Whether you Own 100 Shares or Five Shares, Be in Control of your Shares

None of us likes to think about our own death or the death of our family members. But when it comes to what happens to your CIRI stock, planning ahead by making a will can make things much easier for the loved ones left behind.

This issue is of particular importance for those shareholders who own only a few shares of stock. If there is no will, Alaska law controls the distribution of the stock, which could mean that a handful of shares must be distributed to a large number of people. And if the number of shareholders with a small amount of shares and no valid stock will continues to grow, as those shareholders pass on, the trend will be toward more and more people inheriting only a few shares or only a part of a share.

At the end of September 1999, 194 shareholders owned four or fewer shares of stock, including 57 shareholders who owned one share or less. By the end of the third quarter of 2003, the number of shareholders owning four or fewer shares of stock had grown to 283, including 73 who own one share or less. The increase in the number of shareholders who own small numbers of shares is due, in large part, to the number of CIRI shareholders who pass away without a will.

In the case of shareholders who die “intestate,” which means not leaving a valid will to dispose of their CIRI shares, CIRI is required by Alaska law to distribute the shares to certain relatives of the deceased shareholder.

For example, if a shareholder owning five shares of CIRI stock passed away without leaving a valid will to dispose of those shares, CIRI would be required to distribute those five shares according to Alaska law. If the shareholder had never been married, had no children, had no living parents, but had 10 surviving brothers and sisters, the shares would be divided equally among each brother and sister – meaning half of a share of CIRI stock to each. And if, in turn, any of those 10 brothers and sisters were to pass away without leaving a valid will, his or her half of a share would also be distributed according to the laws of intestate succession, meaning it may be further split.

Sometimes, legal requirements leave survivors feeling frustrated, because they believe their loved one would have wanted his or her CIRI shares to be distributed in a manner other than what is dictated by the law. But Alaska law is very specific about who should receive CIRI shares when a shareholder passes away without leaving a valid will.

Have you completed a valid will so that your wishes for the distribution of your CIRI shares are known, and your instructions can be followed?

Remember, even if you have previously completed a CIRI Stock Will, marriage, divorce, birth or adoption of children, the death of a designated beneficiary, or changes in plans or circumstances are all reasons to consider filing a new will. If you have not already done so, please take a few minutes to complete a CIRI Stock Will. CIRI’s Shareholder Relations department will be happy to send you a CIRI Stock Will form, instructions, and a return envelope. Simply call 274-8638, in Anchorage, or call toll-free by dialing (800) 764-CIRI. Taking a few minutes today can make it easier on your loved ones.

CIRI Settles Lawsuits with Directors Rude and Rudolph

In October 2003, CIRI entered into a final settlement agreement with CIRI directors Robert Rude and Harold Rudolph, ending a series of lawsuits and administrative actions stretching over a seven-year period.

“After many years of legal battles, we have finally ended the litigation between Mr. Rude and Mr. Rudolph and the company. We sat down, as a full board, to put politics aside and the business of the company first. This was not an easy decision, but it was the right thing to do. This settlement saves the company hundreds of thousands of additional dollars which might have been spent to take it to trial,” said CIRI Chairman Terry Simpson. Dr. Simpson described the settlement as a victory for shareholders. “In the end, the shareholders won. I think we have delivered the message the company will defend the shareholders’ right to truthfulness in proxy campaigns, but over time, these legal battles were distracting the company from business and business ventures. Moving forward as a united board will serve the best interest of all of our shareholders.”

The litigation between CIRI and these directors began in 1996 when CIRI filed an administrative complaint with the State’s Division of Banking, Securities and Corporations claiming that Rude and Rudolph made false and misleading statements to shareholders while campaigning for seats on the CIRI Board. Similar actions alleging violation of Alaska’s proxy regulations were filed against Rude and Rudolph with the Division of Banking, Securities and Corporations and with the Superior Court in 1997 and 1998. The Division issued Orders finding false and misleading statements by Rude and Rudolph in 1996, and by Rudolph in 1998, and ordered that such statements be corrected (the 1996 Order was later withdrawn by the Division due to budgetary constraints). In the 1997 Superior Court lawsuit, the court issued a preliminary injunction against Rude and Rudolph, directing them to correct false and misleading statements made to shareholders during Rudolph’s 1997 board campaign.

In response to CIRI’s legal actions, Rude and Rudolph, between 1996 and 2002, filed counterclaims of their own, filed a separate class-action lawsuit, and filed dozens of administrative complaints against the company, alleging, among other things, that the company had violated the Alaska proxy regulations and had violated their rights as directors. CIRI estimates that it spent more than $2 million in the litigation, more than half of which was spent in responding to motions and claims filed by Rude and Rudolph against the company.

The October settlement between CIRI and directors Rude and Rudolph puts an end to all pending litigation. Under the settlement, CIRI paid the directors $25,000 each as partial repayment of their attorneys’ fees in litigating the cases. In return, each side agreed to drop all outstanding litigation against the other.

CIRI President and CEO Carl Marrs was pleased with the settlement. “I think it was time to settle. We had really achieved what we had set out to accomplish in the litigation, and staying in the fight was costing the company time and money.” Marrs expressed his hope that such lawsuits could be avoided in the future. “During the settlement process, Mr. Rude and Mr. Rudolph expressed a desire to put the legal and political battles of the past behind us and to focus on the important business of the company. If we can achieve this, the settlement is well worth it.”

Would you Rather Receive your CIRI Shareholder Update Electronically?

Some shareholders have suggested that CIRI can save on printing and postage by distributing CIRI newsletters electronically. While this is an excellent idea, not all shareholders receive e-mail; nor want to. As an alternative, CIRI is offering shareholders who are online the option of signing up to receive an e-mail advisory message instead of having their newsletters mailed to them. The newsletter advisory will be sent each time that the latest newsletter is added to the CIRI web site, and will include a link to the current newsletter.

If you currently receive a paper copy of the CIRI newsletter and would prefer instead to receive an e-mail notification, please complete and sign the form on the previous page and return it to the CIRI Shareholder Relations department. You may also call Shareholder Relations to ask that the form and a return envelope be mailed to you. Shareholder Relations plans to implement the e-mail notification service in March 2004.

Forms may be faxed to CIRI Shareholder Relations at (907) 263-5186; however, be sure to call (907)274-8638, or toll-free at (800)764-2474, to make sure your fax was received.

Are You Interested in Being Considered for the Board of Directors of CIRI or CIRI’s Non-profits?

CIRI shareholders are invited to express an interest in serving on the CIRI Board of Directors or one of the CIRI non-profit boards of directors. Official nominating packets will be available in January. In the mean time, all interested shareholders should contact CIRI's Shareholder Relations department by calling (907) 274-8638, toll free (800) 764-2474, or e-mailing webmaster@ciri.com.

CIRI directors are responsible for initiating and developing the policies that further the goals of the company, while addressing the economic, social and cultural needs of the shareholders. Board candidates must be at least 18 years of age and a voting CIRI shareholder. Candidates with demonstrated decision-making, leadership and communication skills as well as honesty and integrity are preferred. Knowledge of business operations, involvement in Native issues, and a college degree or equivalent business experience are other favored attributes.

Shareholders who submit an application are welcome to run for the CIRI Board of Directors whether or not they are selected for the board-endorsed slate of candidates.