Regarding your comments Richard:

 

  1. The provisions allowing modifications or amendments only allow modifications or amendments “which do not materially change the substance or economics of the Land Sale Agreement”.  Without such language, any sale would have to be completed based on the exact terms and conditions, e.g. if a different officer signs or there is a typo in the agreement, that would require new shareholder vote.  I understand your concern and would be happy to modify the language, but would definitely recommend that some form of language for the concept be included.  Maybe something like:  “allow modifications or amendments only so long as such modifications are minor and do not materially deviate from the agreed terms of the Land Sale Agreement” so some similar language?

 

  1. I could not agree with you more strongly that the tax consequences need to be looked at by an accountant.  The board itself might be personally liable to the IRS or a creditor or a shareholder in the event that all of the money was distributed and nothing was held back for the taxes that are incurred by the corporation.  Similarly, shareholders should be told if there will be taxes on their distributions so that they can adequately plan for that tax bill.  I agree that, generally, ANCSA distributions of land might be non-taxable, but this land went first to AJV and then to Uganik and I cannot say with certainty how this might impact the tax ramifications of the transaction.  Further, shareholder distributions are normally dividends, subject to income taxes on such income.  There may be exceptions, but I am not a tax attorney and do not know what they might be.

 

  1. In the proxy as drafted, the terms of the distribution will be set forth in the Exhibit which describes the “Net Distributable Proceeds”.  I can’t imagine any scenario for a Native corporation, which receives 7(i) or 7(j), to distribute all of its cash to shareholders.  Under ANCSA, all Native corporations must continue to exist under Federal law and always have administrative obligations (e.g. keep a shareholder list, transfer stock to heirs, provide information to the Regionals, store records, respond to IRS audits, etc.).  Some funds should be held for these administrative duties.

 

  1. I don’t know what the situation is for the corporation and the shareholders when Exxon money is distributed.  It is my understanding, however, that approximately $115 million +/- of the total $350 million +/- is going to be distributed now and the balance later.  Additionally, there is still a Supreme Court appeal of the interest issue which could effectively double the total Exxon will ultimately have to pay.  This is not an issue that needs to be described in the Proxy Statement as it isn’t directly relevant to it, but may be a factor in the tax analysis.

 

  1. Does the Board want to have separate votes on the distributions to the shareholders?  We could certainly get the Land Sale approved at this meeting without tying it to an immediate distribution to the shareholders and this might be desirable.  The longer deals are allowed to stretch out, the more likely something will change and have a potentially adverse effect on the closing of the deal at all.

 

If I can be of further assistance, please feel free to give me a call.  Our office is closed Thursday and Friday for Thanksgiving, but I will be back in the office next Monday.

 

Kathy

 

Richard,

 

Regarding the “100” shares issue, is the statement in one of the first paragraphs that says that the corporation has 3100 outstanding shares”?  Or should it correctly state “the corporation has 310 outstanding shares”?

 

If it is 310, then would it be appropriate to take my proposed 1,705,000.00 and divide it by 310 to come up with the distribution per full share?  I’m not sure about these calculations.  It’s much easier for me to deal with 100 shares.

 

Do you like the idea of rounding up?

 

Sis

— On Sun, 11/23/08, Richard E Simeonoff <rsimeonoff@hotmail.com> wrote:

From: Richard E Simeonoff <rsimeonoff@hotmail.com>
Subject:
To: “Kathy Black” <kblack@bhb.com>, ancroberts@yahoo.com, “John standing in the rain” <johntollakc55@hotmail.com>, tweten@ptialaska.net, ellen@kvok.com
Date: Sunday, November 23, 2008, 11:03 PM

Kathy, the intention of Uganik acquiring the land and selling the land was to improve the lives of present shareholders, and keep the emphasis on managing the remaining lands with out of pocket cost. The proxy to sell the land should be a binding and clear document that explains that the land will be sold, and 95 % of the proceeds will go directly to the shareholders upon close of escrow and payment. There should not be any loop holes for anything but full distribution of the amount voted upon by the Current board of directors, and the shareholders in the proxy. The proxy shall state the tax implications of a sale and distribution. The land for sale under that was received from the Afognak Joint Venture, is land that is covered under the Alaska Native Settlement ACT. This land is not taxable as a distribution to shareholders. This should be clearly stated on the proxy. This land deal is by no means an isolated or “new” deal to both accountants and Lawyers familiar with the AJV partition process. State and Federal law and the ANSCA have ample situations where this has occurred, and there is no reason we cannot clearly state the tax implications of this sale. This tax issue may have a negative impact on the passage of this proxy. The other issue I have is,, what is the authorization to close transaction section C?  Which states that officers may make amendments and modifications.   It would be better if the Board of Directors were making those decisions. my main question. Does this mean issues like missing punctuation? Or can this have ramification to distribution of net proceeds? implementation would be by the officers

I know that Don Nekeferoff and others at the last shareholder meeting explicitly asked that we clear up any tax issues. Either way, we need to clear this up now before we proceed. It would not be in the best interest of shareholders to vote in the blind without a clear understanding of the tax situation. We cannot distribute the money until this is resolved.  So why would we vote without shareholders knowing what their tax liability is. It is in the best interest of the Corporation to resolve this issue before wasting money on a proxy. The likelihood of the proxy passing is highly increased with educated shareholders. I have attached a copy of the original proxy with my remarks for all to see. We as a board should be able to resolve this issue working with Kathy. Kathy, with her experience in theses matters and professional contacts, should make this a seamless one. My main concern is that the shareholders have a clear understanding of what they are voting on.

 

Sincerely,

Richard Simeonoff

RSJ Construction & Design LC

949 W 13th Ave, Apache Junction, Arizona, 85220

www.azbuild.com

rsj@azbuild.com

Phone: 480.982.9419

Fax: 888.419.0393