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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 25, 2000
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GLAMIS GOLD LTD.
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(Exact name of registrant as specified in its charter)
British Columbia, Canada
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(State or other jurisdiction of incorporation)
0-31986 (86-689) None
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(Commission File Number) (IRS Employer Identification No.)
5190 Neil Road, Suite 310, Reno, Nevada, 89502
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(Address of principal executive officers) (Zip Code)
Registrant's telephone number, including area code (702) 827-4600
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n/a
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(Former name or former address, if changed since last report)
Exhibits begin on page 8
Page 1 of 63 Pages
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ITEM 5: OTHER EVENTS
The Board of Directors (the "Board") of the Registrant approved on February 25,
2000 the adoption of a shareholders' rights plan (the "Plan") as set forth in an
agreement (the "Rights Agreement") dated as of February 25, 2000 between the
Registrant and Montreal Trust Registrant of Canada (the "Rights Agent"). The
Plan is to be effective immediately.
SUMMARY OF OPERATION OF THE PLAN
As described in more detail below, if a person (an "Acquiring Person") acquires
20% or more of the Voting Shares of the Registrant, other than by way of (i) a
Permitted Bid, (ii) a Competing Bid, (iii) a transaction otherwise approved by
the Board or (iv) through distributions by the Registrant, holders of Rights
other than the Acquiring Person may acquire for Cdn$100, Common Shares of the
Registrant having a market value of $200. In such a case, the Rights will cause
substantial dilution to an Acquiring Person. This dilutive aspect of the Plan is
intended to discourage a potential acquirer from undertaking "creeping
acquisitions" or buying a large block of shares from a select group of
shareholders through "private agreement transactions."
The adoption of the Plan will not affect the duties imposed upon the Board at
law to act honestly and in good faith and in the best interests of the
Registrant and to consider any Take-over Bid in respect of the Registrant on
that basis. In addition, the Plan will not prevent a person from utilizing the
proxy solicitation mechanism of the Registrant Act (British Columbia) to effect
a change of the Board nor will it affect the right of holders of not less than
5% of the Voting Shares of the Registrant to requisition the Board to call a
meeting of shareholders for the purposes stated in the requisition.
Issuance of the Rights will not alter in any way the financial condition of the
Registrant and will not interfere with the day-to-day operations of the
Registrant or its business plans nor will it change the way in which
shareholders currently trade Common Shares.
DESCRIPTION OF THE PLAN
Issuance of Rights
Effective at 5:00 p.m. on February 25, 2000, one Right was issued in respect of
each outstanding Common share (each a "Voting Share") of the Registrant (the
"Effective Time") and one Right will be issued in respect of each Voting Share
of the Registrant issued thereafter, prior to the earlier of the Separation Time
and the Expiration Time. If the Plan is approved by shareholders at the
Registrant's annual meeting (the "Meeting") to be held on May 3, 2000, the
Rights will expire at the termination of the Registrant's annual meeting in the
year 2003 (the "Expiration Time"), unless earlier redeemed by the Registrant. If
the Plan is not approved by the shareholders of the Registrant at the Meeting,
the Plan will expire.
Trading of Rights
Certificates for Voting Shares issued after the Effective Time will contain a
notation incorporating the Rights Agreement by reference. Until the Separation
Time, or earlier
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termination or expiration of the Rights, the Rights will be evidenced by and
transferred with the associated Voting Shares and the surrender for transfer of
any certificate representing Voting Shares will also constitute the surrender
for transfer of the Rights associated with those Voting Shares. After the
Separation Time, the Rights will become exercisable and begin to trade
separately from the associated Voting Shares. As soon as practicable following
the Separation Time, separate certificates evidencing rights ("Rights
Certificates") will be mailed to the holders of record of Voting Shares as of
the Separation Time and the Rights Certificates alone will evidence the Rights.
The Rights will be listed in Canada on The Toronto Stock Exchange.
Separation Time
Under the Plan the Separation Time means the close of business on the 10th
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 of the Registrant ("Voting Shares"), other than
as a result of (i) a reduction in the number of Voting Shares outstanding, (ii)
a Permitted Bid, (iii) acquisitions of Voting Shares approved by the Board, or
(iv) other specified exempt acquisitions where shareholders participate on a pro
rata basis;
(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, together with the Voting Shares beneficially 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,
or such later date as the Board may determine.
Under the Plan, a Take-over Bid means an offer to acquire Voting Shares where
the Voting Shares subject to the offer together with the number of Voting Shares
held by the person making the bid constitute in the aggregate 20% or more of the
outstanding Voting Shares of the Registrant.
Exercise of Rights
Rights will not be exercisable until the Separation Time. After the Separation
Time and prior to the occurrence of a transaction which results in a person
becoming an Acquiring Person (a "Flip-In Event"), each Right will entitle the
registered holder thereof to purchase from the Registrant one Common share at a
price of $100, subject to adjustment and certain anti-dilution provisions (the
"Exercise Price"). If a Flip-In Event occurs, each Right will, unless the
Flip-In Event is waived in accordance with the terms of the Plan, entitle the
registered holder to receive, upon payment of the Exercise Price, Common Shares
of the Registrant having an aggregate market price equal to twice the Exercise
Price. 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.
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Until a Right is exercised, the holder thereof, as such, will have no rights as
a shareholder of the Registrant, 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 Separation Time if it meets certain conditions. A "Permitted Bid" is
defined as an offer to acquire Voting Shares for cash or securities made by
means of a Take-over Bid circular, where the 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:
(a) the bid must be made to all the holders of Voting Shares wherever
resident; and
(b) the bid must contain the following irrevocable and unqualified
conditions:
(i) no Voting Shares will be taken up or paid for prior to the
close of business on the 45th day following the date the circular
is sent to shareholders and then only if more than 50% of the
then outstanding Voting Shares held by Independent Shareholders
have been tendered to the bid and not withdrawn;
(ii) Voting Shares may be deposited pursuant to the bid, unless
it is withdrawn, at any time during the 45 day period described
in Section (b)(i);
(iii) Voting Shares deposited pursuant to the bid may be
withdrawn until taken up or paid for; and
(iv) if the deposit condition referred to in Section (b)(i) is
satisfied, the offeror will extend the expiration date for the
bid for at least 10 Business Days from the date on which the
offer would otherwise expire.
"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
Registrant or its wholly-owned subsidiaries unless the beneficiaries of such
plans or trusts direct the voting or tendering to a Take-over Bid for the Voting
Shares.
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 at least 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 Registrant
within substantially the same time frame.
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Beneficial Ownership
Under the definition of "Beneficial Ownership" in the Plan, a person is deemed
to own securities owned by the person's affiliates and associates and by any
person acting jointly or in concert with such person. A person is also deemed to
own securities which such person has a right to acquire within 60 days of the
exercise of conversion rights or purchase rights. The Plan contains certain
exceptions which would permit investment managers and trust companies holding
securities on behalf of clients, Crown agents, certain statutory bodies and
pension plan administrators to hold more than 20% of the outstanding Voting
Shares of the Registrant in the ordinary course of their business without
becoming an Acquiring Person, provided they do not actually make a Take-over Bid
for such shares. In addition, the Plan has an exemption from the deemed
ownership of securities for those which are lodged under a Permitted Lock-up
Agreement or in respect of securities which have been deposited or tendered
pursuant to a tender or exchange offer or Take-over Bid unless such deposited or
tendered shares have been accepted unconditionally for payment or exchange or
have been taken up or paid for.
A Permitted Lock-up Agreement is an agreement whereby a person agrees to deposit
or tender Voting Shares held by the person to a Take-over Bid, but which permits
the person to withdraw the Voting Shares from the agreement in certain
circumstances in order to tender or deposit them to another Take-over Bid.
Redemption of Rights and Waiver of a Flip-In Event
At any time prior to the occurrence of a Flip-In Event, the Board may authorize
the redemption of all, but not less than all, of the then outstanding Rights at
a redemption price of $0.00001 per Right, subject to adjustment. In addition, if
an offeror acquires more than 50% of the Outstanding Voting Shares not already
beneficially owned by the offeror, pursuant to a Permitted Bid, a Competing
Permitted Bid or another exempt acquisition, the Board will be deemed to have
elected to have the Registrant redeem the Rights at the redemption price.
Prior to the occurrence of a Flip-In Event, the Board may waive a Flip-In Event
that occurs as a result of a circular Take-over Bid sent to all holders of
Voting Shares. In that event, the Board will be deemed to have waived any other
Flip-In Event occurring by reason of any other circular Take-over Bid.
The Board may also waive the application of the Plan to a Flip-In Event
resulting from inadvertence where the Acquiring Person has reduced its
beneficial ownership of Voting Shares to below 20%. Except as described above,
the waiver of the application of the Plan to a particular Flip-In Event requires
shareholder approval.
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.
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Supplements and Amendments
Assuming that the shareholders approve the Plan at the Meeting, the Registrant
may thereafter, without the approval of the holders of Voting Shares or Rights,
make any amendments to the Rights Agreement (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 Agreement
as a result of any change in any applicable laws or regulatory requirements. If
these amendments occur before the Separation Time, they must be put before the
shareholders for ratification at the next occurring meeting of shareholders and
if the amendments occur after the Separation Time they must be put before the
holders of Rights for ratification at a meeting to be called in accordance with
the Articles of the Registrant and the Registrant Act (B.C.).
At any time before the Separation Time, the Registrant may, with the prior
consent of the holders of Voting Shares, amend, vary or rescind any of the
provisions of the Rights Agreement 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
Registrant may, with the prior consent of the holders of Rights, amend, vary or
rescind any of the provisions of the Rights Agreement or the Rights whether or
not such action would materially adversely affect the interests of the holders
of Rights generally.
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ITEM 7: EXHIBITS PAGE
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10.59 Shareholders' Rights Plan agreement made between the
Registrant and Montreal Trust Company of Canada dated
February 25, 2000. 8
99.1 Press release dated February 28, 2000. 55
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GLAMIS GOLD LTD.
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(Registrant)
March 3, 2000
Signed "Charles A. Jeannes"
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Charles A. Jeannes Senior Vice-President,
Administration and General Counsel
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EXHIBIT 10.59
GLAMIS GOLD LTD.
AND
MONTREAL TRUST COMPANY OF CANADA
AS RIGHTS AGENT
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SHAREHOLDER RIGHTS PLAN AGREEMENT
DATED
FEBRUARY 25, 2000
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TABLE OF CONTENTS
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PAGE
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ARTICLE 1 - INTERPRETATION...................................................................1
CERTAIN DEFINITIONS.......................................................................1
CURRENCY.................................................................................13
HEADINGS.................................................................................14
NUMBER AND GENDER........................................................................14
ACTING JOINTLY OR IN CONCERT.............................................................14
STATUTORY REFERENCES.....................................................................14
HOLDER...................................................................................14
CALCULATION OF VOTING SHARE PERCENTAGE...................................................14
INTERPRETATION...........................................................................15
ARTICLE 2 - THE RIGHTS......................................................................15
LEGEND ON VOTING SHARE CERTIFICATES......................................................15
INITIAL EXERCISE PRICE...................................................................16
RIGHTS NOT EXERCISABLE UNTIL SEPARATION TIME.............................................16
MAILING OF RIGHTS CERTIFICATES AND DISCLOSURE STATEMENT..................................16
EXERCISE OF RIGHTS.......................................................................17
DUTIES OF RIGHTS AGENT UPON RECEIPT OF ELECTION TO EXERCISE..............................17
PARTIAL EXERCISE OF RIGHTS...............................................................18
DUTIES OF THE CORPORATION................................................................18
ADJUSTMENTS TO EXERCISE PRICE; NUMBER OF RIGHTS..........................................19
DATE ON WHICH EXERCISE IS EFFECTIVE......................................................25
EXECUTION OF RIGHTS CERTIFICATES.........................................................25
AUTHENTICATION OF RIGHTS CERTIFICATES....................................................25
DATING OF RIGHTS CERTIFICATES............................................................25
REGISTER OF RIGHTS.......................................................................25
TRANSFERS AND EXCHANGES..................................................................26
MUTILATED RIGHTS CERTIFICATES............................................................26
DESTROYED, LOST AND STOLEN RIGHTS CERTIFICATES...........................................26
REPLACEMENT FEE..........................................................................27
VALIDITY OF REPLACEMENT RIGHTS CERTIFICATES..............................................27
PERSONS DEEMED OWNERS....................................................................27
DELIVERY AND CANCELLATION OF RIGHTS CERTIFICATES.........................................27
AGREEMENT OF RIGHTS HOLDERS..............................................................27
RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER.......................................28
ARTICLE 3 - ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS..................29
FLIP-IN EVENT............................................................................29
CANCELLATION OF RIGHTS HELD BY AN ACQUIRING PARTY........................................29
LEGEND ON RIGHTS CERTIFICATES TRANSFERRED BY AN ACQUIRING PARTY..........................29
ARTICLE 4 - THE RIGHTS AGENT................................................................30
APPOINTMENT OF RIGHTS AGENT..............................................................30
PROTECTION OF RIGHTS AGENT...............................................................30
RIGHTS AGENT TO BE KEPT INFORMED.........................................................31
MERGER OR AMALGAMATION OR CHANGE OF NAME OF RIGHTS AGENT.................................31
COUNTERSIGNING OF RIGHTS CERTIFICATES....................................................31
DUTIES OF RIGHTS AGENT...................................................................31
CHANGE OF RIGHTS AGENT...................................................................33
ARTICLE 5 - MISCELLANEOUS...................................................................34
</TABLE>
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<TABLE>
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REDEMPTION AND WAIVER....................................................................34
EXPIRATION...............................................................................36
ISSUANCE OF NEW RIGHT CERTIFICATES.......................................................36
SUPPLEMENTS AND AMENDMENTS...............................................................36
TIMING OF CERTAIN APPROVALS OF THE SHAREHOLDERS..........................................37
EFFECTIVE TIME OF SUPPLEMENTS AND AMENDMENTS.............................................37
APPROVALS OF AMENDMENTS BY RIGHTS AGENT..................................................37
FRACTIONAL RIGHTS AND FRACTIONAL SHARES..................................................37
RIGHTS OF ACTION.........................................................................38
NOTICE OF PROPOSED ACTIONS...............................................................38
NOTICES..................................................................................38
SUCCESSORS...............................................................................39
BENEFITS OF THIS AGREEMENT...............................................................39
GOVERNING LAW............................................................................39
SEVERABILITY.............................................................................39
EFFECTIVE DATE...........................................................................40
DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS.....................................40
RIGHTS OF BOARD, CORPORATION AND OFFEROR.................................................40
REGULATORY APPROVALS.....................................................................40
DECLARATION AS TO NON-CANADIAN HOLDERS...................................................40
TIME OF THE ESSENCE......................................................................41
EXECUTION IN COUNTERPARTS................................................................41
</TABLE>
EXHIBITS
Exhibit A - Form of Rights Certificate (and attached Form of Election to
Exercise and Form of Assignment)
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SHAREHOLDER RIGHTS PLAN AGREEMENT
THIS AGREEMENT dated as of the 25th day of February, 2000 between Glamis Gold
Ltd. (the "Corporation"), a corporation incorporated under the Company Act
(British Columbia), and Montreal Trust Company of Canada, a trust company
incorporated under the laws of Canada, as Rights Agent (the "RIGHTS AGENT",
which term will include any successor Rights Agent hereunder).
WHEREAS:
(A) The Board of Directors of the Corporation has determined that it is
advisable and in the best interests of the Corporation and its shareholders to
adopt a shareholder rights plan (the "RIGHTS PLAN") to ensure, to the extent
possible, that all shareholders of the Corporation are treated fairly in
connection with any take-over bid for the Corporation;
(B) In order to implement the adoption of the Rights Plan the Board of Directors
has, subject to receipt of shareholder and regulatory approval:
(a) authorized the issuance of one Right (as hereinafter defined)
effective the Record Time (as hereinafter defined) in respect of each
Common Share outstanding at the Record Time; and
(b) authorized the issuance of one Right in respect of each Common Share
issued after the Record Time and prior to the earlier of the Separation
Time (as hereinafter defined) and the Expiration Time (as hereinafter
defined);
(C) Each Right entitles the holder thereof, after the Separation Time, to
purchase securities of the Corporation pursuant to the terms and subject to the
conditions set forth herein; and
(D) The Corporation desires to appoint the Rights Agent to act on behalf of the
Corporation, and the Rights Agent is willing to so act, in connection with the
issuance, transfer, exchange and replacement of Rights Certificates, the
exercise of Rights, and other matters referred to herein.
NOW THEREFORE in consideration of the premises and the respective covenants and
agreements set forth herein the parties agree as follows:
ARTICLE 1-INTERPRETATION
CERTAIN DEFINITIONS
1.1 For purposes of this Agreement, the following terms have the meanings
indicated:
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(a) "1933 SECURITIES ACT" means the Securities Act of 1933 of the United
States, as amended, and the rules and regulations thereunder, and any
comparable or successor laws or regulations thereto.
(b) "1934 EXCHANGE ACT" means the Securities Exchange Act of 1934 of the
United States, as amended, and the rules and regulations thereunder, and
any comparable or successor laws or regulations thereto.
(c) "ACQUIRING PERSON" means, any Person who is the Beneficial Owner of
20% or more of the outstanding Voting Shares; save and except that the
term "Acquiring Person" will not include:
(i) the Corporation or any Subsidiary of the Corporation;
(ii) any Person who becomes the Beneficial Owner of 20% or more
of the outstanding Voting Shares of the Corporation as a result
of
(A) Corporate Acquisitions,
(B) Permitted Bid Acquisitions,
(C) Corporate Distributions,
(D) Exempt Acquisitions, or
(E) Convertible Security Acquisitions;
(each an "Exempt Transaction")
provided, however, that if a Person becomes the Beneficial Owner
of 20% or more of the outstanding Voting Shares by reason of one
or more or any combination of Exempt Transactions and, after such
becomes the Beneficial Owner of an additional 1% or more of the
outstanding Voting Shares, other than pursuant to an Exempt
Transaction, such Person will, as at such time, become an
Acquiring Person;
(iii) for a period of 10 days after the Disqualification Date,
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 Section 1.1(g)(vi) or Section
1.1(g)(viii) solely because such Person makes or proposes to make
a Take-over Bid in respect of securities of the Corporation alone
or by acting jointly or in concert with any other Person;
(iv) an underwriter or member of a banking or selling group which
acquires Voting Shares from the Corporation in connection with a
distribution to the public of securities of the Corporation; and
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(v) any employee benefits plan or other compensation arrangement
of the Corporation.
(d) "AFFILIATE", when used to indicate a relationship with a specified
Person, means a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with, such specified Person and a body corporate will be deemed
to be an Affiliate of another body corporate if one of them is the
Subsidiary of the other or if both are Subsidiaries of the same body
corporate or if each of them is controlled by the same Person.
(e) "AGREEMENT" means this agreement as amended, modified or
supplemented from time to time.
(f) "ASSOCIATE", when used to indicate a relationship with a specified
Person, means
(i) a spouse of such specified Person,
(ii) any Person of either sex with whom such specified Person is
living in a conjugal relationship outside marriage, or
(iii) any relative of such specified Person or of a Person
mentioned in Section (i) or Section (ii) of this definition if
that relative has the same residence as the specified Person.
(g) a Person will be deemed the "BENEFICIAL OWNER", and to have
"BENEFICIAL OWNERSHIP" of, and to "BENEFICIALLY OWN":
(i) any securities of which such Person or any Affiliate or
Associate of such Person is the owner in law or equity;
(ii) any securities as to which such Person or any of such
Person's Affiliates or Associates has the right
(A) to become the owner at law or in equity (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 or the making of any payment)
pursuant to any agreement, arrangement, pledge or
understanding, whether or not in writing (other than
customary agreements with and between underwriters and
banking group or selling group members with respect to a
public offering of securities or pursuant to a bona fide
pledge of securities), or
(B) to vote such securities (whether such right is
exercisable immediately or after the passage of time or
upon the occurrence of a contingency or otherwise)
pursuant to any agreement, arrangement, pledge or
understanding (written or oral), or otherwise, other than
pledges of securities in the ordinary course of business;
and
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(iii) any securities that are Beneficially Owned within the
meaning of Section 1.1(g)(i) or (ii) by any other Person with
whom such Person is acting jointly or in concert;
provided, however, that a Person will not be deemed to be the
"BENEFICIAL OWNER", or to have "BENEFICIAL OWNERSHIP" of, or to
"BENEFICIALLY OWN", any security solely by reason of:
(iv) such security having been deposited or tendered pursuant to
a tender or exchange offer or Take-over Bid made by such Person
or any of such Person's Affiliates or Associates or made by any
other Person acting jointly or in concert with such Person,
unless such deposited or tendered security has been accepted
unconditionally for payment or exchange or has been taken up or
paid for, whichever occurs first; or
(v) the holder of such security having agreed to deposit or
tender such security to a Take-over Bid made by such Person or
any of such Person's Affiliates or Associates or any other Person
referred to in Section (iii) of this definition pursuant to a
Permitted Lock-up Agreement; or
(vi) such Person or any Affiliate or Associate of such Person or
any other Person acting jointly or in concert with such Person,
holding or exercising voting or dispositive power over such
security, in circumstances where
(A) the ordinary business of the Person (the "FUND
MANAGER") includes the management of investment funds for
others and such voting or dispositive power over such
security is held by the Fund Manager in the ordinary
course of such business in the performance of such Fund
Manager's duties for the account of any other Person (a
"CLIENT"), or
(B) such Person (the "TRUST COMPANY") is licensed to carry
on the business of a trust company under applicable law
and, as such, acts as trustee or administrator or in a
similar capacity in relation to the estates of deceased or
incompetent Persons or in relation to other accounts and
holds or exercises voting or dispositive power over such
security in the ordinary course of such duties for the
estate of any such deceased or incompetent Person (each an
"ESTATE ACCOUNT") or for such other accounts (each an
"OTHER ACCOUNT") and holds such voting or dispositive
power over such security and is acting in the ordinary
course of such duties for the Estate Account or for such
Other Account,
(C) the ordinary business or activity of such Person
includes acting as an agent of the Crown in the management
of public assets (the "CROWN AGENT"), or
(D) the Person is the administrator or the trustee of one
or more pension funds, plans or related trusts (each a
"PENSION FUND") registered or qualified under the laws of
Canada or any province thereof or the laws
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of the United States or any state thereof (the
"INDEPENDENT PERSON"), or is a Pension Fund, and holds
such securities solely for the purposes of its activities
as an Independent Person or as a Pension Fund, or
(E) the Person is an independent Person established by
statute for purposes that include, and the ordinary
business or activity of such Person (in this definition,
the "STATUTORY BODY") includes, the management of
investment funds for employee benefit plans, pension
plans, insurance plans of various public bodies and the
Statutory Body holds such security for the purposes of its
activities as such;
and provided that the Fund Manager, the Trust Company, the Crown
Agent, the Independent Person, the Pension Fund or the Statutory
Body, as the case may be, does not make or propose to make a
Take-over Bid in respect of securities of the Corporation alone
or by acting jointly or in concert with any other Person (other
than by means of ordinary market transactions (including
prearranged trades entered into in the ordinary course of
business of such Person) executed through the facilities of a
stock exchange or organized over-the-counter market); or
(vii) such Person being a Client of the same Fund Manager as
another Person on whose account the Fund Manager holds or
exercises voting or dispositive power over such security, or such
Person being an Estate Account or an Other Account of the same
Trust Company as another Person on whose account the Trust
Company holds or exercises voting or dispositive power over such
security, or such Person being a Pension Fund with the same
Independent Person as another Pension Fund;
(viii) such Person being a Client of a Fund Manager and such
security is owned at law or in equity by the Fund Manager, or
such Person being 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 such Person being a Pension Fund and such
security is owned at law or in equity by the Independent Person
or the Pension Fund; or
(ix) such Person being a registered holder of securities as a
result of carrying on the business of, or acting as the nominee
of, a securities depository.
(h) "BOARD OF DIRECTORS" means, at any time, the duly constituted board
of directors of the Corporation.
(i) "BUSINESS DAY" means any day other than a Saturday, Sunday or a day
on which banking institutions in the Cities of Vancouver, British
Columbia and Toronto, Ontario are authorized or obligated by law to
close.
(j) "COMPANY ACT" means the Company Act, R.S.B.C. 1996, c.62, as
amended, and the regulations made thereunder, and any comparable or
successor laws or regulations thereto.
<PAGE> 9
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(k) "CANADIAN DOLLAR EQUIVALENT" of any amount which is expressed in
United States dollars means on any date the Canadian dollar equivalent
of such amount determined by reference to the Canadian-U.S. Exchange
Rate on such date.
(l) "CANADIAN-U.S. EXCHANGE RATE" means, on any date, the inverse of the
U.S.-Canadian Exchange Rate.
(m) "CLOSE OF BUSINESS" on any given day means the time on such day (or,
if such day is not a Business Day, the time on the next succeeding
Business Day) at which the office of the transfer agent for the Common
Shares in Vancouver, British Columbia (or, after the Separation Time,
the office of the Rights Agent in Vancouver, British Columbia) is closed
to the public.
(n) "COMMON SHARES" means the common shares in the capital of the
Corporation.
(o) "COMPETING PERMITTED BID" means a Take-over Bid that is made while
another Permitted Bid or Competing Permitted Bid is in existence and
that satisfies all of the components of the definition of a Permitted
Bid, except that the requirements set out in Section (ii) of the
definition of a Permitted Bid will be satisfied if the Competing
Permitted Bid contains, and the take up and payment for securities
tendered or deposited thereunder will be subject to, an irrevocable and
unqualified condition that no Voting Shares will be taken up or paid for
pursuant to the Competing Permitted Bid prior to the close of business
on the day that is no earlier than the later of 21 days after the date
the Competing Permitted Bid is made and the earliest date on which
Voting Shares may be taken up or paid for under any other Permitted Bid
in existence at the date of such Competing Permitted Bid and only if at
the time when Voting Shares are first taken up and paid for under the
Competing Permitted Bid, more than 50% of the then outstanding Voting
Shares held by Independent Shareholders have been deposited to the
Competing Permitted Bid and not withdrawn.
(p) "CONTROLLED": a corporation is "controlled" by another Person 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 for the benefit of the
other Person or Persons; and
(ii) the votes carried by such securities are entitled, if
exercised, to elect a majority of the board of directors of such
corporation;
and "CONTROLS", "CONTROLLING" and "UNDER COMMON CONTROL WITH" will be
interpreted accordingly.
(q) "CONVERTIBLE SECURITY" means at any time:
(i) any right (regardless of whether such right constitutes a
security); or
(ii) any security issued by the Corporation (other than the
Rights);
<PAGE> 10
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which is exercisable or exercisable within a period of 60 days from that
time, by the holder thereof to acquire Voting Shares or other securities
which are convertible into or exercisable or exchangeable for Voting
Shares (in each case, whether such right is then exercisable or
exercisable within a period of 60 days from that time and whether or not
on condition or the happening of any contingency).
(r) "CONVERTIBLE SECURITY ACQUISITION" means the acquisition of Voting
Shares upon the exercise of Convertible Securities received by a Person
pursuant to a Permitted Bid Acquisition, an Exempt Acquisition or a
Corporate Distribution.
(s) "CORPORATE ACQUISITION" means an acquisition by the Corporation or a
Subsidiary of the Corporation of Voting Shares which by reducing the
number of outstanding Voting Shares, increases the proportionate number
of Voting Shares Beneficially Owned by any Person.
(t) "CORPORATE DISTRIBUTION" means:
(i) a stock dividend or a stock split or other event pursuant to
which a Person receives or acquires Voting Shares or Convertible
Securities on the same pro rata basis as all other holders of
Voting Shares of the same class; or
(ii) any other event pursuant to which all holders of Voting
Shares are entitled to receive Voting Shares or Convertible
Securities on a pro rata basis, including, without limiting the
generality of the foregoing, pursuant to the receipt or exercise
of rights issued by the Corporation and distributed to all the
holders of a series or class of Voting Shares to subscribe for or
purchase Voting Shares or Convertible Securities, provided that
such rights are acquired directly from the Corporation and not
from any other Person.
(u) "DISQUALIFICATION DATE" in respect of a Person means the first date
that a public announcement is made indicating that the Person has or is
making or has announced on intention to make, a Take-over Bid alone or
by acting jointly or in concert with any other Person.
(v) "ELECTION TO EXERCISE" has the meaning ascribed thereto in Section
2.5(a).
(w) "EXEMPT ACQUISITION" means an acquisition of Voting Shares
(i) in respect of which the Board of Directors has waived the
application of Section 3.1 pursuant to the provisions of Section
5.1(b), Section 5.1(c) or Section 5.1(d), or
(ii) pursuant to a dividend reinvestment plan of the
Corporation, or
(iii) pursuant to a distribution by the Corporation of Voting
Shares or Convertible Securities made pursuant to a prospectus,
or
(iv) pursuant to a distribution by the Corporation of Voting
Shares or Convertible Securities by way of a private placement
by the Corporation or upon
<PAGE> 11
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the exercise by an individual employee or director of stock
options granted under a stock option plan of the Corporation or
rights to purchase securities granted under a share purchase plan
of the Corporation, provided that all necessary stock exchange
approvals for such private placement, stock option plan or share
purchase plan have been obtained and such private placement,
stock option plan or share purchase plan complies with the terms
and conditions of such approvals.
(x) "EXERCISE PRICE" means, as of any date, the price at which a holder
may purchase the securities isSuable upon exercise of one whole Right.
Until adjustment or revision thereof in accordance with the terms
hereof, the Exercise Price will be $100.00.
(y) "EXPIRATION TIME" means the earlier of:
(i) the Termination Time, and
(ii) the close of business on the date of the Corporation's 2003
Annual Meeting of Shareholders.
(z) "FLIP-IN EVENT" means a transaction or event that results in a
Person becoming an Acquiring Person.
(aa) "INDEPENDENT SHAREHOLDERS" means all holders of Voting Shares
except for
(i) an Acquiring Person,
(ii) an Offeror,
(iii) an Affiliate or Associate of such Acquiring Person or such
Offeror,
(iv) a Person acting jointly or in concert with such Acquiring
Person or such Offeror, and
(v) an employee benefit plan, stock purchase plan, deferred
profit sharing plan or any similar plan or trust for the benefit
of employees of the Corporation or a Subsidiary of the
Corporation, unless the beneficiaries of any such plan or trust
direct the manner in which the Voting Shares are to be voted or
withheld from voting or direct whether the Voting Shares are to
be tendered to a Take-over Bid.
(ab) "MARKET PRICE" per security of any securities on any date of
determination means the average of the daily closing prices per security
of such securities (determined as described below) on each of the 20
consecutive Trading Days through and including the Trading Day
immediately preceding such date; provided, however, that if an event of
a type analogous to any of the events described in Section 2.9 has
caused the closing prices used to determine the Market Price on any
Trading Days not to be fully comparable with the closing price on such
date of determination or, if the date of determination is not a Trading
Day, on the immediately preceding Trading Day, each such closing price
so used will be appropriately adjusted in a manner analogous to the
applicable adjustment provided for in Section 2.9 in order to make it
fully comparable with the closing price on such
<PAGE> 12
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date of determination or, if the date of determination is not a Trading
Day, on the immediately preceding Trading Day. The closing price per
security of a security on a specified date will be
(i) the closing board lot sale price on the date or, if such
price is not available, the average of the closing bid and asked
prices on the date, for the security as reported by The Toronto
Stock Exchange, or
(ii) if for any reason none of such prices is available on such
day or the securities are not listed or admitted to trading on
The Toronto Stock Exchange, the closing board lot sale price on
the date, or if such price is not available, the average of the
closing bid and asked prices on the date, for the security as
reported by the NYSE, 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
The Toronto Stock Exchange or the NYSE, the closing board lot
sale price on the date, or if such price is not available, the
average of the closing bid and asked prices on the date, for the
security as reported by the principal stock exchange in Canada or
the United States on which the security is primarily traded, or
(iv) if not so listed, the last quoted price on the date, or if
not so quoted, the average of the high bid and low asked prices
on the date, for the security in the over-the-counter market, as
reported by Nasdaq or, if the securities are not quoted on
Nasdaq, as reported by such other system then in use, or
(v) if on any such date the securities are not quoted by any such
organization, the average of the closing bid and asked prices on
the date as furnished by a professional market maker making a
market in the security as selected by the Board of Directors;
provided, however, that if on any such date the security is not
traded in the over-the-counter market, the closing price per
security on such date will mean the fair value per security on
such date as determined by the Board of Directors, after
consultation with a nationally or internationally recognized
investment dealer or investment banker.
The Market Price will be expressed in Canadian dollars. If the price for
the security on any day forming part of the 20 consecutive Trading Day
period is in United States dollars, such amount will be translated into
Canadian dollars at the Canadian Dollar Equivalent thereof.
Notwithstanding the foregoing, where the Board of Directors is satisfied
that the Market Price of securities as determined herein was affected by
an anticipated or actual Take-over Bid or by improper manipulation, the
Board of Directors may determine the Market Price of securities based on
a finding as to the price of which a holder of securities of that class
could reasonably have expected to dispose of his securities immediately
prior to the relevant date excluding any change in price reasonably
attributable to the anticipated or actual Take-over Bid or to the
improper manipulation.
(ac) "NASDAQ" means The NASDAQ SmallCap Market.
<PAGE> 13
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(ad) "NYSE" means the New York Stock Exchange.
(ae) "OFFER TO ACQUIRE" means:
(i) an offer to purchase, a public announcement of an intention
to make an offer to purchase, or a solicitation of an offer to
sell, Voting Shares; and
(ii) an acceptance of an offer to sell Voting Shares, whether or
not such offer to sell has been solicited;
or any combination thereof, and the Person accepting an offer to sell
will be deemed to be making an Offer to Acquire to the Person that made
the offer to sell.
(af) "OFFEROR" means a Person who has announced an intention to make, or
who makes and has outstanding, a Take-over Bid.
(ag) "OFFEROR'S SECURITIES" means the Voting Shares and Convertible
Securities Beneficially Owned by an Offeror, any Affiliate or Associate
of such Offeror, any Person acting jointly or in concert with the
Offeror or with any Affiliate of the Offeror and any Affiliates or
Associates of such Person so acting jointly or in concert.
(ah) "OUTSTANDING VOTING SHARES" means that number of Common Shares, or
other Voting Shares, which are issued and outstanding at the time of a
Flip-in Event on a fully-diluted basis and, for more certainty, includes
without limitation all outstanding options, warrants, rights or other
securities (excluding the Rights) convertible into Common Shares or
other Voting Shares to be issued from treasury at the time of a Flip-in
Event.
(ai) "PERMITTED BID" means a Take-over Bid made by an Offeror which is
made by means of a Take-over Bid circular and which:
(i) is made on identical terms (other than terms of a
non-material nature that may be required by applicable law) to
all holders of record of Voting Shares wherever resident as
registered on the books of the Corporation and must be made for
all of the outstanding Voting Shares;
(ii) contains, and the take up and payment for securities
tendered or deposited thereunder will be subject to, an
irrevocable and unqualified condition that no Voting Shares will
be taken up or paid for pursuant to the Take-over Bid prior to
the close of business on the date which is not less than 45 days
following the date the Take-over Bid circular is sent to
shareholders of the Corporation and that no Voting Shares will be
taken up or paid for pursuant to the Take-over Bid unless, at
such date, more than 50% of the then outstanding Voting Shares
held by Independent Shareholders have been deposited to the
Take-over Bid and not withdrawn;
(iii) contains an irrevocable and unqualified provision that,
unless the Take-over Bid is withdrawn in accordance with
applicable law, Voting Shares of the Corporation may be deposited
pursuant to the Take-over Bid at any time during
<PAGE> 14
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the period of time described in Section 1.1(ai)(ii) and that any
Voting Shares deposited pursuant to the Take-over Bid may be
withdrawn at any time until taken up and paid for; and
(iv) contains an irrevocable and unqualified provision that
provides upon the condition referred to in Section 1.1(ai)(ii)
being satisfied, the Offeror will make a public announcement of
that fact on the date the Take-over Bid would otherwise expire
and the Take-over Bid will be extended for a period of not less
than 10 Business Days from the date it would otherwise expire;
provided always that a Permitted Bid will cease to be a Permitted Bid at
any time when it ceases to meet any of the provisions of this definition
and any acquisitions of Voting Shares made pursuant to such Permitted
Bid, including any acquisition of Voting Shares theretofore made, will
cease to be a Permitted Bid Acquisition.
(aj) "PERMITTED BID ACQUISITION" means the acquisition of Voting Shares
made pursuant to a Permitted Bid or a Competing Permitted Bid.
(ak) "PERMITTED 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 or Convertible
Securities 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"), but which permits the Locked-up Person
to withdraw the Voting Shares or Convertible Securities from the
agreement in order to tender or deposit them to another Take-over Bid
that contains an offering price or value per Voting Share or Convertible
Security, as the case may be, that is at least 5% in excess of the price
or value per Voting Share or Convertible Security offered under the
Lock-Up Bid.
(al) "PERSON" means any individual, firm, partnership, association,
trust, trustee, executor, administrator, legal or personal
representative, government, governmental body, entity or authority,
group, body corporate, corporation, unincorporated organization or
association, syndicate, joint venture or any other entity, whether or
not having legal personality, and any of the foregoing in any
derivative, representative or fiduciary capacity, and pronouns have a
similar extended meaning.
(am) "RECORD TIME" means 5:00 p.m. (Toronto time) on February 25, 2000.
(an) "REDEMPTION PRICE" has the meaning ascribed thereto in Section
5.1(a).
(ao) "REGULAR PERIODIC CASH DIVIDENDS" means cash dividends paid at
regular intervals in any fiscal year of the Corporation to the extent
that such cash dividends do not exceed, in the aggregate, the greatest
of
<PAGE> 15
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(i) 200% of the aggregate amount of cash dividends declared
payable by the Corporation on its Common Shares in its
immediately preceding fiscal year, and
(ii) 100% of the aggregate consolidated net income of the
Corporation, before extraordinary items, for its immediately
preceding fiscal year.
(ap) "RIGHT" means a right issued pursuant to this Agreement.
(aq) "RIGHTS CERTIFICATE" has the meaning ascribed thereto in Section
2.4(a).
(ar) "RIGHTS REGISTER" has the meaning ascribed thereto in Section 2.14.
(as) "SECURITIES ACT (BRITISH COLUMBIA)" means the Securities Act,
R.S.B.C. 1996, c.418, as amended, and the regulations, rules, policies
and notices thereunder, and any comparable or successor laws,
regulations, rules, policies or notices thereto.
(at) "SECURITIES ACT (ONTARIO)" means the Securities Act, R.S.O. 1990,
c. S.5, as amended, and the regulations, rules, policies, and notices
thereunder, and any comparable or successor laws, regulations, rules,
policies or notices thereto.
(au) "SEPARATION TIME" means the close of business (Vancouver Time) on
the 10th 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 the
Corporation or any Subsidiary of the Corporation) to commence, a
Take-over Bid (other than a Permitted Bid or Competing Permitted
Bid), and
(iii) the date upon which a Permitted Bid or Competing Permitted
Bid ceases to be such,
or such later date as may be determined by the Board of Directors
provided that, if any such Take-over Bid expires, is cancelled,
terminated or otherwise withdrawn prior to the Separation Time, such
Take-over Bid will be deemed, for the purposes of this definition, never
to have been made and provided further that if the Board of Directors
determines pursuant to Section 5.1(b), Section 5.1(c) or Section 5.1(d)
to waive the application of Section 3.1 to a Flip-in Event, the
Separation Time in respect of such Flip-in Event will be deemed never to
have occurred.
(av) "STOCK ACQUISITION DATE" means the first date of public
announcement (which, for purposes of this definition, will include,
without limitation, a report filed pursuant to Section 101 of the
Securities Act (Ontario) or Section 111 of the Securities Act (British
Columbia) or Section 13(d) under the 1934 Exchange Act) by the
Corporation or an Offeror or Acquiring Person, that a Person has become
an Acquiring Person.
<PAGE> 16
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(aw) "SUBSIDIARY": a corporation will be deemed to be a Subsidiary of
another corporation if:
(i) it is controlled by:
(A) that other; or
(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.
(ax) "TAKE-OVER BID" means an Offer to Acquire Voting Shares or
Convertible Securities where the Voting Shares subject to the Offer to
Acquire, together with the Voting Shares into which the Convertible
Securities are convertible, exchangeable or exercisable, and the
Offeror's Securities, constitute in the aggregate 20% or more of the
outstanding Voting Shares at the date of the Offer to Acquire.
(ay) "TERMINATION TIME" means the time at which the right to exercise
Rights will terminate pursuant to Section 5.1(a) and Section 5.1(e).
(az) "TRADING DAY", when used with respect to any securities, means a
day on which the principal Canadian stock exchange or American stock
exchange or market on which such securities are listed or admitted to
trading is open for the transaction of business or, if the securities
are not listed or admitted to trading on any Canadian stock exchange or
American stock exchange or market, a Business Day.
(ba) "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 which is
calculated in the manner which will be determined by the Board of
Directors from time to time acting in good faith.
(bb) "VOTING SHARES" means the Common Shares and any other shares in the
capital of the Corporation entitled to vote generally in the election of
all directors of the Corporation.
CURRENCY
1.2 All sums of money which are referred to in this Agreement are expressed in
lawful money of Canada, unless otherwise specified.
<PAGE> 17
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HEADINGS
1.3 The division of this Agreement into Articles, Sections, Subsections, Clauses
and Subclauses and the insertion of headings, subheadings and a table of
contents are for convenience of reference only and will not affect the
construction or interpretation of this Agreement.
NUMBER AND GENDER
1.4 Wherever the context so requires, terms used herein importing the singular
number only will include the plural and vice-versa and words importing only one
gender will include all others.
ACTING JOINTLY OR IN CONCERT
1.5 For the purposes of this Agreement, a Person will be deemed to be acting
jointly or in concert with every Person who is a party to an agreement,
commitment or understanding, whether formal or informal, with the first Person
or any Associate or Affiliate of such Person for the purpose of acquiring or
making an Offer to Acquire Voting Shares of the Corporation (other than
customary agreements with and between underwriters or banking group members or
selling group members with respect to a distribution of securities or to a
pledge of securities in the ordinary course of business).
STATUTORY REFERENCES
1.6 Unless the context otherwise requires or except as expressly provided
herein, any reference herein to a specific part, section, subsection, clause or
rule of any statute or regulation will be deemed to refer to the same as it may
be amended, re-enacted or replaced or, if repealed and there will be no
replacement therefor, to the same as it is in effect on the date of this
Agreement.
HOLDER
1.7 As used in this Agreement, unless the context otherwise requires, the term
"holder" when used with reference to Rights, means the registered holder of such
Rights or, prior to the Separation Time, the associated Voting Shares.
CALCULATION OF VOTING SHARE PERCENTAGE
1.8 For purposes of this Agreement, the percentage of Voting Shares Beneficially
Owned by any Person, will be and be deemed to be the product of 100 and the
number of which the numerator is the number of votes for the election of all
directors generally attaching to the Voting Shares and Convertible Securities
Beneficially Owned by such Person and the denominator of which is the number of
votes for the election of all directors generally attaching to all outstanding
Voting Shares and Convertible Securities. Where any Person is deemed to
Beneficially Own unissued Voting Shares, such Voting Shares will be deemed to be
issued and outstanding for the purpose of calculating the percentage of Voting
Shares Beneficially Owned by such Person.
<PAGE> 18
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INTERPRETATION
1.9 For the purposes of this Agreement, except as otherwise expressly provided
herein:
(a) the symbol Section followed by a number or some combination of
numbers and letters refers to the section, paragraph, subparagraph,
clause or subclause of this Agreement so designated,
(b) the word "or" is not exclusive and the word "including" is not
limiting (whether or not non-limiting language such as "without
limitation" or "but not limited to" or other words of similar import is
used with reference thereto); and
(c) a reference to a corporate entity includes and is also a reference
to any corporate entity that is a successor to such entity.
ARTICLE 2 - THE RIGHTS
LEGEND ON VOTING SHARE CERTIFICATES
2.1 Certificates:
(a) issued for Voting Shares after the Record Time but prior to the
close of business on the earlier of the Separation Time and the
Expiration Time will evidence one Right for each Common Share
represented thereby and will have impressed on, printed on, written on
or otherwise affixed to them, a legend in substantially the following
form:
"Until the Separation Time (as defined in the Rights Plan
referred to below), this certificate also evidences and entitles
the holder hereof to certain Rights as set forth in a Shareholder
Rights Plan Agreement, dated as of February 25, 2000 (the "RIGHTS
PLAN"), between Glamis Gold Ltd. (the "CORPORATION") and The
Montreal Trust Company of Canada, as rights agent (the "RIGHTS
AGENT"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal
executive office of the Corporation. Under certain circumstances,
as set forth in the Rights Plan, such Rights may be amended or
redeemed, may expire, may become null and void (if, in certain
cases, they are issued to or "BENEFICIALLY OWNED" by any Person
who is, was or becomes an "ACQUIRING PERSON", as such terms are
defined in the Rights Plan, whether currently held by or on
behalf of such Person or any subsequent holder) or may be
evidenced by separate certificates and may no longer be evidenced
by this certificate.
The Corporation will mail or arrange for the mailing of a copy of
the Rights Plan to the holder of this certificate without charge
upon receipt of a written request therefor."
and
<PAGE> 19
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(b) representing Common Shares that are issued and outstanding at the
Record Time will evidence one Right for each Common Share evidenced
thereby notwithstanding the absence of the foregoing legend until the
earlier of the Separation Time and the Expiration Time.
INITIAL EXERCISE PRICE
2.2 Subject to adjustment as herein set forth and subject to Section 3.1, each
Right, save and except those held by the Corporation and any of its Subsidiaries
which will be void, will entitle the holder thereof, from and after the
Separation Time and prior to the Expiration Time, to purchase, for the Exercise
Price as at the Business Day immediately preceding the date of exercise of the
Right, one Common Share.
RIGHTS NOT EXERCISABLE UNTIL SEPARATION TIME
2.3 Until the Separation Time:
(a) the Rights will not be exercisable, and
(b) for administrative purposes each Right will be evidenced by the
certificates for the associated Voting Shares registered in the names of
the holders thereof (which certificates will also be deemed to be Rights
Certificates) and will be transferable only together with, and will be
transferred by a transfer of, such associated Voting Shares.
MAILING OF RIGHTS CERTIFICATES AND DISCLOSURE STATEMENT
2.4 From and after the Separation Time and prior to the Expiration Time, the
Rights may be exercised, and will be registered and transferable independently
of Voting Shares. Promptly following the Separation Time, the Corporation will
prepare and the Rights Agent will mail to each holder of record of Rights as of
the Separation Time (other than an Acquiring Person, any other Person whose
Rights are or become void pursuant to the provisions of Section 3.2 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) at
such holder's address as shown by the records of the Corporation (the
Corporation hereby agreeing to furnish copies of such records to the Rights
Agent for this purpose),
(a) a certificate (a "RIGHTS CERTIFICATE") in substantially the form of
Exhibit A hereto appropriately completed, representing the number of
Rights held by such holder at the Separation Time and having such marks
of identification or designation and such legends, summaries or
endorsements printed thereon as the Corporation may deem appropriate and
as are not inconsistent with the provisions of this Agreement, or as may
be required to comply with any law, rule, regulation or judicial or
administrative order or with any rule or regulation made pursuant
thereto 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
(b) a disclosure statement describing the Rights,
<PAGE> 20
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provided that a nominee will be sent the materials provided for in this Section
2.4 in respect of all Voting Shares held of record by it which are not
Beneficially Owned by an Acquiring Person. In order for the Corporation to
determine whether any Person is holding Voting Shares which are Beneficially
Owned by another Person, the Corporation may require such first mentioned Person
to furnish it with such information and documentation as the Corporation
considers advisable.
EXERCISE OF RIGHTS
2.5 Rights may be exercised in whole at any time or in part from time to time on
any Business Day (or other day that is not a bank holiday at the place of
exercise) after the Separation Time and prior to the Expiration Time by
submitting to the Rights Agent, at its office in the City of Vancouver, British
Columbia, Canada or at any other office of the Rights Agent or any Co-Rights
Agent in the cities specified in the Rights Certificate or designated from time
to time for that purpose by the Corporation after consultation with the Rights
Agent:
(a) the Rights Certificate evidencing such Rights with an Election to
Exercise (an "ELECTION TO EXERCISE") substantially in the form attached
to the Rights Certificate, appropriately completed and duly executed by
the holder or his executors or administrators or other personal
representatives or his legal attorney duly appointed by instrument in
writing in form and executed in a manner satisfactory to the Rights
Agent; and
(b) payment by certified cheque or money order payable to the order of
the Corporation, of a sum equal to the Exercise Price multiplied by the
number of Rights being exercised and a sum sufficient to cover any
transfer tax or charge which may be payable in respect of any transfer
involved in the issuance, transfer or delivery of Rights Certificates or
the issuance, transfer or delivery of certificates for Common Shares in
a name other than that of the holder of the Rights being exercised.
DUTIES OF RIGHTS AGENT UPON RECEIPT OF ELECTION TO EXERCISE
2.6 Upon receipt of a Rights Certificate, which is accompanied by a completed
Election to Exercise that does not indicate that such Right is null and void as
provided by Section 3.2, and payment as set forth in Section 2.5(b), the Rights
Agent (unless otherwise instructed by the Corporation) will thereupon promptly:
(a) requisition from the transfer agent for the Common Shares
certificates representing the number of Common Shares to be purchased
(the Corporation hereby irrevocably authorizing its transfer agent to
comply with all such requisitions);
(b) when appropriate, requisition from the Corporation the amount of
cash to be paid in lieu of issuing fractional Common Shares;
(c) after receipt of such certificates, deliver the same to or upon the
order of the registered holder of such Rights Certificate, registered in
such name or names as may be designated by such registered holder;
<PAGE> 21
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(d) when appropriate, after receipt, deliver such cash (less any amounts
required to be withheld) to or to the order of the registered holder of
the Rights Certificate; and
(e) tender to the Corporation all payments received on exercise of the
Rights.
PARTIAL EXERCISE OF RIGHTS
2.7 In case the holder of any Rights exercises less than all of the Rights
evidenced by such holder's Rights Certificate, a new Rights Certificate
evidencing the Rights remaining unexercised will be issued by the Rights Agent
to such holder or to such holder's duly authorized assigns.
DUTIES OF THE CORPORATION
2.8 The Corporation covenants and agrees that it will:
(a) take all reasonable action as may be necessary on its part and
within its power to ensure that all Common Shares or other securities
delivered upon exercise of Rights will, at the time of delivery of the
certificates for such shares (subject to payment of the Exercise Price),
be duly and validly authorized, executed, issued and delivered and fully
paid and non-assessable;
(b) take all reasonable action as may be necessary on its part and
within its power to comply with any applicable requirements of the
Company Act, the Securities Act (British Columbia), the Securities Act
(Ontario), and any applicable comparable securities legislation of each
of the other provinces of Canada, the 1933 Securities Act, the 1934
Exchange Act and any other applicable law, rule or regulation, in
connection with the issuance and delivery of the Rights Certificates and
the issuance of any Common Shares or other securities upon exercise of
Rights. The Corporation may temporarily suspend, for a period of time
not to exceed 90 days, the exercisability of the Rights in order to
prepare and file any securities disclosure documents required by
securities legislation in respect of the issuance and delivery of the
Rights Certificates and the issuance of any Common Shares or other
securities upon exercise of Rights. Upon such suspension, the
Corporation will issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as
a public announcement at such time as the suspension is no longer in
effect, in each case with prompt written notice to the Rights Agent.
Notwithstanding any such provision of this Agreement to the contrary,
the Rights will not be exercisable in any jurisdiction unless the
requisite qualification in such jurisdiction has been obtained;
(c) use its reasonable efforts to cause, from and after such time as the
Rights become exercisable, all Common Shares which may be issued upon
the exercise thereof, to be listed on the principal stock exchanges on
which the Common Shares are traded;
(d) cause to be reserved and kept available out of its 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; and
<PAGE> 22
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(e) pay when due and payable any and all Canadian and, if applicable,
United States, federal, provincial and state transfer taxes and charges
(not including any income or capital taxes of the holder or exercising
holder or any liability of the Corporation to withhold tax) which may be
payable in respect of the original issuance or delivery of the Rights
Certificates, provided that the Corporation will 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 shares or other securities
in a name other than that of the registered holder of the Rights being
transferred or exercised.
ADJUSTMENTS TO EXERCISE PRICE; NUMBER OF RIGHTS
2.9 The Exercise Price, the number and kind of Common Shares or other 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 2.9:
(a) if the Corporation at any time after the Record Time,
(i) declares or pays a dividend on the Common Shares payable in
Common Shares (or other securities exchangeable for or
convertible into or giving a right to acquire Common Shares or
other securities) other than the issue of Common Shares or such
exchangeable or convertible securities to holders of Common
Shares in lieu of but not in an amount which exceeds the value of
regular periodic cash dividends;
(ii) subdivides or changes the Common Shares into a greater
number of Common Shares;
(iii) combines or changes the Common Shares into a smaller number
of Common Shares or;
(iv) issues any Common Shares (or other securities exchangeable
for or convertible into or giving a right to acquire Common
Shares or other securities) in respect of, in lieu of or in
exchange for existing Common Shares in a reclassification or
redesignation of Common Shares, an amalgamation or statutory
arrangement,
the Exercise Price and the number of Rights outstanding, or, if the
payment or effective date therefor will occur after the Separation Time,
the securities purchasable upon exercise of Rights will be adjusted in
the manner set forth below. If an event occurs which would require an
adjustment under both this Section 2.9 and Section 3.1, the adjustment
provided for in this Section 2.9 will be in addition to, and will be
made prior to, any adjustment required under Section 3.1.
If the Exercise Price and number of Rights are to be adjusted,
(A) the Exercise Price in effect after such adjustment
will be equal to the Exercise Price in effect immediately
prior to such adjustment divided
<PAGE> 23
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by the number of Common Shares (or other capital stock of
the Corporation) (the "Expansion Factor") that a holder of
one Common Share immediately prior to such dividend,
subdivision, change, consolidation or issuance would hold
immediately thereafter as a result thereof (assuming the
exercise of all such exchange or conversion rights, if
any), and
(B) 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.
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
immediately thereafter as a result thereof. To the extent that any such
rights of exchange, conversion or acquisition are not exercised prior to
the expiration thereof, the Exercise Price will be readjusted to the
Exercise Price which would then be in effect based upon the number of
Common Shares (or securities convertible into or exchangeable for Common
Shares) actually issued upon the exercise of such rights. If after the
Record Time and prior to the Expiration Time the Corporation issues any
shares of its authorized capital other than Common Shares in a
transaction of a type described in Section 2.9(a)(i) and Section
2.9(a)(iv), such shares will be treated herein as nearly equivalent to
Common Shares as may be practicable and appropriate under the
circumstances and the Corporation and the Rights Agent agree to amend
this Agreement in order to effect such treatment.
If the Corporation, at any time after the Record Time and prior to the
Separation Time, issues any Common Shares otherwise than in a
transaction referred to in this Section 2.9(a), each Common Share so
issued will automatically have one new Right associated with it, which
Right will be evidenced by the certificate representing such share;
(b) if at any time after the Record Time and prior to the Separation
Time the Corporation fixes 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 shares having the same
rights, privileges and preferences as Common Shares ("EQUIVALENT COMMON
shares")) or securities convertible into or exchangeable for or carrying
a right to purchase Common Shares or equivalent common shares, at a
price per Common Share or per equivalent common share (or having a
conversion price or exchange price or exercise price per share, if a
security convertible into or exchangeable for or carrying a right to
purchase Common Shares or equivalent common shares) less than 90% of the
Market Price per Common Share on such record date, the Exercise Price
will be adjusted as follows:
<PAGE> 24
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(i) the Exercise Price to be in effect after such record date
will equal the Exercise Price in effect immediately prior to such
record date multiplied by a fraction, the numerator of which will
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 and/or equivalent
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 so to be offered) would
purchase at such Market Price per Common Share, and the
denominator of which will be the number of Common Shares
outstanding on such record date, plus the number of additional
Common Shares and/or equivalent common shares to be offered for
subscription or purchase (or into which the convertible or
exchangeable securities are initially convertible, exchangeable
or exercisable);
(ii) if the Exercise Price may be paid by delivery of
consideration, part or all of which is in a form other than cash,
the value of such non-cash consideration will be as determined by
the Board of Directors, whose determination will be described in
a certificate filed with the Rights Agent and will be binding on
the Rights Agent and the holders of the Rights; and
(iii) such adjustment will be made successively whenever such a
record date is fixed, and in the event that such rights or
warrants are not so issued, the Exercise Price will be adjusted
to be the Exercise Price which would then be in effect if such
record date had not been fixed.
For purposes of this Agreement, the granting of the right to purchase
Common Shares (or equivalent common shares) (whether from treasury
shares or otherwise) pursuant to any dividend or interest reinvestment
plan and/or any Common Share purchase plan providing for the
reinvestment of dividends or interest payable on securities of the
Corporation and/or the investment of periodic optional payments and/or
employee benefit, stock option or similar plans (so long as such right
to purchase is in no case evidenced by the delivery of rights or
warrants) will not be deemed to constitute an issue of rights, options
or warrants by the Corporation; provided, however, that, in the case of
any dividend or interest reinvestment plan, the right to purchase Common
Shares (or equivalent common shares) must be at a price per share of not
less than 90% of the current market price per share (determined as
provided in such plans) of the Common Shares;
(c) if after the Record Time and prior to the Separation Time the
Corporation fixes a record date for a distribution to all holders of
Common Shares (including any such distribution made in connection with a
merger, amalgamation, arrangement, plan, compromise or reorganization in
which the Corporation is the continuing or successor corporation) of
evidences of indebtedness, cash (other than a regular periodic cash
dividend or a regular periodic cash dividend paid in Common Shares, but
including any dividend payable in securities other than Common Shares),
assets or subscription rights,
<PAGE> 25
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options or warrants (excluding those referred to in Section 2.9(b)), the
Exercise Price will be adjusted as follows:
(i) the Exercise Price to be in effect after such record date
will be determined by multiplying the Exercise Price in effect
immediately prior to such record date by a fraction, the
numerator of which will be the Market Price per Common Share on
such record date, less the fair market value (as determined by
the Board of Directors, whose determination will be described in
a statement filed with the Rights Agent) of the portion of the
cash, assets or evidences of indebtedness so to be distributed or
of such subscription rights, options or warrants applicable to a
Common Share and the denominator of which will be such Market
Price per Common Share; and
(ii) such adjustments will be made successively whenever such a
record date is fixed, and in the event that such distribution is
not so made, the Exercise Price will be adjusted to be the
Exercise Price which would have been in effect if such record
date had not been fixed;
(d) notwithstanding anything herein to the contrary, no adjustment in
the Exercise Price will 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 Section 2.9(d) are
not required to be made will be carried forward and taken into account
in any subsequent adjustment. All calculations under this Section 2.9
will be made to the nearest cent or to the nearest one-hundredth of a
Common Share or other share, as the case may be. Notwithstanding the
first sentence of this Section 2.9(d), any adjustment required by this
Section 2.9 will be made no later than the earlier of (A) 3 years from
the date of the transaction which mandates such adjustment or (B) the
Expiration Time;
(e) each adjustment made pursuant to this Section 2.9 will be made as
of:
(i) the payment or effective date for the applicable dividend,
subdivision, change, consolidation or issuance in the case of an
adjustment made pursuant to Section 2.9(a), and
(ii) the record date for the applicable dividend or distribution,
in the case of an adjustment made pursuant to Section 2.9(b) or
Section 2.9(c);
(f) if the Corporation, at any time after the Record Time and prior to
the Expiration Time, issues any shares of capital stock (other than
Common Shares), or rights 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 Section
2.9(a)(i) or Section 2.9(a)(iv) and, if the Board of Directors
determines that the adjustments contemplated by Section 2.9(a), Section
2.9(b) and Section 2.9(c) in connection with such transaction will not
appropriately protect the interests of the holders of Rights, the Board
of Directors may determine what other adjustments to the Exercise Price,
number of Rights and/or securities purchasable upon exercise of Rights
would be appropriate and, notwithstanding Section 2.9(a), Section 2.9(b)
and Section 2.9(c), such adjustments, rather than the adjustments
contemplated by Section 2.9(a), Section 2.9(b)
<PAGE> 26
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and Section 2.9(c), will be made. The Corporation and the Rights Agent
will amend this Agreement as appropriate to provide for such
adjustments;
(g) each Right originally issued by the Corporation subsequent to any
adjustment made to the Exercise Price hereunder will evidence the right
to purchase, at the adjusted Exercise Price, the number of Common Shares
purchasable from time to time hereunder upon exercise of such Right, all
subject to further adjustment as provided herein;
(h) unless the Corporation has exercised its election as provided in
Section 2.9(i), upon each adjustment of the Exercise Price as a result
of the calculations made in Section 2.9(b) and Section 2.9(c), each
Right outstanding immediately prior to the making of such adjustment
will thereafter evidence the right to purchase, at the adjusted Exercise
Price, that number of Common Shares (calculated to the nearest one
ten-thousandth) obtained by (A) multiplying (x) the number of shares
purchasable upon exercise of a Right immediately prior to this
adjustment by (y) the Exercise Price in effect immediately prior to such
adjustment of the Exercise Price, and (B) dividing the product so
obtained by the Exercise Price in effect immediately after such
adjustment of the Exercise Price;
(i) the Corporation may elect on or after the date of any adjustment of
the Exercise Price to adjust the number of Rights, in lieu of any
adjustment in the number of Common Shares purchasable upon the exercise
of a Right. Each of the Rights outstanding after the adjustment in the
number of Rights will be exercisable for the number of Common Shares for
which a Right was exercisable immediately prior to such adjustment. Each
Right held of record prior to such adjustment of the number of Rights
will become that number of Rights (calculated to the nearest one
ten-thousandth) obtained by multiplying it by a fraction, the numerator
of which is the Exercise Price in effect immediately prior to adjustment
of the Exercise Price and the denominator of which is the Exercise Price
in effect immediately after adjustment of the Exercise Price. The
Corporation will make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment,
and, if known at the time, the amount of the adjustment to be made. This
record date may be the date on which the Exercise Price is adjusted or
any day thereafter, but, if Rights Certificates have been issued, will
be at least 10 days later than the date of the public announcement. If
Rights Certificates have been issued, upon each adjustment of the number
of Rights pursuant to this Section 2.9(i), the Corporation will, as
promptly as practicable, cause to be distributed to holders of record of
Rights Certificates on such record date Rights Certificates evidencing,
subject to Section 5.8, the additional Rights to which such holders will
be entitled as a result of such adjustment, or, at the option of the
Corporation, will cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such
holders prior to the date of adjustment, and upon surrender thereof, new
Rights Certificates evidencing all the Rights to which such holders will
be entitled after such adjustment. Rights Certificates so to be
distributed will be issued, executed and countersigned in the manner
provided for herein and may bear, at the option of the Corporation, the
adjusted Exercise Price and will be registered in the names of the
holders of record of Rights Certificates on the record date for the
adjustment specified in the public announcement;
<PAGE> 27
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(j) irrespective of any adjustment or change in the Exercise Price or
the securities purchasable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to express
the Exercise Price per share and the number of Common Shares or other
securities which were expressed in the initial Rights Certificates
issued hereunder;
(k) in any case in which this Section 2.9 requires that an adjustment in
the Exercise Price be made effective as of a record date for a specified
event, the Corporation may elect to defer until the occurrence of such
event the issuance, to the holder of any Right exercised after such
record date, of the number of Common Shares and other securities of the
Corporation, if any, issuable upon such exercise over and above the
number of Common Shares and other securities of the Corporation, if any,
issuable upon such exercise on the basis of the Exercise Price in effect
prior to such adjustment; provided, however, that the Corporation will
deliver to such holder an appropriate instrument evidencing such
holder's right to receive such additional shares (fractional or
otherwise) or securities upon the occurrence of the event requiring such
adjustment.
(l) notwithstanding anything in this Section 2.9 to the contrary, the
Corporation will be entitled to make such reductions in the Exercise
Price, in addition to those adjustments expressly required by this
Section 2.9, as and to the extent that the Board of Directors determines
to be advisable in order that any
(i) consolidation or subdivision of the Common Shares,
(ii) issuance of any Common Shares at less than the Market Price,
(iii) issuance of securities convertible into or exchangeable for
Common Shares,
(iv) stock dividends or
(v) issuance of rights, options or warrants,
referred to in this Section 2.9 hereafter made by the Corporation to
holders of its Common Shares, will not be taxable to such shareholders;
(m) 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 2.9, the Corporation will 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.
<PAGE> 28
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Failure to file such certificate or to cause such notice to be given as
aforesaid, or any defect therein, will not affect the validity of any
such adjustment or change.
DATE ON WHICH EXERCISE IS EFFECTIVE
2.10 Each Person in whose name any certificate for Common Shares is issued upon
the exercise of Rights, will for all purposes be deemed to have become the
holder of record of the Common Shares represented thereby on, and such
certificate will be dated, the date upon which the Rights Certificate evidencing
such Rights was duly surrendered (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 the Corporation
are closed, such Person will be deemed to have become the record holder of such
shares on, and such certificate will be dated, the next succeeding Business Day
on which the Common Share transfer books of the Corporation are open or on which
such suspension is no longer effective.
EXECUTION OF RIGHTS CERTIFICATES
2.11 The Rights Certificates will be executed on behalf of the Corporation by
its President or any of its senior officers, together with its Secretary or
Assistant Secretary. The signature of any of these officers on the Rights
Certificates may be manual or facsimile. Rights Certificates bearing the manual
or facsimile signatures of individuals who were at any time the proper officers
of the Corporation will bind the Corporation, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
countersignature and delivery of such Rights Certificates.
AUTHENTICATION OF RIGHTS CERTIFICATES
2.12 Promptly after the Corporation learns of the Separation Time, the
Corporation will notify the Rights Agent of such Separation Time and will
deliver Rights Certificates executed by the Corporation to the Rights Agent for
countersignature, and the Rights Agent will countersign (manually or by
facsimile signature in a manner satisfactory to the Corporation) and send such
Rights Certificates to the holders of the Rights pursuant to Section 2.4. No
Rights Certificate will be valid for any purpose until countersigned by the
Rights Agent as aforesaid.
DATING OF RIGHTS CERTIFICATES
2.13 Each Rights Certificate will be dated the date of countersignature thereof.
REGISTER OF RIGHTS
2.14 The Corporation will cause to be kept a register (the "RIGHTS REGISTER") in
which, subject to such reasonable regulations as it may prescribe, the
Corporation will provide for the registration and transfer of Rights. The Rights
Agent is hereby appointed "Rights Registrar" for the purpose of maintaining the
Rights Register for the Corporation and registering Rights and transfers of
Rights as herein provided. In the event that the Rights Agent will cease to be
the
<PAGE> 29
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Rights Registrar, the Rights Agent will have the right to examine the Rights
Register at all reasonable times.
TRANSFERS AND EXCHANGES
2.15 After the Separation Time and prior to the Expiration Time, upon surrender
for registration of transfer or exchange of any Rights Certificate and subject
to the provisions of Section 2.15(c) and the other provisions of this Agreement:
(a) the Corporation 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 will be the valid obligations of the Corporation,
and such Rights will be entitled to the same benefits under this
Agreement as the Rights surrendered upon such registration of transfer
or exchange; and
(c) every Rights Certificate surrendered for registration of transfer or
exchange will be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Corporation or the
Rights Agent, as the case may be, duly executed by the holder thereof or
such holder's attorney duly authorized in writing. As a condition to the
issuance of any new Rights Certificate under this Section 2.15, the
Corporation or the Rights Agent may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and the Corporation may require payment of a
sum sufficient to cover any other expenses (including the fees and
expenses of the Rights Agent) in connection therewith.
MUTILATED RIGHTS CERTIFICATES
2.16 If any mutilated Rights Certificate is surrendered to the Rights Agent
prior to the Expiration Time, the Corporation will execute and the Rights Agent
will manually countersign and deliver in exchange therefor a new Rights
Certificate evidencing the same number of Rights as did the Rights Certificate
so surrendered.
DESTROYED, LOST AND STOLEN RIGHTS CERTIFICATES
2.17 If the Corporation and the Rights Agent receive, prior to the Expiration
Time:
(a) evidence to their reasonable satisfaction of the destruction, loss
or theft of any Rights Certificate; and
(b) such indemnity or other security as may be required by them to save
each of them and any of their agents harmless, then, in the absence of
notice to the Corporation or the Rights Agent that such Rights
Certificate has been acquired by a bona fide purchaser, the Corporation
will execute and upon its request the Rights Agent will countersign and
deliver, in lieu of any such destroyed, lost or stolen Rights
Certificate, a new Rights
<PAGE> 30
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Certificate evidencing the same number of Rights as did the Rights
Certificate so destroyed, lost or stolen.
REPLACEMENT FEE
2.18 As a condition to the issuance of any new Rights Certificate under Section
2.17, the Corporation or the Rights Agent may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and the Corporation may require payment of a sum sufficient to
cover any other expenses (including the fees and expenses of the Rights Agent)
in connection therewith.
VALIDITY OF REPLACEMENT RIGHTS CERTIFICATES
2.19 Every new Rights Certificate issued pursuant to Section 2.17 in lieu of any
destroyed, lost or stolen Rights Certificate will evidence an original
additional contractual obligation of the Corporation, whether or not the
destroyed lost or stolen Rights Certificate will be at any time enforceable by
anyone, and the holder thereof will be entitled to all the benefits of this
Agreement equally and proportionately with any and all other holders of Rights
duly issued by the Corporation.
PERSONS DEEMED OWNERS
2.20 Prior to due presentment of a Rights Certificate (or, prior to the
Separation Time, the associated Common Share certificate) for registration of
transfer, the Corporation, the Rights Agent and any agent of the Corporation or
the Rights Agent will be entitled to 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 will mean the
registered holder of such Rights (or, prior to the Separation Time, the
associated Voting Shares).
DELIVERY AND CANCELLATION OF RIGHTS CERTIFICATES
2.21 All Rights Certificates surrendered upon exercise or for redemption,
registration of transfer or exchange will, if surrendered to any person other
than the Rights Agent, be delivered to the Rights Agent and, in any case, will
be promptly cancelled by the Rights Agent. The Corporation may at any time
deliver to the Rights Agent for cancellation any Rights Certificates previously
countersigned and delivered hereunder which the Corporation may have acquired in
any manner whatsoever, and all Rights Certificates so delivered will be promptly
cancelled by the Rights Agent. No Rights Certificate will be countersigned in
lieu of or in exchange for any Rights Certificates cancelled as provided in this
Section 2.21 except as expressly permitted by this Agreement. The Rights Agent
will destroy all cancelled Rights Certificates and deliver a certificate of
destruction to the Corporation.
AGREEMENT OF RIGHTS HOLDERS
2.22 Every holder of Rights, by accepting the same, consents and agrees with the
Corporation and the Rights Agent and with every other holder of Rights:
<PAGE> 31
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(a) to be bound by and subject to the provisions of this Agreement, as
amended or supplemented from time to time in accordance with the terms
hereof, 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 Common
Share certificate representing such Right;
(c) that after the Separation Time, the Rights Certificates will be
transferable only on the Rights Register as provided herein;
(d) that prior to due presentment of a Rights Certificate (or, prior to
the Separation Time, the associated Common Share certificate) for
registration of transfer, the Corporation, the Rights Agent and any
agent of the Corporation or the Rights Agent will be entitled to deem
and treat the person in whose name the Rights Certificate (or prior to
the Separation Time, the associated Common Share certificate) is
registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on such
Rights Certificate or the associated Common Share certificate made by
anyone other than the Corporation or the Rights Agent) for all purposes
whatsoever, and neither the Corporation nor the Rights Agent will be
affected by any notice to the contrary;
(e) that such holder of Rights has waived his or her right to receive
any fractional Rights or any fractional shares upon exercise of Right;
and
(f) that this Agreement may be supplemented or amended from time to time
pursuant to and as provided herein upon the sole authority of the Board
of Directors without the approval of any holder of Rights.
RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER
2.23 No holder, as such, of any Rights or Rights Certificate will 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 the Corporation which may at
any time be issuable on the exercise of the Rights represented thereby, nor will
anything contained herein or in any Rights Certificate be construed or deemed to
confer upon the holder of any Right or Rights Certificate, as such, any of the
rights, titles, benefits or privileges of a holder of Common Shares or any other
shares or securities of the Corporation or any right to vote at any meeting of
shareholders of the Corporation whether for the election of directors or
otherwise or upon any matter submitted to holders of shares of the Corporation
at any meeting thereof, or to give or withhold consent to any action of the
Corporation, or to receive notice of any meeting or other action affecting any
holder of Common Shares or any other shares or securities of the Corporation
except as expressly provided herein, or to receive dividends, distributions or
subscription rights, or otherwise, until the Right or Rights evidenced by Rights
Certificates will have been duly exercised in accordance with the terms and
provisions hereof.
<PAGE> 32
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ARTICLE 3 - ADJUSTMENTS TO THE RIGHTS
IN THE EVENT OF CERTAIN TRANSACTIONS
FLIP-IN EVENT
3.1 Subject to adjustment pursuant to Article 2 and the redemption and waiver
provisions of Section 5.1 and except as provided below, if prior to the
Expiration Time a Flip-in Event occurs, each Right will thereafter constitute,
effective at the Close of Business on the 10th Business Day after the relevant
Stock Acquisition Date, the right to purchase from the Corporation, upon
exercise thereof in accordance with the terms hereof, that number of Common
Shares of the Corporation having an aggregate Market Price on the date of
consummation or occurrence of such Flip-in Event equal to twice the Exercise
Price for an amount in cash equal to the Exercise Price (such right to be
appropriately adjusted in a manner analogous to the applicable adjustment
provided for in Section 2.9 in the event that, after such date of consummation
or occurrence, an event of a type analogous to any of the events described in
Section 2.9 occurs with respect to such Common Shares).
CANCELLATION OF RIGHTS HELD BY AN ACQUIRING PARTY
3.2 Notwithstanding anything in this Agreement to the contrary, upon the
occurrence of a Flip-In Event, any Rights that are or were Beneficially Owned on
or after the earlier of the Separation Time and the Stock Acquisition Date by:
(a) an Acquiring Person (or any Person acting jointly or in concert with
an Acquiring Person or with an Affiliate or Associate of an Acquiring
Person); or
(b) a direct or indirect transferee of, or other successor in title to,
such Rights (a "Transferee"), who becomes a Transferee concurrently with
or subsequent to the Acquiring Person becoming an Acquiring Person, in a
transfer, whether or not for consideration, that the Board of Directors
has determined is part of a plan, understanding or scheme of an
Acquiring Person (or an Affiliate or Associate of an Acquiring Person or
any Person acting jointly or in concert with an Acquiring Person or an
Affiliate or Associate of an Acquiring Person) that has the purpose or
effect of avoiding the provisions of this Section 3.2;
will thereupon become and be void and any holder of such Rights (including any
Transferee) will thereafter have no rights whatsoever with respect to such
Rights, whether under any provision of this Agreement or otherwise. The holder
of any Rights represented by a Rights Certificate which is submitted to the
Rights Agent, or any Co-Rights Agent, upon exercise or for registration of
transfer or exchange which does not contain the necessary certifications set
forth in the Rights Certificate establishing that such Rights are not void under
this Section 3.2 will be deemed to be an Acquiring Person for the purposes of
this Section 3.2 and such rights will be null and void.
LEGEND ON RIGHTS CERTIFICATES TRANSFERRED BY AN ACQUIRING PARTY
3.3 Any Rights Certificate that represents Rights Beneficially Owned by a Person
described in either clauses Section (a) or (b) of Section 3.2 or transferred to
any nominee of any such Person,
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and any Rights Certificate issued upon the transfer, exchange or replacement of
any other Rights Certificate referred to in this sentence will contain the
following legend:
"The Rights represented by this Rights Certificate were issued to a
Person who was an Acquiring Person or an Affiliate or an Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement) or
was acting jointly or in concert with any of them. This Rights
Certificate and the Rights represented hereby will become void in the
circumstances specified in Section 3.2 of the Rights Agreement."
provided, however, that the Rights Agent will not be under any responsibility to
ascertain the existence of facts that would require the imposition of such
legend but will be required to impose such legend only if instructed to do so by
the Corporation or if a holder fails to certify upon transfer or exchange in the
space provided on the Rights Certificate that such holder is not an Acquiring
Person or an Affiliate or Associate thereof or acting jointly or in concert with
any of them.
ARTICLE 4 - THE RIGHTS AGENT
APPOINTMENT OF RIGHTS AGENT
4.1 The Corporation hereby appoints the Rights Agent to act as agent for the
Corporation in accordance with the terms and conditions hereof, and the Rights
Agent hereby accepts such appointment. The Corporation may from time to time
appoint such co-Rights Agents as it may deem necessary or desirable. If the
Corporation appoints one or more co-Rights Agents, the respective duties of the
Rights Agents and co-Rights Agents will be as the Corporation may determine. The
Corporation agrees to pay the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and other disbursements incurred in the
administration and execution of this Agreement and the exercise and performance
of its duties hereunder. The Corporation also agrees to indemnify the Rights
Agent for, and to hold it harmless against, any loss, liability, or expense
incurred that is not the result of negligence, bad faith or wilful misconduct on
the part of any one or all of the Rights Agent, its officers, employees or other
representatives, for anything done or omitted by the Rights Agent in connection
with the acceptance and administration of this Agreement, including the costs
and expenses of defending against any claim of liability, which right to
indemnification will survive the termination of this Agreement or the
resignation or removal of the Rights Agent.
PROTECTION OF RIGHTS AGENT
4.2 The Rights Agent will be protected from and will incur no liability for or
in respect of any action taken, suffered or omitted by it in connection with its
administration of this Agreement in reliance upon any certificate for Voting
Shares or any Rights Certificate or certificate for other securities of the
Corporation, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
Person or Persons.
<PAGE> 34
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RIGHTS AGENT TO BE KEPT INFORMED
4.3 The Corporation will inform the Rights Agent in a reasonably timely manner
of events which may materially affect the administration of this Agreement by
the Rights Agent and, at any time upon written request, will provide to the
Rights Agent an incumbency certificate certifying the then current officers of
the Corporation.
MERGER OR AMALGAMATION OR CHANGE OF NAME OF RIGHTS AGENT
4.4 Any corporation into which the Rights Agent or any successor 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 or any successor Rights Agent is a
party, or any corporation succeeding to the shareholder or stockholder services
business of the Rights Agent or any successor Rights Agent, will be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 4.7. 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 such
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 Certificates have not been countersigned, any successor
Rights Agent may countersign such Rights Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Rights Certificates will have the full force provided in the
Rights Certificates and in this Agreement.
COUNTERSIGING OF RIGHTS CERTIFICATES
4.5 In case at any time the name of the Rights Agent is changed and at such time
any of the Rights Certificates have been countersigned but not delivered, the
Rights Agent may adopt the countersignature under its prior name and deliver
Rights Certificates so countersigned; and in case at that time any of the Rights
Certificates have not been countersigned, the Rights Agent may countersign such
Rights Certificates either in its prior name or in its changed name; and in all
such cases such Rights Certificates will have the full force provided in the
Rights Certificates and in this Agreement.
DUTIES OF RIGHTS AGENT
4.6 The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, to all of which the
Corporation and the holders of Rights Certificates, by their acceptance thereof,
will be bound:
(a) the Rights Agent may consult with legal counsel (who may be legal
counsel for the Corporation) 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 to be taken by it in good faith and in
accordance with such opinion;
<PAGE> 35
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(b) whenever in the performance of its duties under this Agreement the
Rights Agent deems it necessary or desirable that any fact or matter be
proved or established by the Corporation prior to taking or suffering
any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proven and established by a certificate signed by a person
believed by the Rights Agent to be the Chairman of the Board, the
President or any Vice-President, the Treasurer or the Secretary of the
Corporation and delivered to the Rights Agent; and such certificate will
be full authorization to the Rights Agent for any action taken or
suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate;
(c) the Rights Agent will be liable hereunder only for events which are
the result of its own negligence, bad faith or wilful misconduct and
that of its officers, employees and other representatives;
(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 Voting Shares or the Rights Certificates (except its
countersignature thereof) or be required to verify the same, but all
such statements and recitals are and will be deemed to have been made by
the Corporation only;
(e) the Rights Agent will not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof
(except the due authorization, execution and delivery hereof by the
Rights Agent) or in respect of the validity or execution of any Common
Share certificate or Rights Certificate (except its countersignature
thereof); nor will it be responsible for any breach by the Corporation
of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor will it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void
pursuant to Section 3.2) or any adjustment required under the provisions
of Section 2.9 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 2.9
describing any such adjustment); nor will it by any act hereunder be
deemed to make any representation or warranty as to the authorization of
any 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 or fully paid and
non-assessable;
(f) the Corporation agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged, and
delivered all such further and other acts, instruments and assurances as
may reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement;
(g) the Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder
from any person believed by the Rights Agent to be the Chairman of the
Board, President, any Vice-President, Treasurer or any Assistant
Treasurer or the Secretary or any Assistant Secretary of the Corporation
and to
<PAGE> 36
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apply to such persons for advice or instructions in connection with its
duties, and it will not be liable for any action taken or suffered by it
in good faith in accordance with instructions of any such person;
(h) the Rights Agent and any shareholder or stockholder, director,
officer or employee of the Rights Agent may buy, sell or deal in Common
Shares, Rights or other securities of the Corporation or become
pecuniarily interested in any transaction in which the Corporation may
be interested or contract with or lend money to the Corporation or
otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein will preclude the Rights Agent from
acting in any other capacity for the Corporation or for any other legal
entity; and
(i) the Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent will not
be answerable or accountable for any act, default, neglect or misconduct
of any such attorneys or agents or for any loss to the Corporation
resulting from any such act, omission, default, neglect or misconduct,
provided reasonable care was exercised in the selection and continued
employment thereof.
CHANGE OF RIGHTS AGENT
4.7 The Rights Agent may resign and be discharged from its duties under this
Agreement upon 90 days' notice (or such lesser notice as is acceptable to the
Corporation) in writing mailed to the Corporation and to each transfer agent of
Voting Shares of the Corporation by registered or certified mail, and to the
holders of the Rights in accordance with Section 5.11. The Corporation may
remove the Rights Agent upon 30 days' notice in writing, mailed to the Rights
Agent and to each transfer agent of the Voting Shares of the Corporation by
registered or certified mail and to the holders of the Rights in accordance with
Section 5.11. If the Rights Agent resigns or is removed or otherwise becomes
incapable of acting, the Corporation will appoint a successor to the Rights
Agent. If the Corporation fails to make such appointment within a period of 90
days after such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of any Rights (which holder will, with such notice, submit such
holder's Rights Certificate for inspection by the Corporation), the holder of
any Rights may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Corporation or by such a court, will be a corporation incorporated under the
laws of Canada or a province thereof authorized to carry on the business of a
trust company in Canada. 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, upon receiving from the Corporation payment in full of
all amounts outstanding under this Agreement, will deliver and transfer to the
successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Corporation will file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the Voting Shares of the Corporation, and mail
a notice thereof in writing to the holders of the Rights. The cost of giving any
notice required under this Section 4.7 will be borne solely by the Corporation.
Failure to give any notice provided for in this Section 4.7
<PAGE> 37
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however, or any defect therein, will not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.
ARTICLE 5 - MISCELLANEOUS
REDEMPTION AND WAIVER
5.1 The:
(a) Board of Directors may, 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 a redemption price of $0.00001 per Right
appropriately adjusted in a manner analogous to the applicable
adjustment provided for in Section 2.9 if an event of the type described
in Section 2.9 has occurred (such redemption price being herein referred
to as the "Redemption Price");
(b) Board of Directors may, at any time prior to the occurrence of a
Flip-in Event as to which the application of Section 3.1 has not been
waived pursuant to this Section 5.1, if such Flip-in Event would occur
by reason of an acquisition of Voting Shares otherwise than pursuant to
a Take-over Bid made by means of a Take-over Bid circular to all holders
of record of Voting Shares and otherwise than in the circumstances set
forth in Section 5.1(d) with the prior approval of shareholders, waive
the application of Section 3.1 to such Flip-in Event. In such event, the
Board of Directors will extend the Separation Time to a date at least 10
Business Days subsequent to the meeting of shareholders called to
approve such waiver.
(c) Board of Directors may, prior to the occurrence of a Flip-in Event,
and upon prior written notice delivered to the Rights Agent, determine
to waive the application of Section 3.1 to a Flip-in Event which may
occur by reason of a Take-over Bid made by means of a take-over bid
circular to all holders of record of Voting Shares; provided that if the
Board of Directors waives the application of Section 3.1 to a particular
Flip-in Event pursuant to this Section 5.1(c), the Board of Directors
will 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 made by
means of a take-over bid circular to all holders of record 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 pursuant to this Section 5.1(c).
(d) Board of Directors may, prior to the close of business on the 10th
day following the Stock Acquisition Date, determine, upon prior written
notice delivered to the Rights Agent, to waive or to agree to waive the
application of Section 3.1 to a Flip-in Event, provided that both of the
following conditions are satisfied:
(i) the Board of Directors has determined that a Person became an
Acquiring Person by inadvertence and without any intention to
become, or knowledge that Person would become, an Acquiring
Person; and
(ii) such Acquiring Person has reduced its Beneficial Ownership
of Voting Shares (or has entered into a contractual arrangement
with the Corporation,
<PAGE> 38
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acceptable to the Board of Directors, to do so within 30 days of
the date on which such contractual arrangement is entered into)
such that at the time the waiver becomes effective pursuant to
this Section 5.1(d) it is no longer an Acquiring Person;
and in the event of such a waiver, for the purposes of this Agreement,
the Flip-in Event will be deemed never to have occurred;
(e) Board of Directors will, if a Person acquires, pursuant to a
Permitted Bid or a Competing Permitted Bid or pursuant to an Exempt
Acquisition occurring under Section 5.1(c), more than 50% of the
Outstanding Voting Shares other than Voting Shares Beneficially Owned at
the date of such Permitted Bid, Competing Permitted Bid or Exempt
Acquisition by such Person, and, notwithstanding the provisions of
Section 5.1(a), immediately upon such acquisition and without further
formality be deemed to have elected to redeem the Rights at the
Redemption Price;
(f) right to exercise the Rights will, if the Corporation is obligated
under Section 5.1(e) to redeem the Rights, or if the Board of Directors
elects under Section 5.1(a) or Section 5.1(h) to redeem the Rights,
without further action and without notice, terminate and each Right will
after redemption be null and void and the only right thereafter of the
holders of Rights will be to receive the Redemption Price and no further
Rights will be issued thereafter;
(g) Corporation will, within 10 days after the Corporation is obligated
under Section 5.1(e) to redeem the Rights, or if Section 5.1(a) is
applicable within 10 Business Days after the Board of Directors
determines to redeem the Rights, as applicable, give notice of
redemption to the holders of the then outstanding Rights by mailing such
notice to all such holders at their last address as they appear upon the
Rights Register or, prior to the Separation Time, on the registry books
of the Transfer Agent for the Voting Shares. Any notice which is mailed
in the manner herein provided will be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state
the method by which the payment of the Redemption Price will be made.
The Corporation may not redeem, acquire or purchase for value any Rights
at any time in any manner other than that specifically set forth in this
Section 5.1 and other than in connection with the purchase of Voting
Shares prior to the Separation Time; and
(h) Board of Directors may, where a Take-over Bid that is not a
Permitted Bid Acquisition is withdrawn or is otherwise terminated after
the Separation Time has occurred and prior to the occurrence of a
Flip-in Event, elect to redeem all the outstanding Rights at the
Redemption Price and upon such redemption, all the provisions of this
Agreement will 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 Voting Shares as of the Separation Time had
not been mailed to each such holder and for all purposes of this
Agreement the Separation Time will be deemed not to have occurred.
<PAGE> 39
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EXPIRATION
5.2 No person will have any rights whatsoever pursuant to or arising out of this
Agreement or in respect of any Right after the Expiration Time, except the
Rights Agent as specified in Section 4.2.
ISSUANCE OF NEW RIGHT CERTIFICATES
5.3 Notwithstanding any of the provisions of this Agreement or of the Rights to
the contrary, the Corporation may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the number or kind or class of shares
purchasable upon exercise of Rights made in accordance with the provisions of
this Agreement.
SUPPLEMENTS AND AMENDMENTS
5.4 The Corporation may:
(a) Subject to Section 5.5, prior to the Annual Meeting of Shareholders
of the Corporation to be held in the year 2000, supplement or amend this
Agreement without the approval of any holder of Rights or Voting Shares
in order to make any changes which the Board of Directors may deem
necessary or desirable. Thereafter, the Corporation may from time to
time supplement or amend this Agreement without the approval of any
holders of Rights or Voting Shares to correct any clerical or
typographical error or to maintain the validity of the Agreement as a
result of a change in any applicable legislation or regulations
thereunder, or to cure any ambiguity or to correct or supplement any
provision contained herein which may be inconsistent with the intent of
this Agreement or as otherwise specifically provided herein;
(b) subject to Section 5.4(a), with the prior consent of the holders of
the Voting Shares obtained as set forth below, at any time prior to the
Separation Time amend, vary or rescind any of the provisions of this
Agreement and the Rights (whether or not such action would materially
adversely affect the interests of the holders of Rights generally). Such
consent will be deemed to have been given if provided by the holders of
Voting Shares at a meeting of the holders of Voting Shares, which
meeting will be called and held in compliance with applicable laws and
regulatory requirements and the requirements in the articles and by-laws
of the Corporation. Subject to compliance with any requirements imposed
by the foregoing, consent will be deemed to have been given if the
proposed amendment, variation or revision 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 is an Offeror pursuant to a
Take-over Bid that is not a Permitted Bid or Competing Permitted Bid
with respect to all Voting Shares Beneficially Owned by such Person)
represented in person or by proxy at the meeting; and
(c) with the prior consent of the holders of Rights, at any time after
the Separation Time and before the Expiration Time, amend, vary or
rescind any of the provisions of this Agreement and the Rights (whether
or not such action would materially adversely affect the interests of
the holders of Rights generally). Any approval of the holders of
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Rights will be deemed to have been given if the action requiring such
approval is authorized by the affirmative votes of the holders of Rights
present or represented at and entitled to be voted at a meeting of the
holders of Rights and representing a majority of the votes cast in
respect thereof. For the purposes hereof, each outstanding Right (other
than Rights which are void pursuant to the provisions hereof) will be
entitled to one vote, and the procedures for the calling, holding and
conduct of the meeting will be those, as nearly as may be, which are
provided in the Corporation's Articles and the Company Act with respect
to a meeting of shareholders of the Corporation.
TIMING OF CERTAIN APPROVALS OF THE SHAREHOLDERS
5.5 Any supplements or amendments made by the Corporation to this Agreement
pursuant to Section 5.4(a) which are required to maintain the validity of this
Agreement as a result of any change in any applicable legislation or regulations
thereunder or to correct or supplement any provision contained herein which may
be inconsistent with the intent of this Agreement will:
(a) if made before the Separation Time, be submitted to the shareholders
of the Corporation at the next meeting of shareholders and the
shareholders may, by the majority referred to in Section 5.4(b) confirm
or reject such amendment; and
(b) if made after the Separation Time, be submitted to the holders of
Rights at a meeting to be called and held in accordance with the
provisions of Section 5.4(c).
EFFECTIVE TIME OF SUPPLEMENTS AND AMENDMENTS
5.6 A supplement or amendment will be effective from the date of the resolution
of the Board of Directors adopting such supplement or amendment until it is
confirmed or rejected or until it ceases to be effective (as described in the
next sentence) and, where such supplement or amendment is confirmed, it
continues in effect in the form so confirmed. If such supplement or 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 supplement or amendment
will 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 of Directors to
amend, vary or delete any provision of this Agreement to substantially the same
effect will be effective until confirmed by the shareholders or holders of
Rights, as the case may be.
APPROVALS OF AMENDMENTS BY RIGHTS AGENT
5.7 Notwithstanding anything in Section 5.4 to the contrary, no supplement or
amendment will be made to the provisions of Article 4 except with the written
concurrence of the Rights Agent to such supplement or amendment.
FRACTIONAL RIGHTS AND FRACTIONAL SHARES
5.8 The Corporation will not be required to issue fractions of:
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(a) Rights or to distribute Rights Certificates which evidence
fractional Rights. Any such fractional Right will be null and void and
the Corporation will not have any obligation or liability in respect
thereof; and
(b) Common Shares or other securities upon exercise of the Rights or to
distribute certificates which evidence fractional Common Shares or other
securities. In lieu of issuing fractional Common Shares or other
securities, the Corporation will pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided,
an amount in cash equal to the same fraction of the Market Price of one
Common Share.
RIGHTS OF ACTION
5.9 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 registered holders of the Rights; and any
registered holder of any Rights, without the consent of the Rights Agent or of
the registered 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
the Corporation to enforce such holder's right to exercise such holder's Rights
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 holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of the obligations of
any Person subject to this Agreement.
NOTICE OF PROPOSED ACTIONS
5.10 If the Corporation proposes after the Separation Time and prior to the
Expiration Time to effect the liquidation, dissolution or winding- up of the
Corporation or the sale of all or substantially all of the Corporation's assets,
the Corporation, in each such case, will give to each holder of a Right, in
accordance with Section 5.11, a notice of such proposed action, which will
specify the date on which such liquidation, dissolution, winding-up, or sale is
to take place, and such notice will be so given at least 20 Business Days prior
to the date of such proposed action.
NOTICES
5.11 Notices or demands authorized or required by this Agreement to be given or
made:
(a) by the Rights Agent or by the holder of any Rights to or on the
Corporation will be sufficiently given or made if delivered or sent by
first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:
Glamis Gold Ltd.
5190 Neil Road, Suite 310
Reno, Nevada
U.S.A. 89502
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Attention: Senior Vice-President Administration;
(b) by the Corporation or by the holder of any Rights to or on the
Rights Agent will be sufficiently given or made if delivered or sent by
first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Corporation) as follows:
The Montreal Trust Company of Canada
510 Burrard Street
Vancouver, British Columbia
V6C 3B9
Attention: Assistant Vice-President, Client Services; and
(c) by the Corporation or the Rights Agent to or on the holder of any
Rights will be sufficiently given or made if delivered or sent by
first-class mail, postage prepaid, addressed to such holder at the
address of such holder as it appears upon the Rights Register or, prior
to the Separation Time, on the registry books of the transfer agent for
the Voting Shares. Any notice which is mailed in the manner herein
provided will be deemed given, whether or not the holder receives the
notice.
SUCCESSORS
5.12 All the covenants and provisions of this Agreement by or for the benefit of
the Corporation or the Rights Agent will bind and enure to the benefit of their
respective successors and assigns hereunder.
BENEFITS OF THIS AGREEMENT
5.13 Nothing in this Agreement will be construed to give to any Person other
than the Corporation, the Rights Agent and the holders of the Rights any legal
or equitable right, remedy or claim under this Agreement; but this Agreement
will be for the sole and exclusive benefit of the Corporation, the Rights Agent
and the holders of the Rights.
GOVERNING LAW
5.14 This Agreement and each Right issued hereunder will be deemed to be a
contract made under the laws of the Province of British Columbia and for all
purposes will be governed by and construed in accordance with the laws of such
province.
SEVERABILITY
5.15 If any Section, Subsection, Clause, Subclause, term or provision hereof or
the application thereof to any circumstances or any right hereunder will, in any
jurisdiction and to any extent, be invalid or unenforceable, such Section,
Subsection, Clause, Subclause, term or provision or such right will be
ineffective only in such jurisdiction and to the extent of such invalidity or
unenforceability in such jurisdiction without invalidating or rendering
unenforceable or ineffective the remaining Sections, Subsections, Clauses,
Subclauses, terms and provisions hereof or rights hereunder in such jurisdiction
or the application of such Section,
<PAGE> 43
-40-
Subsection, Clause, Subclause, term or provision or rights hereunder in any
other jurisdiction or to circumstances other than those as to which it is
specifically held invalid or unenforceable.
EFFECTIVE DATE
5.16 This Agreement is effective and in full force and effect in accordance with
its terms as of and from the Record Time. If this Agreement is not confirmed by
a majority of the votes cast by the holders of Common Shares of the Corporation
represented in person or by proxy at the Annual Meeting of Shareholders of the
Corporation to be held in the year 2000 who vote in respect of confirmation of
this Agreement at such meeting, then this Agreement and any then outstanding
Rights will be of no further force and effect from the date of such Annual
Meeting of Shareholders of the Corporation.
DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS
5.17 The Board of Directors will have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board of Directors or to the Corporation as may be necessary or
advisable in the administration of this Agreement. All actions, calculations and
determinations (including all omissions with respect to the foregoing) which are
done or made by the Board of Directors, will not subject the Board of Directors
or any director of the Corporation to any liability to the holders of the
Rights.
RIGHTS OF BOARD, CORPORATION AND OFFEROR
5.18 Without limiting the generality of the foregoing, nothing contained herein
will be construed to suggest or imply that the Board of Directors will not be
entitled to recommend that holders of Voting Shares reject or accept any
Take-over Bid or take any other action (including, without limitation, the
commencement, prosecution, defence or settlement of any litigation and the
submission of additional or alternative Take-over Bids or other proposals to the
Shareholders of the Corporation) with respect to any Take-over Bid or otherwise
that the Board of Directors believes is necessary or appropriate in the exercise
of its fiduciary duties.
REGULATORY APPROVALS
5.19 Any obligation of the Corporation or action or event contemplated by this
Agreement will be subject to the prior receipt of any requisite approval or
consent from any governmental or regulatory authority including, without
limiting the generality of the foregoing, any necessary approval of any
securities regulatory authority or stock exchange.
DECLARATION AS TO NON-CANADIAN HOLDERS
5.20 If in the opinion of the Board of Directors (who may rely upon the advice
of counsel) any action or event contemplated by this Agreement would require
compliance with the securities laws or comparable legislation of a jurisdiction
outside Canada, the Board of Directors may take such actions as it may deem
appropriate to ensure such compliance. In no event will the Corporation or the
Rights Agent be required to issue or deliver Rights or securities issuable on
exercise of Rights to Persons who are citizens, residents or nationals of any
jurisdiction other
<PAGE> 44
-41-
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.
TIME OF THE ESSENCE
5.21 Time will be of the essence in this Agreement.
EXECUTION IN COUNTERPARTS
5.22 This Agreement may be executed in any number of counterparts and each of
such counterparts will for all purposes be deemed to be an original, and all
such counterparts will together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.
GLAMIS GOLD LTD.
Per: Signed: "C. Kevin McArthur"
----------------------------------
Authorized Signatory
THE MONTREAL TRUST COMPANY OF CANADA
Per: Signed: "June P. Glover"
----------------------------------
Authorized Signatory
Per: Signed: "Anne Boisey"
----------------------------------
Authorized Signatory
<PAGE> 45
EXHIBIT A
[FORM OF RIGHTS CERTIFICATE]
Certificate No. ____________ ___________ Rights
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
CORPORATION, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES (SPECIFIED IN Section 3.2 OF THE RIGHTS
AGREEMENT), RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON, ANY
PERSON ACTING JOINTLY OR IN CONCERT WITH AN ACQUIRING PERSON OR
THEIR RESPECTIVE ASSOCIATES AND AFFILIATES (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT) AND THEIR RESPECTIVE TRANSFEREES
WILL BECOME VOID WITHOUT ANY FURTHER ACTION.
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 the 25th day of February, 2000
(the "RIGHTS AGREEMENT") between Glamis Gold Ltd., a corporation formed under
the Company Act (British Columbia) (the "CORPORATION"), and The Montreal Trust
Company of Canada, a trust company incorporated under the laws of Canada, as
rights agent (the "RIGHTS AGENT", which term will include any successor Rights
Agent under the Rights Agreement) to purchase from the Corporation at any time
after the Separation Time (as such term is defined in the Rights Agreement) and
prior to the close of business on the date of the Corporation's Annual Meeting
of Shareholders to be held in the year 2003 (or such earlier expiration time as
is provided in the Rights Agreement) one fully paid and non-assessable Common
Share of the Corporation (a "COMMON SHARE") (subject to adjustment as provided
in the Rights Agreement) at the Exercise Price, upon presentation and surrender
of this Rights Certificate together with the Form of Election to Exercise duly
executed and submitted to the Rights Agent at its principal office in Vancouver.
The Exercise Price will initially be $100.00 (Canadian) per Right and will be
subject to adjustment or revision in certain events as provided in the Rights
Agreement.
In certain circumstances described in the Rights Agreement, each Right evidenced
hereby may entitle the registered holder thereof to purchase or receive assets,
debt securities or other equity securities of the Corporation (or a combination
thereof) all as provided in the Rights Agreement.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Rights Agent, the Corporation and the holders of the Rights. Copies of the
Rights Agreement are on file at the registered head office of the Corporation
and are available upon written request.
<PAGE> 46
-2-
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 entitling the holder to
purchase a like aggregate number of Common Shares as the Rights evidenced by the
Rights Certificate or Rights Certificates surrendered. If this Rights
Certificate will be exercised in part, the registered holder will be entitled to
receive, upon surrender hereof, another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by this
Rights Certificate may be, and under certain circumstances are required to be,
redeemed by the Corporation at a redemption price of $0.00001 per Right.
No fractional Common Shares will be issued upon the exercise of any Right or
Rights evidenced hereby.
No holder of this Rights Certificate, as such, will be entitled to vote, receive
dividends or be deemed for any purpose the holder of Common Shares or of any
other securities of the Corporation which may at any time be issuable upon the
exercise hereof, nor will anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, any of the rights of a
shareholder of the Corporation or any right to vote for the election of
directors or upon any matter submitted to shareholders of the Corporation 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 of the
Corporation (except as expressly provided in the Rights Agreement), or to
receive dividends, distributions or subscription rights, or otherwise until the
Rights evidenced by this Rights Certificate will have been exercised as provided
in the Rights Agreement.
This Rights Certificate will not be valid or obligatory for any purpose until it
will have been manually countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Corporation.
Date _______________________________
GLAMIS GOLD LTD.
By _________________________________ By ____________________________
Countersigned
THE MONTREAL TRUST COMPANY OF CANADA
Transfer Agent and Registrar
By ________________________________
Authorized Signature
By ________________________________
Authorized Signature
<PAGE> 47
(To be attached to each Rights Certificate)
FORM OF ELECTION TO EXERCISE
TO: GLAMIS GOLD LTD.
The undersigned hereby irrevocably elects to exercise __________ whole Rights
represented by the attached Rights Certificate to purchase the Common Shares
issuable upon the exercise of such Rights and requests that certificates for
such Shares be issued to:
-------------------------------
(NAME)
-------------------------------
(ADDRESS)
-------------------------------
(CITY AND STATE OR PROVINCE)
If such number of Rights will not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights will be
registered in the name of and delivered to:
-------------------------------
(NAME)
-------------------------------
(ADDRESS)
-------------------------------
(CITY AND STATE OR PROVINCE)
--------------------------------------------------------------------
SOCIAL INSURANCE, SOCIAL SECURITY OR OTHER TAXPAYER NUMBER
Dated
----------------------
Signature Guaranteed
---------------------------------------------------
Signature
(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 Canadian chartered bank, a Canadian trust
company or a member of a recognized stock exchange or a member of the Transfer
Association Medallion (Stamp) Program.
[THE FOLLOWING IS TO BE COMPLETED, IF TRUE:]
<PAGE> 48
-2-
The undersigned 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 any Person acting
jointly or in consent with any of the foregoing or any Affiliate or Associate of
such Person (as defined in the Rights Agreement).
---------------------------------------------
Signature
NOTICE
In the event the certification set forth in the Form of Election to Exercise is
not completed, the Corporation will deem the Beneficial Owner of the Rights
evidenced by this Rights Certificate to be an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement) and accordingly such
Rights will be null and void.
<PAGE> 49
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate)
FOR VALUE RECEIVED ____________________________________________________________
hereby sells, assigns and transfers unto _______________________________________
-----------------------------------------------
(Please print name and address of transferee)
the Rights represented by this Rights Certificate, together with all right,
title and interest therein and does hereby irrevocably constitute and appoint
____________________________________ as attorney to transfer the within Rights
on the books of the Corporation, with full power of substitution.
Dated _____________________
Signature Guaranteed ___________________________________________________
Signature
(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 Canadian chartered bank, a Canadian trust
company or a member of a recognized stock exchange or a member of the Transfer
Association Medallion (Stamp) Program.
[THE FOLLOWING TO BE COMPLETED, IF TRUE:]
The undersigned 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 any Person acting
jointly or in consent with any of the foregoing (as defined in the Rights
Agreement).
--------------------------------------------
Signature
NOTICE
In the event the certification set forth in the Form of Assignment is not
completed, the Corporation will deem the Beneficial Owner of the Rights
evidenced by this Rights Certificate to be an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement) and accordingly such
Rights will be null and void.
<PAGE> 1
- 55 -
EXHIBIT 99.1
[LOGO] NEWS RELEASE
---------------------------------------
GLAMIS GOLD LTD.
---------------------------------------
FOR IMMEDIATE RELEASE
TRADING SYMBOL: TSE, NYSE - GLG FEBRUARY 28, 2000
- --------------------------------------------------------------------------------
GLAMIS GOLD ANNOUNCES YEAR END FINANCIAL RESULTS
RENO, NEVADA - For the year ended December 31, 1999, Glamis Gold Ltd. achieved
substantial improvements in operating performance at each of its mines and ended
the year in a very strong financial position. With $61.6 million in working
capital at December 31, 1999, as compared to $34.6 million at December 31, 1998,
the Company is poised to use its operating cash flows and solid balance sheet to
continue its program of growth and cost reduction.
FINANCIAL HIGHLIGHTS
Cash flow from operations for the fourth quarter of 1999 totaled $9.5 million
compared to $0.8 million used in operations during the same period of 1998. For
the year, cash flow from operations was $6.2 million as compared to $9.3 million
for the year ending December 31, 1999. The Company's cash and equivalent balance
at December 31, 1999 was $55.2 million as compared to $26.2 million at December
31, 1998.
The Company incurred a loss of $21.3 million for 1999 ($0.33 per share)
including write-downs of $8.2 million ($0.13 per share). The write-downs include
$6.8 million of development costs at the Rand mine and $1.1 million for the
Cieneguita project in Mexico, which constitutes all of the remaining asset value
for that project. For the year ending December 31, 1998, the net loss was $2.0
million ($0.06 per share).
The 1999 results also include a loss of $5.1 million attributable to the Ivan
copper mine, which was sold in October 1999, and other non-recurring items
related to the mergers with Mar-West Resources Ltd. and Rayrock Resources, Inc.
Together with the write-downs, these one-time charges comprise $0.27 per share
of the total $0.33 per share loss. This year's results also reflect continuing
lower average realized prices for gold ($282 in 1999 versus $310 in 1998) and
increased exploration expense of $4.0 million compared to $34,000 in 1998. For
the quarter
<PAGE> 2
- 56 -
ending December 31, 1999 the Company realized a loss of $12.3 million compared
to a loss of $2.4 million for the same quarter in 1998.
Revenue in 1999 was $57.5 million, a 75% increase over 1998 revenue of $32.9
million. After taking into account the $8.5 million revenue from copper sales
from the Ivan mine and $2.6 million lost revenue due to the lower average
realized gold price, 1999 revenues increased 48.9% as a result of increased gold
production.
PRODUCTION HIGHLIGHTS
Gold production for 1999 was 175,894 ounces from five mines. This includes ten
months of production from the Marigold, Dee and Daisy mines, acquired in March
1999. The increase of 69,781 ounces over 1998 production (106,113 ounces) is
directly attributable to production from these mines, which offset a decrease in
production at both the Rand and Picacho mines. As reported in January 2000,
costs have continued to decline each quarter through cost-cutting and
optimization efforts. Results are seen in the steady reduction of total cash
costs per ounce during each quarter of 1999, from $252, to $236, to $207 and
finally to $196 per ounce in the fourth quarter.
Rand Mine.
Production from the Rand mine was 70,978 ounces for the year ended December 31,
1999, compared to 87,015 ounces in the year ended December 31, 1998. The
decrease was due to a stripping program that was completed near the end of the
third quarter. As a result, the production during the fourth quarter was a
record 31,829 ounces. Completion of this stripping campaign will allow Rand to
produce over 98,000 ounces of gold in 2000. The total cash cost per ounce at the
Rand mine for the year ended December 31, 1999 was $210 compared to $228 in
1998. For the quarter ending December 31, 1999 the total cash cost was $163 per
ounce as compared to $237 per ounce in the quarter ended December 31, 1998.
Picacho Mine.
The Picacho Mine continues to produce gold during the reclamation phase. During
1999, 6,684 ounces were produced, 9,591 less than during the year ended December
31, 1998. The total cash cost per ounce for the year ended December 31, 1999 was
$172 compared to $147 per ounce in 1998. For the quarter ended December 31, 1999
the total cash cost per ounce was $165 as compared to $220 in the quarter ended
December 31, 1998.
Marigold Mine (66 2/3% Glamis-owned).
The Marigold Mine produced 37,942 ounces for the Company's account during the
ten months ended December 31, 1999. Glamis is the operator at this mine, with
Homestake Mining Company a 33 1/3 % partner. For the full year of 1999, the mine
produced 74,220 ounces (100%) compared to 71,936 ounces (100%) in 1998. During
1999, 21% of the total ounces were
<PAGE> 3
- 57 -
produced from milling operations compared to 39% from milling operations in
1998. This reduced portion of mill ounces reflects Glamis' decision to place the
mill on standby beginning in June, 1999, and to operate the property as a run of
mine heap leach only. The total cash cost per ounce at Marigold was $207 in the
fourth quarter and $218 for the ten-month period under Glamis ownership ended
December 31, 1999.
Dee Mine.
The Dee Mine was acquired in March 1999 and produced 31,154 ounces for the
Company's account, the majority of which was produced from open pit ore. The new
North Underground Project which commenced during the second quarter of 1999 and
entered the production phase in late 1999, is expected to produce the majority
of gold ounces for the duration of the Dee mine life. A slower than anticipated
phasing to full underground production at Dee resulted in a total cash cost per
ounce for the ten months ended December 31, 1999 of $273 and $327 in the fourth
quarter.
Daisy Mine
The acquisition of the Daisy Mine in March 1999 gave the Company 28,302 ounces
of gold for the ten months ended December 31, 1999. Mining was completed at
Daisy in December 1999, but gold will continue to be produced over the next two
years as rinsing and reclamation continues. The total cash cost for the
ten-month period under Glamis ownership was $195 per ounce and $180 per ounce in
the fourth quarter ending December 31, 1999.
Looking forward to 2000, the Company expects a total of 238,000 ounces of gold
production at an average total cash cost of $200 per ounce. This total includes
14,000 ounces of production in the fourth quarter from the new San Martin mine
now under construction in Honduras.
SHAREHOLDER RIGHTS PLAN
At its meeting on February 25, 2000, the Glamis Gold Ltd. Board of Directors
approved the adoption of a Shareholder Rights Plan, which will remain in effect
until the Company's Annual General Meeting to be held at 1:30 p.m. on May 3,
2000 at the Royal York Hotel in Toronto, Ontario. At the annual meeting, the
Company's shareholders will vote on continuation of the plan. The adoption of
the Shareholder Rights Plan is intended to allow the Company's Board of
Directors a reasonable amount of time to consider and respond to any unsolicited
offer for control of the Company and to enable the Board to maximize value to
the shareholders in any such event. The Shareholder Rights Plan is more
specifically described in the Information Circular to be delivered to
shareholders prior to the Annual General Meeting.
<PAGE> 4
- 58 -
CONFERENCE CALL
Glamis Gold Ltd. will host a conference call to discuss its year-end results at
3:00 p.m. EST on March 2, 2000. All interested parties are invited to listen in
by logging on to the Company's website at www.glamis.com.
Safe Harbor Statement under the United States Private Securities Litigation
Reform Act of 1995: Except for the statements of historical fact contained
herein, the information presented constitutes "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements, including but not limited to those with respect to
the price of gold, estimated future production, the Company's hedging policy and
permitting time lines, involve known and unknown risks, uncertainties, and other
factors that may cause the actual results, performance or achievements of the
Company to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. These
factors include, among others, the factual results of current exploration
activities, conclusions of feasibility studies now underway, changes in project
parameters as plans continue to be refined, future prices of gold, as well as
those factors discussed in the section entitled "Other Considerations" in the
Company's Annual Report on Form 10-K.
On behalf of the Board
(signed)
David L. Hyatt
Vice President, Investor Relations
- --------------------------------------------------------------------------------
For further information contact:
David L. Hyatt, VP Investor Relations Website: www.glamis.com
Glamis Gold Ltd. email requests for investor packets to:
5190 Neil Road, Suite 310 [email protected]
Reno, NV 89502 email question/correspondence to:
davidh@glamis com
Tel: (775) 827-4600 ext. 3109
*Fax (775)827-6992
<PAGE> 5
- 59 -
GLAMIS GOLD LTD.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
THREE MONTHS TWELVE MONTHS
ENDED DECEMBER 31, ENDED DECEMBER 31,
1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gold production -- ounces
Picacho Mine 1,187 1,814 6,684 16,275
Rand Mine 31,829 21,874 70,978 87,015
Daisy Mine * 9,882 -- 28,302 --
Dee Mine * 8,123 -- 31,154 --
Marigold Mine 14,291 -- 37,942 --
(66.7%)*
Cieneguita -- 1,307 834 2,823
- -----------------------------------------------------------------------------------------------------------
TOTAL 65,312 24,995 175,894 106,113
- -----------------------------------------------------------------------------------------------------------
Revenue realized per ounce $ 281 $ 299 $ 282 $ 310
- -----------------------------------------------------------------------------------------------------------
Total cash cost per ounce of
production
Picacho Mine $ 165 $ 220 $ 172 $ 147
Rand Mine $ 163 237 210 228
Daisy Mine * $ 180 $ -- 195 $ --
Dee Mine * $ 327 $ -- 273 $ --
Marigold Mine * $ 207 $ -- 218 $ --
Company Average $ 196 $ 236 219 $ 215
- -----------------------------------------------------------------------------------------------------------
Total cost per ounce of
production
Picacho Mine $ 330 $ 356 282 $ 243
Rand Mine $ 249 $ 333 299 $ 317
Daisy Mine * $ 311 $ -- 312 $ --
Dee Mine * $ 386 $ -- 315 $ --
</TABLE>
<PAGE> 6
- 60 -
<TABLE>
<S> <C> <C> <C> <C>
Marigold Mine * $ 254 $ -- 268 $ --
Company Average $ 278 $ 335 297 $ 305
- -----------------------------------------------------------------------------------------------------------
Working capital (thousands) $ 61,631 $ 34,156 $ 61,631 $ 34,156
- -----------------------------------------------------------------------------------------------------------
Net cash provided by operations
(thousands) $ 9,497 $ (813) $ 6,191 $ 9,331
- -----------------------------------------------------------------------------------------------------------
Net earnings (loss) for the
period (thousands) $ (12,321) $ (2,415) $ (21,285) $ (2,007)
- -----------------------------------------------------------------------------------------------------------
Net cash provided by operations
per share $ 0.14 $ (0.02) $ 0.10 $ 0.28
- -----------------------------------------------------------------------------------------------------------
Earnings (loss) per share $ (0.19) $ (0.07) $ (0.33) $ (0.06)
- -----------------------------------------------------------------------------------------------------------
Average shares outstanding 69,864,832 38,827,279 64,100,787 33,147,350
- -----------------------------------------------------------------------------------------------------------
</TABLE>
* Glamis share of production and costs are for the ownership period only (March
1, 1999 through December 31, 1999).
<PAGE> 7
- 61 -
GLAMIS GOLD LTD.
CONSOLIDATED BALANCE SHEETS
(Expressed in thousands of U.S. dollars)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
DECEMBER 31, December 31,
1999 1998
- ----------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash $ 55,169 $ 26,170
Other current assets 14,084 12,048
- ----------------------------------------------------------------------------------
Current assets
69,253 38,218
Plant and equipment and mine development costs
(net) 88,900 79,655
Other assets 5,579 1,288
- ----------------------------------------------------------------------------------
$ 163,732 $ 119,161
- ----------------------------------------------------------------------------------
LIABILITIES
Current liabilities $ 7,622 $ 4,062
Long term liabilities 17,906 4,740
SHAREHOLDERS' EQUITY
Share capital:
Authorized:
200,000,000 common shares without par value
5,000,000 preferred shares, $10 par value,
issuable in Series
Issued and fully paid:
69,864,832 common shares (1998 - 38,860,612) 158,717 109,587
Contributed surplus 63 63
Cumulative translation adjustment -- --
Retained earnings (deficit) (20,576) 709
- ----------------------------------------------------------------------------------
138,204 110,359
- ----------------------------------------------------------------------------------
$ 163,732 $ 119,161
- ----------------------------------------------------------------------------------
</TABLE>
<PAGE> 8
- 62 -
GLAMIS GOLD LTD.
CONSOLIDATED STATEMENTS OF EARNINGS
(Expressed in thousands of U.S. dollars)
(Except per share amounts)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue from production $ 19,036 $ 7,481 $ 57,462 $ 32,869
Cost of production 13,683 6,298 47,550 23,296
- -----------------------------------------------------------------------------------------------------
5,353 1,183 9,912 9,573
- -----------------------------------------------------------------------------------------------------
Expenses
Depreciation & depletion 5,642 2,177 14,692 8,871
Reclamation 562 207 1,273 557
Selling, general & administrative 1,375 612 5,989 2,558
Write-down of investment and properties 8,223 1,091 8,223 1,091
Exploration 1,898 (1) 4,002 34
- -----------------------------------------------------------------------------------------------------
17,700 4,086 34,179 13,111
- -----------------------------------------------------------------------------------------------------
Earnings (loss) from operations (12,347) (2,903) (24,267) (3,538)
Interest expense 105 (2) (160) (63)
Other income (expense) 971 198 2,890 1,543
- -----------------------------------------------------------------------------------------------------
Earnings (loss) before income taxes (11,271) (2,707) (21,537) (2,058)
Provision for (recovery by) income taxes 1,050 (292) (252) (51)
- -----------------------------------------------------------------------------------------------------
Net earnings (loss) $(12,321) $ (2,415) $(21,285) $ (2,007)
- -----------------------------------------------------------------------------------------------------
Earnings (loss) per share $ (0.19) $ (0.07) $ (0.33) $ (0.06)
- -----------------------------------------------------------------------------------------------------
</TABLE>
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(Expressed in thousands of U.S. dollars)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Retained earnings (deficit),
beginning of period $ (8,255) $ 3,124 $ 709 $ 2,716
Net earnings (loss) (12,321) (2,415) (21,285) (2,007)
Dividends -- -- -- --
- -----------------------------------------------------------------------------------------------------
Retained earnings (deficit), end
of period $(20,576) $ 709 $(20,576) $ 709
- -----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 9
- 63 -
GLAMIS GOLD LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in thousands of U.S. dollars)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net earnings (loss) $(12,321) $ (2,415) $(21,285) $ (2,007)
Adjustment for items not affecting
working capital 10,966 3,137 23,306 10,167
Net changes in non-cash working capital 10,852 (1,535) 4,170 1,171
- -----------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) OPERATIONS 9,497 (813) 6,191 9,331
CASH FLOWS FROM (USED IN) INVESTING
ACTIVITIES*
Capital expenditures (9,563) (594) (15,393) (7,764)
Business acquisition 25,526 (2,225) 33,434 (2,225)
Other assets 3,516 (390) 6,763 (215)
- -----------------------------------------------------------------------------------------------------
NET INVESTMENT ACTIVITIES 19,479 (3,209) 24,804 (10,204)
- -----------------------------------------------------------------------------------------------------
CASH FLOWS FROM (USED IN) FINANCING
ACTIVITIES
Stock issues 1,077 (50) 2,211 130
Repayment of mortgage payable & capital
lease obligations (5,057) -- (4,207) --
Other (69) 250 -- --
- -----------------------------------------------------------------------------------------------------
NET FINANCING ACTIVITIES (4,049) 200 (1,996) 130
- -----------------------------------------------------------------------------------------------------
Increase (decrease) in cash 24,927 (3,822) 28,999 (743)
Cash, beginning of period 30,242 29,992 26,170 26,913
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Cash, end of period $ 55,169 $ 26,170 $ 55,169 $ 26,170
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