. A shareholder may appoint a proxy to vote or
otherwise act for the shareholder by signing an appointment form,
either personally or by the shareholder's agent.
(c) TERM OF APPOINTMENT. An appointment of a proxy is effective when
received by the Secretary. An appointment is valid for eleven (11)
months unless it is revoked earlier or the appointment form expressly
provides for a longer period.
(d) DEATH OR INCAPACITY OF SHAREHOLDER. The death or incapacity of the
shareholder appointing a proxy does not affect the right of the
corporation to accept the proxy's authority, unless the Secretary is
given notice of the death or incapacity before the proxy exercises the
proxy's authority under the appointment.
(e) CORPORATION'S POWER TO ACCEPT PROXY'S ACTIONS. The corporation is
entitled to accept a proxy's vote or other action as that of the
shareholder, subject to the provisions of Section 3.12 and to any
express limitation on the proxy's authority appearing on the face of
the appointment form.
3.12 CORPORATION'S ACCEPTANCE OF VOTES
(a) ACCEPTANCE OF VOTE. If the name signed on a vote, consent, waiver, or
proxy appointment corresponds to the name of a shareholder, the
corporation may accept the vote, consent, waiver, or proxy appointment
as the shareholder's act.
(b) VOTE NOT BY SHAREHOLDER. If the name signed on a vote, consent,
waiver, or proxy appointment does not correspond to the name of its
shareholder, the corporation may accept the vote, consent, waiver, or
proxy appointment as the shareholder's act if:
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(1) The shareholder is an entity and the name signed purports to be
that of an officer, partner, or agent of the entity;
(2) The name signed purports to be that of an administrator,
executor, guardian, or conservator representing the shareholder
and evidence of fiduciary status acceptable to the corporation
has been presented with respect to the vote, consent, waiver, or
proxy appointment;
(3) The name signed purports to be that of a receiver or trustee in
bankruptcy of the shareholder, and evidence of this status
acceptable to the corporation has been presented with respect to
the vote, consent, waiver, or proxy appointment;
(4) The name signed purports to be that of a pledgee, beneficial
owner, or attorney-in-fact of the shareholder and evidence
acceptable to the corporation of the signatory's authority to
sign for the shareholder has been presented with respect to the
vote, consent, waiver, or proxy appointment; or
(5) Two or more persons are the shareholder as co-tenants or
fiduciaries, the name signed purports to be the name of at least
one of the co-owners, and the person signing appears to be acting
on behalf of all the co-owners.
(c) REJECTION OF VOTE. The corporation may reject a vote, consent,
waiver, or proxy appointment if the Secretary has reasonable basis for
doubt about the validity of the signature or about the signatory's
authority to sign for the shareholder.
3.13 SHAREHOLDERS' LIST FOR MEETING
(a) SHAREHOLDERS' LIST. After the corporation fixes a record date for a
meeting, the Secretary shall prepare an alphabetical list of the names
of all shareholders as of the record date who are entitled to notice
of a shareholders' meeting. The list must be arranged by voting group
(and within each voting group by class or series of shares), show the
most recent address on file of each shareholder, and identify the
number of shares held by each shareholder.
(b) LIST AVAILABLE FOR INSPECTION. The Secretary shall make the
shareholders' list available for inspection by any shareholder,
beginning ten (10) days prior to the meeting and continuing through
the meeting. The list will be available at the corporation's
principal office or at a place (identified in the meeting notice) in
the city where the meeting will be held. A shareholder, or the
shareholder's agent, may inspect the list during regular business
hours and at the shareholders expense during the period it is
available for inspection.
(c) LIST AT MEETING. The Secretary shall make the shareholder list
available at the meeting. Any shareholder or shareholder's agent may
inspect the list at any time during the meeting or any adjourned
meeting.
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(d) RIGHT TO COPY. A shareholder may copy the list as provided in
Sections 10.2 and 10.3.
3.14 FIXING THE RECORD DATE
(a) DATE FOR MEETINGS. The Board shall fix a record date in order to
determine which shareholders are entitled to notice of a shareholders'
meeting or to vote at the meeting. If the Board fails to fix a record
date for a meeting, then the day the first notice of the meeting is
delivered to the shareholders shall be the record date. If the
Secretary does not issue notice of a meeting because all shareholders
entitled to notice have waived notice, then the record date shall be
the date on which the Secretary received the last waiver of notice.
(b) DATE FOR ADJOURNED MEETINGS. Once the Secretary has determined which
shareholders are entitled to notice of or to vote at a shareholders'
meeting, the determination is effective for any adjournment of the
meeting unless the Board fixes a new record date. The Board must fix
a new record date if the meeting is adjourned for more than one
hundred twenty (120) days after the date fixed for the original
meeting.
(c) DATE FOR DIVIDENDS AND DISTRIBUTIONS. If the Board fails to fix a
record date for determining which shareholders are entitled to receive
a share dividend or a distribution which does not involve a purchase,
redemption, or other acquisition of the corporation's shares, the
record date shall be the date the Board authorizes that dividend or
distribution.
(d) DATE FOR ACTION WITHOUT MEETING. The record date for determining
which shareholders may vote to take action without a meeting is the
date the first shareholder signs the consent describing the action to
be taken.
3.15 ACTION BY SHAREHOLDERS WITHOUT A MEETING
(a) ACTION AGREED TO BY ALL SHAREHOLDERS. The shareholders may take any
action within their powers without a meeting if the action is agreed
to by all the shareholders entitled to vote on the action. To take an
action without a meeting, each shareholder entitled to vote on the
action must sign a written consent describing the action to be taken.
The consents must be delivered to the corporation for inclusion in the
minutes or filing with the corporate records.
(b) RECORD DATE. The record date for determining shareholders entitled to
take action without a meeting shall be as specified in Section 3.14.
(c) WITHDRAWAL OF CONSENT. A shareholder may withdraw consent only by
delivering a written notice of withdrawal to the Secretary prior to
the time that all consents are in possession of the corporation.
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(d) EFFECTIVE DATE OF ACTION. Action taken by the shareholders without a
meeting shall be effective when all consents are in possession of the
corporation, unless the consents specify a later effective date.
(e) ACTION BY CONSENT. An action taken by consent has the effect of a
meeting vote and may be described as such in any document.
3.16 RATIFICATION
Any action taken by the corporation, the directors, or the officers which is
subsequently authorized, approved, or ratified by vote of the number of shares
that would have been sufficient to approve the action in the first instance,
shall be valid and binding as though ratified by every shareholder of the
corporation.
ARTICLE IV
Board of Directors
4.1 MANAGEMENT RESPONSIBILITY
The corporation shall have a Board of Directors, which shall be responsible for
the exercise of all corporate powers. The Board shall manage the business,
affairs, and property of the corporation.
4.2 COMMITTEES
(a) CREATION. The Board may create one or more Committees of directors.
Each Committee must have two or more members.
(b) APPROVAL OF COMMITTEES. The number of directors required to take
action under Section 4.11 must approve the creation of a Committee.
(c) AUDIT COMMITTEE. The Board shall elect annually from among its number
an audit committee to be composed of not less than three (3) directors
of whom a majority shall not be officers or employees of the Company
or any of its affiliates. The Audit Committee shall review the annual
audited statements of the Company before, and shall comment thereon at
the time, such statements are submitted to the Board for approval.
(d) RULES GOVERNING COMMITTEES. The rules governing meetings, action
without meetings, notice and waiver of notice, and quorum and voting
requirements of the Board, under Sections 4.10 through 4.15, apply to
Committees.
(e) POWERS OF COMMITTEES. Subject to the limitations stated in Paragraph
(e) below, the Board shall specify the extent to which each Committee
may exercise the authority of the Board.
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(f) LIMITATIONS ON COMMITTEE ACTION. A Committee may not:
(1) Authorize or approve a distribution;
(2) Approve or propose to shareholders action which must be approved
by the shareholders;
(3) Fill vacancies on the Board or on any Committee;
(4) Amend the Articles;
(5) Adopt, amend, or repeal these Bylaws;
(6) Approve a plan of merger not requiring shareholder approval;
(7) Reduce earned or capital surplus;
(8) Authorize or approve the reacquisition of shares unless pursuant
to a general formula or method specified by the Board of
Directors; or
(9) Authorize or approve the issuance or sale of shares or contract
for the sale of shares, or determine the designation and relative
rights, preferences, and limitations of a class or series of
shares except pursuant to a general formula or method specified
by the Board of Directors by resolution or by adoption of a stock
option or other plan.
(g) MINUTES. All Committees shall keep regular minutes of their meetings,
which shall be included in the corporate minute books at the
registered office of the corporation.
(h) NO RELIEF FROM RESPONSIBILITY. Neither the Board nor any director may
be relieved of any responsibility imposed by law, the Articles, or
these Bylaws by designating a Committee and delegating the Board's or
the director's responsibilities to the Committee.
4.3 DUTIES OF DIRECTORS
(a) DUE CARE AND LOYALTY. Each person who is a director shall perform the
duties of a director, including any duties the director may have as a
member of any Committee:
(1) In good faith;
(2) In a manner the director reasonably believes to be in the best
interests of the corporation; and
(3) With the care an ordinarily prudent person in a like position
would use under similar circumstances.
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(b) RIGHT TO RELY ON EXPERTS. In performing corporate duties, a director
may rely on information opinions, reports, or statements, including
financial statements or other financial data prepared or presented by:
(1) One or more officers or employees of the corporation whom the
director reasonably believes to be reliable and competent in the
matters presented;
(2) Legal counsel, public accountants, or other persons concerning
matters which the director reasonably believes to be within their
professional or expert competence; or
(3) A Committee, the deliberations of which the director reasonably
believes merits confidence, concerning matters within the
Committee's designated authority.
(c) FAILURE TO ACT IN GOOD FAITH. A director fails to act in good faith
if the director relies on information provided by the above persons
even though the director has knowledge concerning a particular matter
that would make reliance on the information unwarranted.
4.4 NUMBER OF DIRECTORS
The Board shall consist of no fewer than three (3) and no more than nine (9)
directors.
4.5 ELECTION OF DIRECTORS
(a) INITIAL DIRECTORS; ANNUAL ELECTIONS. The terms of the initial
directors will expire at the first annual meeting of shareholders.
The shareholders shall elect successor directors at the first annual
meeting of shareholders, and at each annual meeting thereafter.
(b) CUMULATIVE VOTING. Cumulative voting for election of directors is not
permitted.
(c) ELECTION. In any election of directors, the candidates elected are
those who receive a majority of votes cast by the shares entitled to
vote in the election.
4.6 TERM OF OFFICE
Each director shall hold office for a one-year term until the next succeeding
annual meeting, and thereafter until the director's successor is elected and
qualified. If a director dies, resigns, or is removed, the director's
replacement shall serve throughout the remaining portion of the director's term,
and thereafter until the director's successor is elected and qualified.
4.7 VACANCY ON BOARD OF DIRECTORS
If a vacancy occurs on the Board, the directors then in office may fill the
vacancy by the affirmative vote of a majority of all the directors in office,
even if a quorum is not present.
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4.8 RESIGNATION
A director may resign at any time by delivering written notice to the Chairman,
the President, the Secretary, or each member of the Board. A resignation shall
take effect when notice is delivered, unless the notice specifies a later
effective date. The corporation need not accept a resignation for the
resignation to be effective. A resignation shall not affect the rights of the
corporation under any contract with the resigning director.
4.9 REMOVAL
(a) SPECIAL MEETING. The shareholders may remove one or more directors,
with or without cause, only at a special meeting of shareholders
called expressly for that purpose. The notice of the meeting must
state that the purpose of the meeting is to remove one or more
directors.
(b) VOTING. The shareholders may remove a director by affirmative vote of
the holders of a majority of the shares entitled to vote on the
election of that director. A director may not be removed if votes
sufficient to elect the director are voted against the director's
removal.
4.10 MEETINGS
(a) ANNUAL MEETING. The first meeting of each newly elected Board shall
be known as the annual Board meeting. The Board shall hold the annual
Board meeting, without notice, immediately after the annual
shareholders' meeting or after any special shareholders' meeting at
which new directors are elected. The Board shall hold the annual
Board meeting at the same place as the annual shareholders' meeting
unless the Board specifies another place by resolution.
(b) REGULAR MEETINGS. The Board may hold regular meetings at a place and
on a day and hour fixed by resolution of the Board.
(c) SPECIAL MEETINGS. The Chairman or any two directors may call a
special meeting of the Board. The Board shall hold the special
meeting at the place and on the day and hour specified by the persons
calling the meeting.
(d) ADJOURNED MEETINGS. A majority of the directors present may vote to
adjourn any meeting to another time and place even if the number of
directors present or voting does not constitute a quorum. If the
meeting is adjourned for more than forty-eight (48) hours, the
Secretary shall give notice of the time and place of the adjourned
meeting to the directors who were not present at the time the meeting
was adjourned.
4.11 QUORUM AND VOTING OF DIRECTORS
(a) MAJORITY CONSTITUTES A QUORUM. The minimum number of the directors
required, as regards action under applicable provisions of the Idaho
Business Corporations Act, shall constitute a quorum for the
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transaction of business at a meetings except as provided in Section
4.7 and in Paragraph (b) below. The appropriate percentage of the
directors present at a meeting at which a quorum is present may take
any actions which the directors are authorized to take on behalf of
the corporation.
(b) ACTION IN ABSENCE OF A QUORUM. The Board may continue to transact
business at a meeting at which a quorum was initially present. In
order to take any action at a meeting at which a quorum is no longer
present, the action must be approved by a sufficient percentage of the
number of directors required to establish a quorum.
(c) DISSENT BY DIRECTORS. A director may abstain or dissent from any
action taken. However, a director may not dissent or abstain if the
director voted in favor of the action taken. A director who is
present at a meeting when action is taken is deemed to have assented
to the action taken unless:
(1) The director objects at the beginning of the meeting to holding
the meeting or to transacting business at the meeting;
(2) The director's dissent or abstention from the action taken is
entered in the minutes of the meeting; or
(3) The director delivers written notice of the director's dissent or
abstention to the chairman of the meeting before the Board
adjourns the meeting or to the corporation within a reasonable
time after the Board adjourns the meeting.
4.12 ATTENDANCE BY COMMUNICATIONS EQUIPMENT
The directors may participate in a meeting by means of any communications
equipment which enables all persons participating in the meeting to hear each
other simultaneously during the meeting. A director who participates by means
of communications equipment is deemed to be present in person at the meeting.
4.13 ACTION BY DIRECTORS WITHOUT A MEETING
The Board may take any lawful action, without a meeting if each director
delivers a signed consent to the corporation which describes the action to be
taken. An action approved by consent shall have the same effect as an action
approved by unanimous vote at a meeting duly held upon proper notice, and may be
described as such in any document. All consents shall be inserted into the
minute books as if they were the minutes of a Board meeting. An action taken by
consent by the Board shall be effective when the last director signs the
consent, unless the consent specifies a later effective date.
4.14 NOTICE OF MEETING
(a) REGULAR MEETING. The Secretary may, but need not, issue notice
pursuant to Article IX of any regular Board meeting if the time and
place of the regular meeting has been fixed by resolution of the Board
and a copy of the resolution has been mailed or delivered to
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each director at least two (2) days preceding the day of the first
meeting held under that schedule.
(b) SPECIAL MEETINGS. The Secretary, or the person calling a special
Board meeting, shall issue notice pursuant to Article IX of the date,
time, and place of the meeting at least two (2) days preceding the day
on which the meeting is to be held. Any Board meeting shall be
property called if each director either has received valid notice of
the meeting, is present without objecting, or waives notice of the
meeting pursuant to Paragraph (c) below. The notice of any regular or
special meeting of the Board need not specify the purpose of the
meeting or the actions proposed for the meeting unless these Bylaws so
require.
(c) WAIVER OF NOTICE. A director may waive notice before or after the
date and time stated in the notice. A waiver shall be equivalent to
receipt of notice. A director may waive notice by submitting a
written waiver, signed by the director entitled to the notice, to the
corporation for inclusion in the minutes or filing with the corporate
records. A director may also, by attending or participating in a
meeting, waive any required notice of the meeting unless the director,
at the beginning of the meeting objects to holding the meeting or
transacting business at the meeting and does not thereafter vote for
or assent to action taken at the meeting.
4.15 CHAIRMAN OF THE MEETING
The Chairman shall serve as the chairman of the meeting of all Board meetings.
In the absence of the Chairman, the President or any other person appointed by
the Board shall serve as the chairman of the meeting of a Board meeting.
4.16 COMPENSATION
The Board shall fix the amount or salary to be paid to each director for service
as a director or for attendance at each meeting of the Board. Salary or payment
for service as a director shall not preclude a director from serving the
corporation in any other capacity or from receiving compensation, for service in
that other capacity.
4.17 LIABILITY FOR UNLAWFUL DISTRIBUTIONS
(a) DIRECTOR'S LIABILITY. A director who votes for or assents to an
unlawful distribution made in violation of Section 8.1 is personally
liable to the corporation for the amount of the distribution that
exceeds what could have been distributed without violating Section 8.1
if the director fails to perform the directors duties in compliance
with Section 4.3.
(b) RIGHT TO CONTRIBUTION. A director held liable for an unlawful
distribution is entitled to contribution:
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(1) From every other director who could be held liable for the
unlawful distribution; and
(2) From each shareholder for the amount the shareholder accepted
knowing the distribution was unlawful.
ARTICLE V
Conflicting Interest Transactions
5.1 DEFINITIONS
For purposes of this Article:
(a) "Conflicting interest" means the interest a director has respecting a
transaction effected or proposed to be effected by the corporation or
any other entity in which the corporation has a controlling interest
if:
(1) The director knows at the time the corporation takes action that
the director or a related person is a party to the transaction or
has a significant beneficial financial interest in or so closely
linked to the transaction that a reasonable person would expect
the interest to influence the directors judgment if the director
were called upon to vote on the transaction; or
(2) The transaction is brought before the Board for action, and the
director knows at the time the Board reviews the transaction that
any of the following persons is either a party to the transaction
or has a significant beneficial financial interest in or so
closely linked to the transaction that a reasonable person would
expect the interest to influence the director's judgment if the
director were called upon to vote on the transaction:
(A) An entity of witch the director is a director, general
partner, agent, or employee;
(B) An entity that controls, is controlled by, or is under
common control with one or more of the entities specified in
(A); or
(C) An individual who is a general partner, principal or
employer of the director.
(b) "Director's conflicting interest transaction" means a transaction
effected or proposed to be effected by the corporation or any other
entity in which the corporation has a controlling interest respecting
which a director of the corporation has a conflicting interest.
(c) "Qualified director" means any director who does not have either:
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(1) A conflicting interest respecting the transaction; or
(2) A familial, financial, professional or employment relationship
with a second director who does have a conflicting interest
respecting the transaction, which relationship would, in the
circumstances, reasonably be expected to exert an influence on
the first director's judgment when voting on the transaction.
(d) "Qualified shares" means any shares entitled to vote with respect to
the director's conflicting interest transaction except shares that, to
the knowledge, before the vote, of the Secretary, are beneficially
owned, or the voting of which is controlled, by a director who has a
conflicting interest respecting the transaction or by a related person
of the director, or both.
(e) "Related person" of a director means:
(1) A child, grandchild, sibling, parent, or spouse of, or an
individual occupying the same household as, the director, or a
trust or estate of which any of the above individuals is a
substantial beneficiary; or
(2) A trust, estate, incompetent, conservatee, or minor of which the
director is a fiduciary.
(f) "Required disclosure" means disclosure by the director who has a
conflicting interest of
(1) The existence and nature of the director's conflicting interest;
and
(2) All facts known to the director respecting the subject matter of
the transaction that an ordinarily prudent person would
reasonably believe to be material to a judgment about whether or
not to proceed with the transaction.
5.2 DIRECTORS' ACTION
(a) MAJORITY VOTE. Directors' action respecting a director's conflicting
interest transaction is effective if the transaction received the
affirmative vote of a majority of (but no fewer than two) qualified
directors who voted on the transaction after either required
disclosure to them or compliance with Paragraph (b) below.
(b) DIRECTOR'S DISCLOSURE. If a director has a conflicting interest
respecting a transaction, but neither the director nor a related
person of the director is a party to the transaction, and if the
director has a duty under law or professional canon, or a duty of
confidentiality to another person, which would prevent that director
from making the disclosure described in Paragraph 5.1(f), then
disclosure is sufficient if the director:
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(1) Discloses to the directors voting on the transaction the
existence and nature of the director's conflicting interest and
informs them of the character and limitations imposed by that
duty before their vote on the transaction; and
(2) Plays no part, directly or indirectly in their deliberations or
vote.
(c) QUORUM. A majority (but no fewer than two) of the qualified directors
constitutes a quorum for purposes of action that comply with this
Article. Directors' action that otherwise complies with this Article
is not affected by the presence or vote of a director who is not a
qualified director.
5.3 SHAREHOLDERS' ACTION
(a) MAJORITY VOTE. Shareholders' action respecting a director's
conflicting interest transaction is effective if a majority of the
votes entitled to be cast by the holders of all qualified shares were
cast in favor of the transaction after:
(1) Notice to shareholders describing the director's conflicting
interest;
(2) Provision of the information referred to in Paragraph (b) below;
and
(3) Required disclosure to the shareholders who voted on the
transaction.
(b) DIRECTOR'S DISCLOSURE. A director who has a conflicting interest
respecting the transaction shall before the shareholders' vote, inform
the Secretary of the number, and the identity, of persons holding or
controlling the vote of all shares that the director knows are
beneficially owned or the voting of which is controlled by the
director or by a related person of the director.
(c) QUORUM. A majority of the votes entitled to be cast by the holders of
all qualified shares constitutes a quorum for purposes of action that
complies with this section. Subject to the provisions of Paragraph
(b), shareholders' action that otherwise complies with this section is
not affected by the presence or voting of shares that are not
qualified shares.
ARTICLE VI
Indemnification
6.1 INDEMNIFICATION DEFINITIONS
For purposes of this Article:
(a) "Corporation" includes any domestic or foreign predecessor entity of a
corporation in a merger or other transaction in which the
predecessor's existence ceased upon consummation of the transaction.
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(b) "Director" means an individual who is or was a director of the
corporation or an individual who, while a director of the corporation,
is or was serving at the corporation's request as a director, officer,
partner, trustee, employee, or agent of another foreign or domestic
corporation, partnership, joint venture, trust, employee benefit plan,
or other enterprise. A director is considered to be serving an
employee benefit plan at the corporations request if the director's
duties to the corporation also impose duties on, or otherwise involve
services by, the director to the plan or to participants in or
beneficiaries of the plan. "Director" includes, unless the context
requires otherwise, the estate or personal representative of a
director.
(c) "Expenses" include counsel fees.
(d) "Liability" means the obligation to pay a judgment settlement,
penalty, fine (including an excise tax assessed with respect to an
employee benefit plan), or reasonable expenses incurred with respect
to a proceeding.
(e) "Official capacity" means:
(1) When used with respect to a director, the office of director in
the corporation; and
(2) When used with respect to an individual other than a director, as
contemplated in Section 6.6, the office in the corporation held
by the officer or the employment or agency relationship
undertaken by the employee or agent on behalf of the corporation.
"Official capacity" does not include service for any other foreign or
domestic corporation or any partnership, joint venture, trust,
employee benefit plan, or other enterprise.
(f) "Party" includes an individual who was, is, or is threatened to be
made a named defendant or respondent in a proceeding.
(g) "Proceeding" means any threatened, pending, or completed action, suit,
or proceeding, whether civil, criminal, administrative, or
investigative, and whether formal or informal.
6.2 INDEMNIFICATION
(a) RIGHT TO INDEMNIFICATION. Except as provided in Paragraph (d), the
corporation shall indemnify an individual made a party to a proceeding
because the individual is or was a director against liability incurred
in the proceeding if:
(1) The individual acted in good faith; and
(2) The individual reasonably believed:
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(A) In the case of conduct in the individual's official capacity
with the corporation, that the individual's conduct was in
its best interests; and
(B) In all other cases, that the individual's conduct was at
least not opposed to its best interests; and
(3) In the case of any criminal proceeding, the individual had no
reasonable cause to believe the individual's conduct was
unlawful.
(b) CONDUCT CONCERNING EMPLOYEE BENEFIT PLANS. A directors conduct with
respect to an employee benefit plan for a purpose the director
reasonably believed to be in the interests of the participants in and
beneficiaries of the plan is conduct that satisfies the requirement of
subparagraph (a)(2)(B).
(c) LEGAL PROCEEDINGS. The termination of a proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent is not, of itself, determinative that the director did
not meet the standard of conduct described in this section.
(d) LIMITS ON INDEMNIFICATION. The corporation shall not indemnify a
director under this section:
(1) In connection with a proceeding by or in the right of the
corporation in which the director is adjudged liable to the
corporation; or
(2) In connection with any other proceeding charging improper
personal benefit to the director, whether or not involving action
in the director's official capacity, in which the director was
adjudged liable on the basis that personal benefit was improperly
received by the director.
(e) COVERAGE OF REASONABLE EXPENSES. Indemnification provided under this
section in connection with a proceeding by or in the right of the
corporation is limited to reasonable expenses incurred in connection
with the proceeding.
6.3 ADVANCES FOR EXPENSES
(a) ADVANCES. The corporation shall pay for or reimburse the reasonable
expenses incurred by a director who is a party to a proceeding in
advance of final disposition of the proceeding if:
(1) The director furnishes the corporation a written affirmation of
the director's good faith belief that the director has met the
standard of conduct described in Section 4.3; and
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(2) The director furnishes the corporation a written undertaking,
executed personally or on the director's behalf, to repay the
advance if it is ultimately determined that the director did not
meet the standard of conduct.
(b) DIRECTOR'S UNDERTAKING. The undertaking required by subparagraph
(a)(2) must be an unlimited general obligation of the director, but
need not be secured and may be accepted without reference to financial
ability to make repayment if the Board determines that the risk the
advance will not be repaid is reasonable under the circumstances. The
provisions of Section 5.2 will apply in making any such determination.
6.4 DETERMINATION AND AUTHORIZATION OF INDEMNIFICATION
(a) DETERMINATION OF PROPER CONDUCT. The corporation shall not indemnify
a director under Section 6.2 unless authorized in the specific case
after a determination has been made that indemnification of the
director is permissible in the circumstances because the director has
met the standard of conduct set forth in Section 6.2.
(b) BOARD DETERMINATION. The determination shall be made:
(1) By the Board by majority vote of a quorum consisting of directors
not at the time parties to the proceeding;
(2) If a quorum cannot be obtained under subparagraph (1), by
majority vote of a Committee duly designated by the Board (in
which designation directors who are parties may participate),
consisting solely of two or more directors not at the time
parties to the proceeding;
(3) By special legal counsel:
(A) Selected by the Board or its Committee in the manner
prescribed in subparagraph (1) or (2); or
(B) If a quorum of the Board cannot be obtained under
Subparagraph (1) and a Committee cannot be designated under
Subparagraph (2), selected by majority vote of the full
Board (in which selection directors who are parties may
participate); or
(4) By the shareholders, but shares owned by or voted under the
control of directors who are at the time parties to the
proceeding may not be voted on the determination.
(c) AUTHORIZATION OF INDEMNIFICATION. Authorization of indemnification
and evaluation as to reasonableness of expenses shall be made in the
same manner as the determination that indemnification is permissible,
except that if the determination is made by special legal counsel,
authorization of indemnification and evaluation as to reasonableness
of expenses shall be made by those entitled under subparagraph (b)(3)
to select counsel.
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6.5 SHAREHOLDER AUTHORIZED INDEMNIFICATION AND ADVANCEMENT OF EXPENSES
If authorized by the Articles of Incorporation, any Bylaw adopted or ratified by
the shareholders, or any resolution adopted or ratified, before or after the
event, by the shareholders, the corporation shall have power to make or agree to
indemnify a director made a party to a proceeding, or obligate itself to advance
or reimburse expenses incurred in a proceeding, without regard to the
limitations in Sections 6.2, 6.3, and 6.4; provided that no such indemnification
shall indemnify any director from or on account of:
(a) Acts or omissions of the director finally adjudged to be intentional
misconduct or a knowing violation of law;
(b) Conduct of the director finally adjudged to be in violation of Section
4.17; or
(c) Any transaction with respect to which it is finally adjudged that such
director personally received a benefit in money, property, or services
to which the director was not legally entitled.
6.6 INDEMNIFICATION OF OFFICERS, EMPLOYEES, AND AGENTS
The corporation shall indemnify and advance expenses under Sections 6.2 through
6.5 to an officer, employee, or agent of the corporation who is not a director
to the same extent as to a director.
6.7 INSURANCE
The corporation may purchase and maintain insurance on behalf of an individual
who is or was a director, officer, employee, or agent of the corporation, or
who, while a director, officer, employee, or agent of the corporation, is or was
serving at the request of the corporation as a director, officer, partner,
trustee, employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust, employee benefit plan, or other enterprise,
against liability asserted against or incurred by the individual in that
capacity or arising from the individuals status as a director, officer,
employee, or agent, whether or not the corporation would have power to indemnify
the individual against the same liability under Section 6.2.
6.8 REPORT TO SHAREHOLDERS
If the corporation indemnifies or advances expenses to a director under Section
6.2, 6.3, or 6.5 in connection with a proceeding by or in the right of the
corporation, the corporation shall report the indemnification or advance in
writing to the shareholders with or before the notice of the next shareholders'
meeting.
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ARTICLE VII
Officers
7.1 OFFICERS AND THEIR DUTIES
The following officers shall be elected annually and shall have the duties
enumerated below:
(a) CHAIRMAN OF THE BOARD. The Chairman shall be a director and shall
perform the duties assigned to the Chairman by the Board. The
Chairman shall preside at all meetings of the shareholders and at all
meetings of the Board. The Chairman may sign deeds mortgages, bonds,
contracts, or other instruments, unless these powers have been
expressly delegated by the Board to some other officer or agent of the
corporation or are otherwise required by law to be signed or executed
by some other officer or in some other manner. If the President dies
or becomes unable to act, the Chairman shall perform the duties of the
President, except as may be limited by resolution of the Board.
(b) PRESIDENT.
(1) The President shall be the chief executive officer of the
corporation unless some other officer is so designated by the
Board. The President shall supervise and control the assets,
business, and affairs of the corporation. If no Chairman has
been elected, the President shall be a director. The President
may sign certificates for shares of the corporation, deeds,
mortgages, bonds, contracts, or other instruments, unless these
powers have been expressly delegated by the Board to some other
officer or agent of the corporation. The President shall vote
shares in other corporations which are owned by the corporation,
unless the Board prescribes otherwise. The President shall
perform all duties incident to the office of president and any
other duties which the Board may prescribe.
(2) The President may appoint one or more Assistant Secretaries and
Assistant Treasurers, as the President deems necessary.
(c) VICE PRESIDENTS. The Board may designate one or more Vice Presidents
or other officers and assistant officers as the Board determines is
necessary or advisable, or the Board may delegate that power to the
President. The Vice Presidents shall have the powers and perform the
duties accorded to them by the Board, the Articles, the Bylaws, or
delegated to them by the Chairman or the President. If no Chairman
has been elected, in the absence or disability of the President, the
Vice President designated by the Board shall perform the duties of the
President. When so acting, the designated Vice President shall have
all the powers of and be subject to the same restrictions as is the
President. However, a Vice President may not preside as the chairman
of a Board meeting unless that Vice President is also a director.
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(d) SECRETARY.
(1) The Secretary shall:
(A) Prepare the minutes of meetings of the directors and of the
shareholders, keep the minutes in one or more books provided
for that purpose, and be responsible for authenticating the
records of the corporation;
(B) Ensure that all notices are given in accordance with the
provisions of Sections 3.6, 4.14 and Article IX of these
Bylaws and as required by law;
(C) Serve as custodian of the corporate records and the
corporate seat and ensure that the seal is affixed to all
documents requiring the corporation's seal, provided that
the document has been duly authorized for execution;
(D) Keep a register of the address of each shareholder,
director, and officer;
(E) Sign certificates representing the authorized shares of the
corporation;
(F) Maintain the stock transfer books of the corporation
pursuant to the provisions of Section 2.7;
(G) Appoint a registrar or transfer agent to oversee the stock
transfer books;
(H) When required by law or resolution of the Board, sign the
corporation's deeds, mortgages, bonds, contracts, or other
instruments; and
(I) Perform all other duties incident to the office of Secretary
or assigned by the President or the Board.
(2) In the absence of the Secretary, an Assistant Secretary may
perform the duties of the Secretary.
(e) CHIEF FINANCIAL OFFICER.
(1) The Chief Financial Officer shall:
(A) Take custody of and account for all funds and securities
held by the corporation;
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(B) Receive and give receipts for sums due to the corporation,
and deposit those sums in the name of the corporation in
banks, trust companies, or other depositories which the
Board may select in accordance with the provisions of these
Bylaws; and
(C) Perform all other duties incident to the office of Chief
Financial Officer or assigned to the Chief Financial Officer
by the President or the Board.
(2) In the absence of the Treasurer, an Assistant Treasurer may
perform the duties of the Treasurer.
(f) ADDITIONAL DUTIES; OTHER OFFICERS AND AGENTS. The Board may assign
any officer any additional title that the Board deems appropriate.
The Board may delegate to any officer or agent the power to appoint
assistant officers or agents and to prescribe the terms of office,
authorities, and duties of such assistant officers or agents.
(g) AUTHORITY TO ENTER CONTRACTS AND TO ISSUE CHECKS AND DRAFTS. The
Board may authorize any officer or agent of the corporation to enter
into contracts or to execute and deliver instruments in the name of
and on behalf of the corporation. The Board may grant either general
or limited authority to its officers and agents to make contracts or
execute instruments. The Board shall authorize certain officers or
agents of the corporation to sign the corporation's checks, drafts, or
other orders for the payment of money, notes, or other evidences of
indebtedness issued in the name of the corporation.
7.2 QUALIFICATIONS
None of the officers is required to be a director, except as specified in
Section 7. 1. The same person may hold two or more corporate offices, except
that one person may not hold the offices of President and Secretary at the same
time.
7.3 STANDARDS OF CONDUCT FOR OFFICERS
(a) DUE CARE AND LOYALTY. An officer with discretionary authority shall
discharge the officer's duties under that authority:
(1) In good faith;
(2) With the care an ordinarily prudent person in a like position
would exercise under similar circumstances; and
(3) In a manner the officer reasonably believes to be in the best
interests of the corporation.
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(b) RIGHT TO RELY ON EXPERTS. In performing the officer's duties, the
officer may rely on information, opinions, reports, or statements,
including financing statements and other financial data prepared or
presented by:
(1) One or more officers or employees of the corporation whom the
officer reasonably believes to be reliable and competent in the
matters presented; or
(2) Legal counsel public accountants, or other persons concerning
matters the officer reasonably believes to be within their
professional or expert competence.
(c) FAILURE TO ACT IN GOOD FAITH. An officer fails to act in good faith
if the officer relies on information provided by the above persons
even though the officer has knowledge that makes reliance on the
information unwarranted.
7.4 BONDS
The Board may require any officer to post a bond to ensure that the officer
faithfully performs the duties of the office, and that in case of the death,
resignation, retirement or removal of the officer, the officer returns all
books, papers, vouchers, money and other property in the officer's possession or
under the officer's control which belongs to the corporation. The bond shall be
in the amount and with any sureties required by the Board.
7.5 DELEGATION
The Board may delegate the powers and duties of an officer who is absent or
unable to act to any officer, director, or other person.
7.6 ELECTION AND TERM OF OFFICE
The Board shall elect the officers at the annual Board meeting. If the Board
fails to elect the officers at that meeting, it shall convene a meeting to elect
the officers as soon thereafter as possible. Each officer shall hold office for
a one-year term until the next succeeding annual Board meeting, or until the
officer's successor is elected and qualified, unless the officer dies, resigns,
or is removed.
7.7 VACANCIES
The Board may fill a vacancy in any office created because of the death,
resignation, removal, or disqualification of an officer, because of the creation
of a new office, or for any other cause.
7.8 RESIGNATION
An officer may resign at any time by delivering written notice to the Chairman,
the President, any Vice President, the Secretary, or to each member of the
Board. An officer's resignation shall take effect at the time specified in the
notice or, if the time is not specified, when the notice is delivered. The
corporation need
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not accept a resignation for the resignation to be effective. A resignation
shall not affect the rights of the corporation under any contract with the
resigning officer.
7.9 REMOVAL
The Board may remove an officer or agent of the corporation, with or without
cause, if the Board finds that the best interests of the corporation would be
served by removing that officer or agent. The corporations action to remove the
officer or agent shall not affect the officer's contract rights against the
corporation. Any officer or assistant officer, if appointed by another officer,
may be removed by any officer authorized to appoint officers or assistant
officers.
7.10 COMPENSATION
The Board shall set the compensation for the officers and the other agents and
employees of the corporation. The Board may delegate the authority to set the
compensation of the officers, agents, and employees to the President. No
officer may be prevented from receiving compensation as an officer solely
because the officer is also a director of the corporation.
ARTICLE VIII
Dividends and Distributions
8.1 DISTRIBUTIONS
The Board may authorize and the corporation may make distributions of cash or
other property in the form of a dividend or the purchase, redemption, or other
acquisition of the corporation's shares, unless after making the distribution:
(a) The corporation would be unable to pay its debts as they become due in
the usual course of business; or
(b) The corporations total assets would be less than the sum of its total
liabilities plus the amount needed, if the corporation were dissolved
at the time of distribution, to satisfy the preferential rights of
shareholders whose preferential rights are superior to the
shareholders who receive the distribution.
8.2 MEASURE OF EFFECT OF DISTRIBUTION
For purposes of determining whether a distribution may be authorized by the
Board of Directors and paid by the corporation under Section 8. 1, the effect of
distribution shall be measured as follows:
(a) In the case of a distribution of indebtedness which requires the
corporation to make principal and interest payments only if those
payments would qualify as an allowable distribution under Section 8.1,
each payment of principal and interest must qualify as a separate
distribution, the effect of which shall be measured on the date the
payment is actually made.
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(b) In the case of a distribution made through the purchase, redemption,
or other acquisition of the corporations shares, the effect of the
distribution shall be measured as of the earlier of:
(1) The date on which any money or other property is transferred to
the shareholders;
(2) The date on which any debt is incurred by the corporation; or
(3) The date on which the shareholder ceases to be a shareholder with
respect to the acquired shares.
(c) In the case of a distribution of indebtedness other than that
described in Paragraph (a) above, the effect of the distribution shall
be measured as of the date the indebtedness is distributed.
(d) In any other case, the effect of the distribution shall be measured
either:
(1) As of the date on which the distribution is authorized, if the
corporation paid the distribution within one hundred twenty (120)
days after the date of authorization; or
(2) As of the date of payment if such date occurs more than one
hundred twenty (120) days after the date of authorization.
8.3 SHARE DIVIDENDS
(a) ISSUANCE TO ALL SHAREHOLDERS. The corporation may issue a share
dividend by issuing shares pro rata and without consideration to all
shareholders or to the shareholders of one or more classes or series.
(b) ISSUANCE OF CLASS OF SHAREHOLDERS. Shares of one class or series may
not be issued as a share dividend in respect of shares of another
class or series unless:
(1) The Articles so authorize;
(2) A majority of the votes entitled to be cast by the class or
series to be issued approve the issue; or
(3) There are no outstanding shares of the class or series to be
issued.
8.4 RESERVES
The corporation may, before making any distribution, set aside certain amounts
to serve as a reserve fund to meet contingencies, or for any other purpose. Any
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funds not distributed by the corporation at the end of any fiscal year shall be
deemed to have been thus set aside as a reserve until the Board otherwise
disposes of the funds.
ARTICLE IX
Notices
9.1 METHOD OF NOTICE
(a) GENERAL. In general notices called for under these Bylaws shall be
given in writing.
(b) METHODS OF COMMUNICATION. Notice may be communicated in person; by
telephone, telegraph, teletype, facsimile, or other form of wire or
wireless communication; or by mail or private carrier. If these forms
of personal notice are impracticable, notice may be communicated by a
newspaper of general circulation in the area where published; or by
radio, television, or other form of public broadcast communication.
(c) EFFECTIVE DATE OF NOTICE TO SHAREHOLDER. Written notice to a
shareholder, if in a comprehensible form, is effective when mailed, if
mailed with first-class postage prepaid and correctly addressed to the
shareholder's address shown in the corporation's current record of
shareholders. The Secretary may send notices to a shareholder by
delivering or mailing the notice to the shareholders most recent
address on file. Any notice sent to that address shall be deemed
sufficient if the shareholder fails to furnish a current address to
the Secretary.
(d) NOTICE TO THE CORPORATION. Written notice to the corporation may be
addressed to its registered agent at its registered office or to the
corporation at the address of its principal office as shown in the
most recent annual report.
(e) EFFECTIVE DATE OF NOTICE TO OTHER PARTIES. Except as provided above,
written notice to other parties shall be effective at the earliest of:
(1) The time of receipt;
(2) The date shown on the return receipt if sent by registered mail;
or
(3) Five (5) days after the notice was deposited in the U.S. first
class mail postage prepaid.
9.2 ORAL NOTICE
The persons convening any meeting of the Board or a Committee may give oral
notice of the meeting, which may be communicated in person or by telephone,
wire, or wireless communication. Oral notice is effective when communicated if
the notice is communicated in a comprehensible manner. Oral notice may be
communicated either to the director or to a person who the person giving the
notice has reason to believe will promptly communicate the notice to the
director.
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9.3 WAIVER OF NOTICE
A shareholder or director may waive notice of any meeting by submitting a
written signed waiver of notice either before or after the time for holding the
meeting, or by attending the meeting in person or by proxy without objecting to
a lack of notice.
ARTICLE X
Corporate Records
10.1 MAINTENANCE OF CORPORATE RECORDS
The corporation shall keep the corporation's minute books and all other official
records of all meetings at its registered office or principal place of business.
The corporation shall keep all minutes and records in written form, or in a form
which may be easily converted to written form. The corporation shall maintain
in its records the following items:
(a) The Articles or restated Articles and all amendments to the Articles;
(b) The current Bylaws or restated Bylaws and all amendments to the
Bylaws;
(c) The minutes of all shareholders', Board and Committee meetings and
records of all actions taken by the shareholders, the Board, or a
Committee without a meeting;
(d) All financial statements for the past three (5) years;
(e) All written communications made to the shareholders within the last
three (3) years;
(f) A register of names and business addresses of each shareholder,
director and officer;
(g) The last three (3) annual reports; and
(h) The stock transfer books of the corporation, as described in Section
2.7.
10.2 SHAREHOLDER'S RIGHT TO INSPECT AND COPY RECORDS
(a) INSPECTION OF CORPORATE RECORDS. A shareholder may inspect and copy,
during regular business hours at the corporation's principal office,
any of the records of the corporation described in Section 10.1 if the
shareholder gives the corporation written notice of the shareholder's
demand at least (5) five business days before the date on which the
shareholder wishes to inspect and copy the records.
(b) INSPECTION OF ACCOUNTING AND SHAREHOLDERS' RECORDS. A shareholder may
also inspect and copy the accounting records of the corporation and
the record of shareholders during regular business hours at a
reasonable location specified by the corporation, if the shareholder
gives the corporation written notice of the shareholder's demand at
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<PAGE> 38
least five (5) business days before the date on which the shareholder
wishes to inspect and copy the records and:
(1) The shareholder's demand is made in good faith and for a proper
purpose;
(2) The shareholder describes with reasonable particularity the
shareholder's purpose and the records the shareholder desires to
inspect; and
(3) The records are directly connected with the shareholder's
purpose.
10.3 SCOPE OF INSPECTION RIGHT
(a) SHAREHOLDER'S AGENT. A shareholder's agent or attorney has the same
inspection and copying rights as the shareholder.
(b) COPIES. A shareholder may obtain copies of the corporation's records
made by photographic, xerographic, or other reasonable means,
including copies in electronic or other non-written form if the
shareholder so requests.
(c) CHARGE FOR COPYING. The corporation may charge the shareholder for
the reasonable costs of labor and materials used to produce copies of
any records provided to the shareholder. The charges may not exceed
the estimated cost of producing or reproducing the records.
(d) RECORD OF SHAREHOLDERS. The corporation may comply with a
shareholder's demand to inspect the record of shareholders by
providing the shareholder with a list of shareholders that was
compiled no earlier than the date of the shareholder's demand.
10.4 ANNUAL REPORT
The corporation shall prepare and file an annual report in the required form
with the Secretary of State of Idaho. The corporation shall ensure that the
information in the annual report is current as of the date the corporation
executes the annual report.
ARTICLE XI
Financial Matters
11.1 BOOKS AND RECORDS OF ACCOUNT
The corporation shall maintain correct and complete books, financial statements,
and records of account. The corporation shall keep its books and records of
account and prepare its financial statements in accordance with generally
accepted accounting principles, which shall be applied on a consistent basis
from period to period. The books, records of account, and financial statements
shall be in written form or in any other form capable of being converted into
written form within a reasonable time.
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11.2 BALANCE SHEET AND INCOME STATEMENT
(a) ANNUAL BALANCE SHEET AND INCOME STATEMENT. The corporation shall
prepare annually (1) a balance statement showing in reasonable detail
the financial condition of the corporation as of the close of its
fiscal year and (2) an income statement showing the results of the
corporation's operations during its fiscal year. The corporation
shall prepare these statements not later than four (4) months after
the close of each fiscal year, and in any case before the annual
shareholders' meeting. These statements shall be prepared in
accordance with generally accepted accounting principles which shall
be applied on a consistent basis from period to period. The
President, or the person who prepared the financial statements, shall
prepare a certificate to accompany the annual financial reports
attesting to the fact that the preparer used generally accepted
accounting principles in preparing the financial statements, and
describing any respects in which the statements were prepared on a
basis of accounting which was not consistent with statements prepared
for the preceding year.
(b) COPIES TO SHAREHOLDERS. The corporation shall mail promptly, upon
written request, a copy of the most recent balance sheet and income
statement to any shareholder. The corporation shall also furnish,
upon written request, a statement of the sources and applications of
the corporation's funds and a statement of any changes in the
shareholders' equity for the most recent fiscal year, if such
statements have been prepared for other purposes.
11.3 DEPOSITS
The officers shall cause all funds of the corporation not otherwise employed to
be deposited to the credit of the corporation in such banks, trust companies, or
other depositories as the Treasurer may select.
11.4 LOANS
The corporation may not borrow money or issue evidences of indebtedness unless
the Board authorizes the action. The corporation shall make no loans which are
secured by its own shares, except for indebtedness representing the unpaid
purchase price of the corporation's shares.
11.5 FISCAL YEAR
The corporation shall use a fiscal year ending December 31 unless the Board
expressly determines otherwise.
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ARTICLE XII
Amendment of Articles and Bylaws
12.1 AMENDMENT OF ARTICLES BY THE BOARD AND SHAREHOLDERS
The Board may submit to the shareholders for approval one or more proposed
amendments to the Articles. Following notice to all shareholders of a
shareholders' meeting in accordance with the provisions of paragraph 3.6(c) and
Article IX the shareholders may adopt the proposed amendment if a majority of
the votes in each voting group entitled to vote on each amendment approve.
12.2 AMENDMENT OF BYLAWS BY THE SHAREHOLDERS
The shareholders may amend, alter, or repeal the Bylaws at any meeting of the
shareholders, or by unanimous written consent. The shareholders may amend the
Bylaws at a special shareholders' meeting only if a copy of the proposed
amendments accompanies the notice of the meeting.
12.3 AMENDMENT OF BYLAWS BY THE BOARD
The Board of Directors shall have the power to amend existing Bylaws effective
from the date of the Board resolution, subject to ratification by the
Shareholders at the next Annual or Special Meeting.
ARTICLE XIII
Corporate Seal
The Board of Directors may adopt a corporate seal in a form and with an
inscription to be determined by the Board. The seal shall be in the form of a
circle and shall contain the name of the corporation and the year of
incorporation. The application of or failure to apply the seal to any document
or instrument shall not affect the validity of the document or instrument.
ARTICLE XIV
Miscellany
14.1 INSPECTOR OF ELECTIONS
Before any annual meeting of shareholders, the Board may appoint an inspector of
elections. If the Board does not appoint an inspector of elections, then the
chairman of the meeting may appoint an inspector of elections to act at the
meeting. If the person appointed as inspector of elections fails to act, the
chairman of the meeting may appoint a person to act in the place of the
appointed inspector of elections. The chairman of the meeting shall appoint an
inspector of elections if requested to do so by any shareholder or shareholder's
proxy.
14.2 DUTIES OF INSPECTOR OF ELECTIONS
The inspector of elections shall:
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(a) Determine the number of shares outstanding and the voting power of
each, the number of shares represented at the meeting, whether a
quorum is present, and, with the advice of legal counsel to the
corporation, the authenticity, validity, and effect of proxies;
(b) Receive votes, ballots, or consents;
(c) Hear and determine all challenges and questions in any way arising in
connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine the result of any vote; and
(f) Do any other acts that may be necessary to conduct the election or
vote with fairness to all shareholders.
14.3 RULES OF ORDER
(a) ROBERT'S RULES GOVERN. The rules contained in the most recent edition
of Robert's Rules of Order, Revised, shall govern all meetings of
shareholders and directors where those rules do not conflict with the
Articles or the Bylaws.
(b) CHAIRMAN OF MEETING. The chairman of the meeting shall have absolute
authority over matters of procedure. There shall be no appeal from a
procedural ruling by the chairman of the meeting. The chairman of the
meeting may dispense with the rules of parliamentary procedure for any
meeting or any part of a meeting. The chairman shall clearly state
the rules under which any meeting or part of a meeting will be
conducted.
(c) ADJOURNMENT DUE TO DISORDER. If disorder should arise which prevents
continuation of the legitimate business of any meeting the chairman of
the meeting may adjourn the meeting. Any meeting so adjourned may be
reconvened in accordance with Sections 3.3 and 4.10 of these Bylaws.
(d) REMOVAL OF PERSONS NOT SHAREHOLDERS. The chairman may require anyone
who is not a bona fide shareholder of record or the proxy of a
shareholder of record to leave any shareholders' meeting.
(e) MATTERS THE PROPER SUBJECT ACTION. The shareholders may consider and
vote on a resolution or motion at a shareholders' meeting only if:
(1) The resolution or motion was proposed by a shareholder or the
duly authorized proxy of a shareholder; and
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(2) The resolution or motion was seconded by an individual who is a
shareholder or the duly authorized proxy of a shareholder other
than the person who proposed the resolution or motion.
14.4 NUMBER AND GENDER
When required by the context:
(a) The word "it" will include the plural and the word "its" will include
the singular;
(b) The masculine will include the feminine gender and the neuter, and
vice versa; and
(c) The word "person" will include corporation, firm, partnership or any
other form of association.
14.5 SEVERABILITY
If any provision of these Bylaws or any application of any provision is found to
be unenforceable, the remainder of the Bylaws shall be unaffected. If the
provision is found to be unenforceable when applied to particular persons or
circumstances, the application of the provision to other persons or
circumstances shall be unaffected.
ARTICLE XV
Authentication
The foregoing Bylaws were read, approved, and duly adopted by the Board on the
14th day of November 1995. The President and Secretary were empowered to
authenticate these Bylaws by their signatures below.
CONSIL CORP.
BY: /s/ Ralph R. Noyes
--------------------------
Chairman and Director
ATTEST:
BY: /s/ Nathaniel K. Adams
----------------------------
Secretary
41
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