View:
As filed with the Securities and Exchange Commission on October 1, 2003.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES PURSUANT TO SECTION
12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
GOLD RESERVE INC.
(Exact name of registrant as specified in its charter)
YUKON TERRITORY, CANADA (State of incorporation or organization)
NONE (IRS Employer Identification No.)
926 West Sprague Avenue, Suite 200
Spokane, WA 99201
(Address of principal executive offices) (Zip Code)
If this form relates to the registration of a class of securities pursuant to
Section 12(b) of the Exchange Act and is effective pursuant to General
Instruction A.(c), please check the following box.| |
If this form relates to the registration of a class of securities pursuant to
Section 12(g) of the Exchange Act and is effective pursuant to General
Instruction A.(d), please check the following box. |X|
Securities to be registered pursuant to Section 12(b) of the Act: None
Securities to be registered pursuant to Section 12(g) of the Act:
Title of Name of each exchange on which
each class to be so registered each class is to be registered
- ---------------------- -------------------------------
CLASS A COMMON SHARES,
NO PAR VALUE PER SHARE AMERICAN STOCK EXCHANGE
RIGHTS TO PURCHASE
CLASS A COMMON SHARES AMERICAN STOCK EXCHANGE
Item 1. Description of Registrant's Securities to be Registered.
The information with respect to the Class A common shares and the Company's
Shareholder Rights Plan Agreement (the "Shareholder Rights Plan Agreement") set
forth under the caption "Description of Securities and Comparison of Rights of
Shareholders" set forth in Post-Effective Amendment No. 1 to the Registration
Statement on Form S-4 (Registration No. 333-68061) of Gold Reserve Inc. (the
"Company") filed with the Securities and Exchange Commission on November 30,
1998 is incorporated herein by reference.
In 2000, the Company amended its Shareholder Rights Plan Agreement to (a)
change the expiration date from June 17, 2002 to June 30, 2003 (further
extended this year to 2006, as discussed below), and (b) add provisions to
enable persons to enter into a "Permitted Lock-Up Agreement" without triggering
the Shareholder Rights Plan Agreement. To effect this change, a definition for
"Permitted Lock-Up Agreement" was added. In essence, a Permitted Lock-Up
Agreement will be an agreement by a shareholder to deposit or tender shares to
a take-over bid, provided that the agreement meets certain requirements. These
requirements are essentially that: (a) the terms of the agreement are publicly
disclosed and a copy of the agreement is publicly available; (b) the
shareholder who agrees to tender shares to a take-over bid made by the other
party to the agreement (the "lock-up bid") be allowed to terminate its
obligations under the agreement in order to tender the shares to another
take-over bid or support another transaction where the offer price under the
other bid or transaction is equal to or greater than a specified minimum which
is not more than 7% higher than the offer price under the lock-up bid; and (c)
no break-up fees or other penalties that exceed in the aggregate the greater
of 2.5% of the price or value payable under the lock-up bid and 50% of the
increase in the consideration resulting from another take-over bid or
transaction shall be payable by the shareholder if the shareholder fails to
tender its shares to the lock-up bid.
On June 11, 2003, the Company amended and restated its Shareholder Rights Plan
Agreement to (a) change the expiration date from June 30, 2003 to June 30, 2006,
and (b) effect certain minor amendments, including the replacement of Montreal
Trust Company with Computershare Trust Company of Canada as rights agent and
amendments necessary to reflect the restatement of the Shareholder Rights Plan
Agreement.
The foregoing description of the Shareholder Rights Plan Agreement is qualified
in its entirety by reference to the text of the Shareholder Rights Plan
Agreement, a copy of which is attached hereto as Exhibit 3.
Item 2. Exhibits.
Exhibit
No. Description of Exhibit
1. Restated Articles of Incorporation of the Company (incorporated by
reference from Exhibit 3.1 to the Company's Registration Statement
on Form S-4, Registration No. 333-68061).
2. Bylaws of the Company (incorporated by reference from Exhibit 3.2
to the Company's Registration Statement on Form S-4, Registration
No. 333-68061).
3. Shareholder Rights Plan Agreement (As Amended) of the Company
included herein. (including form of Rights Certificate)
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereto duly authorized.
GOLD RESERVE INC.
Date: October 1, 2003 By: /s/ Robert A. McGuinness
-------------------------
Robert A. McGuinness
Vice President of Finance and
Chief Financial Officer
EXHIBIT 3. SHAREHOLDER'S RIGHTS PLAN AGREEMENT
SHAREHOLDER RIGHTS PLAN AGREEMENT
MEMORANDUM OF AGREEMENT, dated as of October 5, 1998, amended as of
March 20, 2000 and June 2, 2000, and amended and restated as of March 14, 2003
between Gold Reserve Inc. (The "Corporation"), a corporation incorporated under
the laws of the Yukon Territory, and Computershare Trust Company of Canada,
a trust company incorporated under the laws of Canada (the "Rights Agent");
WHEREAS in order to maximize shareholder value the Board of Directors of the
Corporation has determined that it is advisable for the Corporation to adopt a
shareholder rights plan (the "Rights Plan");
WHEREAS in order to implement the adoption of a shareholder rights plan as
established by this Agreement, the board of directors of the Corporation has:
(a) authorized the issuance, effective immediately following the
Effective Time (as hereinafter defined), of one Right (as hereinafter defined)
in respect of each Common Share (as hereinafter defined) outstanding
immediately following the Effective Time (the "Record Time"); and
(b) provided that the Separation Time occurs after the Record Time,
authorized the issuance of one Right in respect of each Common Share of the
Corporation issued after the Record Time and prior to the earlier of the
Separation Time (as hereinafter defined) and the Expiration Time (as
hereinafter defined).
AND WHEREAS each Right, when issued, will entitle the holder thereof, after the
Separation Time, to purchase securities of the Corporation pursuant to the
terms and subject to the conditions set forth herein;
AND WHEREAS the Corporation desires to appoint the Rights Agent to act on
behalf of the Corporation and the holders of Rights, and the Rights Agent is
willing to so act, in connection with the issuance, transfer, exchange and
replacement of Rights Certificates (as hereinafter defined), the exercise of
Rights and other matters referred to herein;
NOW THEREFORE, in consideration of the premises and the respective covenants
and agreements set forth herein, and subject to such covenants and agreements,
the parties hereby agree as follows:
ARTICLE 1
INTERPRETATION
1.1 Certain Definitions
For purposes of this Agreement, the following terms have the meanings
indicated:
(a) "ACQUIRING PERSON" shall mean any Person who is the Beneficial Owner of 20
per cent or more of the outstanding Voting Shares; provided, however, that the
term "Acquiring Person" shall not include:
(i) the Corporation or any Subsidiary of the Corporation;
(ii) any Person who becomes the Beneficial Owner of 20 per cent or more of
the Outstanding Voting Shares as a result of one or any combination of (A) a
Voting Share Reduction, (B) Permitted Bid Acquisitions, (C) an Exempt
Acquisition or (D) Pro Rata Acquisitions; provided, however, that if a Person
becomes the Beneficial Owner of 20 per cent or more of the outstanding Voting
Shares by reason of one or any combination of the operation of Paragraphs (A),
(B), (C) or (D) above and such Person's Beneficial Ownership of Voting Shares
thereafter increases by more than 1 per cent of the number of Voting Shares
outstanding (other than pursuant to one or any combination of a Voting Share
Reduction, a Permitted Bid Acquisition, an Exempt Acquisition or a Pro Rata
Acquisition), then as of the date such Person becomes the Beneficial Owner of
such additional Voting Shares, such Person shall become an "Acquiring Person";
(iii) for a period of ten days after the Disqualification Date (as defined
below), any Person who becomes the Beneficial Owner of 20 per cent or more of
the outstanding Voting Shares as a result of such Person becoming disqualified
from relying on Clause 1.1(g)(B) because such Person makes or announces a
current intention to make a Take-over Bid, either alone or by acting jointly
or in concert with any other Person. For the purposes of this definition,
"Disqualification Date" means the first date of public announcement that any
Person is making or intends to make a Take-over Bid;
(iv) an underwriter or member of a banking or selling group that
becomes the Beneficial Owner of 20 per cent or more of the Voting Shares in
connection with a distribution to the public of securities of the
Corporation; or
(v) a Person (a "Grandfathered Person") who is the Beneficial Owner of
20 per cent or more of the outstanding Voting Shares of the Corporation
determined as of 12:01 am (Toronto time) on the Agreement Date, provided,
however, that this exception shall not be, and shall cease to be, applicable
to a Grandfathered Person in the event that such Grandfathered Person shall,
after 12:01 am (Toronto time) on the Agreement Date, become the Beneficial
Owner of any additional Voting Shares of the Corporation that increases its
Beneficial Ownership of Voting Shares by more than 1 per cent of the number
of Voting Shares outstanding, other than through one or any combination of
a Permitted Bid Acquisition, an Exempt Acquisition, a Voting Share Reduction,
or a Pro Rata Acquisition;
(b) "AFFILIATE": when used to indicate a relationship with a specified
Person, shall mean a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control
with, such specified Person;
(c) "AGREEMENT" shall mean this shareholder rights plan agreement dated
as of October 5, 1998 between the Corporation and the Rights Agent, as amended
or supplemented from time to time; "hereof", "herein", "hereto" and similar
expressions mean and refer to this Agreement as a whole and not to any
particular part of this Agreement;
(d) "AGREEMENT DATE" means October 5, 1998;
(e) "ANNUAL CASH DIVIDEND" shall mean cash dividends paid in any fiscal
year of the Corporation to the extent that such cash dividends do not exceed,
in the aggregate, the greatest of:
(i) 200 per cent of the aggregate amount of cash dividends declared
payable by the Corporation on its Common Shares in its immediately preceding
fiscal year;
(ii) 300 per cent of the arithmetic mean of the aggregate amounts of
the annual cash dividends declared payable by the Corporation on its Common
Shares in its three immediately preceding fiscal years; and
(iii) 100 per cent of the aggregate consolidated net income of the
Corporation, before extraordinary items, for its immediately preceding fiscal
year;
(f) "ASSOCIATE" means, when used to indicate a relationship with a
specified Person, a spouse of that Person, any Person of the same or opposite
sex with whom that Person is living in a conjugal relationship outside marriage,
a child of that Person or a relative of that Person if that relative has the
same residence as that Person;
(g) A Person shall be deemed the "BENEFICIAL OWNER" of, and to have
"BENEFICIAL OWNERSHIP" of, and to "BENEFICIALLY OWN",
(i) any securities as to which such Person or any of such Person's
Affiliates or Associates is the owner at law or in equity;
(ii) any securities as to which such Person or any of such Person's
Affiliates or Associates has the right to acquire (whether such right is
exercisable immediately or within a period of 60 days thereafter and whether
or not on condition or the happening of any contingency) pursuant to any
agreement, arrangement, pledge or understanding, whether or not in writing
(other than (x) customary agreements with and between underwriters and/or
banking group members and/or selling group members with respect to a
distribution of securities by the Corporation, and (y) pledges of securities
in the ordinary course of business), or upon the exercise of any conversion
right, exchange right, share purchase right (other than the Rights),
warrant or option;
(iii) any securities owned through a trustee, legal representative,
agent or other intermediary;
(iv) any securities which are Beneficially Owned within the
meaning of Clauses 1.1(g)(i), (ii) or (iii) by any other Person with which
such Person is acting jointly or in concert;
provided, however, that a Person shall not be deemed the "BENEFICIAL OWNER" of,
or to have "BENEFICIAL OWNERSHIP" of, or to "BENEFICIALLY OWN", any security:
(A) where such security has been deposited or tendered
pursuant to any Take-over Bid or where the holder of such security has agreed
pursuant to a Permitted Lock-Up Agreement to deposit or tender such security
pursuant to a Take-over Bid, in each case made by such Person, made by any of
such Person's Affiliates or Associates or made by any other Person acting
jointly or in concert with such Person, until such deposited or tendered
security has been taken up or paid for, whichever shall first occur;
(B) where such Person, any of such Person's Affiliates or
Associates or any other Person referred to in Clause 1.1(g)(iv), holds such
security provided that (1) the ordinary business of any such Person (the
"Investment Manager") includes the management of investment funds for others
(which others, for greater certainty, may include or be limited to one or more
employee benefit plans or pension plans) and such security is held by the
Investment Manager in the ordinary course of such business in the performance
of such Investment Manager's duties for the account of any other Person or
Persons (a "Client"); or (2) such Person (the "Trust Company") is licensed to
carry on the business of a trust company under applicable laws and, as such,
acts as trustee or administrator or in a similar capacity in relation to the
estates of deceased or incompetent Persons (each an "Estate Account") or in
relation to other accounts (each an "Other Account") and holds such security in
the ordinary course of such duties for the estate of any such deceased or
incompetent Person or for such Other Accounts, (3)such Person is a pension plan
or fund (a "Plan") or is a Person established by statute for purposes that
include, and the ordinary business or activity of such Person (the "Statutory
Body") includes, the management of investment funds for employee benefit plans,
pension plans, insurance plans of various public bodies; or (4) such Person
(the "Administrator") is the administrator or trustee of one or more Plans;
provided, in any of the above cases, that the Investment Manager, the Trust
Company, the Statutory Body, the Administrator or the Plan, as the case may be,
is not then making or has not then announced an intention to make a Take-over
Bid, (other than an Offer to Acquire Voting Shares or other securities by means
of a distribution by the Corporation or by means of ordinary market transactions
(includingprearranged trades) executed through the facilities of a stock
exchange or organized over-the-counter market) alone or by acting jointly or
in concert with any other Person;
(C) where such Person or any of such Person's Affiliates or
Associates is (1) a Client of the same Investment Manager as another Person
on whose account the Investment Manager holds such security, (2) an Estate
Account or an Other Account of the same Trust Company as another Person on
whose account the Trust Company holds or exercises voting or dispositive
power over such security, or (3) a Plan with the same Administrators as
another Plan on whose account the Administrator holds such security;
(D) where such Person is (1) a Client of an Investment
Manager and such security is owned at law or in equity by the Investment
Manager, (2) an Estate Account or an Other Account of a Trust Company and
such security is owned at law or in equity by the Trust Company or (3) a
Plan and such security is owned at law or in equity by the Administrator of
the Plan; or
(E) where such person is the registered holder of
securities as a result of carrying on the business of or acting as a nominee
of a securities depository.
(h) "BOARD OF DIRECTORS" shall mean the board of directors of the
Corporation or any duly constituted and empowered committee thereof;
(i) "BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in Toronto, Ontario are authorized or
obligated by law to close;
(j) "CANADIAN DOLLAR EQUIVALENT" of any amount which is expressed in
United States Dollars means, on any date, the Canadian dollar equivalent of
such amount determined by multiplying such amount by the U.S. - Canadian
Exchange Rate in effect on such date;
(k) "CANADIAN - U.S. EXCHANGE RATE" means, on any date, the inverse of
the U.S. - Canadian Exchange Rate in effect on such date;
(l) "CLASS A SHARES" means the class A common shares in the capital of
the Corporation;
(m) "CLASS B SHARES" means the class B common shares in the capital of
the Corporation;
(n) "CLOSE OF BUSINESS" on any given date shall mean the time on such
date (or, if such date is not a Business Day, the time on the next
succeeding Business Day) at which the transfer office of the transfer agent
(or co-transfer agent) for the Common Shares in the City of Toronto (or,
after the Separation Time, the office of the Rights Agent in the City of
Toronto) is closed to the public;
(o) "COMMON SHARES" shall mean the Class A Shares and the Class B Shares
in the capital of the Corporation and, for the purposes of this Agreement,
except as specifically otherwise provided herein, the Class A Shares and the
Class B Shares shall be treated as a single class of common shares;
(p) "COMPETING PERMITTED BID" means a Take-over Bid that (i) is made
after a Permitted Bid has been made and prior to the expiry of the Permitted
Bid; (ii) satisfies all of the provisions of a Permitted Bid other than
the condition set forth in Clause (ii) of the definition of a Permitted Bid;
and (iii) contains, and the take-up and payment for securities tendered or
deposited is subject to, an irrevocable and unqualified provision that no
Voting Shares will be taken up or paid for pursuant to the Take-over Bid
prior to the close of business on the date that is no earlier than the later
of (A) 21 days after the date of the Take-over Bid constituting the
Competing Permitted Bid; and (B) 60 days following the date on which the
earliest Permitted Bid which preceded the Competing Permitting Bid was made;
and only if at the date that the Voting Shares are to be taken up more than
50% of the Voting Shares held by Independent Shareholders shall have been
deposited or tendered pursuant to the Competing Permitted Bid and not
withdrawn;
(q) "CONTROLLED": a corporation shall be deemed to be "controlled" by
another Person if: (i) securities entitled to vote in the election of
directors carrying more than 50 per cent of the votes for the election of
directors are held, directly or indirectly, by or for the benefit of the
other Person; and (ii) the votes carried by such securities are entitled, if
exercised, to elect a majority of the board of directors of such
corporation; and "controls", "controlling" and "under common control with"
shall be interpreted accordingly;
(r) "CO-RIGHTS AGENTS" shall have the meaning ascribed thereto in
Subsection 4.1(a);
(s) "DIVIDEND REINVESTMENT ACQUISITION" shall mean an acquisition of
Voting Shares of any class pursuant to a Dividend Reinvestment Plan;
(t) "DIVIDEND REINVESTMENT PLAN" means a regular dividend reinvestment or
other plan of the Corporation made available by the Corporation to holders of
its securities where such plan permits the holder to direct that some or all
of: (i) dividends paid in respect of shares of any class of the Corporation;
(ii) proceeds of redemption of shares of the Corporation; (iii) interest
paid on evidences of indebtedness of the Corporation; or (iv) optional cash
payments; be applied to the purchase from the Corporation of Common Shares;
(u) "EFFECTIVE TIME" means the time at which articles of merger were
accepted for filing by the Secretary of State of the State of Montana with
respect to the merger of Gold Reserve Corporation and GR Merger Corp., a
wholly-owned subsidiary of the Corporation, or at such later time as is
specified in such articles of merger, on February 4, 1999;
(v) "ELECTION TO EXERCISE" shall have the meaning ascribed thereto in
Clause 2.2(d)(ii);
(w) "EXEMPT ACQUISITION" means a share acquisition in respect of which
the Board of Directors has waived the application of Section 3.1 pursuant to
the provisions of Subsection 5.1(b), (c) or (d);
(x) "EXERCISE PRICE" shall mean, as of any date, the price at which a
holder may purchase the securities issuable upon exercise of one whole Right
which, until adjustment thereof in accordance with the terms hereof, shall be
$70.00;
(y) "EXPANSION FACTOR" shall have the meaning ascribed thereto in
Clause 2.3(a)(x);
(z) "EXPIRATION TIME" shall mean 5:00 p.m. Toronto time on June 30, 2006;
(aa) "FLIP-IN EVENT" shall mean a transaction in or pursuant to which any
Person becomes an Acquiring Person;
(bb) "HOLDER" shall have the meaning ascribed thereto in Section 2.8;
(cc) "INDEPENDENT SHAREHOLDERS" shall mean holders of Voting Shares,
other than:
(i) any Acquiring Person;
(ii) any Offeror, other than a Person referred to in Clause
1.1(g)(B);
(iii) any Affiliate or Associate of any Acquiring Person or
Offeror;
(iv) any Person acting jointly or in concert with any Acquiring
Person or Offeror; and
(v) any employee benefit plan, deferred profit sharing plan,
stock participation plan and any other similar plan or trust for the benefit
of employees of the Corporation or a Subsidiary of the Corporation, unless
the beneficiaries of the plan or trust direct the manner in which the
Voting Shares are to be voted or direct whether the Voting Shares are to be
tendered to a Take-over Bid;
(dd) "MARKET PRICE" per share of any securities on any date of
determination shall mean the average of the daily closing prices per share
of such securities (determined as described below) on each of the 20
consecutive Trading Days through and including the Trading Day immediately
preceding such date; provided, however, that if an event of a type analogous
to any of the events described in Section 2.3 hereof shall have caused the
closing prices used to determine the Market Price on any Trading Days not to
be fully comparable with the closing price on such date of determination or,
if the date of determination is not a Trading Day, on the immediately
preceding Trading Day, each such closing price so used shall be
appropriately adjusted in a manner analogous to the applicable adjustment
provided for in Section 2.3 hereof in order to make it fully comparable with
the closing price on such date of determination or, if the date of
determination is not a Trading Day, on the immediately preceding Trading
Day. The closing price per share of any securities on any date shall be:
(i) the closing board lot sale price or, in case no such sale
takes place on such date, the average of the closing bid and asked prices
for each of such securities as reported by the principal Canadian stock
exchange on which such securities are listed or admitted to trading;
(ii) if for any reason none of such prices is available on such day
or the securities are not listed or posted for trading on a Canadian stock
exchange, the last sale price or, in case no such sale takes place on such
date, the average of the closing bid and asked prices for each of such
securities as reported by the principal national United States securities
exchange or market on which such securities are listed or admitted to
trading;
(iii) if for any reason none of such prices is available on such day
or the securities are not listed or admitted to trading on a Canadian stock
exchange or a national United States securities exchange or market, the last
sale price or, in case no sale takes place on such date, the average of the
high bid and low asked prices for each of such securities in the
over-the-counter market, as quoted by any reporting system then in use; or
(iv) if for any reason none of such prices is available on such day
or the securities are not listed or admitted to trading on a Canadian stock
exchange or a national United States securities exchange or market or quoted
by any such reporting system, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the securities;
provided, however, that if for any reason none of such prices is available on
such day, the closing price per share of such securities on such date means
the fair value per share of such securities on such date as determined by a
nationally or internationally recognized investment dealer or investment
banker with respect to the fair value per share of such securities. The
Market Price shall be expressed in Canadian dollars and, if initially
determined in respect of any day forming part of the 20 consecutive Trading
Day period in question in United States dollars, such amount shall be
translated into Canadian dollars on such date at the Canadian Dollar
Equivalent thereof.
(ee) "1933 SECURITIES ACT" means the Securities Act of 1933 of the United
States, as amended, and the rules and regulations thereunder as now in effect
or as the same may from time to time be amended, re-enacted or replaced;
(ff) "1934 EXCHANGE ACT" means the Securities Exchange Act of 1934 of the
United States, as amended, and the rules and regulations thereunder as now in
effect or as the same may from time to time be amended, re-enacted or
replaced;
(gg) "NOMINEE" shall have the meaning ascribed thereto in Subsection
2.2(c);
(hh) "OFFER TO ACQUIRE" shall include:
(i) an offer to purchase or a solicitation of an offer to sell; and
(ii) an acceptance of an offer to sell, whether or not such offer to
sell has been solicited;
or any combination thereof, and the Person accepting an offer to sell shall
be deemed to be making an Offer to Acquire to the Person that made the offer
to sell;
(ii) "OFFEROR" shall mean a Person who has announced an intention to make
or who is making a Take-over Bid;
(jj) "PERMITTED BID" means a Take-over Bid made by an Offeror by way of
take-over bid circular which also complies with the following additional
provisions:
(i) the Take-over Bid is made to all holders of Voting Shares as
registered on the books of the Corporation, other than the Offeror;
(ii) the Take-over Bid contains, and the take-up and payment for
securities tendered or deposited is subject to, an irrevocable and
unqualified provision that no Voting Shares will be taken up or paid for
pursuant to the Take-over Bid prior to the close of business on the date
which is not less than 60 days following the date of the Take-over Bid and
only if at such date more than 50 per cent of the Voting Shares held by
Independent Shareholders shall have been deposited or tendered pursuant to
the Take-over Bid and not withdrawn;
(iii) the Take-over Bid contains an irrevocable and unqualified
provision that unless the Take-over Bid is withdrawn, Voting Shares may be
deposited pursuant to such Take-over Bid at any time during the period of
time between the date of the Take-over Bid and the date on which Voting
Shares may be taken up and paid for and that any Voting Shares deposited
pursuant to the Take-over Bid may be withdrawn until taken up and paid for;
and
(iv) the Take-over Bid contains an irrevocable and unqualified
provision that if, on the date on which Voting Shares may be taken up and
paid for, more than 50% of the Voting Shares held by Independent
Shareholders shall have been deposited pursuant to the Take-over Bid and not
withdrawn, the Offeror will make a public announcement of that fact and the
Take- over Bid will remain open for deposits and tenders of Voting Shares for
not less than ten Business Days from the date of such public announcement;
(kk) "PERMITTED BID ACQUISITION" shall mean an acquisition of Voting Shares
made pursuant to a Permitted Bid or a Competing Permitted Bid;
(ll) "PERMITTED LOCK-UP AGREEMENT" shall mean an agreement between a
Person and one or more holders of Voting Shares pursuant to which such holders
(each a "Locked-Up Person") agree to deposit or tender Voting Shares to a
Take-over Bid (the "Lock-Up Bid") made or to be made by such Person or any
of such Persons Affiliates or Associates or any other Person with which
such Person is acting jointly or in concert, provided that:
(i) the terms of such agreement are reduced to writing and publicly
disclosed and a copy of such agreement is made available to the public
(including the Corporation) not later than the date of the Lock-Up Bid or,
if the Lock-Up Bid has been made prior to the date on which such agreement
is entered into, not later than the date of such agreement;
(ii) the agreement permits a Locked-Up Person to terminate its
obligation to deposit or tender Voting Shares to or not to withdraw such
Voting Shares from the Lock-Up Bid, and to terminate any obligation with
respect to the voting of such Voting Shares, in order to tender or deposit
the Voting Shares to another Take-over Bid or to support another transaction
where the price or value of the consideration per Voting Share offered under
such other Take-over Bid or transaction is:
(A) greater than the price or value of the consideration per
Voting Share at which the Locked-Up Person has agreed to deposit or tender
Voting Shares to the Lock-Up Bid; or
(B) equal to or greater than a minimum price or value specified in
the agreement, which specified minimum is not more than 7% higher than the
price or value of the consideration per Voting Share at which the Locked-Up
Person has agreed to deposit or tender Voting Shares to the Lock-Up Bid; and
(iii) no "break-up" fees, "top-up" fees, penalties, expenses or other
amounts that exceed in aggregate the greater of:
(A) 2.5% of the price or value of the consideration payable under
the Lock-Up Bid to a Locked-Up Person; and
(B) 50% of the amount by which the price or value of the
consideration received by a Locked-Up Person under another Take-over Bid or
transaction exceeds the price or value of the consideration that the
Locked-Up Person would have received under the Lock- Up Bid,
shall be payable by such Locked-Up Person if the Locked-Up Person fails to
deposit or tender Voting Shares to the Lock-Up Bid, withdraws Voting Shares
previously tendered thereto or supports another transaction;
(mm) "PERSON" shall include an individual, body corporate, firm,
partnership, limited partnership, limited liability company, syndicate or
other form of unincorporated association, trust, trustee, executor,
administrator, legal personal representative, group, unincorporated
organization, a government and its agencies or instrumentalities, any
entity or group whether or not having legal personality;
(nn) "PRO RATA ACQUISITION" shall mean an acquisition by a Person of
Voting Shares pursuant to:
(i) a Dividend Reinvestment Acquisition;
(ii) a stock dividend, stock split or other event in respect of
securities of the Corporation of one or more particular classes or series
pursuant to which such Person becomes the Beneficial Owner of Voting Shares
on the same pro rata basis as all other holders of securities of the
particular class, classes or series;
(iii) the acquisition or the exercise by the Person of rights to
purchase Voting Shares issued by the Corporation to all holders of
securities of the Corporation of one or more particular classes or series
pursuant to a rights offering or pursuant to a prospectus, provided that
such rights are acquired directly from the Corporation and not from any other
Person; or
(iv) a distribution of Voting Shares, or securities convertible into
or exchangeable for Voting Shares (and the conversion or exchange of such
convertible or exchangeable securities), made pursuant to a prospectus or by
way of a private placement by the Corporation provided that the Person does
not thereby acquire beneficial ownership of a greater percentage of such
Voting Shares or securities convertible into or exchangeable for Voting
Shares so offered than the Person's percentage of Voting Shares beneficially
owned immediately prior to such acquisition ;
(oo) "RECORD TIME" has the meaning set forth in the recitals hereto;
(pp) "REORGANIZATION" shall mean the merger of GR Merger Corp. with and
into Gold Reserve Corporation, pursuant to which the Company will become the
parent of Gold Reserve Corporation;
(qq) "RIGHT" means a right to purchase a Class A Share of the
Corporation, upon the terms and subject to the conditions set forth in this
Agreement;
(rr) "RIGHTS CERTIFICATE" means the certificates representing the Rights
after the Separation Time, which shall be substantially in the form attached
hereto as Attachment 1;
(ss) "RIGHTS REGISTER" shall have the meaning ascribed thereto in
Subsection 2.6(a);
(tt) "SECURITIES ACT (ONTARIO)" shall mean the Securities Act, R.S.O.
1990, c.S.5, as amended, and the regulations thereunder, and any comparable
or successor laws or regulations thereto;
(uu) "SEPARATION TIME" shall mean, subject to Sub-section 5.1(d), the
later of
(i) the close of business on the tenth Trading Day after the
earlier of:
(A) the Stock Acquisition Date; and
(B) the date of the commencement of or first public announcement
of the intent of any Person (other than the Corporation or any Subsidiary of
the Corporation) to commence a Take-over Bid (other than a Permitted Bid or
a Competing Permitted Bid), or such later time as may be determined by the
Board of Directors, provided that, if any Take-over Bid referred to in
clause (B) above expires, is not made, is canceled, terminated or otherwise
withdrawn prior to the Separation Time, such Take-over Bid shall be deemed,
for the purposes of this definition, never to have been commenced, made or
announced; and
(ii) the Record Time;
(vv) "SHARE CAPITAL INCREASE APPROVAL" shall have the meaning ascribed
thereto in Section 5.15;
(ww) "STOCK ACQUISITION DATE" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 101 of the Securities Act
(Ontario) or Section 13(d) of the 1934 Exchange Act) by the Corporation or
an Acquiring Person of facts indicating that a Person has become an
Acquiring Person;
(xx) "SUBSIDIARY": a corporation shall be deemed to be a Subsidiary of
another corporation if:
(i) it is controlled by:
(ii) that other; or
(iii) that other and one or more corporations each of which is
controlled by that other; or (iv) two or more corporations each of which is
controlled by that other; or (v) it is a Subsidiary of a corporation that is
that other's Subsidiary;
(yy) "TAKE-OVER BID" shall mean an Offer to Acquire Voting Shares or
other securities of the Corporation, if, assuming that the Voting Shares or
other securities subject to the Offer to Acquire are acquired at the date of
such Offer to Acquire by the Person making such Offer to Acquire, the Voting
Shares Beneficially Owned by the Person making the Offer to Acquire would
constitute in the aggregate 20 per cent or more of the outstanding Voting
Shares at the date of the Offer to Acquire;
(zz) "TRADING DAY", when used with respect to any securities, shall mean
a day on which the principal Canadian stock exchange on which such
securities are listed or admitted to trading is open for the transaction of
business or, if the securities are not listed or admitted to trading on any
Canadian stock exchange, a Business Day;
(aaa) "U.S.-CANADIAN EXCHANGE RATE" means, on any date: (i) if on such
date the Bank of Canada sets an average noon spot rate of exchange for the
conversion of one United States dollar into Canadian dollars, such rate; and
(ii) in any other case, the rate for such date for the conversion of one
United States dollar into Canadian dollars calculated in such manner as may
be determined by the Board of Directors from time to time acting in good
faith;
(bbb) "U.S. DOLLAR EQUIVALENT" of any amount which is expressed in Canadian
dollars means, on any date, the United States dollar equivalent of such
amount determined by multiplying such amount by the Canadian-U.S. Exchange
Rate in effect on such date;
(ccc) "VOTING SHARE REDUCTION" shall mean an acquisition or redemption
by the Corporation of Voting Shares which, by reducing the number of Voting
Shares outstanding, increases the percentage of outstanding Voting Shares
Beneficially Owned by any person to 20 per cent or more of the Voting
Shares then outstanding; and
(ddd) "VOTING SHARES" shall mean the Common Shares of the Corporation and
any other shares in the capital of the Corporation entitled to vote
generally in the election of all directors.
(eee) "YUKON BUSINESS CORPORATIONS ACT" means the Yukon Business
Corporations Act (Yukon), as amended, and the regulations made thereunder
and any comparable or successor laws or regulations thereto.
1.2 Currency
All sums of money which are referred to in this Agreement are expressed in
lawful money of Canada, unless otherwise specified.
1.3 Headings
The division of this Agreement into Articles, Sections, Subsections,
Clauses, Paragraphs, Subparagraphs or other portions hereof and the
insertion of headings, subheadings and a table of contents are for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
1.4 Calculation of Number and Percentage of Beneficial Ownership of
Outstanding Voting Shares
(a) For purposes of this Agreement, in determining the percentage of
outstanding Voting Shares of the Corporation with respect to which a Person
is or is deemed to be the Beneficial Owner, all unissued Voting Shares of
the Corporation of which such person is deemed to be the Beneficial Owner
shall be deemed to be outstanding.
(b) For purposes of this Agreement, the percentage of Voting Shares
Beneficially Owned by any Person shall be and be deemed to be the product
(expressed as a percentage) determined by the formula:
100 x A/B
where:
A= the number of votes for the election of all directors
generally attaching to the Voting Shares Beneficially Owned by such Person;
and
B= the number of votes for the election of all directors
generally attaching to all outstanding Voting Shares.
The percentage of outstanding Voting Shares represented by any particular
group of Voting Shares acquired or held by any Person shall be determined in
like manner mutatis mutandis.
1.5 Acting Jointly or in Concert
For purposes of this Agreement a Person is acting jointly or in concert
with another Person, if such Person has any agreement, commitment,
arrangement or understanding, whether formal or informal and whether or not
in writing, with such other Person for the purpose of acquiring or Offering
to Acquire any Voting Shares (other than (x) customary agreements with and
between underwriters and/or banking group members and/or selling group
members with respect to a distribution of securities by the Corporation,
(y) pledges of securities in the ordinary course of business, and (z)
Permitted Lock-Up Agreements).
1.6 Generally Accepted Accounting Principles
Wherever in this Agreement reference is made to generally accepted
accounting principles, such reference shall be deemed to be generally
accepted accounting principles followed in Canada applicable on a
consolidated basis (unless otherwise specifically provided herein to be
applicable on an unconsolidated basis) as at the date on which a calculation
is made or required to be made in accordance with generally accepted
accounting principles. Where the character or amount of any asset or
liability or item of revenue or expense is required to be determined, or any
consolidation or other accounting computation is required to be made for the
purpose of this Agreement or any document, such determination or
calculation shall, to the extent applicable and except as otherwise
specified herein or as otherwise agreed in writing by the parties, be made
in accordance with generally accepted accounting principles applied on a
consistent basis.
1.7 Successor Rights Agent and Restatement
Effective March 16, 2001, Computershare was appointed as the successor to
Montreal Trust Company of Canada as Rights Agent under this Agreement. All
references to the "Rights Agent" in this Agreement for any time prior to the
effective time of such appointment shall be taken to be references to
Montreal Trust and all such references for any time after the effective
time of such appointment shall be taken to be references to Computershare.
This Agreement has been amended and restated effective March 14, 2003.
Notwithstanding such amendment and restatement, this Agreement shall be
dated as of October 5, 1998 and shall be considered to speak as of October
5, 1998 except where otherwise specifically provided or where the context
otherwise requires.
ARTICLE 2
THE RIGHTS
2.1 Legend on Share Certificates
Certificates representing Common Shares which are issued after the Record
Time but prior to the earlier of the Separation Time and the Expiration
Time, shall also evidence one Right for each Common Share represented
thereby until the earlier of the Separation Time or the Expiration Time and
the Corporation shall cause such certificates to have impressed thereon,
printed thereon, written thereon or otherwise affixed to them the following
legend:
Until the close of business on the earlier of the Separation Time or the
Expiration Time (as both terms are defined in the Shareholder Rights
Agreement referred to below), this certificate also evidences rights of the
holder described in a Shareholder Rights Plan Agreement dated as of October
5, 1998 (the "Shareholder Rights Agreement") between Gold Reserve Inc. (the
"Corporation") and Computershare Trust Company of Canada, as supplemented
and amended, the terms of which are incorporated herein by reference and a
copy of which is on file at the principal executive offices of the
Corporation. Under certain circumstances set out in the Shareholder Rights
Agreement, the rights may be terminated, may expire, may become null and void
(if, in certain cases they are "Beneficially Owned" by an "Acquiring Person"
as such terms are defined in the Shareholder Rights Agreement, whether
currently held by or on behalf of such Person or a subsequent holder) or may
be evidenced by separate certificates and no longer evidenced by this
certificate. The Corporation will mail or arrange for the mailing of a copy
of the Shareholder Rights Agreement to the holder of this certificate without
charge as soon as practicable after the receipt of a written request
therefor.
Provided that the Record Time occurs prior to the Separation Time,
certificates representing Common Shares that are issued and outstanding at
the Record Time shall also evidence one Right for each Common Share
represented thereby notwithstanding the absence of the foregoing legend,
until the close of business on the earlier of the Separation Time and the
Expiration Time.
2.2 Initial Exercise Price; Exercise of Rights; Detachment of Rights
(a) Subject to adjustment as herein set forth, each Right will entitle
the holder thereof, from and after the Separation Time and prior to the
Expiration Time, to purchase one Class A Share for the Exercise Price or the
U.S. Dollar Equivalent as at the Business Day immediately preceding the day
of exercise of the Right (and the Exercise Price and number of Class A
Shares are subject to adjustment as set forth below).
(b) Until the Separation Time,
(i) the Rights shall not be exercisable and no Right may be
exercised; and
(ii) provided the Record Time occurs prior to the Separation
Time, each Right, when issued, will be evidenced by the certificate for the
associated Common Share of the Corporation registered in the name of the
holder thereof (which certificate shall also be deemed to represent a Rights
Certificate) and will be transferable only together with, and will be
transferred by a transfer of, such associated Common Share of the
Corporation.
(c) From and after the Separation Time and prior to the Expiration Time:
(i) the Rights shall be exercisable; and
(ii) the registration and transfer of Rights shall be separate from
and independent of Common Shares. Promptly following the Separation Time,
the Corporation will prepare and the Rights Agent will mail to each holder
of record of Common Shares as of the Separation Time (other than an Acquiring
Person and, in respect of any Rights Beneficially Owned by such Acquiring
Person which are not held of record by such Acquiring Person, the holder of
record of such Rights (a "Nominee")), at such holder's address as shown by
the records of the Corporation (the Corporation hereby agreeing to furnish
copies of such records to the Rights Agent for this purpose):
(x) a Rights Certificate appropriately completed,
representing the number of Rights held by such holder at the Separation Time
and having such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Corporation may deem
appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any law, rule or regulation
or with any rule or regulation of any self-regulatory organization, stock
exchange or quotation system on which the Rights may from time to time be
listed or traded, or to conform to usage; and
(y) a disclosure statement describing the Rights, provided
that a Nominee shall be sent the materials provided for in (x) and (y) only
in respect of all Common Shares held of record by it which are not
Beneficially Owned by an Acquiring Person.
(d) Rights may be exercised, in whole or in part, on any Business Day
after the Separation Time and prior to the Expiration Time by submitting to
the Rights Agent at its office in Toronto, Ontario or any other office of
the Rights Agent (or any Co-Rights Agent) in cities designated from time to
time for that purpose by the Corporation:
(i) the Rights Certificate evidencing such Rights;
(ii) an election to exercise such Rights (an "Election to
Exercise") substantially in the form attached to the Rights Certificate
appropriately completed and executed by the holder or his executors or
administrators or other personal representatives or his or their legal
attorney duly appointed by an instrument in writing in form and executed in
a manner satisfactory to the Rights Agent; and
(iii) payment by certified cheque, banker's draft or money order
payable to the order of the Corporation, of a sum equal to the Exercise
Price multiplied by the number of Rights being exercised and a sum
sufficient to cover any transfer tax or charge which may be payable in
respect of any transfer involved in the transfer or delivery of Rights
Certificates or the issuance or delivery of certificates for Class A Shares
in a name other than that of the holder of the Rights being exercised.
(e) Upon receipt of a Rights Certificate, together with a completed
Election to Exercise executed in accordance with Clause 2.2(d)(ii), which
does not indicate that such Right is null and void as provided by Subsection
3.1(b), and payment as set forth in Clause 2.2(d)(iii), the Rights Agent
(unless otherwise instructed by the Corporation in the event that the
Corporation is of the opinion that the Rights cannot be exercised in
accordance with this Agreement) will thereupon promptly:
(i) requisition from the transfer agent certificates representing
the number of such Class A Shares to be purchased (the Corporation hereby
irrevocably authorizing its transfer agent to comply with all such
requisitions);
(ii) when appropriate, requisition from the Corporation the amount
of cash to be paid in lieu of issuing fractional Class A Shares;
(iii) after receipt of the certificates referred to in Clause
2.2(e)(i), deliver the same to or upon the order of the registered holder of
such Rights Certificates, registered in such name or names as may be
designated by such holder;
(iv) when appropriate, after receipt, deliver the cash referred to in
Clause 2.2(e)(ii) to or to the order of the registered holder of such Rights
Certificate; and
(v) remit to the Corporation all payments received on the exercise
of Rights.
(f) In case the holder of any Rights shall exercise less than all the
Rights evidenced by such holder's Rights Certificate, a new Rights
Certificate evidencing the Rights remaining unexercised (subject to the
provisions of Subsection 5.5(a)) will be issued by the Rights Agent to such
holder or to such holder's duly authorized assigns.
(g) The Corporation covenants and agrees that it will:
(i) take all such action as may be necessary and within its power
to ensure that all Class A Shares delivered upon exercise of Rights shall,
at the time of delivery of the certificates for such Class A Shares (subject
to payment of the Exercise Price), be duly and validly authorized, executed,
issued and delivered as fully paid and non-assessable;
(ii) take all such action as may be necessary and within its power
to comply with the requirements of the YUKON BUSINESS CORPORATIONS ACT,
the SECURITIES ACT (ONTARIO) and the securities laws or comparable
legislation of each of the provinces of Canada, the 1993 SECURITIES ACT and
the 1934 EXCHANGE ACT and any other applicable law, rule or regulation, in
connection with the issuance and delivery of the Rights Certificates and the
issuance of any Class A Shares upon exercise of Rights;
(iii) use reasonable efforts to cause all Class A Shares issued upon
exercise of Rights to be listed on the stock exchanges and markets on which
such Class A Shares were traded immediately prior to the Stock Acquisition
Date;
(iv) pay when due and payable, if applicable, any and all federal,
provincial and municipal transfer taxes and charges (not including any
income or capital taxes of the holder or exercising holder or any liability
of the Corporation to withhold tax) which may be payable in respect of the
original issuance or delivery of the Rights Certificates, or certificates for
Class A Shares to be issued upon exercise of any Rights, provided that the
Corporation shall not be required to pay any transfer tax or charge which
may be payable in respect of any transfer involved in the transfer or
delivery of Rights Certificates or the issuance or delivery of certificates
for Class A Shares in a name other than that of the holder of the Rights
being transferred or exercised; and
(v) after the Separation Time, except as permitted by Sections 5.1
and 5.4, not take (or permit any Subsidiary to take) any action if at the
time such action is taken it is reasonably foreseeable that such action will
diminish substantially or otherwise eliminate the benefits intended to be
afforded by the Rights.
2.3 Adjustments to Exercise Price; Number of Rights
The Exercise Price, the number and kind of securities subject to purchase
upon exercise of each Right and the number of Rights outstanding are subject
to adjustment from time to time as provided in this Section 2.3.
(a) In the event the Corporation shall at any time after the Agreement
Date:
(i) declare or pay a dividend on Common Shares payable in Common
Shares (or other securities exchangeable for or convertible into or giving a
right to acquire Common Shares or other securities of the Corporation) other
than pursuant to any Dividend Reinvestment Plan;
(ii) subdivide or change the then outstanding Common Shares into a
greater number of Common Shares;
(iii) consolidate or change the then outstanding Common Shares into a
smaller number of Common Shares; or
(iv) issue any Common Shares (or other securities exchangeable
for or convertible into or giving a right to acquire Common Shares or other
securities of the Corporation) in respect of, in lieu of or in exchange for
existing Common Shares except as otherwise provided in this Section 2.3, the
Exercise Price and the number of Rights outstanding, or, if the payment or
effective date therefor shall occur after the Separation Time, the securities
purchasable upon exercise of Rights shall be adjusted as of the payment or
effective date in the manner set forth below. If the Exercise Price and
number of Rights outstanding are to be adjusted:
(x) the Exercise Price in effect after such adjustment will be equal
to the Exercise Price in effect immediately prior to such adjustment divided
by the number of Common Shares (or other capital stock) (the "Expansion
Factor") that a holder of one Common Share immediately prior to such
dividend, subdivision, change, consolidation or issuance would hold
thereafter as a result thereof; and
(y) each Right held prior to such adjustment will become that number
of Rights equal to the Expansion Factor,
and the adjusted number of Rights will be deemed to be distributed among
the Common Shares with respect to which the original Rights were associated
(if they remain outstanding) and the shares issued in respect of such
dividend, subdivision, change, consolidation or issuance, so that each such
Common Share (or other capital stock) will have exactly one Right associated
with it.
For greater certainty, if the securities purchasable upon exercise of Rights
are to be adjusted, the securities purchasable upon exercise of each Right
after such adjustment will be the securities that a holder of the securities
purchasable upon exercise of one Right immediately prior to such dividend,
subdivision, change, consolidation or issuance would hold thereafter as a
result of such dividend, subdivision, change, consolidation or issuance.
If, after the Record Time and prior to the Expiration Time, the Corporation
shall issue any shares of capital stock other than Common Shares in a
transaction of a type described in Clause 2.3(a)(i) or (iv), shares of such
capital stock shall be treated herein as nearly equivalent to Common Shares
as may be practicable and appropriate under the circumstances and the
Corporation and the Rights Agent agree to amend this Agreement in order to
effect such treatment. In the event the Corporation shall at any time after
the Record Time and prior to the Separation Time issue any Common Shares
otherwise than in a transaction referred to in this Subsection 2.3(a), each
such Common Share so issued shall automatically have one new Right
associated with it, which Right shall be evidenced by the certificate
representing such associated Common Share.
(b) In the event the Corporation shall at any time after the Record Time
and prior to the Separation Time fix a record date for the issuance of
rights, options or warrants to all holders of Common Shares entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Common Shares (or securities convertible into or
exchangeable for or carrying a right to purchase Common Shares) at a price
per Common Share (or, if a security convertible into or exchangeable for or
carrying a right to purchase or subscribe for Common Shares, having a
conversion, exchange or exercise price, including the price required to be
paid to purchase such convertible or exchangeable security or right per
share) less than the Market Price per Common Share on such record date, the
Exercise Price to be in effect after such record date shall be determined
by multiplying the Exercise Price in effect immediately prior to such record
date by a fraction:
(i) the numerator of which shall be the number of Common Shares
outstanding on such record date plus the number of Common Shares that the
aggregate offering price of the total number of Common Shares so to be
offered (and/or the aggregate initial conversion, exchange or exercise
price of the convertible or exchangeable securities or rights so to be
offered, including the price required to be paid to purchase such
convertible or exchangeable securities or rights) would purchase at such
Market Price per Common Share; and
(ii) the denominator of which shall be the number of Common Shares
outstanding on such record date plus the number of additional Common Shares
to be offered for subscription or purchase (or into which the convertible or
exchangeable securities or rights so to be offered are initially
convertible, exchangeable or exercisable).
In case such subscription price may be paid by delivery of consideration,
part or all of which may be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board of
Directors, whose determination shall be described in a statement filed with
the Rights Agent and shall be binding on the Rights Agent and the holders
of Rights. Such adjustment shall be made successively whenever such a
record date is fixed, and in the event that such rights, options or warrants
are not so issued, or if issued, are not exercised prior to the expiration
thereof, the Exercise Price shall be readjusted to the Exercise Price which
would then be in effect if such record date had not been fixed, or to the
Exercise Price which would be in effect based upon the number of Common
Shares (or securities convertible into, or exchangeable or exercisable for
Common Shares) actually issued upon the exercise of such rights, options or
warrants, as the case may be.
For purposes of this Agreement, the granting of the right to purchase
Common Shares from treasury pursuant to the Dividend Reinvestment Plan or
any employee benefit, stock option or similar plans shall be deemed not to
constitute an issue of rights, options or warrants by the Corporation;
provided, however, that, in all such cases, the right to purchase Common
Shares is at a price per share of not less than 90 per cent of the current
market price per share (determined as provided in such plans) of the Common
Shares.
(c) In the event the Corporation shall at any time after the Record Time
and prior to the Separation Time fix a record date for the making of a
distribution to all holders of Common Shares (including any such
distribution made in connection with a merger or amalgamation) of evidences
of indebtedness, cash (other than an annual cash dividend or a dividend
paid in Common Shares, but including any dividend payable in securities
other than Common Shares), assets or rights, options or warrants (excluding
those referred to in Subsection 2.3(b)) to purchase Common Shares at a price
per Common Share that is less than the Market Price per Common Share on such
record date, the Exercise Price to be in effect after such record date
shall be determined by multiplying the Exercise Price in effect immediately
prior to such record date by a fraction:
(i) the numerator of which shall be the Market Price per Common
Share on such record date, less the fair market value (the determination of
which shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent and the holders of Rights), on a per
share basis, of the portion of the cash, assets, evidences of indebtedness,
rights, options or warrants so to be distributed; and
(ii) the denominator of which shall be such Market Price per Common
Share. Such adjustments shall be made successively whenever such a record
date is fixed, and in the event that such a distribution is not so made,
the Exercise Price shall be adjusted to be the Exercise Price which would
have been in effect if such record date had not been fixed.
(d) Notwithstanding anything herein to the contrary, no adjustment in
the Exercise Price shall be required unless such adjustment would require
an increase or decrease of at least one per cent in the Exercise Price;
provided, however, that any adjustments which by reason of this Subsection
2.3(d) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under Section 2.3
shall be made to the nearest cent or to the nearest ten-thousandth of a
share. Notwithstanding the first sentence of this Subsection 2.3(d), any
adjustment required by Section 2.3 shall be made no later than the earlier
of:
(i) three years from the date of the transaction which gives rise
to such adjustment; or
(ii) the Expiration Time.
(e) In the event the Corporation shall at any time after the Record Time
and prior to the Separation Time issue any shares of capital stock (other
than Common Shares), or rights, options or warrants to subscribe for or
purchase any such capital stock, or securities convertible into or
exchangeable for any such capital stock, in a transaction referred to in
Clause 2.3(a)(i) or (iv), if the Board of Directors acting in good faith
determines that the adjustments contemplated by Subsections 2.3(a), (b) and
(c) in connection with such transaction will not appropriately protect the
interests of the holders of Rights, the Board of Directors may determine
what other adjustments to the Exercise Price, number of Rights and/or
securities purchasable upon exercise of Rights would be appropriate and,
notwithstanding Subsections 2.3(a), (b) and (c), such adjustments, rather
than the adjustments contemplated by Subsections 2.3(a), (b) and (c), shall
be made. Subject to Subsection 5.4(b) and (c), the Corporation and the
Rights Agent shall have authority without the approval of the holders of
the Common Shares or the holders of Rights to amend this Agreement as
appropriate to provide for such adjustments.
(f) Each Right originally issued by the Corporation subsequent to any
adjustment made to the Exercise Price hereunder shall evidence the right to
purchase, at the adjusted Exercise Price, the number of Class A Shares
purchasable from time to time hereunder upon exercise of a Right immediately
prior to such issue, all subject to further adjustment as provided herein.
(g) Irrespective of any adjustment or change in the Exercise Price or the
number of Class A Shares issuable upon the exercise of the Rights, the
Rights Certificates theretofore and thereafter issued may continue to
express the Exercise Price per Class A Share and the number of Class A
Shares which were expressed in the initial Rights Certificates issued
hereunder.
(h) In any case in which this Section 2.3 shall require that an
adjustment in the Exercise Price be made effective as of a record date for
a specified event, the Corporation may elect to defer until the occurrence
of such event the issuance to the holder of any Right exercised after such
record date the number of Class A Shares and other securities of the
Corporation, if any, issuable upon such exercise over and above the number
of Class A Shares and other securities of the Corporation, if any, issuable
upon such exercise on the basis of the Exercise Price in effect prior to
such adjustment; provided, however, that the Corporation shall deliver to
such holder an appropriate instrument evidencing such holder's right to
receive such additional shares (fractional or otherwise) or other securities
upon the occurrence of the event requiring such adjustment.
(i) Notwithstanding anything contained in this Section 2.3 to the
contrary, the Corporation shall be entitled to make such reductions in the
Exercise Price, in addition to those adjustments expressly required by
this Section 2.3, as and to the extent that in their good faith judgment the
Board of Directors shall determine to be advisable, in order that any:
(i) consolidation or subdivision of Common Shares;
(ii) issuance (wholly or in part for cash) of Common Shares
or securities that by their terms are convertible into or exchangeable for
Common Shares;
(iii) stock dividends; or
(iv) issuance of rights, options or warrants referred to in
this Section 2.3, hereafter made by the Corporation to holders of its Common
Shares, subject to applicable taxation laws, shall not be taxable to such
shareholders or shall subject such shareholders to a lesser amount of tax.
(j) The Rights Agent shall be entitled to rely on any certificate
received from the Corporation stating that any of the events giving rise to
an adjustment required by this section 2.3 has occurred.
2.4 Date on Which Exercise Is Effective
Each Person in whose name any certificate for Class A Shares or other
securities, if applicable, is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Class A
Shares or other securities, if applicable, represented thereon, and such
certificate shall be dated the date upon which the Rights Certificate
evidencing such Rights was duly surrendered in accordance with Subsection
2.2(d) (together with a duly completed Election to Exercise) and payment of
the Exercise Price for such Rights (and any applicable transfer taxes and
other governmental charges payable by the exercising holder hereunder) was
made; provided, however, that if the date of such surrender and payment is
a date upon which the Class A Share transfer books of the Corporation are
closed, such Person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding Business
Day on which the Class A Share transfer books of the Corporation are open.
2.5 Execution, Authentication, Delivery and Dating of Rights
Certificates
(a) The Rights Certificates shall be executed on behalf of the
Corporation by its Chairman of the Board, President or any Vice-President
and by its Corporate Secretary or any Assistant Secretary under the
corporate seal of the Corporation reproduced thereon. The signature of any
of these officers on the Rights Certificates may be manual or facsimile.
Rights Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Corporation shall
bind the Corporation, notwithstanding that such individuals or any of them
have ceased to hold such offices either before or after the
countersignature and delivery of such Rights Certificates.
(b) Promptly after the Corporation learns of the Separation Time, the
Corporation will notify the Rights Agent of such Separation Time and will
deliver Rights Certificates executed by the Corporation to the Rights Agent
for countersignature, and the Rights Agent shall manually countersign (in a
manner satisfactory to the Corporation) and send such Rights Certificates to
the holders of the Rights pursuant to Subsection 2.2(c) hereof. No Rights
Certificate shall be valid for any purpose until countersigned by the Rights
Agent as aforesaid.
(c) Each Rights Certificate shall be dated the date of countersignature
thereof.
2.6 Registration, Transfer and Exchange
(a) The Corporation will cause to be kept a register (the "Rights
Register") in which, subject to such reasonable regulations as it may
prescribe, the Corporation will provide for the registration and transfer
of Rights. The Rights Agent is hereby appointed, effective from and after
the Separation Time, registrar for the Rights (the "Rights Registrar") for
the purpose of maintaining the Rights Register for the Corporation and
registering Rights and transfers of Rights as herein provided and the
Rights Agent hereby accepts such appointment. In the event that the Rights
Agent shall cease to be the Rights Registrar, the Rights Agent will have
the right to examine the Rights Register at all reasonable times. After the
Separation Time and prior to the Expiration Time, upon surrender for
registration of transfer or exchange of any Rights Certificate, and subject
to the provisions of Subsection 2.6(c), the Corporation will execute, and
the Rights Agent will manually countersign and deliver, in the name of the
holder or the designated transferee or transferees, as required pursuant to
the holder's instructions, one or more new Rights Certificates evidencing
the same aggregate number of Rights as did the Rights Certificates so
surrendered.
(b) All Rights issued upon any registration of transfer or exchange of
Rights Certificates shall be the valid obligations of the Corporation, and
such Rights shall be entitled to the same benefits under this Agreement as
the Rights surrendered upon such registration of transfer or exchange.
(c) Every Rights Certificate surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument
of transfer in form satisfactory to the Corporation or the Rights Agent, as
the case may be, duly executed by the holder thereof or such holder's
attorney duly authorized in writing. As a condition to the issuance of any
new Rights Certificate under this Section 2.6, the Corporation may require
the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses
(including the reasonable fees and expenses of the Rights Agent) connected
therewith.
2.7 Mutilated, Destroyed, Lost and Stolen Rights Certificates
(a) If any mutilated Rights Certificate is surrendered to the Rights
Agent prior to the Expiration Time, the Corporation shall execute and the
Rights Agent shall countersign and deliver in exchange therefor a new
Rights Certificate evidencing the same number of Rights as did the Rights
Certificate so surrendered.
(b) If there shall be delivered to the Corporation and the Rights Agent
prior to the Expiration Time:
(i) evidence to their reasonable satisfaction of the destruction,
loss or theft of any Rights Certificate; and
(ii) such security or indemnity as may be reasonably required by
them to save each of them and any of their agents harmless, then, in the
absence of notice to the Corporation or the Rights Agent that such Rights
Certificate has been acquired by a bona fide purchaser, the Corporation
shall execute and upon the Corporation's request the Rights Agent shall
countersign and deliver, in lieu of any such destroyed, lost or stolen
Rights Certificate, a new Rights Certificate evidencing the same number of
Rights as did the Rights Certificate so destroyed, lost or stolen.
(c) As a condition to the issuance of any new Rights Certificate under
this Section 2.7, the Corporation may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the reasonable
fees and expenses of the Rights Agent) connected therewith.
(d) Every new Rights Certificate issued pursuant to this Section 2.7 in
lieu of any destroyed, lost or stolen Rights Certificate shall evidence the
contractual obligation of the Corporation, whether or not the destroyed,
lost or stolen Rights Certificate shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Agreement equally
and proportionately with any and all other Rights duly issued hereunder.
2.8 Persons Deemed Owners of Rights
The Corporation, the Rights Agent and any agent of the Corporation or the
Rights Agent may deem and treat the Person in whose name a Rights
Certificate (or, prior to the Separation Time, the associated Common Share
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby for all purposes whatsoever. As used in this Agreement,
unless the context otherwise requires, the term "holder" of any Right shall
mean the registered holder of such Right (or, from and after the Record Time
and prior to the Separation Time, the registered holder of the associated
Common Share).
2.9 Delivery and Cancellation of Certificates All Rights Certificates
surrendered upon exercise or for redemption, registration of transfer or
exchange shall, if surrendered to any Person other than the Rights Agent, be
delivered to the Rights Agent and, in any case, shall be promptly canceled
by the Rights Agent. The Corporation may at any time deliver to the Rights
Agent for cancellation any Rights Certificates previously countersigned and
delivered hereunder which the Corporation may have acquired in any manner
whatsoever, and all Rights Certificates so delivered shall be promptly
canceled by the Rights Agent. No Rights Certificate shall be countersigned
in lieu of or in exchange for any Rights Certificates canceled as provided
in this Section 2.9, except as expressly permitted by this Agreement. The
Rights Agent shall, subject to applicable laws, destroy all canceled
Rights Certificates and deliver a certificate of destruction to the
Corporation.
2.10 Agreement of Rights Holders
Every holder of Rights, by accepting the same, consents and agrees with the
Corporation and the Rights Agent and with every other holder of Rights:
(a) to be bound by and subject to the provisions of this Agreement, as
amended from time to time in accordance with the terms hereof, in respect
of all Rights held;
(b) that, provided the Separation Time follows the Record Time, from and
after the Record Time and prior to the Separation Time, each Right will be
transferable only together with, and will be transferred by a transfer of,
the associated Common Share certificate representing such Right;
(c) that after the Separation Time, the Rights Certificates will be
transferable only on the Rights Register as provided herein;
(d) that prior to due presentment of a Rights Certificate (or, from and
after the Record Time and prior to the Separation Time, the associated
Common Share certificate) for registration of transfer, the Corporation,
the Rights Agent and any agent of the Corporation or the Rights Agent may
deem and treat the Person in whose name the Rights Certificate (or, prior
to the Separation Time, the associated Common Share certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on such Rights
Certificate or the associated Common Share certificate made by anyone other
than the Corporation or the Rights Agent) for all purposes whatsoever, and
neither the Corporation nor the Rights Agent shall be affected by any
notice to the contrary;
(e) that such holder of Rights has waived his right to receive any
fractional Rights or any fractional shares or other securities upon
exercise of a Right (except as provided herein); and
(f) that, without the approval of any holder of Rights or Voting Shares
and upon the sole authority of the Board of Directors, acting in good
faith, this Agreement may be supplemented or amended from time to time
pursuant to and as provided herein.
2.11 Rights Certificate Holder Not Deemed a Shareholder
No holder, as such, of any Rights or Rights Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose whatsoever the holder
of any Class A Share or any other share or security of the Corporation which
may at any time be issuable on the exercise of the Rights represented
thereby, nor shall anything contained herein or in any Rights Certificate
be construed or deemed or confer upon the holder of any Right or Rights
Certificate, as such, any right, title, benefit or privilege of a holder of
Class A Shares or any other shares or securities of the Corporation or any
right to vote at any meeting of shareholders of the Corporation whether for
the election of directors or otherwise or upon any matter submitted to
holders of Class A Shares or any other shares of the Corporation at any
meeting thereof, or to give or withhold consent to any action of the
Corporation, or to receive notice of any meeting or other action affecting
any holder of Class A Shares or any other shares of the Corporation except
as expressly provided herein, or to receive dividends, distributions or
subscription rights, or otherwise, until the Right or Rights evidenced by
Rights Certificates shall have been duly exercised in accordance with the
terms and provisions hereof.
ARTICLE 3
ADJUSTMENTS TO THE RIGHTS
3.1 Flip-in Event
(a) Subject to Subsection 3.1(b) and Section 5.1, in the event that prior
to the Expiration Time a Flip-in Event shall occur, each Right shall
constitute, effective at the close of business on the later of the
Effective Time or the tenth Trading Day after the Stock Acquisition Date,
the right to purchase from the Corporation, upon exercise thereof in
accordance with the terms hereof, that number of Class A Shares having an
aggregate Market Price on the date of consummation or occurrence of such
Flip-in Event equal to twice the Exercise Price for an amount in cash equal
to the Exercise Price (such right to be appropriately adjusted in a manner
analogous to the applicable adjustment provided for in Section 2.3 in the
event that after such consummation or occurrence, an event of a type
analogous to any of the events described in Section 2.3 shall have
occurred).
(b) Notwithstanding anything in this Agreement to the contrary, upon
the occurrence of any Flip-in Event, any Rights that are or were
Beneficially Owned on or after the earlier of the Separation Time or the
Stock Acquisition Date by:
(i) an Acquiring Person (or any Affiliate or Associate of an
Acquiring Person or any Person acting jointly or in concert with an
Acquiring Person or any Affiliate or Associate of an Acquiring Person); or
(ii) a transferee or other successor in title, directly or
indirectly, (a "Transferee") of Rights or Common Shares held by an
Acquiring Person (or any Affiliate or Associate of an Acquiring Person or
any Person acting jointly or in concert with an Acquiring Person or any
Affiliate or Associate of an Acquiring Person), where such Transferee
becomes a transferee concurrently with or subsequent to the Acquiring
Person becoming such in a transfer that the Board of Directors has
determined is part of a plan, arrangement or scheme of an Acquiring Person
(or any Affiliate or Associate of an Acquiring Person or any Person acting
jointly or in concert with an Acquiring Person or any Affiliate or
Associate of an Acquiring Person), that has the purpose or effect of
avoiding Clause 3.1(b)(i),
shall become null and void without any further action, and any holder of
such Rights (including any Transferee) shall thereafter have no right to
exercise such Rights under any provision of this Agreement and further
shall thereafter not have any other rights whatsoever with respect to such
Rights, whether under any provision of this Agreement or otherwise.
(c) From and after the Separation Time, the Corporation shall do all such
acts and things as shall be necessary and within its power to ensure
compliance with the provisions of this Section 3.1, including without
limitation, all such acts and things as may be required to satisfy the
requirements of the Yukon Business Corporations Act, the Securities Act
(Ontario) and the securities laws or comparable legislation of each of the
provinces of Canada and of the United States and each of the applicable
states thereof in respect of the issue of Class A Shares upon the exercise
of Rights in accordance with this Agreement.
(d) Any Rights Certificate that represents Rights Beneficially Owned by a
Person described in either Clause 3.1(b)(i) or (ii) or transferred to any
nominee of any such Person, and any Rights Certificate issued upon
transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain the following
legend:
The Rights represented by this Rights Certificate were issued to a
Person who was an Acquiring Person or an Affiliate or an Associate of an
Acquiring Person (as such terms are defined in the Shareholder Rights
Agreement) or a Person who was acting jointly or in concert with an
Acquiring Person or an Affiliate or Associate of an Acquiring Person. This
Rights Certificate and the Rights represented hereby are void or shall
become void in the circumstances specified in Subsection 3.1(b) of the
Shareholder Rights Agreement.
provided, however, that the Rights Agent shall not be under any
responsibility to ascertain the existence of facts that would require the
imposition of such legend but shall impose such legend only if instructed
to do so by the Corporation in writing or if a holder fails to certify upon
transfer or exchange in the space provided on the Rights Certificate that
such holder is not a Person described in such legend and provided further
that the fact that such legend does not appear on a certificate is not
determinative of whether any Rights represented thereby are void under
this Section.
ARTICLE 4
THE RIGHTS AGENT
4.1 General
(a) The Corporation hereby appoints the Rights Agent to act as agent for
the Corporation and the holders of the Rights in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Corporation may from time to time appoint such Co-Rights
Agents ("Co-Rights Agents") as it may deem necessary or desirable. In the
event the Corporation appoints one or more Co- Rights Agents, the respective
duties of the Rights Agent and Co-Rights Agents shall be as the Corporation
may determine. The Corporation agrees to pay all reasonable fees and expenses
of the Rights Agent in respect of the performance of its duties under this
Agreement. The Corporation also agrees to indemnify the Rights Agent for,
and to hold it harmless against, any loss, liability or expense, incurred
without negligence, bad faith or wilful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection with
the acceptance and administration of this Agreement, including the costs
and expenses of defending against any claim of liability, which right to
indemnification will survive the termination of this Agreement.
(b) The Rights Agent shall be protected and shall incur no liability for
or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any certificate
for Common Shares, Rights Certificate, certificate for other securities of
the Corporation, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the
proper Person or Persons.
(c) The Rights Agent shall not be responsible for any inaccuracies in
the shareholder information provided by the Corporation to the Rights Agent
pursuant to subsection 2.2(c).
4.2 Merger, Amalgamation or Consolidation or Change of Name of Rights
Agent
(a) Any corporation into which the Rights Agent may be merged or
amalgamated or with which it may be consolidated, or any corporation
resulting from any merger, amalgamation, statutory arrangement or
consolidation to which the Rights Agent is a party, or any corporation
succeeding to the shareholder or stockholder services business of the
Rights Agent, will be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on
the part of any of the parties hereto, provided that such corporation would
be eligible for appointment as a successor Rights Agent under the provisions
of Section 4.4 hereof. In case at the time such successor Rights Agent
succeeds to the agency created by this Agreement any of the Rights
Certificates have been countersigned but not delivered, any successor
Rights Agent may adopt the countersignature of the predecessor Rights Agent
and deliver such Rights Certificates so countersigned; and in case at that
time any of the Rights have not been countersigned, any successor Rights
Agent may countersign such Rights Certificates in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Rights Certificates will have the full force provided in
the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent is changed and at
such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case at
that time any of the Rights Certificates shall not have been countersigned,
the Rights Agent may countersign such Rights Certificates either in its
prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates
and in this Agreement.
4.3 Duties of Rights Agent
The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, all of which the
Corporation and the holders of certificates for Common Shares and the
holders of Rights Certificates, by their acceptance thereof, shall be
bound:
(a) the Rights Agent may consult with legal counsel (who may be legal
counsel for the Corporation), at the Corporation's expense, and the opinion
of such counsel will be full and complete authorization and protection to
the Rights Agent as to any action taken or omitted by it in good faith and
in accordance with such opinion;
(b) whenever in the performance of its duties under this Agreement, the
Rights Agent deems it necessary or desirable that any fact or matter be
proved or established by the Corporation prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by a Person believed by the
Rights Agent to be the Chairman of the Board, President, any Vice- President,
Treasurer, Corporate Secretary or any Assistant Secretary of the Corporation
and delivered to the Rights Agent; and such certificate will be full
authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate;
(c) the Rights Agent will be liable hereunder for its own negligence, bad
faith or wilful misconduct;
(d) the Rights Agent will not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the
certificates for Common Shares, or the Rights Certificates (except its
countersignature thereof) or be required to verify the same, but all such
statements and recitals are and will be deemed to have been made by the
Corporation only;
(e) the Rights Agent will not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except
the due authorization, execution and delivery hereof by the Rights Agent) or
in respect of the validity or execution of any certificate for a Common Share
or Rights Certificate (except its countersignature thereof); nor will it be
responsible for any breach by the Corporation of any covenant or condition
contained in this Agreement or in any Rights Certificate; nor will it be
responsible for any change in the exercisability of the Rights (including
the Rights becoming void pursuant to Subsection 3.1(b) hereof) or any
adjustment required under the provisions of Section 2.3 hereof or
responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights after receipt of
the certificate contemplated by Section 2.3 describing any such
adjustment); nor will it by any act hereunder be deemed to make any
representation or warranty as to the authorization of any Class A Shares to
be issued pursuant to this Agreement or any Rights or as to whether any Class
A Shares will, when issued, be duly and validly authorized, executed,
issued and delivered and fully paid and non-assessable;
(f) the Corporation agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably
be required by the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement;
(g) the Rights Agent is hereby authorized and directed to accept
instructions in writing with respect to the performance of its duties
hereunder from any individual believed by the Rights Agent to be the
Chairman of the Board, President, any Vice-President, Treasurer, Corporate
Secretary or any Assistant Secretary of the Corporation, and to apply to
such individuals for advice or instructions in connection with its duties,
and it shall not be liable for any action taken or suffered by it in good
faith in accordance with instructions of any such individual;
(h) the Rights Agent and any shareholder or stockholder, director,
officer or employee of the Rights Agent may buy, sell or deal in Common
Shares, Rights or other securities of the Corporation or become pecuniarily
interested in any transaction in which the Corporation may be interested, or
contract with or lend money to the Corporation or otherwise act as fully and
freely as though it were not Rights Agent under this Agreement. Nothing
herein shall preclude the Rights Agent from acting in any other capacity
for the Corporation or for any other legal entity; and
(i) the Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent will not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Corporation resulting from
any such act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
4.4 Change of Rights Agent
The Rights Agent may resign and be discharged from its duties under this
Agreement upon 90 days' notice (or such lesser notice as is acceptable to
the Corporation) in writing mailed to the Corporation and to each transfer
agent of Common Shares by registered or certified mail. The Corporation may
remove the Rights Agent upon 30 days' notice in writing, mailed to the
Rights Agent and to each transfer agent of the Common Shares by registered
or certified mail. If the Rights Agent should resign or be removed or
otherwise become incapable of acting, the Corporation will appoint a
successor to the Rights Agent. If the Corporation fails to make such
appointment within a period of 30 days after such removal or after it has
been notified in writing of such resignation or incapacity by the resigning
or incapacitated Rights Agent, then by prior written notice to the
Corporation the resigning Rights Agent or the holder of any Rights (which
holder shall, with such notice, submit such holder's Rights Certificate, if
any, for inspection by the Corporation), may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Corporation or by such a
court, shall be a corporation incorporated under the laws of Canada or a
province thereof authorized to carry on the business of a trust company in
the Province of Ontario. After appointment, the successor Rights Agent
will be vested with the same powers, rights, duties and responsibilities as
if it had been originally named as Rights Agent without further act or
deed; but the predecessor Rights Agent shall, subject to its right to first
require payment of all outstanding fees and other amounts owed to it
hereunder, deliver and transfer to the successor Rights Agent any property
at the time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Corporation will file
notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Common Shares, and mail a notice thereof in writing to
the holders of the Rights in accordance with Section 5.9. Failure to give any
notice provided for in this Section 4.4, however, or any defect therein,
shall not affect the legality or validly of the resignation or removal of
the Rights Agent or the appointment of any successor Rights Agent, as the
case may be.
ARTICLE 5
MISCELLANEOUS
5.1 Redemption and Waiver
(a) The Board of Directors may, with the prior consent of the holders of
Voting Shares or of the holders of Rights given in accordance with Section
5.1(i) or (j), as the case may be, at any time prior to the occurrence of a
Flip-in Event as to which the application of Section 3.1 has not been waived
pursuant to the provisions of this Section 5.1, elect to redeem all but not
less than all of the then outstanding Rights at a redemption price of
$0.00001 per Right appropriately adjusted in a manner analogous to the
applicable adjustment provided for in Section 2.3 in the event that an event
of the type analogous to any of the events described in Section 2.3 shall
have occurred (such redemption price being herein referred to as the
"Redemption Price"). The Board of Directors may, prior to the date of the
shareholders' meeting referred to in Section 5.15, elect to terminate this
Agreement. If the Board of Directors elects to terminate this Agreement
pursuant to this Section 5.1(a), this Agreement will thereupon terminate and
be void and of no further force or effect.
(b) The Board of Directors may, with the prior consent of the holders of
Voting Shares given in accordance with Section 5.1(i), determine, at any
time prior to the occurrence of a Flip-in Event as to which the application
of Section 3.1 has not been waived pursuant to this Section 5.1, if such
Flip-in Event would occur by reason of an acquisition of Voting Shares
otherwise than pursuant to a Take-over Bid made by means of a take-over bid
circular to all holders of record of Voting Shares and otherwise than in
the circumstances set forth in Section 5.1(d), to waive the application of
Section 3.1 to such Flip-in Event. In the event that the Board of Directors
proposes such a waiver, the Board of Directors shall extend the Separation
Time to a date subsequent to and not more than ten Business Days following
the meeting of shareholders called to approve such waiver.
(c) The Board of Directors may, until the occurrence of a Flip-in Event
upon prior written notice delivered to the Rights Agent, determine to waive
the application of Section 3.1 to such particular Flip-in Event provided
that the Flip-in Event would occur by reason of a Take-over Bid made by way
of take-over bid circular sent to all holders of Voting Shares (which for
greater certainty shall not include the circumstances described in
Subsection 5.1(d)); provided that if the Board of Directors waives the
application of Section 3.1 to a particular Flip-in Event pursuant to this
Subsection 5.1(c), the Board of Directors shall be deemed to have waived
the application of Section 3.1 to any other Flip-in Event occurring by
reason of any Take- over Bid which is made by means of a take-over bid
circular to all holders of Voting Shares (i) prior to the granting of such
waiver, (ii) thereafter and prior to the expiry of any Take-over Bid (as the
same may be extended from time to time) outstanding at the time of the
granting of such waiver or (iii) thereafter and prior to the expiry of any
Take-over Bid in respect of which a waiver is, or is deemed to have been,
granted under this Subsection 5.1(c).
(d) Notwithstanding the provisions of Subsections 5.1(b) and (c) hereof,
the Board of Directors may waive the application of Section 3.1 in respect
of the occurrence of any Flip-in Event, provided that both of the following
conditions are satisfied:
(i) the Board of Directors has determined within ten Trading Days
following a Stock Acquisition Date that a Person became an Acquiring Person
by inadvertence and without any intention to become, or knowledge that it
would become, an Acquiring Person under this Agreement, and
(ii) such Person has reduced its Beneficial Ownership of Voting
Shares such that at the time of granting the waiver pursuant to this
Subsection 5.1(d), such Person is no longer an Acquiring Person and in the
event that such a waiver is granted by the Board of Directors, such Stock
Acquisition Date and Flip- in Event shall be deemed not to have occurred and
the Separation Time shall be deemed not to have occurred as a result of
such Person having inadvertently become an Acquiring Person.
(e) The Board of Directors, shall, without further formality, be deemed
to have elected to redeem the Rights at the Redemption Price on the date
that a Person which has made a Permitted Bid, a Competing Permitted Bid, a
Take-Over Bid in respect of which the Board of Directors has waived, or is
deemed to have waived, pursuant to Section 5.1(c) the application of Section
3.1, takes up and pays for Voting Shares pursuant to the terms and
conditions of such Permitted Bid, Competing Permitted Bid or Take- over bid,
as the case may be.
(f) Where a Take-over Bid that is not a Permitted Bid Acquisition is
withdrawn or otherwise terminated after the Separation Time has occurred
and prior to the occurrence of a Flip-in Event, the Board of Directors may
elect to redeem all the outstanding Rights at the Redemption Price. Upon
the Rights being redeemed pursuant to this Subsection 5.1(f), all the
provisions of this Agreement shall continue to apply as if the Separation
Time had not occurred and Rights Certificates representing the number of
Rights held by each holder of record of Common Shares as of the Separation
Time had not been mailed to each such holder and for all purposes of this
Agreement the Separation Time shall be deemed not to have occurred.
(g) If the Board of Directors elects or is deemed to have elected to
redeem the Rights, and, in circumstances in which Subsection 5.1(a) is
applicable, such redemption is approved by the holders of Voting Shares or
the holders of Rights in accordance with Subsection 5.1(i) or (j), as the
case may be, the right to exercise the Rights, will thereupon, without
further action and without notice, terminate and the only right thereafter
of the holders of Rights shall be to receive the Redemption Price.
(h) Within 10 Business Days after the Board of Directors elects or is
deemed to elect, to redeem the Rights or if Subsection 5.1(a) is applicable
within 10 Business Days after the holders of Common Shares of the holders of
Rights have approved a redemption of Rights in accordance with Section 5.1(i)
or (j), as the case may be, the Corporation shall give notice of redemption
to the holders of the then outstanding Rights by mailing such notice to
each such holder at his last address as it appears upon the registry books
of the Rights Agent or, prior to the Separation Time, on the registry books
of the transfer agent for the Voting Shares. Any notice which is mailed in
the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method by
which the payment of the Redemption Price will be made. The Corporation may
not redeem, acquire or purchase for value any Rights at any time in any
manner other than specifically set forth in this Section 5.1 or in
connection with the purchase of Common Shares prior to the Separation Time.
(i) If a redemption of Rights pursuant to Section 5.1(a) or a waiver of a
Flip-in Event pursuant to Section 5.1(b) is proposed at any time prior to
the Separation Time, such redemption or waiver shall be submitted for
approval to the holders of Voting Shares. Such approval shall be deemed to
have been given if the redemption or waiver is approved by the affirmative
vote of a majority of the votes cast by Independent Shareholders
represented in person or by proxy at a meeting of such holders duly held in
accordance with applicable laws and the Corporation's by-laws.
(j) If a redemption of Rights pursuant to Section 5.1(a) is proposed at
any time after the Separation Time, such redemption shall be submitted for
approval to the holders of Rights. Such approval shall be deemed to have
been given if the redemption is approved by holders of Rights by a majority
of the votes cast by the holders of Rights represented in person or by proxy
at and entitled to vote at a meeting of such holders. For the purposes
hereof, each outstanding Right (other than Rights which are Beneficially
Owned by any Person referred to in clauses (i) to (v) inclusive of the
definition of Independent Shareholders) shall be entitled to one vote, and
the procedures for the calling, holding and conduct of the meeting shall be
those, as nearly as may be, which are provided in the Corporation's by-laws
and the Yukon Business Corporations Act with respect to meetings of
shareholders of the Corporation.
5.2 Expiration
No Person shall have any rights whatsoever pursuant to this Agreement or in
respect of any Right after the Expiration Time, except the Rights Agent as
specified in Subsection 4.1 of this Agreement.
5.3 Issuance of New Rights Certificates
Notwithstanding any of the provisions of this Agreement or the Rights to
the contrary, the Corporation may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by the Board
of Directors to reflect any adjustment or change in the number or kind or
class of securities purchasable upon exercise of Rights made in accordance
with the provisions of this Agreement.
5.4 Supplements and Amendments
(a) The Corporation may make amendments to this Agreement to correct any
clerical or typographical error or which are required to maintain the
validity of this Agreement as a result of any change in any applicable
legislation or regulations thereunder. The Corporation may, prior to the date
of the shareholders' meeting referred to in Section 5.15, supplement, amend,
vary, rescind or delete any of the provisions of this Agreement and the
Rights (whether or not such action would materially adversely affect the
interests of the holders of the Rights generally) without the approval of
any holders of Rights or Voting Shares in order to make any changes which
the Board of Directors acting in good faith may deem necessary or
desirable. Notwithstanding anything in this Section 5.4 to the contrary, no
such supplement or amendment shall be made to the provisions of Article 4
or to the rights, duties, obligations or indemnities of the Rights Agent,
except with the written concurrence of the Rights Agent to such supplement
or amendment.
(b) Subject to Subsection 5.4(a), the Corporation may, with the prior
consent of the holders of Voting Shares obtained as set forth below, at any
time before the Separation Time, supplement, amend, vary, rescind or delete
any of the provisions of this Agreement and the Rights (whether or not such
action would materially adversely affect the interests of the holders of
Rights generally). Such consent shall be deemed to have been given if the
action requiring such approval is authorized by the affirmative vote of a
majority of the votes cast by Independent Shareholders present or
represented at and entitled to be voted at a meeting of the holders of
Voting Shares duly called and held in compliance with applicable laws and
the articles and by- laws of the Corporation.
(c) Subject to subsection 5.4(a), the Corporation may, with the prior
consent of the holders of Rights, at any time on or after the Separation
Time, supplement, amend, vary, rescind or delete any of the provisions of
this Agreement and the Rights (whether or not such action would materially
adversely affect the interests of the holders of Rights generally), provided
that no such amendment, variation or deletion shall be made to the
provisions of Article 4 or to the rights, duties, obligations or
indemnities of the Rights Agent, except with the written concurrence of the
Rights Agent thereto.
(d) Any approval of the holders of Rights shall be deemed to have been
given if the action requiring such approval is authorized by the
affirmative votes of the holders of Rights present or represented at and
entitled to be voted at a meeting of the holders of Rights and representing
a majority of the votes cast in respect thereof. For the purposes hereof,
each outstanding Right (other than Rights which are void pursuant to the
provisions hereof) shall be entitled to one vote, and the procedures for the
calling, holding and conduct of the meeting shall be those, as nearly as may
be, which are provided in the Corporation's by- laws and the Yukon Business
Corporations Act with respect to meetings of shareholders of the
Corporation.
(e) Any amendments made by the Corporation to this Agreement pursuant
to Subsection 5.4(a) which are required to maintain the validity of this
Agreement as a result of any change in any applicable legislation or
regulation thereunder shall:
(i) if made before the Separation Time, be submitted to the
shareholders of the Corporation at the next meeting of shareholders and the
shareholders may, by the majority referred to in Subsection 5.4(b), confirm
or reject such amendment;
(ii) if made after the Separation Time, be submitted to the holders
of Rights at a meeting to be called for on a date not later than
immediately following the next meeting of shareholders of the Corporation
and the holders of Rights may, by resolution passed by the majority referred
to in Subsection 5.4(d), confirm or reject such amendment.
Any such amendment shall be effective from the date of the resolution of the
Board of Directors adopting such amendment, until it is confirmed or
rejected or until it ceases to be effective (as described in the next
sentence) and, where such amendment is confirmed, it continues in effect in
the form so confirmed. If such amendment is rejected by the shareholders or
the holders of Rights or is not submitted to the shareholders or holders of
Rights as required, then such amendment shall cease to be effective from and
after the termination of the meeting (or any adjournment of such meeting) at
which it was rejected or to which it should have been but was not submitted
or from and after the date of the meeting of holders of Rights that should
have been but was not held, and no subsequent resolution of the Board of
Directors to amend this Agreement to substantially the same effect shall be
effective until confirmed by the shareholders or holders of Rights as the
case may be.
5.5 Fractional Rights and Fractional Shares
(a) The Corporation shall not be required to issue fractions of Rights or
to distribute Rights Certificates which evidence fractional Rights. After
the Separation Time, in lieu of issuing fractional Rights, the Corporation
shall pay to the holders of record of the Rights Certificates (provided the
Rights represented by such Rights Certificates are not void pursuant to the
provisions of Subsection 3.1(b), at the time such fractional Rights would
otherwise be issuable), an amount in cash equal to the fraction of the
Market Price of one whole Right that the fraction of a Right that would
otherwise be issuable is of one whole Right.
(b) The Corporation shall not be required to issue fractions of Class A
Shares upon exercise of Rights or to distribute certificates which evidence
fractional Class A Shares. In lieu of issuing fractional Class A Shares, the
Corporation shall pay to the registered holders of Rights Certificates, at
the time such Rights are exercised as herein provided, an amount in cash
equal to the fraction of the Market Price of one Class A Share that the
fraction of a Class A Share that would otherwise be issuable upon the
exercise of such Right is of one whole Class A Share at the date of such
exercise.
5.6 Rights of Action
Subject to the terms of this Agreement, all rights of action in respect of
this Agreement, other than rights of action vested solely in the Rights
Agent, are vested in the respective holders of the Rights. Any holder of
Rights, without the consent of the Rights Agent or of the holder of any
other Rights, may, on such holder's own behalf and for such holder's own
benefit and the benefit of other holders of Rights, as the case may be,
enforce, and may institute and maintain any suit, action or proceeding
against the Corporation to enforce such holder's right to exercise such
holder's Rights, or Rights to which he is entitled, in the manner provided
in such holder's Rights Certificate and in this Agreement. Without limiting
the foregoing or any remedies available to the holders of Rights, as the
case may be, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement
and will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of the obligations
of any Person subject to, this Agreement.
5.7 Regulatory Approvals
Any obligation of the Corporation or action or event contemplated by this
Agreement shall be subject to the receipt of any requisite approval or
consent from any governmental or regulatory authority, including without
limiting the generality of the foregoing, any necessary approvals of The
Toronto Stock Exchange and the NASDAQ Small-Cap Market or any other
applicable stock exchange or market.
5.8 Notice of Proposed Actions
In case the Corporation shall propose after the Separation Time and prior to
the Expiration Time:
(a) to effect or permit (in cases where the Corporation's permission is
required) any Flip-in Event; or
(b) to effect the liquidation, dissolution or winding up of the
Corporation or the sale of all or substantially all of the Corporation's
assets, then, in each such case, the Corporation shall give to each holder
of a Right, in accordance with Section 5.9 hereof, a notice of such proposed
action, which shall specify the date on which such Flip-in Event,
liquidation, dissolution, winding up or sale is to take place, and such
notice shall be so given at least 10 Business Days prior to the date of
taking of such proposed action by the Corporation.
5.9 Notices
(a) Notices or demands authorized or required by this Agreement to be
given or made by the Rights Agent or by the holder of any Rights to or on
the Corporation shall be sufficiently given or made if delivered, sent by
registered or certified mail, postage prepaid (until another address is
filed in writing with the Rights Agent), or sent by facsimile or other form
of recorded electronic communication, charges prepaid and confirmed in
writing, as follows:
Gold Reserve Inc.
926 W. Sprague Avenue, Suite 200
Spokane, Washington 99201
Attention: President
Telecopy No.: (509) 623-1634
(b) Notices or demands authorized or required by this Agreement to be
given or made by the Corporation or by the holder of any Rights to or on
the Rights Agent shall be sufficiently given or made if delivered, sent by
registered or certified mail, postage prepaid (until another address is filed
in writing with the Corporation), or sent by facsimile or other form of
recorded electronic communication, charges prepaid and confirmed in
writing, as follows:
Computershare Trust Company of Canada
100 University Avenue
8th Floor
Toronto, Ontario M5J 2Y1
Attention: Manager, Client Services
Telecopy No.: (416) 981-9800
(c) Notices or demands authorized or required by this Agreement to be
given or made by the Corporation or the Rights Agent to or on the holder of
any Rights shall be sufficiently given or made if delivered or sent by first
class mail, postage prepaid, addressed to such holder at the address of such
holder as it appears upon the register of the Rights Agent or, prior to the
Separation Time, on the register of the Corporation for its Common Shares.
Any notice which is mailed or sent in the manner herein provided shall be
deemed given, whether or not the holder receives the notice.
(d) Any notice given or made in accordance with this Section 5.9 shall be
deemed to have been given and to have been received on the day of delivery,
if so delivered, on the third Business Day (excluding each day during which
there exists any general interruption of postal service due to strike,
lockout or other cause) following the mailing thereof, if so mailed, and on
the day of telegraphing, telecopying or sending of the same by other means
of recorded electronic communication (provided such sending is during the
normal business hours of the addressee on a Business Day and if not, on the
first Business Day thereafter). Each of the Corporation and the Rights
Agent may from time to time change its address for notice by notice to the
other given in the manner aforesaid.
5.10 Costs of Enforcement
The Corporation agrees that if the Corporation fails to fulfil any of its
obligations pursuant to this Agreement, then the Corporation will reimburse
the holder of any Rights for the costs and expenses (including legal fees)
incurred by such holder to enforce his rights pursuant to any Rights or this
Agreement.
5.11 Successors
All the covenants and provisions of this Agreement by or for the benefit of
the Corporation or the Rights Agent shall bind and enure to the benefit of
their respective successors and assigns hereunder.
5.12 Benefits of this Agreement
Nothing in this Agreement shall be construed to give to any Person other than
the Corporation, the Rights Agent and the holders of the Rights any legal or
equitable right, remedy or claim under this Agreement; further, this
Agreement shall be for the sole and exclusive benefit of the Corporation,
the Rights Agent and the holders of the Rights.
5.13 Governing Law
This Agreement and each Right issued hereunder shall be deemed to be a
contract made under the laws of the Province of Ontario and for all
purposes shall be governed by and construed in accordance with the laws of
such Province applicable to contracts to be made and performed entirely
within such Province.
5.14 Severability
If any term or provision hereof or the application thereof to any
circumstance shall, in any jurisdiction and to any extent, be invalid or
unenforceable, such term or provision shall be ineffective only as to such
jurisdiction and to the extent of such invalidity or unenforceability in
such jurisdiction without invalidating or rendering unenforceable or
ineffective the remaining terms and provisions hereof in such jurisdiction
or the application of such term or provision in any other jurisdiction or
to circumstances other than those as to which it is specifically held
invalid or unenforceable.
5.15 Date Agreement Becomes Effective
This Agreement is effective and in full force and effect in accordance with
its terms from and after the Effective Time. At the first meeting following
the Agreement Date of holders of voting shares of Gold Reserve Corporation
held to approve the merger of Gold Reserve Corporation with GR Merger Corp.,
a wholly- owned subsidiary of the Corporation, and to approve the
Reorganization, the Gold Reserve Corporation shareholders shall be requested
to confirm this Agreement.
If, at such meeting (which meeting shall include, if the meeting is adjourned
one or more times, each reconvened meeting resulting from such
adjournment(s)), this Agreement is not confirmed by a majority of the votes
cast by holders of voting shares of Gold Reserve Corporation held by
Independent Shareholders of Gold Reserve Corporation who vote in respect of
confirmation of the Agreement at such meeting or the merger and
Reorganization is not approved in accordance with the applicable
requirements of the Montana Business Corporations Act, then this Agreement
shall terminate and be void and of no further force and effect on and from
the close of business on the date of termination of such meeting (which, in
the case such meeting is adjourned one or more times, means the termination
of the last reconvened meeting resulting from such adjournment(s)).
5.16 Reconfirmation
Notwithstanding the confirmation of this Agreement pursuant to Section 5.15
and the approval of the merger and Reorganization as contemplated by
Section 5.15, this Agreement must be reconfirmed by a resolution passed by a
majority of greater than 50 per cent of the votes cast by holders of Voting
Shares held by Independent Shareholders who vote in respect of such
reconfirmation at a meeting of holders of Voting Shares to be held not
earlier than April 2, 2000 and not later than the date on which the 2000
annual meeting of holders of Voting Shares terminates. If the Agreement is
not so reconfirmed, the Agreement and all outstanding Rights shall terminate
and be void and of no further force and effect on and from the close of
business on that date which is the earlier of the date of termination of the
meeting called to consider the reconfirmation of this Agreement and the date
of termination of the [2000] annual meeting of holders of Voting Shares;
provided, that termination shall not occur if a Flip-in Event has occurred
(other than a Flip-in Event which has been waived pursuant to Subsection
5.1(c) or (d) hereof), prior to the date upon which this Agreement would
otherwise terminate pursuant to this Section 5.16.
5.17 Determinations and Actions by the Board of Directors
The Board of Directors shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers
specifically granted to the Board of Directors or the Corporation, or as may
be necessary or advisable in the administration of this Agreement. All such
actions, calculations and determinations (including all omissions with
respect to the foregoing) which are done or made by the Board of Directors,
in good faith, shall not subject the Board of Directors or any director of
the Corporation to any liability to the holders of the Rights.
5.18 Declaration as to Non-Canadian Holders
If in the opinion of the Board of Directors (who may rely upon the advice
of counsel) any action or event contemplated by this Agreement would
require compliance by the Corporation with the securities laws or
comparable legislation of a jurisdiction outside Canada, the Board of
Directors acting in good faith shall take such actions as it may deem
appropriate to ensure such compliance. In no event shall the Corporation or
the Rights Agent be required to issue or deliver Rights or securities
issuable on exercise of Rights to persons who are citizens, residents or
nationals of any jurisdiction other than Canada or the United States, in
which such issue or delivery would be unlawful without registration of the
relevant Persons or securities for such purposes.
5.19 Time of the Essence
Time shall be of the essence in this Agreement.
5.20 Execution in Counterparts
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and
all such counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
GOLD RESERVE INC.
By: /s/ Robert A. McGuinness
COMPUTERSHARE TRUST COMPANY OF CANADA
By: /s/ Christine Lawton
By: /s/ Irene Zelman
ATTACHMENT 1
GOLD RESERVE INC.
SHAREHOLDER RIGHTS PLAN AGREEMENT
[Form of Rights Certificate]
Certificate No.
______________________________________________________________
Rights ____________________________________________________________
THE RIGHTS ARE SUBJECT TO TERMINATION ON THE TERMS SET FORTH IN
THE SHAREHOLDER RIGHTS PLAN AGREEMENT. UNDER CERTAIN CIRCUMSTANCES
(SPECIFIED IN SUBSECTION 3.1(b) OF THE SHAREHOLDER RIGHTS PLAN
AGREEMENT), RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR
CERTAIN RELATED PARTIES, OR TRANSFEREES OF AN ACQUIRING PERSON OR
CERTAIN RELATED PARTIES, MAY BECOME VOID.
Rights Certificate
This certifies that_____________________________________________________
_______or registered assigns, is the registered holder of the number of
Rights set forth above, each of which entitles the registered holder
thereof, subject to the terms, provisions and conditions of the Shareholder
Rights Plan Agreement, dated as of October 5, 1998, as the same may be
amended or supplemented from time to time (the "Shareholder Rights
Agreement"), between Gold Reserve Inc., a corporation duly incorporated
under the laws of the Yukon Territory (the "Corporation") and Computershare
Trust Company of Canada, a trust company incorporated under the laws of
Canada (the "Rights Agent") (which term shall include any successor Rights
Agent under the Shareholder Rights Agreement), to purchase from the
Corporation at any time after the Separation Time (as such term is defined
in the Shareholder Rights Agreement) and prior to the Expiration Time (as
such term is defined in the Shareholder Rights Agreement), one fully paid
Class A Share of the Corporation (a "Class A Share") at the Exercise Price
referred to below, upon presentation and surrender of this Rights
Certificate with the Form of Election to Exercise (in the form provided
hereinafter) duly executed and submitted to the Rights Agent at its
principal office in the City of Toronto [insert other cities, if
applicable]. The Exercise Price shall initially be $70.00 (Cdn.) or the U.S.
Dollar Equivalent per Right and shall be subject to adjustment in certain
events as provided in the Shareholder Rights Agreement.
This Rights Certificate is subject to all of the terms and provisions of the
Shareholder Rights Agreement, which terms and provisions are incorporated
herein by reference and made a part hereof and to which Shareholder Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Rights Agent, the Corporation and the holders of the Rights Certificates.
Copies of the Shareholder Rights Agreement are on file at the registered
office of the Corporation.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at any of the offices of the Rights Agent designated for such
purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing an aggregate number of Rights
equal to the aggregate number of Rights evidenced by the Rights Certificate
or Rights Certificates surrendered. If this Rights Certificate shall be
exercised in part, the registered holder shall be entitled to receive, upon
surrender hereof, another Rights Certificate or Rights Certificates for the
number of whole Rights not exercised.
Subject to the provisions of the Shareholder Rights Agreement, the Rights
evidenced by this Rights Certificate may be, and under certain circumstances
are required to be, redeemed by the Corporation at a redemption price of
$0.00001 per Right.
No fractional Class A Shares will be issued upon the exercise of any Right
or Rights evidenced hereby, but in lieu thereof a cash payment will be
made, as provided in the Shareholder Rights Agreement. No holder of this
Rights Certificate, as such, shall be entitled to vote or receive dividends
or be deemed for any purpose the holder of Class A Shares or of any other
securities which may at any time be issuable upon the exercise hereof, nor
shall anything contained in the Shareholder Rights Agreement or herein be
construed to confer upon the holder hereof, as such, any of the rights of a
shareholder of the Corporation or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except
as provided in the Shareholder Rights Agreement), or to receive dividends or
subscription rights, or otherwise, until the Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Shareholder Rights
Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Corporation and
its corporate seal.
Date: ________________________
GOLD RESERVE INC.
By: ___________________________ By: ___________________________
[President] [Corporate Secretary]
Countersigned:
COMPUTERSHARE TRUST COMPANY OF CANADA
By: ___________________________
Authorized Signature
By: ___________________________
Authorized Signature
=======================================
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer
the Rights Certificate.)
FOR VALUE RECEIVED hereby sells, assigns and transfers unto
- ---------------------
(Please print name and address of transferee.)
the Rights represented by this Rights Certificate, together with all right,
title and interest therein, and does hereby irrevocably constitute and
appoint _______________________, as attorney, to transfer the within Rights
on the books of the Corporation, with full power of substitution. Dated:
Signature
Signature Guaranteed:
(Signature must correspond to name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or any
change whatsoever.) Signature must be guaranteed by a member firm of a
recognized stock exchange in Canada, a registered national securities
exchange in the United States, a member of the Investment Dealers
Association of Canada or National Association of Securities Dealers, Inc. or
a commercial bank or trust company having an office or correspondent in
Canada or the United States or a member of the Securities Transfer Agent
Medallion Program (STAMP).
- -----------------------------------------------------------------------------
CERTIFICATE
(To be completed if true.)
The undersigned party transferring Rights hereunder, hereby represents, for
the benefit of all holders of Rights and Class A Shares, that the Rights
evidenced by this Rights Certificate are not, and, to the knowledge of the
undersigned, have never been, Beneficially Owned by an Acquiring Person or
an Affiliate or Associate thereof or a Person acting jointly or in concert
with any of the foregoing. Capitalized terms shall have the meaning
ascribed thereto in the Shareholder Rights Agreement.
Signature
- -----------------------------------------------------------------------------
(To be attached to each Rights Certificate.)
=======================================
FORM OF ELECTION TO EXERCISE
(To be executed by the registered holder if such holder desires to exercise
the Rights Certificate.)
TO:
The undersigned hereby irrevocably elects to exercise _____________ whole
Rights represented by the attached Rights Certificate to purchase the Class
A Shares or other securities, if applicable, issuable upon the exercise of
such Rights and requests that certificates for such securities be issued in
the name of:
(Name)
(Address)
(City and Province)
Social Insurance Number or other taxpayer identification number. If such
number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights shall
be registered in the name of and delivered to:
(Name)
(Address)
(City and Province)
Social Insurance Number or other taxpayer identification number. Dated:
Signature
Signature Guaranteed: (Signature must correspond to name as written upon
the face of this Rights Certificate in every particular, without alteration
or enlargement or any change whatsoever.) Signature must be guaranteed by a
member firm of a recognized stock exchange in Canada, a registered
national securities exchange in the United States, a member of the
Investment Dealers Association of Canada or National Association of
Securities Dealers, Inc. or a commercial bank or trust company having an
office or correspondent in Canada or the United States or a member of the
Securities Transfer Agent Medallion Program (STAMP).
Signature
- -----------------------------------------------------------------------------
(To be attached to each Rights Certificate.)
=======================================
CERTIFICATE
(To be completed if true.)
The undersigned party exercising Rights hereunder, hereby represents, for
the benefit of all holders of Rights and Class A Shares, that the Rights
evidenced by this Rights Certificate are not, and, to the knowledge of the
undersigned, have never been, Beneficially Owned by an Acquiring Person or
an Affiliate or Associate thereof or a Person acting jointly or in concert
with any of the foregoing. Capitalized terms shall have the meaning
ascribed thereto in the Shareholder Rights Agreement.
Signature
- -----------------------------------------------------------------------------
(To be attached to each Rights Certificate.)
=======================================
NOTICE
In the event the certification set forth above in the Forms of Assignment
and Election is not completed, the Corporation will deem the Beneficial
Owner of the Rights evidenced by this Rights Certificate to be an
Acquiring Person or an Affiliate or Associate thereof. No Rights
Certificates shall be issued in exchange for a Rights Certificate owned or
deemed to have been owned by an Acquiring Person or an Affiliate or
Associate thereof, or by a Person acting jointly or in concert with an
Acquiring Person or an Affiliate or Associate thereof.
Amended and Restated March 14, 2003/Approved by Shareholders June 11,
2003