MERIDIAN GOLD INC.
MANAGEMENT PROXY CIRCULAR
This Management Information Circular and Proxy Statement (the "Circular") is
furnished in connection with the solicitation of proxies by the management of
Meridian Gold Inc. (the "Corporation") for use at the Annual and Special Meeting
of Shareholders (or any adjournments thereof) of the Corporation (the "Meeting")
to be held at 4:00 p.m. on Wednesday, April 21, 1999, in the Main Dining Room of
The National Club, 303 Bay Street, Toronto, Ontario (business attire required)
for the purposes set forth in the accompanying Notice of Meeting. The
solicitation will be primarily by mail, but proxies may also be solicited
personally by regular employees of the Corporation for which no additional
compensation will be paid. In addition, the Corporation has retained Shareholder
Communications Canada to assist in the solicitation of proxies in Canada and the
United States, respectively, for total estimated fees of CDN$16,000. The cost of
preparing, assembling and mailing this Circular, the Notice of Meeting, form of
proxy and any other material relating to the Meeting has been or will be borne
by the Corporation. It is anticipated that copies of this Circular and
accompanying proxy will be distributed to shareholders on or about March 16,
1999.
Shareholders who are not able to attend the Meeting in person should complete
and sign the enclosed proxy and return it to The Trust Company of Bank of
Montreal, the Corporation's registrar and transfer agent, in the pre-addressed
envelope. Please ensure that your completed proxy is received no later than 5:00
p.m. (Eastern Daylight Time) on April 20, 1999. To be effective, proxies must be
received before 5:00 p.m. (Eastern Daylight Time) on April 20, 1999 by The Trust
Company of Bank of Montreal, 129 St. Jacques Street West, Level B North,
Montreal, Quebec H2Y 1L6.
APPOINTMENT OF PROXYHOLDER
Any shareholder has the right to appoint a person (who need not be a
shareholder) other than the persons designated in the enclosed form of proxy to
attend and to vote and to act for and on behalf of the shareholder at the
Meeting. In order to do so, the shareholder may insert the name of such other
person in the blank space provided in the proxy, or use another form of proxy.
EXERCISE OF VOTE BY PROXY
The shares represented by the proxy which is hereby solicited will be voted or
withheld from voting in accordance with the instructions of the shareholder on
any ballot that may be called for and, if the shareholder specifies a choice
with respect to any matter to be acted upon, the shares shall be voted
accordingly. Where a shareholder fails to specify a choice with respect to any
matter referred to in the Notice of Meeting in a proxy appointing a management
nominee (the nominees specified in the proxy enclosed with this Circular) as
proxyholder, the shares represented by the proxy will be voted for or in favor
of the matter.
The enclosed proxy confers discretionary authority with respect to any
amendments or variations to the matters referred to in the Notice of Meeting and
any other matters which may properly come before the Meeting.
REVOCATION OF PROXY
In addition to revocation in any other manner permitted by law, a shareholder
who has executed a proxy has the power to revoke it by depositing an instrument
in writing executed by the shareholder (or the shareholder's attorney authorized
in writing): (i) at the registered office of the Corporation at any time up to
and including the last business day preceding the day of the Meeting (or any
adjournment of the Meeting), or (ii) with the Chairman of the Meeting on the day
of the Meeting (or any adjournment of the Meeting).
<PAGE>
VOTING SHARES AND PRINCIPAL HOLDERS
At March 3, 1999, there were outstanding 73,641,420 common shares of the
Corporation. Holders of record of common shares at the close of business on
March 3, 1999 are entitled to one vote for each common share held, except to the
extent that subsequent transferees become entitled to vote by complying with the
Canada Business Corporations Act.
The following table shows, as of March 3, 1999, each person who, to the
knowledge of the Corporation, its directors or officers, beneficially owns,
directly or indirectly, or exercises control or direction over, in excess of 10%
of any class of voting securities of the Corporation:
<TABLE>
Name and Address of Amount and Nature of
Class of Securities Beneficial Owner Beneficial Ownership Percent of Class
------------------- ---------------- -------------------- ----------------
<S> <C> <C> <C>
Common Royal Trust Investment 12,405,000 16.85%
Management Holdings Inc. Shared Voting and
P. O. Box 7500 Dispositive Power
Station A
Toronto, Ontario
Common Fidelity Management and 7,841,075* 10.65%
Research Corporation Sole Dispositive Power
82 Devonshire Street
Boston, MA *Total shares owned is
7,841,075, which
includes the sole voting
power shares of 665,875
</TABLE>
ELECTION OF DIRECTORS
Under the Articles of the Corporation, the Board of Directors consists of a
minimum of three members and a maximum of ten members; the number of directors
within this range is determined by the Board. The number of directors is
currently fixed at six.
The persons named in the enclosed form of proxy intend to vote for the election
of the six nominees listed in the following table, all of whom are now members
of the Board of Directors and have been for the periods indicated. It is not
anticipated that any of these nominees will be unable to serve as directors, but
if that should occur for any reason prior to the Meeting, the persons named in
the enclosed form of proxy shall be entitled to vote for any other nominees in
their discretion.
Each director elected will hold office until the next Annual Meeting of
Shareholders or until his or her successor is elected or appointed.
<PAGE>
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
Name Age Director Since Shares Owned(1)
- ---- --- -------------- ---------------
John A. Eckersley(4) 54 1996 4,500
West Vancouver,
British Columbia
Mr. Eckersley is a private investor. Prior to October 1995, he was
Vice-President, Secretary and General Counsel of Placer Dome Inc., a mining
company.
Brian J. Kennedy 55 1996 4,700(2)
Reno, Nevada
Mr. Kennedy has been President and Chief Executive Officer of the Corporation
since April 1996. He was President of FMC Gold Company, a predecessor of the
Corporation, from May 1987 until June 1996. Mr. Kennedy is also a director and
officer of certain subsidiaries of the Corporation.
Christopher R. Lattanzi(3) 62 1999 nil
Toronto, Ontario
Mr. Lattanzi, elected to the Board of Directors in February 1999, is currently a
mining engineer and President of Micon International Limited, mineral industry
consultants.
Malcolm W. MacNaught(3) 61 1997 10,000
Duxbury, Massachusetts
In 1996, Mr. MacNaught culminated his career with Fidelity Investments where he
managed the Fidelity Select Precious Metals and Minerals fund and the Fidelity
Select American Gold Portfolio fund. He also acted as Manager of Fidelity
Advisor Global Resources. Mr. MacNaught is a private investor.
Robert G. Matthews(4) 64 1999 nil
Toronto, Ontario
Mr. Matthews, elected to the Board of Directors in February 1999, retired in
1990 as Vice President and Director, Corporate Finance with RBC Dominion
Securities where he specialized in mine financing, mergers and acquisitions. Mr.
Matthews is a private investor.
David S. Robertson(3)(4) 75 1996 5,000
North York, Ontario
Dr. Robertson is an independent consultant in the mineral industry.
Notes
- -----
(1) Information as to shares beneficially owned, directly or indirectly, or
over which control or direction is exercised, is not within the knowledge
of management and has been furnished by the respective nominees, as of
March 3, 1999.
(2) Mr. Kennedy also holds 10,000 non-voting Preferred Shares, Series 1 of the
Corporation.
(3) Member of Compensation Committee.
(4) Member of Audit Committee.
<PAGE>
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
The Board of Directors
- ----------------------
The Board of Directors is responsible for the supervision of the management of
the Corporation's business and affairs. It has the statutory authority and
obligation to protect and enhance the assets of the Corporation in the interest
of all shareholders. The Board of Directors believes in the principles of
maintaining an independent and effective board of directors, assumption by the
board of stewardship of the Corporation and compliance, to the extent
practicable for the Corporation, with the guidelines adopted by the Toronto
Stock Exchange Committee on Corporate Governance (the "TSE Guidelines").
While management is responsible for day-to-day operations, the Board of
Directors has assumed the stewardship of the Corporation. This includes
responsibility for (i) adoption of a strategic planning process, (ii)
identifying principal risks of the Corporation's business and ensuring
implementation of appropriate systems to manage those risks, (iii) succession
planning, including appointing and monitoring senior management, (iv) a
communications policy, and (v) integrity of the Corporation's internal control
and management information systems.
New directors are provided with substantial reference material relating to the
Corporation's strategies, business plan and recent performance, as well as their
responsibilities as directors. Specific briefing sessions from appropriate
senior management personnel take place regularly at meetings of the Board of
Directors.
The Board of Directors met six times in 1998.
Board Composition and Independence from Management
- --------------------------------------------------
The Corporation's policy is that a majority of the members of the Board of
Directors be "unrelated", within the meaning of the TSE Guidelines, meaning
independent of management and free from any interest and any business or other
relationship which could, or could be perceived to, interfere with a director's
independence. In its determination as to whether a particular director is a
"related director", the Board of Directors examines the individual circumstances
of each director and the relationship of the director to management and to the
Corporation. The Board is of the view that five of the six present directors are
independent of management and unrelated for purposes of the TSE Guidelines, the
exception being Mr. Brian J. Kennedy, the President and Chief Executive Officer
of the Corporation. At the Meeting, a slate of six individuals is being proposed
for election by the shareholders. Five of the nominees qualify as unrelated
directors.
The Corporation's policy is to maintain a non-executive Chairman of the Board of
Directors, to ensure that the Board can function independently of management.
The current Chairman of the Board of Directors, David S. Robertson, qualifies as
an unrelated director.
The current composition of the Board of Directors reflects a breadth of
background and experience that are important for effective governance of a
company in the mining industry. Additional nominees to the Board of Directors
would be expected to possess backgrounds and/or experience to complement that of
the Board.
Board Committees
- ----------------
The Audit Committee, on behalf of the Board, has responsibility for: (a)
reviewing the financial statements of the Corporation and recommending whether
such statements should be approved by the Board; (b) reviewing interim financial
statements of the Corporation; (c) recommending to the Board annually or as they
may otherwise determine, a duly qualified auditor; (d) reviewing the scope of
the audit to be conducted by the external and internal auditors of the
Corporation; (e) reviewing the auditors' fees and assessing the performance of
external and internal auditors and the nature and cost of other services
provided by such auditors; (f) reviewing all public disclosure documents
containing financial information before release; (g) reviewing all post-audit or
management letters containing material recommendations of the external auditor
<PAGE>
and management's response in respect of any identified material weakness; and
(h) having such other duties, powers and authorities as the Board may delegate
to the Committee from time to time. The members of the Committee have the right,
for the purpose of performing their duties, of inspecting all the books and
records of the Corporation and its affiliates and of discussing such accounts
and records and any matters relating to the financial position or condition of
the Corporation with the auditors of the Corporation or its affiliates.
The Committee is composed of three (3) directors. This Committee has the
following members: John A. Eckersley (Chairman), David S. Robertson, and Robert
G. Matthews. Mr. Mars was a member of the Committee throughout 1998 and until
his resignation from the Board in February 1999. Mr. Matthews joined the
Committee in March 1999.
The Compensation Committee has responsibility for: (a) fixing the compensation
of the President and Chief Executive Officer and approving the compensation of
the other officers of the Corporation; (b) exercising the powers conferred on it
by the Board with respect to option and share purchase plans; and (c) reviewing
annually, or more often if it deems appropriate, succession for key executives,
performance appraisal (having regard to the criteria referred to under
"Executive Annual Incentive Plan") and development of senior officers, senior
management organization and reporting structure, contingency plans in the event
of the unexpected disability of key executives, and performance and funding of
pensions and other benefits.
The Committee is composed of three (3) directors. This Committee has the
following members: David S. Robertson (Chairman), Malcolm W. MacNaught, and
Christopher R. Lattanzi. Mr. Lattanzi joined the Committee in March 1999.
As additional members join the Board of Directors and as the needs of the
Corporation change, the Board will review the need for, and establish as
appropriate, additional committees.
Decisions Requiring Board Approval
- ----------------------------------
Approval of annual budgets and major acquisitions, investments and expenditures,
as well as all significant matters outside the ordinary course of business and
matters requiring such approval under applicable law, are subject to review and
approval by the Board of Directors.
Board Performance
- -----------------
The Chairman of the Board of Directors provides leadership to the effective
performance of the Board of Directors.
Shareholder Communications
- --------------------------
The Corporation maintains shareholder communications through an investor
relations program.
The Board's Expectations of Management
- --------------------------------------
The Board of Directors through the Compensation Committee conducts an annual
performance evaluation of the President and Chief Executive Officer and
establishes a list of objectives for the ensuing year.
The Board of Directors expects management to provide information and maintain
processes which enable the Board of Directors to identify issues, challenges,
and opportunities for the Corporation and otherwise discharge its
responsibilities.
This statement of corporate governance practices has been developed and approved
by the Board of Directors.
<PAGE>
STATEMENT OF EXECUTIVE COMPENSATION
Summary Compensation
- --------------------
The following table sets forth, for the periods indicated, information
concerning compensation earned during such periods by the Corporation's Chief
Executive Officer and by the Corporation's four other most highly compensated
executive officers who were serving as executive officers on December 31, 1998
(the "Named Executives").
<TABLE>
SUMMARY COMPENSATION TABLE(1)
- ---------------------------------------------------------------------------------------------------------------
Long-Term
Annual Compensation Compensation
----------------------------------- ------------
Securities
Name and Other Annual under Options All Other
Principal Position Year Salary Bonus Compensation(2) Granted Compensation
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Brian J. Kennedy(3)(4) 1998 283,976 260,548 4,000 274,250 nil
President and 1997 283,976 105,000 7,099 235,000 nil
Chief Executive Officer 1996 170,728 105,000 2,675 250,000 250,000
Donald L. Beckwith(2)(4)(6) 1998 153,755 93,114 3,844 nil 390,714
Vice President, Development 1997 146,433 79,308 3,661 65,000 nil
1996 128,394 48,769 22,342 113,300 105,000
Edward H. Colt(2)(5) 1998 141,667 103,474 3,542 59,500 nil
Vice President, Finance and 1997 127,083 81,333 51,510 55,000 nil
Chief Financial Officer 1996 15,376 3,125 nil 113,300 65,000
Richard C. Lorson 1998 141,537 101,907 2,654 61,250 nil
Vice President, Exploration 1997 134,797 69,286 3,370 55,000 nil
1996 108,215 30,012 500 113,300 nil
Christopher D.S. Bates(2) 1998 122,839 87,092 1,353 55,250 5,000
Vice President, Business 1997 115,067 82,170 nil 50,000 nil
Development 1996 54,737 25,875 nil 105,000 nil
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
Notes:
- ------
(1) All figures, other than numbers of options granted, are expressed in U.S.
dollars. Mr. Bates joined the Company on July 1, 1996 and Mr. Colt joined
the Company on November 18, 1996.
(2) Consists of matching payments to a 401(k) Thrift Plan established by a
subsidiary of the Corporation. Excludes any perquisites and other benefits
not greater than the lesser of Cdn. $50,000 and 10% of the Named Executive
Officer's total annual salary and bonus. 1998 relocation expenditures for
Mr. Bates of $5,000 are also included in "Other". 1996 relocation
expenditures for Mr. Colt of $48,333 are also included in "Other". In 1996,
Mr. Beckwith received payments for unused vacation entitlements.
(3) On July 31, 1996, Mr. Kennedy was issued 10,000 non-voting Preferred
Shares, Series 1 of the Corporation, with a face amount of U.S. $100,000,
which amount is included under 1996 "All Other Compensation".
(4) "All Other Compensation" for 1996 includes, in the case of Messrs. Kennedy
and Beckwith, certain incentive payments made in 1996 by the former parent
of FMC Gold Company, the Company's predecessor.
(5) "All Other Compensation" for Mr. Colt in 1996 consists of certain payments
in connection with his hiring.
(6) As of December 31, 1998, Mr. Beckwith resigned from the Corporation.
Therefore, "All Other Compensation" for Mr. Beckwith in 1998 consists of
his severance package.
<PAGE>
Long-Term Incentive Plan
- ------------------------
There were no awards or payouts to the Named Executive Officers during the
financial year ended December 31, 1998 under any arrangements of the Corporation
which would constitute a long-term incentive plan.
Grants of Options
- -----------------
The following table provides information concerning grants of options under the
Corporation's 1996 Stock Option Plan to the Named Executive Officers during the
financial year ended December 31, 1998.
<TABLE>
Options % of Exercise Value at
Name Granted Total Price(1) Grant Date(2) Expiration Date
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Brian J. Kennedy 90,000 7.1 3.19 3.19 February 18, 2008
184,250 14.6 4.63 4.63 October 23, 2008
Donald L. Beckwith nil nil nil nil nil
Edward H. Colt 59,500 4.7 4.63 4.63 October 23, 2008
Richard C. Lorson 61,250 4.9 4.63 4.63 October 23, 2008
Christopher D.S. Bates 55,250 4.4 4.63 4.63 October 23, 2008
</TABLE>
Notes:
- ------
(1) Exercise Prices are expressed in U.S. dollars. All exercise prices are the
closing price of the Common Shares of the Corporation on the New York Stock
Exchange on the trading day prior to the grant.
(2) The figure is the closing price of the Common Shares of the Corporation on
the New York Stock Exchange on the trading day prior to the grant.
Option Exercises and Year-End Option Values
- -------------------------------------------
The following table provides information concerning (i) options exercised by any
Named Executive Officer during the financial year ended December 31, 1998; and
(ii) the number and the value at December 31, 1998 of unexercised options held
by the Named Executive Officers. In the table, "exercisable" options are those
for which the vesting period or conditions, if any, have been met, and "in the
money" options are those where the exercise price was less than the market price
of the Common Shares of the Corporation at December 31, 1998.
<TABLE>
Value of Unexercised
Options Exercised Unexercised Options In-the-money Options
----------------- ------------------- --------------------
Securities Aggregate Not Not
Name Acquired Value Exercisable Exercisable Exercisable Exercisable
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Brian J. Kennedy nil nil 143,933 675,917 256,905 1,083,519
Donald L. Beckwith nil nil 37,767 140,533 76,950 243,274
Edward H. Colt nil nil 37,767 190,033 44,848 228,540
Richard C. Lorson nil nil 38,367 191,783 77,813 294,602
Christopher D.S. Bates nil nil 35,000 175,250 71,313 270,078
</TABLE>
Note:
- -----
All figures relating to "value" are expressed in U.S. dollars.
<PAGE>
Pension Plans
- -------------
The Named Executive Officers are participants in a defined benefit pension plan
of Meridian Gold Company, the Corporation's principal operating subsidiary. The
following table provides information concerning the total annual retirement
benefit payable under these arrangements at retirement (normally age 65).
<TABLE>
Years of Service
--------------------------------------------------------------------------------
Final Earnings 10 15 20 25 30
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$100,000 $13,347 $ 20,021 $ 26,694 $ 33,368 $ 40,041
150,000 20,847 31,271 41,694 52,118 62,541
200,000 28,347 42,521 56,694 70,868 85,041
250,000 35,847 53,771 71,694 89,618 107,541
300,000 43,347 65,021 86,694 108,368 130,041
400,000 58,347 87,521 116,694 145,868 175,041
500,000 73,347 110,021 146,694 183,368 220,041
600,000 88,347 132,521 176,694 220,868 265,041
</TABLE>
All figures are expressed in U.S. dollars.
Compensation covered by this plan includes only the remuneration appearing in
the "Salary" and "Bonus" columns in the Summary Compensation Table. Benefits are
not subject to any deduction for social security or other offset amounts. The
Named Executive Officers have the following number of years of service credited:
Mr. Kennedy, 25, Mr. Beckwith, 19, Mr. Bates, 3, Mr. Colt, 2, and Mr. Lorson,
17. Credited years of service, in the case of Messers. Kennedy and Lorson,
include service with FMC Gold Company, the Corporation's predecessor.
Employment Contracts
- --------------------
Each of the Named Executive Officers has entered into an employment contract
with the Corporation or Meridian Gold Company. Each of these contracts has a
term of five years, with an automatic renewal for five years. Compensation is
comprised of base salary, bonus and stock options, generally at the discretion
of the Board of Directors of the Corporation, together with certain benefits.
The employment contracts also provide for certain payments to the employee upon
certain defined events of termination of employment (including termination or a
change of responsibility after a change of control of the Corporation). These
payments range from 18 months to 36 months of the employee's regular monthly
compensation.
Composition of the Compensation Committee
- -----------------------------------------
In 1998, the Compensation Committee of the Corporation performed the functions
of determining compensation of the Corporation's executive officers, including
the Named Executive Officers. In 1998, the Compensation Committee was comprised
of David S. Robertson, John C. White and Malcolm W. MacNaught. In February 1998,
Mr. White resigned from the Board of Directors and the Compensation Committee,
and the Compensation Committee was comprised of David S. Robertson and Malcolm
W. MacNaught for the balance of the year. Mr. Lattanzi joined the Committee in
March 1999. The report of the Compensation Committee on these matters is set
forth below:
As noted elsewhere above, Brian J. Kennedy, one of the directors, is President
and Chief Executive Officer. Mr. Kennedy always absented himself from the voting
of the board which related to his compensation and did not participate in the
board's determinations in respect of his compensation. None of the other members
of the Board of Directors of the Corporation are or were officers or employees
of the Corporation or its subsidiaries (with the exception of the Chairman of
the Board of Directors, who is deemed to be an officer of the Corporation).
<PAGE>
Report on Executive Compensation
- --------------------------------
Compensation Philosophy
The Corporation's principal goal is to create value for its shareholders. The
Corporation believes that directors, officers and employees should have their
benefits aligned with both the short and long term interests of the
shareholders.
The compensation of the Corporation's executive officers is comprised of three
components; base salary, annual cash bonus, and long-term incentive in the form
of stock options. It is structured to be competitive with a select group of
comparative North American gold mining companies.
Cash bonuses and stock options are directly related to company performance and
the individual's contribution. The Corporation strongly believes that annual
incentives and stock options play an important role in increasing shareholder
value.
Base Salary
To ensure that the Corporation is capable of attracting, motivating and
retaining individuals with exceptional executive skills, cash compensation is
reviewed and adjusted annually, based primarily on individual and corporate
performance, as well as compensation practices of similar gold mining companies.
In determining 1998 executive compensation levels, the Board of Directors
commissioned a report of an independent consultant. On the basis of this report
and the board's own determination and discussion, the Board of Directors
approved salaries and a bonus plan for the Corporation's executives for 1998 and
subsequent years, based on the recommendations of management and the
Compensation Committee of the Board (which recommendations were endorsed by the
Board of Directors), which were in turn based on enumerated and weighted
objectives for each. In all such cases, Mr. Kennedy absented himself from the
Board's determinations of compensation of the Corporation's President and Chief
Executive Officer.
Stock Options
The purpose of the Corporation's stock option plan is to develop the interest
and incentive of eligible employees, officers and directors in the Corporation's
growth and development by giving an opportunity to purchase Common Shares on a
favorable basis, thereby advancing the interests of the Corporation, enhancing
the value of the Common Shares for the benefit of all shareholders and
increasing the ability of the Corporation to attract and retain skilled and
motivated individuals.
Stock options are granted in accordance with the stock option plan approved by
the shareholders at not less than the closing price of the Common Shares on the
business day immediately prior to the date of grant.
President and Chief Executive Officer
In 1998, Mr. Brian Kennedy provided leadership and strategic direction that has
enabled the Corporation to position itself for future growth. In determining Mr.
Kennedy's compensation, the Compensation Committee and the Board of Directors
relied on the report of an independent consultant comparing compensation
practices of similar gold mining companies. The Compensation Committee and the
Board of Directors also considered other factors, such as Mr. Kennedy's
contribution to the business performance and anticipated future performance of
the Corporation.
In consideration of Mr. Kennedy's contribution to the Corporation, Mr. Kennedy
received a salary of $283,976, was awarded a cash bonus of $260,548 and received
options to purchase 274,250 Common Shares. In February 1998, Mr. Kennedy was
awarded options to purchase 90,000 Common Shares in lieu of a higher cash bonus.
These options to purchase 90,000 Common Shares are included in his total options
granted in 1998 to purchase 274,250 Common Shares.
<PAGE>
The Compensation Committee has also approved those executive officers of the
Corporation and its subsidiaries who will be eligible to participate in the
Bonus Plan in 1999, together with enumerated and weighted objectives for each of
these executive officers for 1999. Each of these sets of objectives includes a
component of the Corporation's share performance, which will be calculated by
comparing the trading prices of the Corporation's common shares against a
weighted basket of shares of a list of comparable companies.
Going forward, the Compensation Committee and, as appropriate, the Board of
Directors, will address other issues relating to executive compensation,
including the relative emphasis on the components of executive compensation,
including compensation for the Corporation's President and Chief Executive
Officer.
Presented by the Compensation Committee: D.S. Robertson (Chairman), M.W.
MacNaught, and C.R. Lattanzi.
PERFORMANCE GRAPH
The following graph charts performance of an investment in the common shares of
the Corporation against the TSE 300 Stock Index and the TSE Gold and Precious
Metals Sub-Index, assuming an investment of $100 on July 31, 1996. No dividends
were paid by the Corporation during this period.
[chart goes here]
<PAGE>
Compensation of Directors
The non-executive Chairman of the Board of Directors receives an annual retainer
of U.S. $50,000; other directors of the Corporation who are not employees of the
Corporation or its affiliates receive an annual retainer of U.S. $20,000, plus
an additional U.S. $2,500 for each committee for which such director serves as
chairman. All directors of the Corporation receive a fee of U.S. $1,000 for
attending each meeting of the Board of Directors or a committee thereof, plus
reimbursement of expenses. Directors are also eligible to receive grants under
the Corporation's 1996 Stock Option Plan and its proposed successor plan, the
1999 Share Incentive Plan. The aggregate compensation paid to the directors of
the Corporation during 1998 was U.S. $151,222, and the directors as a group
(excluding Mr. Kennedy) were granted 50,000 options.
Directors' and Officers' Insurance
The Corporation maintains directors' and officers' liability insurance for the
benefit of the directors and officers of the Corporation and certain
subsidiaries. The current annual policy limit is U.S. $25,000,000. Protection is
provided to directors and officers for wrongful acts or omissions done or
committed during the course of their duties as such. Under the insurance
coverage, the Corporation is reimbursed for payments which it is required or
permitted to make to its directors and officers to indemnify them, subject to a
deductible of U.S. $250,000 per loss. Individual directors and officers are
reimbursed for losses incurred in their capacities as such, which are not
subject to a deductible. The annual premium for the period January 1, 1998 to
December 31, 1998 was U.S. $230,898, all of which was paid by the Corporation.
Indebtedness of Directors and Officers
None of the directors or officers of the Corporation, nor any proposed nominees
for election as directors, nor any associate or affiliate of any such person,
has been indebted to the Corporation or any of its subsidiaries at any time
since January 1, 1998, other than amounts owing for purchases subject to usual
trade terms, for ordinary travel and expense advances and for other transactions
in the ordinary course of business.
Interests in Material Transactions
None of the directors or officers of the Corporation, nor any proposed nominees
for election as directors, nor any associate or affiliate of any such person,
had any direct or indirect material interest, since January 1, 1998, in respect
of any matter that has materially affected or will materially affect the
Corporation or any of its subsidiaries.
Appointment of Auditors
Unless otherwise instructed, the persons named in the enclosed form of proxy
intend to vote such proxy in favor of the reappointment of KPMG LLP as auditors
of the Corporation to hold office until the next annual meeting of shareholders
and the authorization of the Board of Directors to fix their remuneration. KPMG
LLP have been auditors of the Corporation since July 1996.
Representatives of KPMG LLP will attend the Meeting, will have the opportunity
to make a statement if they desire to do so, and will respond to any appropriate
questions.
The Board of Directors recommends that shareholders vote in favor of the
appointment of KPMG LLP as auditors of the Corporation.
<PAGE>
Adoption of 1999 Share Incentive Plan
The Corporation's 1996 Stock Option Plan (the "1996 Plan") provided for the
grant of options to purchase up to 3,750,000 common shares of the Corporation to
directors, officers and employees of the Corporation. As of January 31, 1999,
options were outstanding under the 1996 Plan to purchase 3,253,533 common
shares.
On March 5, 1999, the directors of the Corporation resolved to adopt the 1999
Share Incentive Plan (the "Plan") to replace the 1996 Plan, subject to
shareholder approval. A copy of the Plan is attached as Exhibit I. The purpose
of the Plan is to attract, retain and motivate eligible employees, directors and
consultants, to compensate them for their contributions to the Corporation's
long-term growth and development, and to encourage them to acquire a proprietary
interest in the success of the Corporation. The Plan has been pre-cleared by the
TSE, subject to shareholder approval at the Meeting.
The major differences between the Plan and the 1996 Plan are: (i) the Plan
provides for equity-based or equity-related awards in addition to options,
including share appreciation rights, restricted shares, restricted share units,
and performance shares and share units, as more fully described in Exhibit I;
and (ii) the Plan increases the number of common shares issuable.
The maximum number of common shares which may be reserved for issuance under the
Plan pursuant to:
-- options and share appreciation rights is 5,200,000, minus the number
of Common Shares which may be issued on the exercise of options
granted under the 1996 Plan (the "Option/SAR Component"), and
-- awards other than options and share appreciation rights is 1,000,000
(the "Bonus Component").
The increase in the maximum number of common shares issuable from 3,750,000
under the 1996 Plan to 6,200,000 under the Plan represents an increase from
approximately 5.1% to approximately 8.5% of the Company's common shares
outstanding as of March 3, 1999. The Corporation will need the ability to issue
these additional common shares to achieve the purpose of the Plan as stated
above.
The aggregate number of Common Shares which may be reserved for issuance
pursuant to awards granted under the Plan to directors as a group shall not
exceed 100,000 during any one-year period.
In accordance with the rules of The Toronto Stock Exchange, separate shareholder
approval is being sought for the Option/SAR Component and the Bonus Component.
To be effective, the Option/SAR Component resolution set forth below must be
approved by a majority of the votes at the Meeting in person or by proxy by
shareholders of the Corporation, and the Bonus Component resolution set forth
below must be approved by a majority of the votes cast at the Meeting in person
or by proxy by shareholders of the Corporation other than insiders of the
Corporation to whom awards may be granted under the Plan and their associates.
Shareholders in this excluded class include all directors and senior officers of
the Corporation, their relatives and any corporation controlled by them. To the
best of the knowledge of the Corporation, as at March 3, 1999, the aggregate
number of common shares held by those insiders of the Corporation to whom awards
may be granted under the Plan and their associates was 42,700. Common shares
held by such persons will be excluded for the purposes of determining whether
the Option/SAR Component resolution and the Bonus Component resolution are
approved.
The form of the Option/SAR Component resolution to be presented at the Meeting
is as follows:
RESOLVED THAT:
1. The 1999 Share Incentive Plan of the Corporation substantially in the
form attached as Exhibit I to the Management Proxy Circular of the
Corporation dated March 16, 1999 as it relates to options and share
appreciation rights and matters related thereto, is authorized,
approved and adopted, together with such additions, deletions or
changes thereto as may be required by any applicable securities
regulatory authority or stock exchange; and
<PAGE>
2. Any director or officer of the Corporation is hereby authorized and
directed to do all such things and to execute and deliver all such
documents as may be necessary or desirable in order to implement the
1999 Share Incentive Plan.
The form of the Bonus Component resolution to be presented at the Meeting is as
follows:
RESOLVED THAT:
1. The 1999 Share Incentive Plan of the Corporation substantially in the
form attached as Exhibit I to the Management Proxy Circular of the
Corporation dated March 16, 1999, as it relates to restricted shares,
restricted share units, performance shares and share units, and other
equity-based or equity-related awards (other than options and share
appreciation rights), and matters related thereto, is authorized,
approved and adopted, together with such additions, deletions or
changes thereto as may be required by any applicable securities
regulatory authority or stock exchange; and
2. Any director or officer of the Corporation is hereby authorized and
directed to do all such things and to execute and deliver all such
documents as may be necessary or desirable in order to implement the
1999 Share Incentive Plan.
The Board of Directors recommends that shareholders vote in favor of the
Option/SAR Component resolution and the Bonus Component resolution.
Adoption of Shareholder Rights Plan
At the Meeting, the shareholders will be asked to confirm the adoption of a new
shareholder rights plan (the "Rights Plan"). The Rights Plan, which was
unanimously adopted by the Board of Directors on March 5, 1999, is intended to
replace the shareholder rights plan which shareholders of the Corporation
ratified in 1996 (the "Current Rights Plan"), which will expire at the close of
business on July 30, 1999.
The Board of Directors has determined that the Rights Plan is in the best
interest of the Corporation and its shareholders. The Board of Directors
unanimously recommends that the shareholders vote in favor of the Rights Plan.
Purpose of the Rights Plan
- --------------------------
The Rights Plan is designed to give the Corporation's shareholders sufficient
time to properly assess a take-over bid without undue pressure and to give the
Corporation's Board of Directors time to consider alternatives designed to allow
the Corporation's shareholders to receive full and fair value for their Meridian
Gold Inc. Common Shares ("Meridian Gold Common Shares"). Additionally, the
Rights Plan is designed to provide the Corporation's shareholders with equal
treatment in a take-over bid. The desire to ensure that the Corporation is able
to address unsolicited take-over bids for its issued and outstanding voting
shares during the term of the Rights Plan stems from a concern that Canadian
take-over bid rules (which only require take-over bids to be open for 21 days)
provides too short a response time to companies that are subject to unsolicited
take-over bids to ensure that shareholders are offered full and fair value for
their shares.
Since the adoption of the original rights plan by the Corporation, shareholder
rights plans have been adopted by approximately three hundred Canadian companies
and the terms of such plans have evolved to reflect changes in investor
attitudes, standards of corporate governance, requirements of securities
regulatory authorities and the advice of third party commentators. The
replacement Rights Plan reflects this evolution and is consistent with rights
plans that other issuers have adopted in recent months.
<PAGE>
Summary of the Rights Plan
- --------------------------
The following is a summary of the principal terms of the Rights Plan which is
qualified in its entirety by reference to the text of the Rights Plan, a copy of
which is attached to this circular as Exhibit II. (Copies of the complete Rights
Plan were filed with securities regulators in Canada, together with a copy of a
material change report in respect of the Rights Plan.)
Effective Time
- --------------
The effective time of the Rights Plan (the "Effective Time") is the earlier of
(a) the close of business on July 30, 1999;
(b) the date that an Acquiring Person (see below) becomes an Acquiring
Person; or
(c) the date that an event occurs that would give rise to the subsequent
separation of rights under the Current Rights Plan.
This definition of Effective Time is intended to preclude any attempt by a
bidder to make a bid that would expire immediately after the Current Rights Plan
comes to an end but before rights separate under the new Rights Plan.
Term and Shareholder Approval
- -----------------------------
The Rights Plan will remain in effect until the close of business on the tenth
anniversary of the Effective Time. The Rights Plan must, however, be approved by
more than 50% of the votes cast at the Meeting by shareholders present or voting
by proxy in order to come into force. In addition, the Rights Plan must be
reconfirmed by more than 50% of the votes cast at each of the third and sixth
annual meetings of the Corporation's shareholders following the Meeting.
Issue of Rights
- ---------------
Immediately after the Effective Time, one Right will be issued and will attach
to each Meridian Gold Common Share outstanding and to each Meridian Gold Common
Share subsequently issued.
Rights Exercise Privilege
- -------------------------
The Rights will separate from the Meridian Gold Common Shares and will be
exercisable ten trading days after a person has acquired 20% or more of, or
commences or announces a take-over bid for, the Corporation's outstanding Common
Shares, other than by an acquisition pursuant to a Permitted Bid or a Competing
Permitted Bid. The acquisition by an Acquiring Person of 20% or more of the
Meridian Gold Common Shares is referred to as a "Flip-in Event". When a Flip-in
Event occurs, each Right (except for Rights beneficially owned by an Acquiring
Person or certain transferees of an Acquiring Person, which rights will be void
pursuant to the Rights Plan) becomes a right to purchase from the Corporation,
upon exercise thereof in accordance with the terms of the Rights Plan, that
number of Meridian Gold Common 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 subject to adjustment in accordance with the Rights Plan Agreement).
Any Rights held by an Acquiring Person will become void upon the occurrence of a
Flip-in Event. Any offer other than a Permitted Bid or a Competing Bid will be
prohibitively expensive for the Acquiring Person. The Rights Plan is therefore
designed to require any person interested in acquiring more than 20% of the
Meridian Gold Common Shares to do so by way of a Permitted Bid or a Competing
Permitted Bid or to make an offer which the Board considers to represent the
full value of the Meridian Gold Common Shares.
Prior to the Rights being triggered by a party acquiring a voting interest of
20% or greater, the Rights will have no value and will have no dilutive effect
on the Common Shares.
<PAGE>
Certificates and Transferability
- --------------------------------
Prior to the Separation Time, the Rights will be evidenced by a legend imprinted
on the common share certificates of the Corporation and will not be transferable
separately from the Meridian Gold Common Shares. Your Meridian Gold Common Share
certificates do not need to be exchanged to entitle you to these Rights. The
legend will be on all new certificates issued by the Corporation after the
Effective Time. From and after the Separation Time, the Rights will be evidenced
by Rights certificates and will be transferable separately from the Meridian
Gold Common Shares.
Permitted Bid Requirements
The Permitted Bid requirements include the following:
(i) the take-over bid must be made by way of a take-over bid circular;
(ii) the take-over bid must be made to all shareholders of the
Corporation;
(iii) the take-over bid must be outstanding for a minimum period of 60
days and Meridian Gold Common Shares tendered pursuant to the
take-over bid may not be taken up prior to the expiry of the 60-day
period and only if at such time more than 50% of the Meridian Gold
Common Shares held by the shareholders, other than the bidder, its
affiliates and persons acting jointly or in concert and certain
other persons (the "Independent Shareholders"), have been tendered
to the take-over bid and not withdrawn;
(iv) the Meridian Gold Common Shares deposited pursuant to the bid may
be withdrawn until taken up and paid for; and
(v) if more than 50% of the Meridian Gold Common Shares held by
Independent Shareholders are tendered pursuant to the takeover bid
within the 60-day period, the bidder must make a public
announcement of that fact and the take-over bid must remain open
for deposits of Meridian Gold Common Shares for an additional 10
business days from the date of such public announcement.
The Rights Plan allows for a competing Permitted Bid (a "Competing Permitted
Bid") to be made while a Permitted Bid is in existence. A Competing Permitted
Bid must satisfy all of the requirements of a Permitted Bid except that it may
expire on the same day as the Permitted Bid, subject to the requirement that it
be outstanding for a minimum period of 21 days.
Waiver
- ------
The Board of Directors, acting in good faith, may prior to the occurrence of a
Flip-in Event, waive the application of the Rights Plan to a particular Flip-in
Event (an "Exempt Acquisition") where the take-over bid is made by a take-over
bid circular to all holders of Meridian Gold Common Shares. Where the Board
exercises the waiver power for one take-over bid, the waiver will also apply to
any other take-over bid for the Corporation made by a take-over bid circular to
all holders of Meridian Gold Common Shares prior to the expiry of any other bid
for which the Rights Plan has been waived.
Redemption
- ----------
The Board of Directors with the approval of a majority of votes cast by
shareholders (or the holders of the Rights if the Separation Time has occurred)
voting in person and by proxy, at a meeting duly called for that purpose, may
redeem all of the then outstanding Rights at $0.0001 per Meridian Gold Common
Share as adjusted by the terms of the Rights Plan. Rights may also be redeemed
by the Board without such approval following completion of a Permitted Bid,
Competing Permitted Bid or Exempt Acquisition.
<PAGE>
Amendment
- ---------
The Board of Directors may amend the Rights Plan with the approval of a majority
of votes cast by shareholders (or the holders of the Rights if the Separation
Time has occurred) voting in person and by proxy, at a meeting duly called for
that purpose. The Directors, without such approval, may correct clerical or
typographical errors and, subject to the approval as noted above at the next
meeting of the shareholders (or holders of Rights, as the case may be), may make
amendments to the Rights Plan to maintain its validity due to changes in
applicable legislation.
Board of Directors
- ------------------
The Rights Plan will not detract from or lessen the duty of the Corporation's
Board of Directors to act honestly and in good faith with a view to the best
interest of the Corporation. The Board of Directors will continue to have the
duty and power to take such actions and make such recommendations to
shareholders of the Corporation as are considered appropriate.
Exemptions for Investment Advisors
- ----------------------------------
Investment advisors (for fully managed accounts), trust companies (acting in
their capacities as trustees and administrators), statutory bodies whose
business includes the management of funds, administrators of registered pension
plans, and crown agents acquiring greater than 20% of the Meridian Gold Common
Shares are exempted from triggering a Flip-in Event, provided that they are not
making, or are part of a group making, a take-over bid.
Certain Canadian Federal Income Tax Considerations of the Rights Plan
- ---------------------------------------------------------------------
The Corporation will not have any income for the purposes of the Income Tax Act
(Canada) (the "ITA") as a result of the issuance of the Rights. The ITA provides
that the value of a right to acquire additional shares of a corporation is not a
taxable benefit which must be included in computing income, and is not subject
to non-resident withholding tax if the right is conferred on all holders of
common shares. Although the Rights are to be so conferred, the Rights could
become void in the hands of certain holders of the Corporation's Common Shares
upon certain triggering events occurring (see "Flip-in Event") and,
consequently, whether or not the issuance of the Rights is a taxable event is
not entirely free from doubt. In any event, no amount must be included in
computing income if the Rights do not have a monetary value at the date of
issue. The Corporation considers that the Rights, when issued, will have
negligible monetary value, there being only a remote possibility that the Rights
will ever be exercised. A holder of Rights may have income or be subject to
withholding tax under the ITA if the Rights become exercisable or are exercised.
A holder of Rights may be subject to tax in respect of the proceeds of
disposition of such Rights.
This statement is of a general nature only and is not intended to constitute nor
should it be construed to constitute legal or tax advice to any particular
holder of the Corporation's Common Shares. Such shareholders are advised to
consult their own tax advisors regarding the consequences of acquiring, holding,
exercising or otherwise disposing of their Rights, taking into account their own
particular circumstances and any applicable foreign, provincial or territorial
legislation.
The text of the resolutions proposed to be considered at the Meeting, which must
be approved by a majority of the votes cast at the Meeting in person or by
proxy, is as follows:
RESOLVED THAT:
1. The Shareholder Rights Plan of the Corporation in the form attached
as Exhibit II to the Management Proxy Circular of the Corporation
dated March 16, 1999 is authorized, approved, ratified and adopted,
and
<PAGE>
2. Any director or officer of the Corporation is hereby authorized and
directed to do all such things and to execute and deliver all such
documents as may be necessary or desirable in order to implement the
Shareholder Rights Plan.
General
The information contained in this Circular is given as of March 3, 1999 and is
expressed in United States dollars, except as otherwise indicated.
Management knows of no matters to come before the Meeting other than the matters
referred to in the Notice of Meeting. If any matters which are not known should
properly come before the Meeting, proxies will be voted on matters in accordance
with the best judgment of the person voting.
The Corporation's 1998 Annual Report is being mailed to shareholders with the
Notice of Meeting and this Circular. The Corporation will provide to any person,
upon written request, a copy of the Corporation's latest Annual Information Form
("AIF"), any documents incorporated in the AIF by reference, interim financial
statements for periods after December 31, 1998 (when available), as well as a
copy of this Circular. Written requests for these documents should be addressed
to Investor Relations, Meridian Gold Inc., 9670 Gateway Drive, Suite 200, Reno,
Nevada 89511-8997. If the person requesting the documents is not a shareholder,
he or she may be required to pay a reasonable charge for the document.
The Corporation's registered office is located c/o Osler, Hoskin & Harcourt,
Suite 6600, 1 First Canadian Place, Toronto, Ontario M5X 1B8.
Director's Approval
The contents and sending of this circular have been approved by the Board of
Directors of the Corporation.
/S/ Eden M. Oliver
- ------------------
Eden M. Oliver
Secretary
<PAGE>
EXHIBIT I
1999 SHARE INCENTIVE PLAN
MERIDIAN GOLD INC.
1999 SHARE INCENTIVE PLAN
1. Purpose of the Plan
The purpose of this Meridian Gold Inc.1999 Share Incentive Plan is to attract,
retain and motivate eligible employees (including prospective employees),
officers and directors of, and Consultants who may perform services for, the
Company and its subsidiaries, to compensate them for their contributions to the
Company's long-term growth and development, and to encourage them to acquire a
proprietary interest in the success of the Company.
2. Definitions
Unless otherwise defined herein, the following terms used in this Plan have the
meaning given to them below:
"Associate" has the meaning given to it in the Securities Act
(Ontario), as amended from time to time;
"Award" means an award made pursuant to the Plan as provided in
section 4;
"Award Agreement" means a written document by which each Award is
evidenced;
"Board" and "Board of Directors" mean the board of directors of the
Company;
"Certificate" means a share certificate (or other appropriate document
or indicia of ownership) representing Common Shares of the Company;
"Code" means the United States Internal Revenue Code of 1986, as
amended from time to time;
"Committee" means the compensation committee appointed by the Board of
Directors to administer this Plan. All references in this Plan to the
Committee means the Board of Directors if no such compensation
committee has been appointed;
"Common Shares" means the Common Shares of the Company or, in the
event of an adjustment contemplated in Section 15, such other shares
to which a Participant may be entitled as a result of such adjustment;
"Company" means Meridian Gold Inc., any successor of it, and where the
context so requires, any subsidiary of Meridian Gold Inc.;
"Consultant" means an individual, other than an Employee or an Officer
of the Company, that:
(i) is engaged to provide ongoing consulting, technical,
management or other services on a bona fide basis to
the Company or to a subsidiary of the Company under a
written contract between the Company or the
subsidiary and the individual or a company or
partnership of which the individual consultant is an
employee or a shareholder or partner, and
<PAGE>
(ii) in the reasonable opinion of the Company, spends or
will spend a significant amount of time and attention
on the affairs and business of the Company or a
subsidiary of the Company;
"Consulting Contract" means a contract between a Consultant (or a
company or partnership of which the individual consultant is an
employee or a shareholder or partner) and the Company, governing the
terms with respect to the provision of the Consultant's services to
the Company;
"Date of Grant" means the date a Participant is granted an Option;
"Director" means a person occupying the position of director on the
Board of Directors;
"Disability" for purposes of this Plan means permanent and total
disability as determined in the sole discretion of the Committee;
"Employee" means a full time permanent or contract employee of the
Company or a subsidiary of the Company;
"Exchange Act" means the United States Securities Exchange Act of
1934, as amended from time to time;
"Exercise Date" means the date the Company receives from a Participant
a completed notice of exercise contemplated by Section 8(d), together
with payment for the Option Shares being purchased;
"Fair Market Value" means, with respect to a Common Share on any day,
the weighted average trading price of the Common Shares on the TSE for
the previous five days prior to the date in question, provided that,
if no sales of Common Shares were made on said exchange on such dates,
the weighted average trading price of the Common Shares as reported
for the five most recent preceding days on which sales of Common
Shares were made on said exchange;
"Incentive Stock Option" has the meaning given to it in Section 8(e);
"Insider" means:
(i) an insider of the Company as defined in the
Securities Act (Ontario), as amended from time to
time, other than a person who falls within such
definition solely by virtue of being a director or
senior officer of a subsidiary of the Company; and
(ii) an Associate of any person who is an insider by
virtue of clause (i) of this definition;
"Market Price" has the meaning given to it in the Regulation to the
Securities Act (Ontario), as amended from time to time;
"NYSE" means the New York Stock Exchange;
"Officer" means an officer as defined by the Securities Act (Ontario),
as amended from time to time, of the Company or its subsidiaries;
"Option" means a non-assignable, non-transferable right to purchase
Common Shares granted pursuant to this Plan;
"Option Period" means the period set forth in Section 8(a) during
which a Participant may purchase Option Shares (provided, however,
that the Option Period may not exceed ten years from the relevant Date
of Grant);
<PAGE>
"Option Price" means the price per share at which a Participant may
purchase Option Shares as fixed by the Committee;
"Option Shares" means the Common Shares which a Participant is
entitled to purchase pursuant to Options granted pursuant to this
Plan;
"Participants" means Directors, Officers, Employees, and Consultants;
"Plan" means this 1999 Share Incentive Plan, as amended from time to
time;
"Policy" means the Revised Policy of the Toronto Stock Exchange on
Listed Company Share Incentive Arrangements;
"Restricted Officers" means the Chief Executive Officer of the Company
and the four highest compensated officers (other than the Chief
Executive Officer) as defined in (United States) Treasury Regulation
1.162-27(c)(2); and
"TSE" means The Toronto Stock Exchange.
3. Eligibility
Participation in this Plan shall be limited to Participants who are designated
from time to time by the Committee. Participation shall be voluntary and the
extent to which any Participant shall be entitled to participate in this Plan
shall be determined by the Committee.
4. Types of Awards Under Plan
Awards under the Plan may be made in the form of (a) Options, (b) share
appreciation rights, (c) restricted shares, (d) restricted share units, (e)
performance shares and share units, and (f) other equity-based or equity-related
awards that the Committee determines to be consistent with the purpose of the
Plan and the interests of the Company.
5. Number of Common Shares Available for Awards
(a) The aggregate number of Common Shares which may be reserved
for issuance pursuant to Options and share appreciation rights
granted under this Plan shall not exceed (i) 5,200,000 Common
Shares, minus (ii) the number of Common Shares which may be
issued on the exercise of options granted under the Company's
1996 Stock Option Plan.
(b) Of the 5,200,000 Common Shares referred to in Section 5(a),
the aggregate number which may be reserved for issuance
pursuant to Incentive Stock Options shall not exceed 2,000,000
Common Shares.
(c) The aggregate number of Common Shares which may be reserved
for issuance pursuant to Awards other than Options and share
appreciation rights granted under this Plan shall not exceed
1,000,000 Common Shares.
(d) The aggregate number of Common Shares which may be reserved
for issuance pursuant to Awards granted under this Plan to all
of the Directors as a group shall not exceed 100,000 during
any one year period.
(e) If, for any reason, any Common Shares subject to issuance
under this Plan or the Company's 1996 Stock Option Plan are
not issued for reasons including, but not limited to,
expiration or cancellation as provided for herein, such Common
Shares shall again become available for grant under this Plan.
<PAGE>
(f) The following restrictions shall also apply to this Plan,
together with all other plans or stock option agreements of
the Company:
(i) the aggregate number of Common Shares reserved for
issuance pursuant to Awards that provide for an
option to purchase Common Shares from treasury
granted to Insiders shall not exceed 10% of the
Outstanding Issue;
(ii) Insiders shall not be issued, within any one year
period, a number of Common Shares pursuant to Awards
which exceeds 10% of the Outstanding Issue
(iii) no Insider together with such Insider's Associates
shall be issued, within any one year period, a number
of Common Shares pursuant to Awards which exceeds 5%
of the Outstanding Issue; and
(iv) the number of Common Shares reserved for issuance
pursuant to Awards that provide for an option to
purchase Common Shares from treasury to any one
Participant shall not exceed 5% of the Outstanding
Issue.
For purposes of this section, the term "Outstanding Issue" shall have the
meaning ascribed to it in the Policy. In addition, for purposes of clauses (ii)
and (iii) above, "Outstanding Issue" shall be determined on the basis of the
number of shares that are outstanding immediately prior to the share issuance in
question, excluding shares issued pursuant to share compensation arrangements
over the preceding one-year period.
6. Agreements Evidencing Awards
Each Award granted under the Plan (except an Award of unrestricted Common
Shares) shall be evidenced by a written document which shall contain such
provisions and conditions as the Committee in its discretion deems appropriate.
The Committee may grant Awards in tandem with or, subject to pre-clearance with
the TSE, in substitution for any other Award or Awards granted under this Plan
or any award granted under any other plan of the Company. By accepting an Award
pursuant to the Plan, a Participant thereby agrees that the Award shall be
subject to all of the terms and conditions of the Plan and the applicable Award
Agreement.
7. No Rights as a Shareholder
No Participant shall have any of the rights of a shareholder of the Company with
respect to shares subject to such Award until the issuance of a Certificate for
such shares. Except as otherwise provided in Section 15, no adjustments shall be
made for dividends, distributions or other rights (whether ordinary or
extraordinary, and whether in cash, securities or other property) for which the
record date is prior to the date such Certificate is issued.
8. Options, Price, Vesting, Payment, Termination and Incentive Stock Options
(a) The Committee shall advise each Participant of the number of
Option Shares that such Participant is entitled to purchase,
the Option Price, the Option Period (which may not exceed ten
years from the relevant Date of Grant) and the vesting
schedule.
(b) The Committee shall fix the Option Price in its discretion,
provided that
(i) the Option Price shall be fixed by the Committee in
Canadian or U.S. dollars;
(ii) if the Option Price is fixed in Canadian dollars, it
shall be no less than the closing price of the Common
Shares on the TSE on the trading day prior to the
Date of Grant;
(iii) if the Option Price is fixed in U.S. dollars, it
shall be no less than the closing price of the Common
Shares on the NYSE on the trading day prior to the
Date of Grant;
<PAGE>
(iv) if the Common Shares are not listed on the TSE or the
NYSE, the Option Price shall be determined based upon
the trading prices of the Common Shares on any stock
exchange in Canada or the United States on which the
Common Shares are then listed; and
(v) if the Common Shares are not listed on any stock
exchange in Canada or the United States, the Option
Price shall be determined by the Committee in its
sole discretion.
(c) At the time of grant, the Committee may determine when an
Option will become exercisable and may determine that the
Option shall be exercisable in instalments on such terms as to
vesting or otherwise as the Committee deems advisable. Unless
otherwise provided by the Committee, Options will vest, as to
one third of the Options granted, on each of the first, second
and third anniversaries of the Date of Grant, provided that
the Participant is an Employee, Officer, Director or
Consultant at the time of vesting.
(d) A Participant may from time to time and at any time during the
Option Period, elect to purchase all or a portion of the
purchase by delivering to the Company at its registered
office, a notice in writing which shall specify the number of
Option Shares that the Participant desires to purchase and
shall be accompanied by payment in full of the purchase price
for such Option Shares. Payment may be made by cash, certified
cheque, bank draft or money order, payable to the order of the
Company, or if permitted by the Committee, by means of
tendering Common Shares valued at the Market Price or as
otherwise required by applicable law, or surrendering another
Award, subject to pre-clearance with the TSE, or any
combination thereof. The Committee shall determine acceptable
methods to exercise an Option as it deems appropriate.
(e) An Option may be in the form of an incentive stock option
("Incentive Stock Option"), which, in addition to being
subject to the applicable terms, conditions, and limitations
established by the Committee with respect to Options, complies
with section 421 and 422 of the Code, and which is so
designated in the applicable Award Agreement. No Incentive
Stock Option shall be granted more than ten years after the
date of this Plan. Incentive Stock Options may be granted only
to Participants who are Employees.
(f) If, for any reason, a Participant's employment with the
Company and any of its subsidiaries is terminated for any
reason whatsoever, whether for or without cause and whether
with or without reasonable notice, or a Participant who is a
Director or Consultant ceases to be a Director or a
Consultant, as the case may be, and such termination of
employment, Board position or Consulting Contract is due to:
(i) (A) normal retirement under the Company's then existing
policies; (B) early retirement at the request of the
Company; (C) death; or (D) Disability, then there shall
be immediate vesting upon the effective date such
employment is terminated or a Participant who is a
Director or Consultant ceases to be a Director or
Consultant, as the case may be (and not at the date any
period of reasonable notice would expire in the case of
termination by the Company)(the "Termination Date") of
the Awards that would otherwise have vested in the 12
month period following the Termination Date, and all
Awards that would have vested after such 12 month
period following the Termination Date shall expire. All
Awards that have vested in such Participant shall be
exercisable during the period which is the shorter of:
<PAGE>
(x) the remainder of the applicable Option Period (or
other applicable exercise period); and (y) 180 days
after the Termination Date, after which period, such
Awards may no longer be exercised; or
(ii) any reason other than those specified in item (i) (A)
to (D), inclusive, then the Awards that have vested
(but not yet expired) before the Termination Date shall
be exercisable during the period which is the shorter
of: (x) the remainder of the applicable Option Period
(or other applicable exercise period), and (y) 90 days
after the Termination Date, after which period, the
Awards may no longer be exercised. Any Awards that have
not vested before the Termination Date shall expire on
the Termination Date.
9. Share Appreciation Rights
The Committee may grant share appreciation rights in such amounts and subject to
such terms and conditions as the Committee shall determine in its discretion.
The grantee of a share appreciation right shall have the right, subject to the
terms of the Plan and the applicable Award Agreement, to receive from the
Company an amount equal to (a) the excess of the Fair Market Value of a Common
Share on the date of exercise of the share appreciation right, over (b) the
exercise price of such right as set forth in the Award Agreement, multiplied by
(c) the number of Common Shares with respect to which the share appreciation
right is exercised. Payment upon exercise of a share appreciation right may be
in cash, Common Shares (valued at Fair Market Value), or any combination
thereof, all as the Committee shall determine in its discretion.
10. Restricted Shares
(a) The Committee may grant restricted shares to Participants in
such amounts and subject to such terms and conditions as the
Committee shall determine in its discretion.
(b) Promptly after a Participant accepts a restricted share Award,
the Company shall issue in the Participant's name a
Certificate for the Common Shares covered by the Award. Upon
the issuance of such Certificate, the Participant shall have
the rights of a shareholder with respect to the restricted
shares, subject to any restrictions and conditions as the
Committee in its discretion may include in the applicable
Award Agreement. Unless the Committee shall otherwise
determine, any Certificate issued evidencing shares of
restricted shares shall remain in the possession of the
Company or its designated agent until such shares are free of
any restrictions specified in the applicable Award
Agreement.
(c) Restricted shares may not be sold, exchanged, transferred,
assigned, pledged, hypothecated or otherwise disposed of
(including through the use of any cash-settled instrument)
except as specifically provided in the applicable Award
Agreement. The Committee at the time of grant shall specify
the date or dates (which may depend upon or be related to the
attainment of performance goals and other conditions) on which
the nontransferability of the restricted shares shall lapse.
11. Restricted Share Units
The Committee may grant Awards of restricted share units to Participants in such
amounts and subject to such terms and conditions as the Committee shall
determine in its discretion. A Participant who is granted a restricted share
unit will have only the rights of a general unsecured creditor of the Company
until payment of Common Shares, cash or other securities or property is made as
specified in the applicable Award Agreement. On the payment date, the
Participant of each restricted share unit not previously forfeited under the
terms of the applicable Award Agreement shall receive Common Shares, cash,
securities or other property equal in value to the Common Shares or a
combination thereof, as specified by the Committee.
<PAGE>
12. Performance Shares and Share Units
The Committee may grant Awards of performance shares to Participants in the form
of actual Common Shares or share units having a value equal to an identical
number of Common Shares in such amounts and subject to such terms and conditions
as the Committee shall determine in its discretion. A Participant who is granted
a performance share unit will have only the rights of a general unsecured
creditor of the Company until payment of Common Shares, cash or other securities
or property is made as specified in the applicable Award Agreement. In the event
that a Certificate is issued in respect of performance shares, such Certificate
shall be registered in the name of the Participant but shall be held by the
Company or its designated agent until the time the performance shares are
earned. The Committee shall determine in its sole discretion whether performance
shares and performance share units shall be paid in Common Shares, cash,
securities or other property, or a combination thereof.
13. Other Stock-Based Awards
The Committee may grant other types of equity-based or equity-related Awards to
Participants (including the grant of unrestricted Common Shares) in such amounts
and subject to such terms and conditions as the Committee shall in its
discretion determine. Such Awards may entail the transfer of actual Common
Shares to Participants, or payment in cash or otherwise of amounts based on the
value of Common Shares, and may include, without limitation, Awards designed to
comply with or take advantage of the applicable local laws of foreign
jurisdictions.
14. Withholding of Tax
If the Company determines that under the requirements of applicable taxation
laws it is obliged to withhold for remittance to a taxing authority any amount
as a condition of the issuance of any Common Shares pursuant to any Awards, the
Company may, prior to and as a condition of issuing the Common Shares, require
the Participant to pay to the Company, in addition to and in the same manner as
the purchase price for the Common Shares, such amount as the Company is obliged
to remit to such taxing authority in respect of the issuance of the Common
Shares. Any such additional payment shall, in any event, be due no later than
the date as of which any amount with respect to the issuance of the Common Share
exercise must be remitted by the Company to such taxing authority. Payment may
be in cash or, with the prior approval of and upon conditions established by the
Committee, by withholding or tendering of Common Shares, valued at the closing
trading price of the Common Shares on the TSE for the previous day prior to the
date in question.
15. Adjustment in Shares
The number of Common Shares subject to this Plan, the number of Common Shares
available under Awards granted, the Option Price, and the exercise price for
share appreciation rights and other stock-based Awards shall be adjusted from
time to time, in such manner and by such procedure deemed appropriate by the
Committee, to reflect adjustments in the number of Common Shares arising as a
result of subdivision, stock dividends, consolidations or reclassification of
the Common Shares or other relevant changes in the authorized or issued capital
of the Company. No fractional Common Shares shall be issued on the exercise of
an Award. Accordingly, if, as a result of any adjustment under this Section, a
Participant would become entitled to a fractional Common Share, the Participant
shall have the right to acquire only the adjusted number of full Common Shares
and no payment or other adjustment will be made with respect to the fractional
Common Shares so disregarded.
16. Required Consents
(a) If the Committee shall at any time determine that any consent
(as hereinafter defined) is necessary or desirable as a
condition of, or in connection with, the granting of any
Award, the issuance of Common Shares or the delivery of any
cash, securities or other property under the Plan, or the
taking of any other action thereunder (each such action being
hereinafter referred to as a "plan action"), then such plan
action shall not be taken, in whole or in part, unless and
until such consent shall have been effected or obtained to the
full satisfaction of the Committee.
<PAGE>
(b) The term "consent" as used herein with respect to any plan
action includes (i) any and all listings, registrations or
qualifications in respect thereof upon any stock exchange or
under any applicable law, rule or regulation, (ii) any and all
written agreements and representations by the grantee with
respect to the disposition of shares, or with respect to any
other matter, which the Committee shall deem necessary or
desirable to comply with the terms of any such listing,
registration or qualification or to obtain an exemption from
the requirement that any such listing, qualification or
registration be made and (iii) any and all other consents,
clearances and approvals in respect of a plan action by any
governmental or other regulatory body or any stock exchange or
self-regulatory agency having jurisdiction.
17. Transfer and Assignment
Except to the extent otherwise provided in the applicable Award Agreement, no
Award or right granted to any person under the Plan shall be sold, exchanged,
transferred, assigned, pledged, hypothecated or otherwise disposed of (including
through the use of any cash-settled instrument) other than by will or by the
laws of descent and distribution, and all such Awards and rights shall be
exercisable during the life of the grantee only by the grantee or the grantee's
legal representative. Notwithstanding the immediately preceding sentence, the
Committee may permit, under such terms and conditions that it deems appropriate
in its sole discretion, a grantee to transfer any Award (other than Options) to
any person or entity that the Committee so determines.
18. Employment and Board Position Non-Contractual
The granting of an Award to a Participant under this Plan does not confer upon
the Participant any right to continue as an Employee, Officer, Consultant or as
a Director, as the case may be, nor does it interfere in any way with the right
of the Participant or the Company to terminate the Participant's employment or a
Consultant Contract at any time, or the shareholders' right to elect or remove
Directors.
19. Code Section 162(m) Provisions Applicable to Restricted Officers
Awards under this Plan to Restricted Officers are intended to come within the
exception to the nondeductibility of compensation exceeding $1,000,000 for
qualified performance-based compensation under Treasury Regulation 1.162-27(e),
unless otherwise provided in the Award Agreement. Any ambiguities or
inconsistencies in the construction of this Plan shall be interpreted to give
effect to this intention, and if any provision of the Plan is found not to be in
compliance with such Regulation, such provision shall be null and void to the
extent required to permit the Award to be considered qualified performance-based
compensation. Therefore, notwithstanding anything in this Plan to the contrary,
the requirements of Treasury Regulation Section 1.162-27(e) for qualified
performance-based compensation further limits Awards intended to meet the
requirements of Code Section 162(m).
20. Administration of Plan
(a) This Plan shall be administered by the Committee. The
Committee shall have the power and authority to exercise all
of the powers granted to it under the Plan, construe,
interpret and implement the Plan and any Award Agreements,
prescribe, amend and rescind rules and regulations relating to
the Plan, including rules governing its own operations, make
all determinations necessary or advisable in administering the
Plan, correct any defect, supply any omission and reconcile
any inconsistency in the Plan, amend the Plan to reflect
changes in applicable law, subject to pre-clearance with the
TSE, unless otherwise provided in any Award Agreement with
respect to a particular Award, and subject to pre-clearance
with the TSE, amend the Award Agreement in any respect,
including, without limitation, to accelerate the time or times
at which the Award becomes unrestricted or may be exercised,
waive or amend any goals, restrictions or conditions set forth
in the Award Agreement, or impose new goals, restrictions and
conditions, or reflect a change in the grantee's circumstances
(eg., a change to part-time employment status), provided such
<PAGE>
amendment is not adverse to the Participant holding such
Award, or consented to by such Participant, determine whether,
to what extent and under what circumstances Awards may be
settled or exercised in cash, Common Shares, other securities,
other Awards (subject to pre-clearance with the TSE) or other
property, or cancelled, forfeited or suspended, Common Shares,
other securities, other Awards or other property and other
amounts payable with respect to an Award shall be deferred
either automatically or at the election of the holder thereof
or of the Committee, and Awards shall be settled by the
Company or any of its subsidiaries.
(b) Any determination by the Committee shall be final and
conclusive on all persons affected thereby unless otherwise
determined by the Board of Directors.
(c) The day-to-day administration of this Plan may be delegated to
such officers and employees of the Company or any subsidiary
of the Company as the Committee shall determine.
(d) To the extent required for transactions under the Plan to
qualify for the exemptions available under Rule 16b-3
promulgated under the Exchange Act, all actions relating to
Awards to persons subject to Section 16 of the Exchange Act
shall be taken by the Board or a committee or subcommittee of
the Board composed of two or more members, each of whom is a
"non-employee director" within the meaning of Exchange Act
Rule 16b-3. To the extent required for compensation realized
from Awards under the Plan to be deductible by the Company
pursuant to Section 162(m) of the Code, such Awards may be
granted by a committee or subcommittee of the Board composed
of two or more members, each of whom is an "outside director"
within the meaning of Code Section 162(m).
21. Notices
All written notices to be given by the Participant to the Company may be
delivered personally or by registered mail, postage prepaid, addressed as
follows:
Meridian Gold Inc.
Suite 200
9670 Gateway Drive
Reno, NV 89511-8997
Attention: Chief Financial Officer
Any notice given by the Participant pursuant to the terms of the Option shall
not be effective until actually received by the Company at the above address.
Any notice to be given to the Participant shall be sufficiently given if
delivered personally or by postage prepaid mail to the last address of the
Participant on the records of the Company and shall be effective seven days
after mailing.
22. Corporate Action
Nothing contained in this Plan or any Award granted shall be construed so as to
prevent the Company or any subsidiary of the Company from taking corporate
action which is deemed by the Company or the subsidiary to be appropriate or in
its best interest, whether or not such action would have an adverse effect on
this Plan or on any Award granted.
23. Amendments
The Board of Directors shall have the right, in its sole discretion, to alter,
amend or discontinue this Plan from time to time and at any time. No such
amendment or discontinuation may, without the consent of a Participant, alter or
impair such Participant's rights or increase such Participant's obligations with
respect to an Award previously granted. Any amendment to this Plan is subject to
the prior approval of applicable securities regulatory authorities and may
require the approval of the Company's shareholders.
<PAGE>
24. Governing Law
This Plan is established under the laws of Ontario and the rights of all parties
and the construction and effect of each provision of this Plan shall be
according to the laws of Ontario and the laws of Canada applicable in Ontario.
25. Government Regulation
The Company's obligation to issue and deliver Common Shares under any Award is
subject to:
(a) the satisfaction of all requirements under applicable
securities law in respect thereof and obtaining all regulatory
approvals as the Company shall determine to be necessary or
advisable in connection with the authorization, issuance or
sale thereof;
(b) the admission of such Common Shares to listing on any stock
exchange in Canada or the United States on which Common Shares
may then be listed; and
(c) the receipt from the Participant of such representations,
agreements and undertakings as to future dealings in such
Common Shares as the Company determines to be necessary or
advisable in order to safeguard against the violation of the
securities laws of any jurisdiction.
In this connection, the Company shall take all reasonable steps to obtain such
approvals and registrations as may be necessary for the issuance of such Common
Shares in compliance with applicable securities laws and for the listing of such
Common Shares on a stock exchange in Canada or the United States on which the
Common Shares are then listed.
26. Approvals
This Plan shall be subject to shareholder approval and acceptance by the TSE in
compliance with all conditions imposed by the TSE. Any Awards granted prior to
such acceptance shall be conditional upon such acceptance being given and any
conditions complied with and no Options may be exercised unless such acceptance
is given and such conditions are complied with.
DATED March 5, 1999.
MERIDIAN GOLD INC.
/S/
---------------------
David S. Robertson
Chairman
<PAGE>
EXHIBIT II
SHAREHOLDER RIGHTS PLAN
SHAREHOLDER RIGHTS PLAN AGREEMENT
DATED AS OF
_______________, 1999
BETWEEN
MERIDIAN GOLD INC
AND
THE TRUST COMPANY OF BANK OF MONTREAL
AS RIGHTS AGENT
<PAGE>
ARTICLE 1 - INTERPRETATION.....................................................2
1.1 Certain Definitions..........................................2
1.2 Currency....................................................10
1.3 Headings....................................................10
1.4 Calculation of Number and Percentage of Beneficial
Ownership of Outstanding Voting Shares......................10
1.5 Acting Jointly or in Concert................................10
1.6 Generally Accepted Accounting Principle.....................10
ARTICLE 2 - THE RIGHTS........................................................10
2.1 Legend on Common Share Certificates.........................10
2.2 Initial Exercise Price; Exercise of Rights;
Detachment of Rights........................................11
2.3 Adjustments to Exercise Price; Number of Rights.............13
2.4 Date on Which Exercise Is Effective.........................16
2.5 Execution, Authentication, Delivery and Dating of
Rights Certificates.........................................16
2.6 Registration, Transfer and Exchange.........................16
2.7 Mutilated, Destroyed, Lost and Stolen Rights Certificates...17
2.8 Persons Deemed Owners of Rights.............................17
2.9 Delivery and Cancellation of Certificates...................18
2.10 Agreement of Rights Holders.................................18
2.11 Rights Certificate Holder Not Deemed a Shareholder..........18
ARTICLE 3 - ADJUSTMENTS TO THE RIGHTS IN THE..................................19
3.1 Flip-in Event...............................................19
ARTICLE 4 - THE RIGHTS AGENT..................................................20
4.1 General.....................................................20
4.2 Merger, Amalgamation or Consolidation or Change of Name
of Rights Agent.............................................20
4.3 Duties of Rights Agent......................................20
4.4 Change of Rights Agent......................................22
ARTICLE 5 - MISCELLANEOUS.....................................................22
5.1 Redemption, Waiver..........................................22
5.2 Expiration..................................................23
5.3 Issuance of New Rights Certificates.........................23
5.4 Supplements and Amendments..................................23
5.5 Fractional Rights and Fractional Shares.....................25
5.6 Rights of Action............................................25
5.7 Regulatory Approvals........................................25
5.8 Declaration as to Non-Canadian Holders......................25
5.9 Notices.....................................................25
5.10 Costs of Enforcement........................................26
5.11 Successors..................................................26
5.12 Benefits of this Agreement..................................26
5.13 Governing Law...............................................26
5.14 Severability................................................27
5.15 Effective Date..............................................27
5.16 Determinations and Actions by the Board of Directors........27
5.17 Time of the Essence.........................................27
5.18 Execution in Counterparts...................................27
<PAGE>
SHAREHOLDER RIGHTS PLAN AGREEMENT
MEMORANDUM OF AGREEMENT, dated as of o, 1999 between Meridian Gold Inc.
("Meridian") a corporation incorporated under the laws of Canada and The Trust
Company of Bank of Montreal, a trust company incorporated under the laws of
Canada (the "Rights Agent");
RECITALS:
A. The Board (as defined below) has determined that it is in the best
interests of Meridian to adopt a shareholder rights plan to ensure, to the
extent possible, that all shareholders of Meridian are treated fairly in
connection with any take-over bid for Meridian;
B. In order to implement the adoption of a shareholder rights plan as
established by this Agreement, the Board has:
(a) authorized the issuance, effective at the Effective Time (as
defined below), of one Right (as defined below) in respect of each
Common Share (as defined below) on the Effective Date (the "Record
Time"); and
(b) authorized the issuance of one Right in respect of each Common
Share of Meridian issued after the Record Time and prior to the
earlier of the Separation Time (as defined below) and the
Expiration Time (as defined below);
C. Each Right entitles the holder thereof, after the Separation Time, to
purchase securities of Meridian pursuant to the terms and subject to the
conditions set forth in this Agreement;
D. Meridian desires to appoint the Rights Agent to act on behalf of Meridian
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 defined below), the exercise of Rights and other matters
referred to in this Agreement;
E. The Board proposes that this Agreement be in place for a period of ten
years, subject to the Agreement being reconfirmed by Meridian's
shareholders every three years; and
F. The Board approved the adoption of this Agreement on February 18, 1999, and
this Agreement shall only become effective as at the date that Meridian's
shareholders confirm the Agreement in the manner provided for in Section
5.15 of this Agreement.
NOW THEREFORE, in consideration of the premises and the respective
covenants and agreements set forth in this Agreement, and subject to such
covenants and agreements, the parties hereby agree as follows:
<PAGE>
ARTICLE 1 - INTERPRETATION
1.1 Certain Definitions
For purposes of this Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" means any Person who is the Beneficial owner of 20% or
more of the outstanding Voting Shares of any class; provided, however, that
the term "Acquiring Person" shall not include:
(i) Meridian or any Subsidiary of Meridian;
(ii)any Person who becomes the Beneficial owner of 20% or more of the
outstanding Voting Shares as a result of one or any combination of (A)
an acquisition or redemption by Meridian of Voting Shares of any class
which, by reducing the number of Voting Shares outstanding, increases
the proportionate number of Voting Shares Beneficially owned by such
Person to 20% or more of the Voting Shares then outstanding, (B)
Permitted Bid Acquisitions, (C) Pro Rata Acquisitions, or (D) Exempt
Acquisitions; provided, however, that if a Person becomes the
Beneficial owner of 20% or more of the outstanding Voting Shares by
reason of one or any combination of the operation of (A), (B), (C) or
(D) above and such Person thereafter becomes the Beneficial owner of
more than 1% of the number of outstanding Voting Shares other than
pursuant to one or more of any combination of (A), (B), (C) or (D)
above, as the case may be, 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 calendar days after the Disqualification Date (as
defined below), any Person who becomes the Beneficial owner of 20% or
more of the outstanding Voting Shares as a result of such Person
becoming disqualified from relying on Clause 1.1(f)(B) solely because
such Person is making or has announced a current intention to make a
Take-over Bid or any plan or proposal relating thereto or resulting
therefrom, 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 a public announcement of facts indicating
that any Person is making or has announced a current intention to make,
has participated in, has made, proposes or intends to make or is
participating in a Take-over Bid;
(iv) an underwriter or member of a banking or selling group that becomes the
Beneficial owner of 20% or more of the Voting Shares in connection with
a bona fide distribution of securities of Meridian; or
(v) a Person (a "Grandfathered Person") who is the Beneficial owner of more
than 20% of the outstanding Voting Shares determined as at the Record
Time, and is not an Acquiring Person as that term is defined in the
shareholder rights plan agreement dated as of July 31, 1996 between
Meridian and The Trust Company of Bank of Montreal, 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 the Record Time: (1) cease to own more than 20% of the
outstanding Voting Shares; or (2) become the Beneficial owner of any
additional Voting Shares that increases its Beneficial ownership of
Voting Shares by more than 1% of the number of Voting Shares
outstanding as at the Record Time, other than through an acquisition to
which a Person becomes a Beneficial Owner of additional Common Shares
or Voting Shares by reason of one or any combination of the operation
of Clauses 1.1(a)(ii)(A), (B), (C) or (D).
(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 a specified Person.
(c) "Agreement" means this shareholder rights plan agreement, as amended or
supplemented from time to time;
(d) "annual cash dividend" means cash dividends paid in any fiscal year of
Meridian, to the extent that such cash dividends do not exceed in the
aggregate, the greatest of:
<PAGE>
(i) 200% of the aggregate amount of cash dividends declared payable by
Meridian on its Common Shares in its immediately preceding fiscal year;
(ii) 300% of the arithmetic mean of the aggregate amounts of the annual cash
dividends declared payable by Meridian on its Common Shares in its
three immediately preceding fiscal years;
(iii)100% of the aggregate consolidated net income of Meridian, before
extraordinary items, for its immediately preceding fiscal year;
(e) "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 who has the
same residence as that Person;
(f) 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 become the owner at law or in
equity 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 customary agreements with and between underwriters and/or banking
group members and/or selling group members with respect to a
distribution of securities and other than 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; and
(iii)any securities which are Beneficially owned within the meaning of
Clauses 1.1(f)(i) or (ii) by any other Person with whom 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) because such security has been deposited or tendered pursuant to
any Take-over Bid made by such Person, made by any of such
Person's Affiliates or Associates or made by any other Person
referred to in Clause 1.1(f)(iii), until the earliest of such
deposited or tendered security has been taken up or paid for;
(B) because such Person, any of such Person's Affiliates or Associates
or any other Person referred to in Clause 1.1(f)(iii), 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
(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, such Estate Accounts or
for such Other Accounts; or (3) such Person is 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 or various public bodies; or (4) such
Person (the "Administrator") is the administrator or trustee
of one or more pension funds, plans or related trusts (a "Plan")
registered under the laws of Canada or any province thereof or
the laws of the United States of America or any state thereof or
is a Plan; or (5) such Person is a Crown agent or agency;
provided, in any of the above cases, that the Investment Manager, the
Trust Company, the Statutory Body, the Administrator, the Plan, or the
<PAGE>
Crown agent or agency as the case may be, is not then making a Takeover
Bid 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 Meridian or by means of ordinary market
transactions (including pre-arranged trades entered into in the
ordinary course of business to such Person) 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) because such Person 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 such security, or (3) a Plan with the same
Administrator 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, or (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;
(E) such security has been agreed to be deposited or tendered pursuant
to a Lock-up Agreement, or is otherwise deposited or tendered, to
any Take-over Bid 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; or
(F) such Person is a registered holder of such security as a result of
carrying on the business of, or acting as a nominee of, a
securities depositary.
(g) "Board" means the board of directors of Meridian or any duly constituted
and empowered committee thereof;
(h) "Business Day" means any day other than a Saturday, Sunday or a day on
which banks in Toronto are authorized or obligated by law to close.
(i) "CBCA" means the Canada Business Corporations Act, R.S.C. 1985, C. 44, as
amended, and the regulations made thereunder, and any comparable or
successor laws or regulations thereto;
(j) "Canadian Dollar Equivalent" of any amount which is expressed in United
States Dollars means, on any date, the Canadian dollar equivalent of any
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) "close of business" on any given date means the time on such date (or, if
such date is not a Business Day, the time on the next Business Day) at
which the principal transfer office in Toronto of the transfer agent for
the Common Shares (or, after the Separation Time, the principal transfer
office in Toronto of the Rights Agent) is closed to the public;
(m) "Common Shares" means the common shares in the capital of Meridian;
(n) "Competing Permitted Bid" means a Take-over Bid that:
(i) is made after another Permitted Bid has been made and prior to the
expiry of that other Permitted Bid;
(ii) satisfies all components of the definition of a Permitted Bid other
than the requirements set out 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 dose of business on a date that is no earlier than the
later of: (a) 21 days after the date of the Take-over Bid; and (b) the
<PAGE>
60th day after the earliest date on which any other Permitted Bid that
is then in existence was made;
(o) "controlled" a corporation is "controlled" by another Person or two or more
Persons acting jointly or in concert if:
(i) securities entitled to vote in the election of directors carrying more
than 50% of the votes for the election of directors are held, directly
or indirectly, by or on behalf of the other Person or two or more
Persons acting jointly or in concert; 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;
(p) "Co-Rights Agents" has the meaning given in Subsection 4.1(a);
(q) "Disposition Date" has the meaning given in Subsection 5.1(a);
(r) "Dividend Reinvestment Acquisition" means an acquisition of Voting Shares
of any class pursuant to a Dividend Reinvestment Plan;
(s) "Dividend Reinvestment Plan" means a regular dividend reinvestment or other
plan of Meridian made available by Meridian to holders of its securities
and to holders of securities of a Subsidiary of Meridian, where such plan
permits the holder to direct that some or all of:
(i) dividends paid in respect of shares of any class of Meridian or a
Subsidiary;
(ii) proceeds of redemption of shares of Meridian or a Subsidiary;
(iii)interest paid on evidences of indebtedness of Meridian or a
Subsidiary; or
(iv) optional cash payments;
be applied to the purchase from Meridian of Common Shares;
(t) "Election to Exercise" has the meaning given in Subsection 2.2(d);
(u) "Effective Time" means the earlier of:
(i) the close of business on July 30, 1999;
(ii) the date that an Acquiring Person has become an Acquiring Person; and
(iii) the date that an event occurs that would give rise to the subsequent
separation of rights pursuant to subsections 1.1(uu) and 2.2 of the
rights agreement dated as of the 31st day of July, 1996 between
Meridian Gold Inc. and The Trust Company of Bank of Montreal and, for
this purpose, disregarding the expiration time under that agreement;
<PAGE>
(v) "Exempt Acquisition" means a share acquisition in respect of which the
Board has waived the application of Section 3.1 pursuant to the provisions
of Subsections 5.1(a), (b) or (e);
(w) "Exercise Price" means, 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 of this Agreement,
shall be $25.00;
(x) "Expansion Factor" has the meaning given in Subsection 2.3(a);
(y) "Flip-in Event" means a transaction in or pursuant to which any Person
becomes an Acquiring Person;
(z) "holder" has the meaning given in Section 2.8;
(aa) "Independent Shareholders" means holders of any Voting Shares, other than
(a) any Acquiring Person, (b) any Offeror, (c) any Affiliate or Associate
of any Acquiring Person or Offeror, (d) any Person acting jointly or in
concert with any Acquiring Person or Offeror, and (e) any employee benefit
plan, stock purchase plan, deferred profit sharing plan and any similar
plan or trust for the benefit of employees of Meridian or a Subsidiary of
Meridian, unless the beneficiaries of the plan or trust direct the manner
in which the Voting Shares are to be voted or withheld from voting direct
whether the Voting Shares are to be tendered to a Take-over Bid;
(bb) Lock-up Agreement" means an agreement between an Offeror, any of its
Affiliates or Associates or any other Person acting jointly or in concert
with the Offeror and a Person (the "Locked-up Person") who is not an
Affiliate or Associate of the Offeror or a Person acting jointly or in
concert with the Offeror whereby the Locked-up Person agrees to deposit or
tender the Voting Shares held by the Locked-up Person to the Offeror's
Take-over Bid or to any Take-over Bid made by any of the Offeror's
Affiliates or Associates or made by any other Person acting jointly or in
concert with the Offeror (the "Lock-up Bid"), provided that:
(i) the agreement:
(A) permits the Locked-up Person to withdraw the Voting Shares from
the agreement in order to tender or deposit the Voting Shares to
another Take-over Bid or to support another transaction that
contains an offering price for each Voting Share that is higher
than the offering price contained in or proposed to be contained
in the Lock-up Bid; or
(B) permits the Locked-up Person to withdraw the Voting Shares from
the agreement in order to tender or deposit the Voting Shares to
another Take-over Bid or to support another transaction that
contains an offering price for each Voting Share that exceeds by
as much as or more than a specified amount (the "Specified
Amount") the offering price for each Voting Share contained in or
proposed to be contained in the Lock-up Bid; and (b) does not by
its terms provide for a Specified Amount that is greater than 7%
of the offering price contained in or proposed to be contained in
the Lock-up Bid; and
and, for greater clarity, an agreement that contains a right of first
refusal or requires a period of delay to give an offeror an opportunity
to match a higher price in another take-over bid or other similar
limitation on a Locked-up Person as long as the Locked-up Person can
accept another bid or tender to another transaction;
(ii) no "break-up" fees, "top-up" fees, penalties or other amounts that
exceed in the aggregate one-half of the cash equivalent of any amount
in excess of the amount offered under the Lock-up Bid and that the
Locked-up Person receives pursuant to another Take-over Bid or
transaction shall be payable pursuant to the agreement in the event
that the Locked-up Person fails to tender Voting Shares pursuant
thereto in order to accept the other Take-over Bid or support another
transaction.
(cc) "Market Price" per share of any securities on any date of determination
means the average of the daily closing sale prices per share of such class
of 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 shall have caused the closing sale
prices used to determine the Market Price on any Trading Days not to be
fully comparable with the closing sale price on such date of determination
or, if the date of determination is not a Trading Day, on the immediately
<PAGE>
preceding Trading Day, each such closing sale price so used shall be
appropriately adjusted in a manner analogous to the applicable adjustment
provided for in Section 2.3 in order to make it fully comparable with the
closing sale 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 sale price per share of any securities on any date shall
be:
(i) the closing board lot sale price per share or, if such price is not
available, the average of the closing bid and asked prices, for each
of such securities as reported by the principal Canadian securities
exchange (as determined by volume of trading) on which such securities
are listed or admitted to trading, or if for any reason neither of
such prices is available on such day or the securities are not listed
or admitted to trading on a Canadian securities exchange, the closing
board lot sale price per share or, if such price is not available, the
average of the closing bid and asked prices, for each security as
reported by the principal national securities exchange (as determined
by the volume of trading) on which such securities are listed or
admitted for trading;
(ii) if for any reason none of such prices is available on such date or the
securities are not listed or admitted to trading on a Canadian stock
exchange or a national securities exchange, 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
(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 securities exchange 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 on any such date none of such prices is
available, the closing sale price per share of such securities on such date
shall mean the fair value per share of the securities on such date as
determined by a nationally or internationally recognized investment dealer
or investment banker and provided further that if an event of a type
analogous to any of the events described in Section 2.3 hereof shall have
caused any price used to determine the Market Price on any Trading Day not
to be fully comparable with the price as so determined on the Trading Day
immediately preceding such date of determination, each such 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 price on the Trading Day immediately preceding such date
of determination. 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.
(dd) "Meridian" means Meridian Gold Inc., together, where the context requires,
with its subsidiaries;
(ee) "Nominee" has the meaning given in Subsection 2.2(c);
(ff) "Offer to Acquire" includes:
(i) an offer to purchase or a solicitation of an offer to sell Voting
Shares of any class or classes, and
(ii) an acceptance of an offer to sell Voting Shares of any class or
classes, 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;
(gg) "Offeror" means a Person who has announced and has not withdrawn an
intention to make or who has made and has not withdrawn a Take-over Bid,
other than a Person who has completed a Permitted Bid, a Competing
Permitted Bid or an Exempt Acquisition;
(hh) "Offeror's Securities" means Voting Shares Beneficially owned by an Offeror
on the date of the Offer to Acquire;
<PAGE>
(ii) "Permitted Bid" means a Take-over Bid made by an Offeror that is made by
means of a Take-over Bid circular and 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 Meridian, 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 and paid for pursuant
to the Take-over Bid (A) prior to the close of business on a date which
is not less than 60 days following the date of the Take-over Bid and
(B) unless at such date more than 50% of the Voting Shares held by
Independent Shareholders shall have been deposited or tendered pursuant
to the Take-over Bid and not withdrawn;
(iii) unless the Take-over Bid is withdrawn, the Take-over Bid contains an
irrevocable and unqualified provision that Voting Shares may be
deposited pursuant to such Take-over Bid at any time during the period
described in Clause 1.1(ii)(ii) and that any Voting Shares deposited
pursuant to the Take-over Bid may be withdrawn until taken up and paid
for; and
(iv)unless the Take-over Bid is withdrawn, the Take-over Bid contains an
irrevocable and unqualified provision that in the event that the
deposit condition set forth in Clause 1.1(ii)(ii) is satisfied 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;
(jj) "Permitted Bid Acquisition" means an acquisition of Voting Shares made
pursuant to a Permitted Bid or a Competing Permitted Bid;
(kk) "Person" includes an individual, firm, association, trustee, executor,
administrator, legal personal representative, body corporate, corporation,
trust, partnership, joint venture, syndicate or other form of
unincorporated association, a government and its agencies or
instrumentalities, any entity or group whether or not having legal
personality and any of the foregoing acting in any derivative,
representative or fiduciary capacity;
(ll) "Pro Rata Acquisition" means an acquisition of Voting Shares pursuant to:
(i) a Dividend Reinvestment Acquisition; or (ii) pursuant to a Dividend
Reinvestment Plan; or (iii) pursuant to the receipt and/or exercise of
rights issued by Meridian to all the holders of Voting Shares of Meridian
to subscribe for or purchase Voting Shares of Meridian, provided that such
rights are acquired directly from Meridian as part of a bona fide rights
offering and not from any other Person; or (iv) pursuant to a distribution
by Meridian to the public 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 a
distribution by way of private placement by Meridian, provided that the
Person does not thereby acquire a greater percentage of such Voting Shares,
or securities convertible or exchangeable for Voting Shares, than the
Person's percentage of Voting Shares Beneficially owned immediately prior
to such acquisition;
(mm) "Record Time" has the meaning set forth in the recitals to this Agreement;
(nn) "Redemption Price" has the meaning given in Subsection 5.1(c);
(oo) "Right" means a right to purchase a Common Share of Meridian, upon the
terms and subject to the conditions set forth in this Agreement;
(pp) "Rights Certificate" means the certificates representing the Rights after
the Separation Time, which shall be substantially in the form of Attachment
1;
(qq) "Rights Holders' Special Meeting" means a meeting of the holders of Rights
called by the Board for the purpose of approving a supplement or amendment
to this Agreement pursuant to Subsection 5.4(c);
<PAGE>
(rr) "Rights Register" has the meaning given in Subsection 2.6(a);
(ss) "Securities Act (Ontario)" means the Securities Act, R.S.0 1990, c.S.5, as
amended, and the regulations thereunder, and any comparable or successor
laws or regulations thereto;
(tt) "Separation Time" means the close of business on the tenth Trading Day
after the earlier of:
(i) the Stock Acquisition Date;
(ii) the date of the commencement of or first public announcement of the
intent of any Person (other than Meridian or any Subsidiary of
Meridian) to commence a Take-over Bid (other than a Permitted Bid or a
Competing Permitted Bid, as the case may be),
(iii)the date upon which a Permitted Bid or Competing Permitted Bid cease
to be such,
or such later time as may be determined by the Board, provided that, if any
Take-over Bid referred to in this Clause (ii) expires, is cancelled,
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 made;
(uu) "Special Meeting" means a special meeting of the holders of Voting Shares,
called by the Board for the purpose of approving a supplement, amendment or
variation to this Agreement pursuant to Subsections 5.4(b) or 5.4(c);
(vv) "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 U.S. Exchange Act) by Meridian or an Acquiring Person
that an Acquiring Person has become such;
(ww)"Subsidiary": a corporation is a Subsidiary of another corporation if:
(i) it is controlled by: (A) that other, (B) that other and one or more
corporations each of which is controlled by that other, or (C) two or
more corporations each of which is controlled by that other, or
(ii) it is a Subsidiary of a corporation that is that other's Subsidiary;
(xx) "Take-over Bid" means an Offer to Acquire Voting Shares or securities
convertible into Voting Shares if, assuming that the Voting Shares or
convertible securities subject to the Offer to Acquire are acquired and are
Beneficially owned at the date of such Offer to Acquire by the Person
making such Offer to Acquire, such Voting Shares (including Voting Shares
that may be acquired upon conversion of securities convertible into Voting
Shares) together with the Offeror's Securities, constitute in the aggregate
20% or more of the outstanding Voting Shares at the date of the offer to
Acquire;
(yy) "Trading Day", when used with respect to any securities, means a day on
which the principal Canadian securities 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
securities exchange, a Business Day;
(zz) "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 from time to time acting in good faith;
(aaa)"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; and
<PAGE>
(bbb)"Voting Shares" means the Common Shares and any other shares in the capital
of Meridian entitled to vote generally in the election of all elected
directors.
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 of this Agreement 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
For purposes of this Agreement, the percentage of Voting Shares of any class
Beneficially owned by any Person, shall be and be deemed to be the product
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.
Where any Person is deemed to Beneficially own unissued Voting Shares, such
Voting Shares shall be deemed to be outstanding for the purpose of calculating
the percentage of Voting Shares owned by such Person.
1.5 Acting Jointly or in Concert
For purposes of this Agreement, a Person is acting jointly or in concert with
every Person who, as a result of any agreement, commitment or understanding
whether formal or informal, with the first Person, acquires or offers to acquire
Voting Shares (other than customary agreements with and between underwriters
and/or banking group members and/or selling group members with respect to a
public offering or private placement of securities or pledges of securities in
the ordinary course of business.
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 the recommendations at the
relevant time of the Canadian Institute of Chartered Accountants, or any
successor institute, applicable on a consolidated basis (unless otherwise
specifically provided in this Agreement 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 in
this Agreement or as otherwise agreed in writing by the parties, be made in
accordance with generally accepted accounting principles applied on a consistent
basis.
ARTICLE 2- THE RIGHTS
2.1 Legend on Common Share Certificates
Certificates for the Common Shares that 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 and shall bear the
following legend:
<PAGE>
"Until the Separation Time (as defined in the Rights Agreement referred
to below), this certificate also evidences rights of the holder
described in a Shareholder Rights Plan Agreement dated as of [ , 1999]
(the "Rights Agreement") between Meridian Gold Inc. (the "Corporation")
and The Trust Company of Bank of Montreal, the terms of which are
incorporated herein by reference and a copy of which is on file at the
registered office of the Corporation. Under certain circumstances set
out in the Rights Agreement, the rights may expire, may become null and
void 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 Rights Agreement to the holder of this
certificate without charge as soon as practicable after receipt of a
written request therefor."
2.2 Initial Exercise Price; Exercise of Rights; Detachment of Rights
(A) Subject to adjustment as set forth below, each Right will entitle the
holder thereof, from and after the Separation Time and prior to the
Expiration Time, to purchase one Common Share for the Exercise Price (and
the Exercise Price and number of Common Shares are subject to adjustment as
set forth below).
Notwithstanding any other term of this Agreement, any Rights held by
Meridian or any of its Subsidiaries shall be void.
(B) Until the Separation Time,
(i) the Rights shall not be exercisable and no Right may be exercised; and
(ii) each Right will be evidenced by the certificate for the associated
Common Share of Meridian 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
Meridian.
(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, Meridian 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 other Person whose
Rights are or become void pursuant to the provisions of subsection 3.1(b)
hereof 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 Meridian (Meridian 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
Meridian may deem appropriate and as are not inconsistent with the terms 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) in respect of all Common
Shares held of record by it which are not Beneficially owned by an
Acquiring Person. In order for Meridian to determine whether any Person is
holding Common Shares which are Beneficially owned by another Person,
Meridian may require such first mentioned Person to furnish such
information and documentation as Meridian deems necessary or appropriate in
order to make such determination.
(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 in the manner specified in the Rights Certificate:
(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
<PAGE>
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 Meridian, of a sum equal to the Exercise Price multiplied
by the number of Rights being exercised and a sum sufficient to cover
any withholding taxes payable by a holder who is a non-resident of
Canada for purposes of the Income Tax Act (Canada) in respect of the
exercise of the Rights or the fact that the Rights have been exercised
and any transfer tax or similar 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 Common
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 Meridian in the event that Meridian 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 Common Shares to be purchased (Meridian hereby
irrevocably authorizing its transfer agents to comply with all such
requisitions);
(ii)when appropriate, requisition from Meridian the amount of cash to be
paid in lieu of issuing fractional Common 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) tender to Meridian all payments received on the exercise of the 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 Subsection 5.5(a))
will be issued by the Rights Agent to such holder or to such holder's duly
authorized assigns.
(G) Meridian covenants and agrees that it will:
(i) take all such action as may be necessary and within its power to ensure
that all Common Shares delivered upon exercise of Rights shall, at the
time of delivery of the certificates for such Common Shares (subject to
payment of the Exercise Price), be duly and validly authorized,
executed, issued and delivered and 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 CBCA, the Securities Act (Ontario), and
the securities laws or comparable legislation of each of the provinces
of Canada and any other applicable law, rule or regulation, in
connection with the issuance and delivery of the Rights Certificates
and the issuance of any Common Shares upon exercise of Rights;
(iii) use reasonable efforts to cause all Common Shares issued upon
exercise of Rights to be listed on the principal stock exchanges on
which such Common Shares were traded immediately prior to the Stock
Acquisition Date;
(iv)cause to be reserved and kept available out of the authorized and
unissued Common Shares, the number of Common Shares that, as provided
in this Agreement, will from time to time be sufficient to permit the
exercise in full of all outstanding Rights;
(v) pay when due and payable, if applicable, any and all federal,
provincial and municipal transfer taxes and similar charges (not
including any income or capital taxes of the holder or exercising
<PAGE>
holder or any liability of Meridian to withhold tax) which may be
payable in respect of the original issuance or delivery of the Rights
Certificates, or certificates for Common Shares to be issued upon
exercise of any Rights, provided that Meridian 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 Common Shares in a name
other than that of the holder of the Rights being transferred or
exercised; and
(vi)after the Separation Time, except as permitted by Section 5.1 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.
Meridian shall provide the Rights Agent with notice of any such adjustment.
(A) In the event Meridian shall at any time after the date of this Agreement:
(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 capital stock) other than
pursuant to any optional stock dividend program;
(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
capital stock) 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 an event occurs
which would require an adjustment under both this Section 2.3 and
subsection 3.1(a), the adjustment provided for in this Section 2.3 shall be
in addition to, and shall be made prior to, any adjustment required under
subsection 3.1(a).
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, Meridian 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 in this Agreement as nearly equivalent to Common
Shares as may be practicable and appropriate under the circumstances and
Meridian and the Rights Agent agree to amend this Agreement in order to
effect such treatment.
<PAGE>
In the event Meridian 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 Meridian 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, 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 (whether from treasury or otherwise) 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 Meridian; provided, however, that, in all such cases, the right to
purchase Common Shares is at a price per share of not less than 95% of the
current market price per share (determined as provided in such plans) of
the Common Shares.
(C) In the event Meridian 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 referred to in
Section 2.3(a)(i), 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)), 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 (as determined in good
faith by the Board, 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), 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.
<PAGE>
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 in this Agreement to the contrary, no adjustment
in the Exercise Price shall be required unless such adjustment would
require an increase or decrease of at least 1% 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 Meridian 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 Clauses 2.3(a)(i) or
(iv) above, if the Board acting in good faith determines that the
adjustments contemplated by Subsections 2.3(a), (b) and (c) above in
connection with such transaction will not appropriately protect the
interests of the holders of Rights, the Board 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) above, such adjustments,
rather than the adjustments contemplated by Subsections 2.3(a), (b) and (c)
above, shall be made. Subject to the prior consent of the holders of the
Voting Shares or the Rights as set forth in subsection 5.4(b) or (c),
Meridian and the Rights Agent shall have authority upon receiving such
consent to amend this Agreement as appropriate to provide for such
adjustments.
(F) Each Right originally issued by Meridian subsequent to any adjustment made
to the Exercise Price hereunder shall evidence the right to purchase, at
the adjusted Exercise Price, the number of Common Shares purchasable from
time to time hereunder upon exercise of a Right immediately prior to such
issue, all subject to further adjustment as provided in this Agreement.
(G) Irrespective of any adjustment or change in the Exercise Price or the
number of Common Shares issuable upon the exercise of the Rights, the
Rights Certificates theretofore and thereafter issued may continue to
express the Exercise Price per Common Share and the number of Common 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, Meridian 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 Common Shares and other securities of Meridian, if any, issuable
upon such exercise over and above the number of Common Shares and other
securities of Meridian, if any, issuable upon such exercise on the basis of
the Exercise Price in effect prior to such adjustment; provided, however,
that Meridian 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, Meridian 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 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 term are convertible into or exchangeable for Common
Shares;
(iii)stock dividends; or
<PAGE>
(iv) issuance of rights, options or warrants referred to in this Section
2.3,
hereafter made by Meridian to holders of its Common Shares, shall not be
taxable to such shareholders.
(J) If, as a result of an adjustment made pursuant to Section 3.1, the holder
of any Right thereafter exercised shall become entitled to receive any
securities other than Common Shares, thereafter the number of such other
securities so receivable upon exercise of any Right and the applicable
Exercise Price thereof shall be subject to adjustment from time to time in
a manner and on terms as nearly equivalent as may be practicable to the
provisions with respect to the Common Shares contained in the foregoing
subsections of this Section 2.3 and the provisions of this Agreement with
respect to the Common Shares shall apply on like terms to any such other
securities;
(K) Whenever an adjustment to the Exercise Price or a change in the securities
purchasable upon the exercise of Rights is made pursuant to this Section
2.3, the Corporation shall promptly:
(i) prepare a certificate setting forth such adjustment and a brief
statement of the facts accounting for such adjustment;
(ii)file with the Rights Agent and with each transfer agent for the Common
Shares, a copy of such certificate; and
(iii) cause notice of the particulars of such adjustment or change to be
given to the holders of the Rights.
Failure to file such certificate or to cause such notice to be given as
aforesaid, or any defect therein, shall not affect the validity of any such
adjustment or change.
2.4 Date on Which Exercise Is Effective
Each Person in whose name any certificate for Common 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 Common 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 Common Share transfer books
of Meridian 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 Common Share transfer books of Meridian are
open.
2.5 Execution, Authentication, Delivery and Dating of Rights Certificates
(A) The Rights Certificates shall be executed on behalf of Meridian by its
Chairman of the Board, President or any of its Vice Presidents and by its
Secretary or one of its Assistant Secretaries under the corporate seal of
Meridian 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 Meridian shall bind Meridian, 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 Meridian learns of the Separation Time, Meridian will notify
the Rights Agent of such Separation Time and will deliver Rights
Certificates executed by Meridian to the Rights Agent for countersignature,
and the Rights Agent shall countersign (in a manner satisfactory to
Meridian) and send such Rights Certificates to the holders of the Rights
pursuant to Subsection 2.2(c). No Rights Certificate shall be valid for any
purpose until countersigned by the Rights Agent.
(C) Each Rights Certificate shall be dated the date of its countersignature.
2.6 Registration, Transfer and Exchange
(A) Meridian will cause to be kept a register (the "Rights Register") in which,
subject to such reasonable regulations as it may prescribe, Meridian will
provide for the registration and transfer of Rights. The Rights Agent is
hereby appointed registrar for the Rights (the "Rights Registrar") for the
<PAGE>
purpose of maintaining the Rights Register for Meridian and registering
Rights and transfers of Rights 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 Subsection 2.6(c),
Meridian will execute, and the Rights Agent will 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 Meridian, 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 Meridian 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, Meridian 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).
(D) Meridian shall not be required to register the transfer or exchange of any
Rights after the Rights have been terminated pursuant to the provisions of
this Agreement.
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, Meridian shall execute and the Rights Agent
shall countersign and deliver in exchange therefor a new Rights Certificate
evidencing the same number of Rights as the surrendered Rights Certificate.
(B) If there shall be delivered to Meridian 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 Meridian or the Rights Agent that such Rights
Certificate has been acquired by a bona fide purchaser, Meridian shall
execute and upon Meridian'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, Meridian 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 Meridian, 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
Meridian, the Rights Agent and any agent of Meridian 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 Rights shall mean the registered holder of such Rights
(or, prior to the Separation Time, of the associated Common Share).
<PAGE>
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 cancelled by the Rights Agent. Meridian may at any time deliver to
the Rights Agent for cancellation any Rights Certificates previously
countersigned and delivered hereunder which Meridian may have acquired in any
manner whatsoever, and all Rights Certificates so delivered shall be promptly
Cancelled by the Rights Agent. No Rights Certificate shall be countersigned in
lieu of or in exchange for any Rights Certificates cancelled as provided in this
Section 2.9, except as expressly permitted by this Agreement. The Rights Agent
shall, subject to applicable laws, destroy all cancelled Rights Certificates and
deliver a certificate of destruction to Meridian.
2.10 Agreement of Rights Holders
Every holder of Rights, by accepting the same, consents and agrees with Meridian
and the Rights Agent and with every other holder of Rights:
(A) to be bound by and subject to the terms of this Agreement, as amended from
time to time in accordance with the terms of this Agreement, in respect of
all Rights held;
(B) that 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 in this Agreement;
(D) that prior to due presentment of a Rights Certificate (or, prior to the
Separation Time, the associated Common Share certificate) for registration
of transfer, Meridian, the Rights Agent and any agent of Meridian 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 Meridian or the Rights Agent) for all purposes
whatsoever, and neither Meridian 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 in this Agreement);
(F) that, subject to Section 5.4, without the approval of any holder of Rights
or Voting Shares and upon the sole authority of the Board, acting in good
faith, this Agreement may be supplemented or amended from time to time
pursuant to Subsection 5.4(a) and the last sentence of the penultimate
paragraph of Subsection 2.3(a);
(G) that as between such holder and all other parties to this Agreement, no
party other than such holder shall be liable for any withholding taxes that
may become payable by or on behalf of a holder in respect of the Rights
should they become exercisable or be exercised; and
(H) that notwithstanding anything in this Agreement to the contrary, neither
Meridian nor the Rights Agent shall have any liability to any holder of a
Right or to any other Person as a result of its inability to perform any of
its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a government, regulatory or administrative
agency or commission, or any statute, rule, regulation or executive order
promulgated or enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation.
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 Common Share or any other share or security of Meridian which may at any
time be issuable on the exercise of the Rights represented thereby, nor shall
anything contained in this Agreement 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 Common Shares or any other
shares or securities of Meridian or any right to vote at any meeting of
shareholders of Meridian whether for the election of directors or otherwise or
<PAGE>
upon any matter submitted to holders of Common Shares or any other shares of
Meridian at any meeting thereof, or to give or withhold consent to any action of
Meridian, or to receive notice of any meeting or other action affecting any
holder of Common Shares or any other shares of Meridian except as expressly
provided in this Agreement, 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 of this
Agreement.
ARTICLE 3- ADJUSTMENTS TO THE RIGHTS IN THE
EVENT OF CERTAIN TRANSACTIONS
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 tenth Trading Day
after the Stock Acquisition Date, the right to purchase from Meridian, upon
exercise of the Right in accordance with the terms of this Agreement, that
number of Common 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 the
consummation or occurrence or event, 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 of Rights, directly or indirectly, from 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 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 Associate or
Affiliate 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 transferees) shall thereafter have no right to
exercise such Rights under any term of this Agreement and further shall
thereafter not have any other rights whatsoever with respect to such
Rights, whether under any term of this Agreement or otherwise.
(C) From and after the Separation Time, Meridian shall do all such acts and
things as shall be necessary and within its power to ensure compliance with
Section 3.1, including without limitation, all such acts and things as may
be required to satisfy the requirements of the CBCA, the Securities Act
(Ontario) and the securities laws or comparable legislation in each of the
provinces of Canada and of the United States and each of the States thereof
in respect of the issue of Common 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 either not be issued upon
the instruction of Meridian in writing to the Rights Agent or 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 Plan 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
<PAGE>
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 Plan 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 Meridian 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. The issuance of a
Rights Certificate without the legend referred to in this Subsection 3.1(d)
shall be of no effect on the provisions of Subsection 3.1(b).
ARTICLE 4 - THE RIGHTS AGENT
4.1 General
(A) Meridian hereby appoints the Rights Agent to act as agent for Meridian and
the holders of the Rights in accordance with the terms and conditions of
this Agreement, and the Rights Agent hereby accepts such appointment.
Meridian may from time to time appoint one or more co-Rights Agents
("Co-Rights Agents") as it may deem necessary or desirable. In the event
Meridian appoints one or more Co-Rights Agents, the respective duties of
the Rights Agent and Co-Rights Agents shall be as Meridian may determine,
subject to the consent (which shall not be unreasonably withheld) of the
Rights Agent. Meridian 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 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 or omitted by it in connection with this
Agreement in reliance upon any certificate for Common Shares, Rights
Certificate, certificate for other securities of Meridian or other document
believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons.
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 Section 4.4. 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 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 Right 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 Right Certificates
shall have the full force provided in the Right 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 Meridian and the holders
of certificates for Common Shares and Rights Certificates, by their acceptance
thereof, shall be bound:
<PAGE>
(A) the Rights Agent may consult with legal counsel (who may be legal counsel
for Meridian) 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 Meridian prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be
specifically prescribed in this Agreement) 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, Secretary, or any Assistant Secretary of Meridian 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 terms of this Agreement in reliance upon such
certificate;
(C) the Rights Agent will be liable 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
Meridian only;
(E) the Rights Agent will not be under any responsibility in respect of the
validity of this Agreement or the execution and delivery of this Agreement
(except the due authorization, execution and delivery of this Agreement by
the Rights Agent) or in respect of the validity or execution of any
certificate for a Common Share or Rights Certificate (except
countersignature of the Rights Certificate); nor will it be responsible for
any breach by Meridian of any covenant or condition contained in this
Agreement or in any Rights Certificate; nor will it be responsible for any
change in the exerciseability of the Rights (including the Rights becoming
void pursuant to Subsection 3.1(b)) or any adjustment required under
Section 2.3 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 under this Agreement be deemed to make
any representation or warranty as to the authorization of any Common Shares
to be issued pursuant to this Agreement or any Rights or as to whether any
Common Shares will, when issued, be duly and validly authorized, executed,
issued and delivered and fully paid and non-assessable;
Meridian 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 this Agreement;
(F) the Rights Agent is hereby authorized and directed to accept instructions
in writing with respect to the performance of its duties under this
Agreement from the Chairman of the Board, President, any Vice President,
Treasurer, Secretary or any Assistant Secretary of Meridian, 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;
(G) the Rights Agent and any affiliate, shareholder or stockholder, director,
officer or employee of the Rights Agent may buy, sell or deal in Common
Shares, Rights or other securities of Meridian or become pecuniarily
interested in any transaction in which Meridian may be interested, or
contract with or lend money to Meridian or otherwise act as fully and
freely as though it were not the Rights Agent under this Agreement. Nothing
in this Agreement shall preclude the Rights Agent or its affiliates from
acting in any other capacity for Meridian or for any other legal entity;
and
(H) 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 Meridian resulting from any
such act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
<PAGE>
4.4 Change of Rights Agent
The Rights Agent may resign and be discharged from its duties under this
Agreement upon 60 days' notice (or such lesser notice as is acceptable to
Meridian) in writing mailed to Meridian and to each transfer agent of Common
Shares by registered or certified mail. Meridian may remove the Rights Agent
upon 60 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, Meridian
will appoint a successor to the Rights Agent. If Meridian fails to make such
appointment by the date on which the 60-day notice period expires for the
resignation of the Rights Agent or within a period of 60 days after such removal
or after it has been notified in writing of such incapacity by the incapacitated
Rights Agent, then by prior written notice to Meridian 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 Meridian), may apply
to any court of competent jurisdiction for the appointment of a new Rights
Agent. Any successor Rights Agent, whether appointed by Meridian 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 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, Meridian 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 in such notice, shall not affect the
legality or validity 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, Waiver
(A) The Board shall waive the application of Section 3.1 in respect of the
occurrence of any Flip-in Event if the Board has determined following a
Stock Acquisition Date and prior to the Separation Time 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, in the event that such a waiver is granted by the Board,
such Stock Acquisition Date shall be deemed not to have occurred. Any such
waiver pursuant to this Subsection 5.1 (a) must be on the condition that
such Person, within 14 days after the foregoing determination by the Board
or such earlier or later date as the Board may determine (the "Disposition
Date"), has reduced its Beneficial ownership of Voting Shares such that the
Person is no longer an Acquiring Person. If the Person remains an Acquiring
Person at the close of business on the Disposition Date, the Disposition
Date shall be deemed to be the date of occurrence of a further Stock
Acquisition Date and Section 3.1 shall apply.
(B) The Board acting in good faith may, prior to a Flip-in Event having
occurred, upon prior written notice delivered to the Rights Agent,
determine to waive the application of Section 3.1 to a Flip-in Event that
may occur by reason of a Take-over Bid made by means of take-over bid
circular to all holders of record of Voting Shares (which for greater
certainty shall not include the circumstances described in Subsection 5.1
(a)), provided that if the Board waives the application of Section 3.1 to a
particular Flip-in Event pursuant to this Subsection 5.1(b), the Board
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 prior to
the expiry of any Take-Over Bid (as the same may be extended from time to
time) in respect of which a waiver is, or is deemed to have been granted
under this Subsection 5.1(b).
(C) In the event that prior to the occurrence of a Flip-in Event a person
acquires, pursuant to a Permitted Bid, a Competing Permitted Bid, or an
Exempt Acquisition under Subsection 5.1(b), outstanding Voting Shares, then
the Board shall, immediately upon the consummation of such acquisition
without further formality be deemed to have elected to redeem the Rights at
a redemption price of $0.0001 per Right appropriately adjusted in a manner
analogous to the applicable adjustment provided for in Section 2.3 if an
event of the type analogous to any of the events described in Section 2.3
shall have occurred (the "Redemption Price").
<PAGE>
(D) The Board of Meridian acting in good faith may, with the prior approval of
the holders of Voting Shares or Rights given in accordance with the terms
of Section 5.4, at any time prior to the occurrence of a Flip-in Event
elect to redeem all but not less than all of the then outstanding Rights at
the Redemption Price appropriately adjusted in a manner analogous to the
applicable adjustments provided for in Section 2.3, which adjustments shall
only be made in the event that an event of the type analogous to any of the
events described in Section 2.3 shall have occurred.
(E) The Board may, prior to the close of business on the tenth Trading Day
following a Stock Acquisition Date or such later Business Day as they may
from time to time determine, upon prior written notice delivered to the
Rights Agent, waive the application of Section 3.1 to the related Flip-in
Event, provided that the Acquiring Person has reduced its beneficial
ownership of Voting Shares (or has entered into a contractual arrangement
with Meridian, acceptable to the Board, to do so within 10 calendar days of
the date on which such contractual arrangement is entered into or such
other date as the Board may have determined) such that at the time the
waiver becomes effective pursuant to this Subsection 5.1(e) such Person is
no longer an Acquiring Person. In the event of such a waiver becoming
effective prior to the Separation Time, for the purposes of this Agreement,
such Flip-in Event shall be deemed not to have occurred.
(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 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 and
Meridian shall be deemed to have issued replacement Rights to the holders
of its then outstanding Common Shares.
(G) If the Board is deemed under Subsection 5.1(c) to have elected or elects
under Subsections 5.1(d) or (e) to redeem the Rights, the right to exercise
the Rights will, 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 ten days after the Board is deemed under Subsection 5.1(c) to have
elected or elects under Subsection 5.1(d) or (e) to redeem the Rights,
Meridian 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 provided herein
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.
(I) Meridian shall give prompt written notice to the Rights Agent of any waiver
of the application of Section 3.1 pursuant to this Subsection 5.1.
5.2 Expiration
No Person shall have any rights under this Agreement or in respect of any Right
after the Expiration Time, except the Rights Agent as specified in Subsection
4.1(a).
5.3 Issuance of New Rights Certificates
Notwithstanding any term of this Agreement or of the Rights to the contrary,
Meridian may, at its option, issue new Rights Certificates evidencing Rights in
such form as may be approved by the Board to reflect any adjustment or change in
the number or kind or class of securities issuable upon exercise of the Rights
made in accordance with the provisions of this Agreement.
5.4 Supplements and Amendments
(A) Meridian may make any amendments to this Agreement to correct any clerical
or typographical error or which are required to maintain the validity of
the Agreement as a result of any change in any applicable legislation,
<PAGE>
regulations or rules thereunder. Meridian may, prior to the date of the
first shareholders' meeting referred to in Section 5.15, supplement or
amend this Agreement without the approval of the Rights Agent or any
holders of Rights or Voting Shares in order to make any changes which the
Board acting in good faith may deem necessary or desirable. Notwithstanding
anything in this Section 5.4, no amendment shall be made to Article 4
except with the written concurrence of the Rights Agent to such supplement
or amendment.
(B) Subject to Subsection 5.4(a), Meridian may, with the prior consent of the
holders of Voting Shares obtained as set forth below, at any time before
the Separation Time, amend, vary or rescind any of the terms 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 provided by the holders of
Voting Shares at a Special Meeting, which Special Meeting shall be called
and held in compliance with applicable laws and regulatory requirements and
the requirements in the articles and by-laws of Meridian. Subject to
compliance with any requirements imposed by the foregoing, consent shall be
given if the proposed amendment, variation or rescission is approved by the
affirmative vote of a majority of the votes cast by all holders of Voting
Shares (other than any holder of Voting Shares who does not qualify as an
Independent Shareholder, with respect to all Voting Shares Beneficially
owned by such Person), represented in person or by proxy at the Special
Meeting.
(C) Meridian may, with the prior consent of the holders of Rights obtained as
set forth below, at any time after the Separation Time and before the
Expiration Time, amend, vary or rescind any of the terms 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 provided by the holders of Rights at
a Rights Holders Special Meeting, which Rights Holders' Special Meeting
shall be called and held in compliance with applicable laws and regulatory
requirements and, to the extent possible, with the requirements in the
articles and by-laws of Meridian applicable to meetings of holders of
Voting Shares, applied mutatis mutandis. Subject to compliance with any
requirements imposed by the foregoing, consent shall be given if the
proposed amendment, variation or rescission is approved by the affirmative
vote of a majority of the votes cast by holders of Rights (other than
holders of Rights whose Rights have become null and void pursuant to
Subsection 3.1(b)), represented in person or by proxy at the Rights
Holders' Special Meeting.
(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 of this Agreement, each
outstanding Right (other than Rights which are void pursuant to the terms
of this Agreement) 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 Meridian's by-laws and the CBCA with
respect to the meetings of shareholders of Meridian.
(E) Any amendments made by Meridian 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, regulation or rule
thereunder shall:
(i) if made before the Separation Time, be submitted to the shareholders of
Meridian 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 Meridian 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 adopting it, until it is confirmed or rejected or until it ceases
to be effective (as described below) 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 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 to amend this Agreement to substantially the same effect shall
<PAGE>
be effective until confirmed by the shareholders or holders of Rights as
the case may be.
5.5 Fractional Rights and Fractional Shares
(A) Meridian shall not be required to issue fractions of Rights or to
distribute Rights Certificates which evidence fractional Rights and
Meridian shall not be required to pay any amount to a holder of record of
Rights Certificates in lieu of such fractional Rights.
(B) Meridian shall not be required to issue fractions of Common Shares upon
exercise of Rights or to distribute certificates which evidence fractional
Common Shares. In lieu of issuing fractional Common Shares, Meridian shall
pay to the registered holders of Rights Certificates, at the time such
Rights are exercised, an amount in cash equal to the fraction of the Market
Price of one Common Share that the fraction of a Common Share that would
otherwise be issuable upon the exercise of such Right is of one whole
Common 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, enforce, and may institute and maintain any suit,
action or proceeding against Meridian to enforce such holder's right to exercise
such holder's Rights, or Rights to which such holder 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, it is
specifically acknowledged that the holder 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 Meridian or action or event contemplated by this Agreement, as
well as any amendment to this Agreement, shall be subject to the receipt of any
requisite approval or consent from any governmental or regulatory authority
(including The Toronto Stock Exchange).
5.8 Declaration as to Non-Canadian Holders
If in the opinion of the Board (who may rely upon the advice of counsel) any
action or event contemplated by this Agreement would require compliance by
Meridian with the securities laws or comparable legislation of a jurisdiction
outside Canada, the Board acting in good faith shall take such actions as it may
deem appropriate to ensure such compliance. In no event shall Meridian 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.
5.9 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 Meridian
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 fax or other form of recorded electronic
communication, charges prepaid, and confirmed in writing, as follows:
Meridian Gold Inc.
Suite 200
9670 Gateway Drive, Suite 200
Reno, NV 89511-8997
Attention: Chief Financial Officer
Fax No.: 775-850-3733
<PAGE>
(B) Notices or demands authorized or required by this Agreement to be given or
made by Meridian 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 Meridian), or sent by fax or other form of recorded electronic
communication, charges prepaid, and confirmed in writing, as follows:
The Trust Company of Bank of Montreal
129 Saint Jacques Street, B Level North
Montreal, Quebec H2Y IL6
Attention: Account Manager and Supervisor, Shareholder Services
Fax No.: 514-877-9676
(C) Notices or demands authorized or required by this Agreement to be given or
made by Meridian or the Rights Agent to or on the holder of any Rights
shall be sufficiently given or made if delivered or sent by registered or
certified 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 Meridian for its Common Shares.
Any notice which is mailed or sent in the manner provided above shall be
deemed given, whether or not the holder receives the notice.
(D) Any notice given or made in accordance with Section 5.9 shall be deemed to
have been given and to have been received on the day of delivery, if so
delivered on a Business Day (otherwise on the first Business Day
thereafter), 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 mailing, if so mailed, and on the day of
faxing or sending 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 Meridian and the Rights Agent may from time to time change its address
for notice by notice to the other given in the manner provided above.
5.10 Costs of Enforcement
Meridian agrees that if Meridian fails to fulfil any of its obligations pursuant
to this Agreement, then Meridian 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 terms of this Agreement by or for the benefit of Meridian
or the Rights Agent shall bind and enure to the benefit of their respective
successors and assigns.
5.12 Benefits of this Agreement
Nothing in this Agreement shall be construed to give to any Person (other than
Meridian, the Rights Agent and the holders of the Rights) any legal or equitable
right, remedy or claim under this Agreement. This Agreement shall be for the
sole and exclusive benefit of Meridian, the Rights Agent and the holders of the
Rights.
5.13 Governing Law
This Agreement and each Right issued shall be deemed to be a contract made under
the laws of Ontario and for all purposes shall be governed by and construed in
accordance with the laws of Ontario applicable to contracts to be made and
performed entirely within Ontario.
<PAGE>
5.14 Severability
If any term of this Agreement or the application thereof to any circumstance
shall, in any jurisdiction and to any extent, be invalid or unenforceable, such
term shall be ineffective only as to such jurisdiction and to the extent of such
invalidity or unenforceability in such jurisdiction without invalidating or
rendering ineffective or unenforceable the remaining terms of this Agreement in
such jurisdiction or the application of such term in any other jurisdiction or
to circumstances other than those as to which it is specifically held invalid or
unenforceable.
5.15 Effective Date
This Agreement is effective and in full force and effect in accordance with its
terms from and after the Effective Date. In the event that this Agreement is not
confirmed by a majority of the votes cast by holders of Voting Shares who vote
in respect of confirmation of this agreement (other than any holder who does not
qualify as an Independent Shareholder, with respect to all Voting Shares
Beneficially owned by such Person) at Meridian's annual and special meeting of
shareholders in 1999, then this Agreement and all outstanding Rights shall
terminate and shall be void and of no further force and effect from the date
that such event occurs.
This Agreement must be reconfirmed by a resolution passed by a majority of the
votes cast by all holders of Voting Shares who vote in respect of such
reconfirmation (other than any holder who does not qualify as an Independent
Shareholder, with respect to all Voting Shares Beneficially owned by such
Person) at the third and sixth annual meeting following Meridian's annual and
special meeting of shareholders in 1999. If this agreement is not so reconfirmed
or is not presented for reconfirmation at such annual meeting, this Agreement
and all outstanding Rights shall terminate and be void and of no further force
and effect on and from the date of termination of the annual meeting; 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(a) or (b)
hereof), prior to the date upon which this Agreement would otherwise terminate
pursuant to this Section 5.15.
5.16 Determinations and Actions by the Board of Directors
All actions, calculations and determinations (including all omissions with
respect to the foregoing) which are done or made by the Board, in good faith,
shall not subject the Board or any director of Meridian to any liability to the
holders of the Rights.
5.17 Time of the Essence
Time shall be of the essence in this Agreement.
5.18 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 have caused this Agreement to be
executed as of the date first above written.
MERIDIAN GOLD INC.
By: ______________________________________
THE TRUST COMPANY OF
BANK OF MONTREAL
By: ______________________________________
By: ______________________________________
<PAGE>
ATTACHMENT I
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 [, 1999] (the "Shareholder Rights Plan
Agreement"), between Meridian Gold Inc., a corporation incorporated under the
laws of Canada and The Trust Company of Bank of Montreal, a trust company
incorporated under the laws of Canada (the "Rights Agent") (which term shall
include any successor Rights Agent under the Shareholder Rights Plan Agreement),
to purchase from Meridian Gold Inc. at any time after the Separation Time (as
defined in the Shareholder Rights Plan Agreement) and prior to the Expiration
Time (as defined in the Shareholder Rights Plan Agreement), one fully paid
common share of Meridian Gold Inc. (a "Common 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. The Exercise Price shall initially be $25.00 (Cdn.) per Right and
shall be subject to adjustment in certain events as provided in the Shareholder
Rights Plan Agreement.
This Rights Certificate is subject to all of the terms of the Shareholder Rights
Plan Agreement, which terms are incorporated herein by reference and made a part
hereof and to which Shareholder Rights Plan Agreement reference is hereby made
for a full description of the rights, limitations of rights, obligations, duties
and immunities thereunder of the Rights Agent, Meridian Gold Inc. and the
holders of the Rights Certificates. Copies of the Shareholder Rights Plan
Agreement are on file at the registered office of Meridian Gold Inc.
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.
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 Common 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 Plan Agreement or herein
be construed to confer upon the holder hereof, as such, any of the Rights of a
shareholder of Meridian Gold Inc. 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 Plan 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 Plan Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose until
it shall have been countersigned by the Rights Agent.
<PAGE>
WITNESS the facsimile signature of the proper officers of Meridian Gold Inc. and
its corporate seal.
Date: ______________________
MERIDIAN GOLD INC.
By: _______________________________ By: _______________________________
President Secretary
Countersigned:
THE TRUST COMPANY OF BANK OF MONTREAL
By: _______________________________
Authorized Signature
<PAGE>
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
Meridian Gold Inc., 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, or a commercial bank or trust company having an office or correspondent
in Canada.
CERTIFICATE
The undersigned party transferring Rights hereunder, hereby represents, for the
benefit of all holders of Rights and Common 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 an Acquiring
Person or an Affiliate or Associate thereof. Capitalized terms shall have the
meaning ascribed thereto in the Shareholder Rights Plan Agreement.
---------------------------------
Signature
FORM OF ELECTION TO EXERCISE
(To be exercised by the registered holder if such holder desires to exercise the
Rights Certificate.)
TO: Meridian Gold Inc. and The Trust Company of Bank of Montreal
The undersigned hereby irrevocably elects to exercise o whole Rights represented
by the attached Rights Certificate to purchase the Common 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)
__________________ (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) _________________ (Social Insurance Number or
other taxpayer identification number)
<PAGE>
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, or a commercial bank or trust company having an office or correspondent
in Canada.
CERTIFICATE
The undersigned party transferring Rights hereunder, hereby represents, for the
benefit of all holders of Rights and Common 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 an Acquiring
Person or an Affiliate or Associate thereof. Capitalized terms shall have the
meaning ascribed thereto in the Shareholder Rights Plan Agreement.
---------------------------------
Signature
NOTICE
In the event the certification set forth above in the Forms of Assignment and
Election is not completed, Meridian Gold Inc. 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.
