SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 6-K
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Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
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For the Month of March, 1999 Commission File Number: 001-12003
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MERIDIAN GOLD INC.
(Translation of Registrant's Name into English)
9670 Gateway Drive, 2nd Floor
Reno, Nevada 89511
(Address of Principal Executive Offices)
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Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [ ]
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Indicate by check mark whether the registrant by furnishing the information
contained in this form is also thereby furnishing the information to the SEC
pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes [X] No [ ]
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Meridian Gold Inc. [LOGO OF MERIDIAN GOLD INC.
9670 Gateway Drive, 2nd Floor APPEARS HERE]
Reno, Nevada 89511
Phone: 775-850-3777
Fax: 775-850-3733
<PAGE>
MERIDIAN GOLD INC.
9670 GATEWAY DRIVE, 2nd Floor
RENO, NEVADA 89511
PHONE: (775) 850-3777
FAX: (775) 850-3733
MERIDIAN GOLD INC. ANNOUNCES NEW SHAREHOLDER RIGHTS PLAN
Reno, Nevada, March 19, 1999 - Meridian Gold Inc. ("Meridian") announced today
that it has entered into a new shareholder rights plan agreement with The Trust
Company of Bank of Montreal as rights agent. The new plan is designed to
encourage the fair and equal treatment of its shareholders in connection with
any take-over offer, and will provide shareholders with more time to fully
consider certain types of unsolicited take-over bids and allow Meridian's Board
of Directors to pursue other alternatives, if appropriate, to maximize
shareholder value. Succeeding the current plan which will expire on July 30,
1999, this new plan has been implemented at this time to prevent any gap in
shareholder protection. It will be effective as of July 30, 1999 or earlier if
certain events under the current plan were to occur, and would be in effect
until 2009 subject to reconfirmation by holders of Meridian's voting securities
at Meridian's annual meetings in 2003 and 2006.
Shareholder approval of the new plan will be sought at Meridian's 1999 Annual
and Special Meeting of Shareholders. This plan was not adopted in response to
any specific proposal or effort to acquire control of Meridian and Meridian is
not aware of any such proposal or effort. The new plan is similar to plans
recently approved by shareholders of other Canadian companies.
The rights issued under the plan will initially attach to and trade with
Meridian's Common Shares and no separate certificates will be issued unless an
event triggering these rights occurs. The rights become exercisable only when a
person, including any party related to it, acquires, or announces its intention
to acquire, beneficial ownership of 20 per cent or more of Meridian's then
outstanding Common Shares without complying with the "permitted bid" provisions
of the plan, or without the approval of Meridian's Board of Directors. Should
such an acquisition occur, each right would entitle a holder, other than the
acquiring person or persons related to it, to purchase Common Shares of Meridian
at a 50 per cent discount to the then current market price.
A "permitted bid" is a bid made to all holders of Meridian's outstanding Common
Shares that is open for at least 60 days. If at the end of the 60 day period,
more than 50 per cent of Meridian's total of then outstanding Common Shares,
other than those owned by the party making the bid and certain related persons,
have been tendered, such party may take up and pay for the Common Shares but
must extend the bid for a further 10 business days to allow other shareholders
to tender. This feature would provide shareholders with more time to consider
the bid and any other options that may be available. Meridian's Board of
Directors would also have more time to consider alternatives and to make
recommendations to shareholders.
Meridian will be entitled to redeem the rights for nominal consideration at any
time prior to the acquisition by a person or group of beneficial ownership of 20
per cent or more of Meridian's Common Shares. Brian J. Kennedy, President and
CEO said: "This Rights Plan is intended to help protect our shareholders and is
designed to help ensure that they will receive fair and equal treatment in the
event of any takeover."
Meridian Gold Inc. is a growth gold business with its common shares traded on
The Toronto Stock Exchange (MNG) and the New York Stock Exchange (MDG).
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Safe Harbor Statement under the United States Private Securities Litigation
Reform Act of 1995: Statements in this release that are forward-looking
statements are subject to various risks and uncertainties concerning the
specific factors identified above and in the corporation's periodic filings with
the Ontario Securities Commission and the U.S. Securities Exchange Commission.
Such information contained herein represents management's best judgment as of
the date hereof based on information currently available. The corporation does
not intend to update this information and disclaims any legal liability to the
contrary.
For further information, please visit our website at www.meridiangold.com, or
contact:
Wayne M. Hubert Tel: (775) 850-3730
Investor Relations Fax: (775) 850-3733
Meridian Gold Inc. E-mail: [email protected]
MATERIAL CHANGE REPORT
PURSUANT TO
SECTION 85(1)OF THE SECURITIES ACT (BRITISH COLUMBIA)
SECTION 118(2) OF THE SECURITIES ACT (ALBERTA)
SECTION 84(1) OF THE SECURITIES ACT (SASKATCHEWAN)
SECTION 75(2) OF THE SECURITIES ACT (ONTARIO)
SECTION 73 OF THE SECURITIES ACT (QUEBEC)
SECTION 81(2) OF THE SECURITIES ACT (NOVA SCOTIA)
SECTION 76(2) OF THE SECURITIES ACT (NEWFOUNDLAND)
ITEM 1: REPORTING ISSUER
Meridian Gold Inc.
9670 Gateway Drive
Reno, Nevada 89511
ITEM 2: DATE OF MATERIAL CHANGE
March 19, 1999
ITEM 3: PRESS RELEASE
The attached press release was issued by Meridian Gold Inc. ("Meridian" or the
"Corporation") on March 19, 1999.
ITEM 4: SUMMARY OF MATERIAL CHANGE
On March 19, 1999, Meridian entered into a new shareholder rights plan agreement
(the "Plan" or "Rights Plan") with The Trust Company of Bank of Montreal as
rights agent. The new plan is designed to encourage the fair and equal treatment
of its shareholders in connection with any take-over offer, and will provide
shareholders with more time to fully consider certain types of unsolicited
take-over bids and allow Meridian's board of directors (the "Board") to pursue
other alternatives, if appropriate, to maximize shareholder value. Succeeding
the current plan which will expire on July 30, 1999, this new plan has been
implemented at this time to prevent any gap in shareholder protection. It will
be effective as of July 30, 1999 or earlier if certain events under the current
plan were to occur, and would be in effect until 2009 subject to reconfirmation
by holders of Meridian's voting securities at Meridian's annual meetings in 2003
and 2006.
<PAGE>
ITEM 5: FULL DESCRIPTION OF MATERIAL CHANGE
The following is a summary of the principal terms of the Rights Plan Reference
is made to the shareholder rights plan agreement, the full text of which has
been filed with securities regulatory authorities in each of the above
jurisdictions.
BACKGROUND
The Plan will replace the shareholders' rights plan originally adopted in 1996
which expires on July 30, 1999. The original plan was adopted to assist the
Board in ensuring fair treatment of all holders of common shares in the event
that a person sought to acquire control of Meridian.
The Plan is not intended to and will not prevent a take-over of the Corporation.
The objectives of the Plan are to provide shareholders with sufficient time to
assess and evaluate a take-over bid and permit the Board, where appropriate, to
explore, develop and evaluate alternatives designed to maximize value to
shareholders.
Since the adoption of the original plan by Meridian in 1996, shareholders'
rights plans have been adopted by numerous Canadian companies and the terms of
such plans have evolved over the years to reflect changes in investor attitudes,
standards of corporate governance, requirements of securities regulatory
authorities and the advice of third party commentators. The Plan reflects this
evolution while maintaining the objectives of the original plan.
The Board implemented the Plan on March 19, 1999 by entering into the Rights
Plan with The Trust Company of Bank of Montreal, as rights agent, to act in
connection with the exercise of rights, the issue of certificates evidencing the
rights and other related matters. The Board authorized the issue of one right (a
"Right") in respect of each outstanding common share of the Corporation ("Common
Shares") to holders on the Effective Date (as defined below), as well as in
respect of each Common Share issued after the Effective Date and prior to the
Separation Time (as defined below). The Plan is scheduled to become effective at
the close of business on July 30, 1999 or earlier if an event occurs which would
give rise to the subsequent separation of rights under the original plan (the
"Effective Date").
TRADING OF RIGHTS
On the Effective Date, the Rights will not be exercisable and certificates
representing the Rights will not be sent to shareholders. Certificates for
Common Shares issued after the Effective Date of the Plan will contain a
<PAGE>
notation incorporating the Rights Plan by reference. Until the Separation Time,
or earlier termination or expiration of the Rights, the Rights are evidenced by
and transferred with the associated Common Shares and the surrender for transfer
of any certificate representing Common Shares will also constitute the surrender
for transfer of the Rights associated with those Common Shares. The Rights are
not exercisable until the Separation Time. After the Separation Time, the Rights
will become exercisable and begin to trade separately from the associated Common
Shares. The initial "Exercise Price" for Common Shares is $25.
SEPARATION OF RIGHTS
The Rights will become exercisable and begin to trade separately from the
associated Common Shares at the "Separation Time", which is generally the close
of business on the tenth trading day after the earliest to occur of (a) a public
announcement that a person or a group of affiliated or associated persons (an
"Acquiring Person") has acquired beneficial ownership of 20% or more of the
outstanding voting shares (Common Shares) of the Corporation ("Voting Shares")
other than as a result of (i) a reduction in the number of Voting Shares
outstanding, (ii) a Permitted Bid or Competing Permitted Bid (see below), (iii)
acquisitions of Voting Shares approved by the Board, or (iv) other specified
exempt acquisitions where shareholders participate on a pro rata basis; and (b)
the date of commencement of, or the first public announcement of an intention of
any person to commence, a take-over bid where the Voting Shares subject to the
bid owned by that person (including affiliates, associates and joint actors)
would constitute 20% or more of the outstanding Voting Shares; and (c) the date
upon which a Permitted Bid or Competing Permitted Bid ceases to be such.
As soon as practicable following the Separation Time, separate certificates
evidencing rights ("Rights Certificates") will be mailed to the holders of
record of Common Shares as of the Separation Time and the Rights Certificates
alone will evidence the Rights. Assuming the adoption of the Rights Plan is
confirmed by a vote of the shareholders at Meridian's 1999 Annual and Special
Meeting of shareholders, the Rights will expire at the termination of the annual
meeting of the Corporation in the year 2003 or 2006, as the case may be, unless
reconfirmed by shareholders at such respective meetings or unless the Plan has
been redeemed by the Corporation.
WHEN RIGHTS BECOME EXERCISABLE
After the Separation Time, each Right entitles the holder thereof to purchase
one Common Share for the Exercise Price. Following a transaction which results
in a person becoming an Acquiring Person (a "Flip-in Event"), the Rights entitle
<PAGE>
the holders thereof to receive upon exercise Common Shares with a market value
equal to twice the Exercise Price of the Rights. In such event, however, any
Rights beneficially owned by an Acquiring Person (including affiliates,
associates and joint actors), or the transferee of any such person, will be
void. A Flip-in Event does not include acquisitions approved by the Board or
acquisitions pursuant to a "Permitted Bid" or "Competing Permitted Bid" (as
defined below).
Until a Right is exercised, the holder thereof, as such, will have no rights as
a shareholder of the Corporation, including the right to vote or receive
dividends.
PERMITTED BIDS
The Plan employs a "Permitted Bid" concept whereby a take-over bid will not
trigger the Rights if it meets certain conditions. A "Permitted Bid" is defined
as an offer to acquire Voting Shares or securities that are eligible to be
converted into Voting Shares for cash or securities made by means of a take-over
bid circular where the Voting Shares (including Voting Shares that may be
acquired upon conversion of securities convertible into Voting Shares) subject
to the offer, together with shares beneficially owned by the offeror at the date
of the offer (including its affiliates, associates and joint actors), constitute
20% or more of the outstanding Voting Shares and that also complies with the
following additional provisions:
(i) the bid must be made to all the holders of Voting Shares as registered on
the books of Meridian, other than the offeror;
(ii) the bid must contain the following irrevocable and unqualified conditions:
(a) no Voting Shares will be taken up or paid for prior to the close of
business on the 60th day following the date of the bid and then only
if more than 50% of the Voting Shares held by Independent Shareholders
(see below) have been deposited or tendered to the bid and not
withdrawn;
(b) Voting Shares may be deposited pursuant to the bid, unless it is
withdrawn, at any time prior to the date shares are first taken up or
paid for under the bid;
(c) Voting Shares deposited pursuant to the bid may be withdrawn until
taken up or paid for; and
(d) if the deposit condition referred to in (ii)(a) above is satisfied,
the offeror will extend the bid for deposit of Voting Shares for at
<PAGE>
least 10 business days from the date such extension is publicly
announced.
"Independent Shareholders" are holders of Voting Shares other than (i) an
Acquiring Person, (ii) any offeror making a take-over bid, (iii) any affiliate
or associate of an Acquiring Person or offeror, (iv) joint actors with such
persons, and (v) employee benefit plans or trusts for employees of the
Corporation or its wholly-owned subsidiaries unless the beneficiaries of such
plans or trusts direct the voting or tendering to a take-over bid of the Voting
Shares.
The Plan will not detract from or lessen the duty of the Board to act honestly
and in good faith with a view to the best interests of Meridian. The Board, when
a Permitted Bid is made, will continue to have the duty and power to take such
actions and make such recommendations to shareholders as are considered
appropriate.
COMPETING PERMITTED BIDS
A "Competing Permitted Bid" is a take-over bid made after a Permitted Bid has
been made and prior to its expiry that satisfies all of the provisions of a
Permitted Bid, except that it must remain open for acceptance until no earlier
than the later of 21 days and the expiry of the outstanding Permitted Bid. The
reduction in the time for acceptance of a Competing Permitted Bid is to allow,
as nearly as practicable, all bids to be dealt with by the shareholders of the
Corporation within substantially the same time frame.
REDEMPTION AND WAIVER
The Rights may be redeemed by the Board, with the prior approval of the holders
of Voting Shares or Rights, as the case may be, at any time prior to the
occurrence of a Flip-in Event at a redemption price of $0.0001 per Right. Rights
are deemed to have been redeemed if a bidder successfully completes a Permitted
Bid.
The provisions of the Plan which apply upon the occurrence of a Flip-in Event
may be waived at the option of the Board at any time prior to the occurrence of
the relevant event in the case of a bid made by take-over bid circular to all
holders of record of Voting Shares. All other waivers require shareholder
approval. If the Board waives the Rights Plan with respect to one take-over bid,
it is deemed to have waived the Rights Plan for all other contemporaneous bids
made by take-over bid circular to all holders of record of Voting Shares.
The Board shall also waive the application of the Flip-In Event provisions to a
Flip-In Event where the Board determines prior to the Separation Time that the
<PAGE>
Acquiring Person became such by inadvertence, but only if such Acquiring Person
has reduced its beneficial ownership of Voting Shares by the disposition date
set by the Board such that the person is no longer an Acquiring Person.
PROTECTION AGAINST DILUTION
The Exercise Price, the number and nature of securities which may be purchased
upon the exercise of Rights and the number of Rights outstanding are subject to
adjustment from time to time to prevent dilution in the event of stock
dividends, subdivisions, consolidations, reclassifications or other changes in
the outstanding Common Shares, pro rata distributions to holders of Common
Shares and other circumstances where adjustments are required to appropriately
protect the interests of the holders of Rights.
SHAREHOLDER APPROVAL
The Corporation intends to place the Plan before shareholders for ratification
at its annual and special meeting of shareholders (the "Meeting") on April 21,
1999. The shareholder vote required for ratification of the Plan at the Meeting
will be the affirmative vote of a majority of the votes cast at the Meeting by
holders of Voting Shares, excluding for all purposes shares held by certain
types of shareholders who would not be deemed to be independent for the purposes
of the Plan ("Non-Independent Shareholders").
AMENDMENTS
The Corporation may, prior to the date of the Meeting, supplement or amend the
Rights Plan without the approval of the shareholders or holders of Rights where
the Board deems such action necessary or desirable. After the Meeting, the
ability to amend the Rights Plan without shareholder approval will be
significantly limited.
Assuming shareholders ratify the Rights Plan at the Meeting, the Corporation may
thereafter, without the approval of the shareholders or holders of Rights, make
any amendments to the Rights Plan (i) specifically contemplated therein, or (ii)
to correct clerical or typographical errors, or (iii) which may be required to
maintain the validity and effectiveness of the Rights Plan as a result of any
change in any applicable laws or regulatory requirements. Any amendments
referred to in (iii) must, if made before the Separation Time, be submitted for
approval at the next meeting of shareholders and, if made after the Separation
Time, must be submitted to the holders of Rights. The affirmative vote of a
majority of the votes cast by all holders of Voting Shares (excluding
<PAGE>
Non-Independent Shareholders) or holders of Rights which have not become void,
as applicable, represented in person or by proxy at the meeting will constitute
confirmation.
At any time before the Separation Time, the Corporation may, with the prior
consent of the holders of Voting Shares (excluding Non-Independent Shareholders)
received at a special meeting called and held for such purpose, amend, vary or
rescind any of the provisions of the Rights Plan or the Rights whether or not
such action would materially adversely affect the interests of the holders of
Rights generally.
At any time after the Separation Time and before the Expiration Time, the
Corporation may, with the prior consent of the holders of Rights (other than
those holders whose Rights have become void) at a special meeting of holders of
Rights called and held for such purpose, amend, vary or rescind any of the
provisions of the Rights Plan or the Rights whether or not such action would
materially adversely affect the interests of the holders of Rights generally.
ITEM 6: RELIANCE ON CONFIDENTIALITY SECTION OF THE ACT
This report is not being filed on a confidential basis.
ITEM 7: OMITTED INFORMATION
None.
ITEM 8: SENIOR OFFICER - FOR FURTHER INFORMATION CONTACT:
For further information, contact Edward H. Colt, Chief Financial Officer
at (702) 850-3736.
ITEM 9: STATEMENT OF SENIOR OFFICER
The foregoing accurately discloses the material change referred to herein.
DATED at Toronto this 19th day of March, 1999
<PAGE>
(Signed) Eden M. Oliver
-----------------------
Eden M. Oliver, Secretary
IT IS AN OFFENCE FOR A PERSON TO MAKE A STATEMENT IN A DOCUMENT REQUIRED TO BE
FILED OR FURNISHED UNDER THE ACT OR THIS REGULATION THAT AT THE TIME AND IN THE
LIGHT OF THE CIRCUMSTANCES UNDER WHICH IT IS MADE, IS A MISREPRESENTATION.
SHAREHOLDER RIGHTS PLAN AGREEMENT
DATED AS OF
MARCH 19, 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...........................................................13
1.3 Headings...........................................................14
1.4 Calculation of Number and Percentage of Beneficial Ownership of
Outstanding Voting Shares..........................................15
1.5 Acting Jointly or in Concert.......................................15
1.6 Generally Accepted Accounting Principles...........................15
ARTICLE 2 - THE RIGHTS........................................................16
2.1 Legend on Common Share Certificates................................16
2.2 Initial Exercise Price; Exercise of Rights; Detachment of Rights...16
2.3 Adjustments to Exercise Price; Number of Rights....................19
2.4 Date on Which Exercise Is Effective................................24
2.5 Execution, Authentication, Delivery and Dating of Rights
Certificates.......................................................24
2.6 Registration, Transfer and Exchange................................25
2.7 Mutilated, Destroyed, Lost and Stolen Rights Certificates..........26
2.8 Persons Deemed Owners of Rights....................................26
2.9 Delivery and Cancellation of Certificates..........................27
2.10 Agreement of Rights Holders........................................27
2.11 Rights Certificate Holder Not Deemed a Shareholder.................28
ARTICLE 3 - ADJUSTMENTS TO THE RIGHTS IN THE..................................28
3.1 Flip-in Event......................................................28
ARTICLE 4 - THE RIGHTS AGENT..................................................30
4.1 General............................................................30
4.2 Merger, Amalgamation or Consolidation or Change of Name of
Rights Agent.......................................................30
4.3 Duties of Rights Agent.............................................31
4.4 Change of Rights Agent.............................................33
ARTICLE 5 - MISCELLANEOUS.....................................................33
5.1 Redemption, Waiver.................................................33
5.2 Expiration.........................................................35
5.3 Issuance of New Rights Certificates................................36
5.4 Supplements and Amendments.........................................36
5.5 Fractional Rights and Fractional Shares............................37
5.6 Rights of Action...................................................38
5.7 Regulatory Approvals...............................................38
5.8 Declaration as to Non-Canadian Holders.............................38
5.9 Notices............................................................39
5.10 Costs of Enforcement...............................................40
5.11 Successors.........................................................40
5.12 Benefits of this Agreement.........................................40
5.13 Governing Law......................................................40
5.14 Severability.......................................................40
5.15 Effective Date.....................................................40
<PAGE>
5.16 Determinations and Actions by the Board of Directors...............41
5.17 Time of the Essence................................................41
5.18 Execution in Counterparts..........................................41
<PAGE>
SHAREHOLDER RIGHTS PLAN AGREEMENT
MEMORANDUM OF AGREEMENT, dated as of March 19, 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; 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 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
<PAGE>
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 the 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:
(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
<PAGE>
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
<PAGE>
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 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 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.
<PAGE>
(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 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;
<PAGE>
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:
(1) the close of business on July 30, 1999;
(2) the date that an Acquiring Person has become an Acquiring Person; and
(3) 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;
(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;
<PAGE>
(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, other than a Person who pursuant
to Clause 1.1(f) is not deemed to beneficially own the Voting Shares held
by such Person, (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;
<PAGE>
and, for greater clarity, an agreement may contain a right of first
refusal or require 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
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
<PAGE>
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;
(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:
<PAGE>
(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 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;
<PAGE>
(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);
(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);
<PAGE>
(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
(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
<PAGE>
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.
<PAGE>
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.
<PAGE>
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:
"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 March 19, 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.
<PAGE>
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
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.
<PAGE>
(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;
<PAGE>
(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
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
<PAGE>
(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.
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.
<PAGE>
(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
<PAGE>
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.
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
<PAGE>
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
<PAGE>
(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
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
<PAGE>
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
<PAGE>
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
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
<PAGE>
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
<PAGE>
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 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
<PAGE>
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:
(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;
<PAGE>
(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;
(f) 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;
(g) 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;
(h) 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
<PAGE>
(i) the Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent will not be
answerable or accountable for any act, default, neglect or misconduct of
any such attorneys or agents or for any loss to Meridian resulting from any
such act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
4.4 CHANGE OF RIGHTS AGENT
The Rights Agent may resign and be discharged from its duties under this
Agreement upon 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
<PAGE>
(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").
(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.
<PAGE>
(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 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).
<PAGE>
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,
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
<PAGE>
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
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.
<PAGE>
(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.
<PAGE>
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
(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
<PAGE>
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.
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
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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
<PAGE>
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 March 19, 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.
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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.
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
<PAGE>
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)
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.
