As filed with the Securities and Exchange Commission on June 17, 1996
File No. 33-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
RICH COAST RESOURCES LTD.
------------------------------------------------
(Exact name of Registrant as specified in charter)
British Columbia 5093 98-0130480
- ----------------------------- ----------------- ---------------
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Classification Identification No.)
organization) Code No.)
Robert W. Truxell
206-475 Howe Street c/o Waste Recovery Systems
Vancouver, British Columbia, 10200 Ford Road
Canada V6C 2B3 Dearborn, MI 48126
(800) 435-4933 (313) 582-8866
------------------------------------- -----------------------------------
(Address, including zip code, and (Name, address, including zip code
telephone number, including area code, of and telephone number, including
Registrant's principal executive offices) code, of Agent for Service and
Authorized Representative
in the U.S. )
-------------------
It is requested that copies of all correspondence be sent to:
Heather H.S. Sander, Esq., Brenman Key & Bromberg, P.C., 1775 Sherman Street,
Suite 1001, Denver, Colorado 80203, telephone number (303) 894-0234, facsimile
number (303) 839-1633.
--------------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box: ____
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
====================================================================================================================================
Title of each class of Amount to Proposed maximum Proposed maximum Amount of
securities to be registered be registered offering price per unit (1) aggregate offering price registration fee
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par value 14,420,843 Shares $ .75 $10,815,633 $3,730.00(2)
====================================================================================================================================
(1) Registration fee is based on the closing sale price reported by NASDAQ on June 10, 1996 (a date within five business days
prior to the initial filing hereof) pursuant to Rule 457(c).
(2) Represents minimum filing fee.
The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date
until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter
become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement
becomes effective on such date as the Securities and Exchange Commission acting pursuant to said Section 8(a) may determine.
</TABLE>
<PAGE>
Rich Coast Resources Ltd.
Cross Reference Sheet
Pursuant to Item 1 of Form S-4 and Item 501(b) of Regulation S-K
Form S-4
Item No. Caption Sections in Proxy Statement/Prospectus
- --------- ------- --------------------------------------
A. Information about the Transaction
1 Forefront of the Registration Statement and
Outside Front Cover Page of Prospectus............. Outside Front Cover Page
2 Inside Front and Outside Back Cover Pages of
Prospectus......................................... Inside Front Cover Pages;
Table of Contents
3 Risk Factors, Ratio of Earnings (loss) to
Fixed Charges and Other Information................ Not Applicable
4 Terms of the Transaction........................... Available Information;
Summary; Voting
Shares and Principal
Shareholders; Particulars
of Matters to be Acted
Upon - Proposal Number
One - Domestication
to the State of Delaware
5 Pro Forma Financial Information.................... Not Applicable
6 Material Contracts with the Company Being
Acquired........................................... Not Applicable
7 Additional Information Required for
Reoffering by Persons and Parties Deemed to
Be Underwriters.................................... Not Applicable
8 Interest of Named Experts and Counsel.............. Not Applicable
9 Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities......................................... PART II
B. Information about the Registrant
10 Information with Respect to S-3 Registrants........ Not Applicable
11 Incorporation of Certain Information by
Reference.......................................... Not Applicable
-ii-
<PAGE>
12 Information with Respect to S-2 or S-3
Registrants........................................ Not Applicable
13 Incorporation of Certain Information by
Reference.......................................... Not Applicable
14 Information with Respect to Registrants Other
Than S-3 or S-2 Registrants........................ Available Information;
Summary; Voting Shares
and Principal
Shareholders;
Particulars of Matters
to be Acted Upon -
Proposal Number One
- Domestication to the
State of Delaware
Information about the
Company Being Acquired
C. Information about the Company Being Acquired
15 Information with Respect to S-3 Companies.......... Not Applicable
16 Information with Respect to S-2 or S-3
Companies.......................................... Not Applicable
D. Voting and Management Information
17 Information with Respect to Companies Other
Than S-3 or S-2 Companies.......................... Available Information;
Summary; Voting Shares
and Principal
Shareholders;
Particulars
of Matters to be
Acted Upon - Proposal
Number One -
Domestication to
the State of Delaware
D. Voting and Management Information
18 Information if Proxies, Consents or
Authorizations are to be Solicited................ Revocability of Proxy,
Available Information;
Summary; Voting Shares
and Principal
Shareholders;
Particulars of Matters to
be Acted Upon - Proposal
Number One -
Domestication to the
State of Delaware
19 Information if Proxies, Consents or
Authorizations are not to be Solicited in an
Exchange Offer.................................... Not Applicable
20 Indemnification of Directors and Officers......... Part II
21 Exhibits and Financial Statement Schedules........ Part II
22 Undertakings ..................................... Part II
-iii-
<PAGE>
RICH COAST RESOURCES LTD.
Suite 206 - 475 Howe Street
Vancouver, B.C.
V6C 2B3
NOTICE OF EXTRAORDINARY GENERAL MEETING
NOTICE IS HEREBY GIVEN THAT the Extraordinary General Meeting of the members of
RICH COAST RESOURCES LTD. (the "Company") will be held at the offices of
DuMoulin Black, 10th Floor, 595 Howe Street, Vancouver, British Columbia, on
Wednesday, August 14, 1996, at the hour of 10:30 A.M., Vancouver time, for the
following purposes:
1. To consider and, if thought fit, approve the following special resolutions:
"Resolved as a special resolution that:
1. the domestication of the Company's jurisdiction of incorporation
from the Province of British Columbia to the State of Delaware
pursuant to Section 388 of the Delaware General Corporation Law and
any and all amendments to the Company's Articles and Bylaws required
as a result thereof be and are hereby approved;
2. the Company obtain the approval of the Registrar of Companies for
British Columbia for approval that the Company be permitted to be
continued into and be registered as a "Corporation" in the State of
Delaware pursuant to the Delaware General Corporation Law;
3. the Company make application to the appropriate authorities in the
State of Delaware for consent to be domesticated into and registered
as a "Corporation" pursuant to the Delaware General Corporation Law;
4. effective on the date of such domestication under the Delaware
General Corporation Law, the authorized share capital of the Company
be altered from 100,000,000 shares without par value to 100,000,000
common shares with a par value of $.001 U.S. per share;
5. effective on the date of such domestication as a Corporation under
the Delaware General Corporation Law, the Company adopt a
Certificate of Incorporation in substantially the form submitted to
the meeting, in substitution for the existing Memorandum of the
Company;
6. effective on the date of such domestication as a Corporation under
the Delaware General Corporation Law, to change the Company's name
to "Rich Coast Inc." or such other name as the Board of Directors
may approve;
7. the Board of Directors of the Company be authorized to perform such
further acts and execute such further documents as may be required
to give effect to the foregoing; and
<PAGE>
8. the Directors may, in their sole discretion, elect not to act on or
carry out this Special Resolution without further approval of the
members of the Company."
2. To consider and vote upon an amendment to the Company's 1995 Incentive
Compensation Plan to: (i) increase the number of shares reserved
thereunder; and (ii) decrease the number of shares to be automatically
granted to disinterested Directors under the formula provisions of the
Plan.
3. To consider and vote upon such further or other business as may properly
come before the Meeting and any adjournments thereof.
Management of the Company is not aware of any other matter to come before the
Meeting other than as set forth in this Notice of Meeting and Information
Circular.
Take notice that pursuant to the British Columbia Company Act shareholders may,
until 5:00 p.m. daylight savings time, at Vancouver, British Columbia, on
Monday, August 12, 1996, give the Company a Notice of Dissent by registered
mail, addressed to the Company at 10th Floor - 595 Howe Street, Vancouver,
British Columbia, V6C 2T5, with respect to the Special Resolution to continue
the Company out of the Province of British Columbia and under the General
Corporation Law of the State of Delaware. As a result of giving a Notice of
Dissent, a shareholder may, on receiving a Notice of Intention to Act under
Section 231 of the British Columbia Company Act, require the Company to purchase
all of such shareholder's shares in respect of which the Notice of Dissent was
given.
The accompanying Proxy Statement/Prospectus and Information Circular provides
additional information relating to the matters to be dealt with at the Meeting
and is deemed to form part of this Notice.
Only shareholders of record of the Company's common shares at the close of
business on July 8, 1996, shall be entitled to notice of and vote at the
Meeting. If you are unable to attend the Meeting in person, please complete,
sign and date the enclosed form of proxy and return the same in the enclosed
return envelope provided for that purpose within the time and to the location
set out in the form of proxy accompanying this Notice.
DATED as of the day of July, 1996.
BY ORDER OF THE BOARD
-----------------------------
THORNTON J. DONALDSON
DIRECTOR
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<PAGE>
Subject to Completion - Preliminary Prospectus dated June 17, 1996
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
RICH COAST RESOURCES LTD.
206-475 Howe Street
Vancouver, British Columbia
Canada V6C 2B3
PROXY STATEMENT/PROSPECTUS
INFORMATION CIRCULAR
EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS OF
RICH COAST RESOURCES LTD.
TO BE HELD ON AUGUST 14, 1996
This Proxy Statement/Prospectus and Information Circular ("Proxy
Statement/Prospectus") is being furnished to holders of Common Stock without par
value (the "Company Common Stock") of Rich Coast Resources Ltd. (the "Company"),
a British Columbia corporation proposed to be continued in the State of
Delaware, in connection with the solicitation of proxies by the Board of
Directors of the Company for use at an Extraordinary General Meeting of
Shareholders of the Company to be held on August 14, 1996, at the offices of
DuMoulin Black located at 10th Floor, 595 Howe Street, Vancouver, British
Colombia, commencing at 10:30 a.m. Vancouver time, and at any adjournment or
postponement thereof (the "Meeting").
This Proxy Statement/Prospectus constitutes a prospectus of the Company, with
respect to 14,420,843 common shares, $.001 par value, to be issued in connection
with the Domestication (as defined herein).
<PAGE>
THE SECURITIES TO BE ISSUED PURSUANT TO THIS PROXY STATEMENT/PROSPECTUS
HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Proxy Statement/Prospectus and the accompanying proxy forms are first being
mailed to shareholders of the Company on or about July , 1996.
The date of this Proxy Statement/Prospectus is July , 1996
-2-
<PAGE>
TABLE OF CONTENTS
Page
----
SOLICITATION OF PROXIES.....................................................5
REVOCABILITY OF PROXY.......................................................5
VOTING SHARES AND PRINCIPAL HOLDERS ........................................5
VOTING OF PROXIES ..........................................................8
EXECUTIVE COMPENSATION......................................................8
AVAILABLE INFORMATION......................................................13
SUMMARY ...................................................................14
PARTICULARS OF MATTERS TO BE ACTED UPON ...................................19
Proposal Number One - Domestication to State of Delaware .............19
Principal Reasons For Changing the Jurisdiction
of Incorporation ......................................20
Corporate Governance Differences ........................21
Regulatory Approval......................................28
Canadian Tax Implications to Canadian
Shareholders. .........................................29
Canadian Tax Implications to Company ....................30
U.S. Federal Income Tax Consequences.....................31
Right of Dissent .......................................32
U.S. Federal Securities Law Consequences.................34
Canadian Securities Law Consequences.....................34
Description of Securities................................34
Legal Matters............................................35
The Domestication Resolution ............................35
Recommendation of the Directors .........................36
Proposal Number Two - Amendment to the 1995 Incentive
Compensation Plan ....................................................36
Administration of the Plan ..............................37
Formula Plan Provisions..................................38
Eligibility .............................................38
Adjustment ..............................................39
Sale of Bonus Shares and Shares Underlying Options ......39
-3-
<PAGE>
Other Provisions ........................................40
Income Tax Consequences of the Plan .....................40
New Plan Benefits .......................................42
Recommendation of the Board of Directors ................42
Other Matters.....................................................43
SHAREHOLDER PROPOSALS .....................................................43
APPENDIX 1: Section 231 of the Company Act (British Columbia) ............
-4-
<PAGE>
SOLICITATION OF PROXIES
The solicitation will be conducted by mail and may be supplemented by telephone
or other personal contact to be made without special compensation by officers
and employees of the Company. The Company intends to request banks, brokerage
houses, and other custodians, nominees and fiduciaries, to forward copies of the
proxy material to those persons for whom they hold such shares and request
authority for the execution of the proxies. The cost of solicitation will be
borne by the Company.
REVOCABILITY OF PROXY
The persons named as proxyholders in the enclosed form of proxy are Directors or
officers of the Company.
Any member returning the enclosed form of proxy may revoke the same at any time
insofar as it has not been exercised. In addition to revocation in any other
manner permitted by law, a proxy may be revoked by instrument in writing
executed by the member or by his attorney authorized in writing or, if the
member is a corporation, under its corporate seal or by an officer or attorney
thereof duly authorized, and deposited at the registered office of the Company,
at any time up to and including the last business day preceding the day of the
Meeting, or any adjournment thereof, or with the chairman of the Meeting on the
day of the Meeting.
VOTING SHARES AND PRINCIPAL HOLDERS
The Company is authorized to issue 100,000,000 shares without par value (the
"common shares"), of which 14,420,843 common shares are issued and outstanding
on July 8, 1996. The holders of common shares are entitled to one vote for each
common share held. Holders of common shares of record at the close of business
on July 8, 1996 will be entitled to receive notice of and vote at the Meeting.
The Company has only one class of shares. The presence of a shareholder(s) or
proxyholder(s) representing shareholder(s) holding in the aggregate not less
than 5% of the issued and outstanding shares entitled to vote, is necessary to
constitute a quorum at the Meeting. Broker non-votes and abstentions will be
counted for purposes of determining a quorum; however, they will not be counted
as votes cast. Therefore, such votes will not affect the outcome of the voting
on either proposal presented herein.
Beneficial Ownership of Common Shares
The following table sets forth certain information as of July 8, 1996 with
respect to the beneficial ownership of the Company's common shares by each
Director and Executive Officer, and by all Directors and Executive Officers as a
group.
-5-
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Owner Title Beneficial Ownership Percent of Class
- ----------------- ----- -------------------- ----------------
<S> <C> <C> <C>
Thornton J. Donaldson Director 223,856(1) 1.53%
Randall Pow Secretary/Director 200,000(2) 1.37%
Geoffrey Hornby Director 32,410(3) .22%
Robert Truxell Chairman/CEO/Director 1,883,200(4) 12.62%
James Fagan President/Director 808,400(5) 5.41%
Ronald Waltz CFO/Treasurer 100,000(6) .68%
All Executive Officers and
Directors as a Group (six
persons) 3,247,866(1,2,3,4,5,6) 20.36%
- -------------------------------------
1 Includes currently exercisable options to purchase 200,000 common shares at $1.00 U.S. per share.
2 Randall Pow holds currently exercisable options to purchase 200,000 common shares at $1.00 U.S. per share.
3 Includes currently exercisable options to purchase 28,218 common shares at $1.00 U.S. per share.
4 Includes: (i) 1,383,200 shares held jointly with Mr. Truxell's wife; (ii) currently exercisable options to purchase 400,000
common shares at $.50 U.S. per share; and (iii) currently exercisable options to purchase 100,000 common shares at $.75 U.S.
per share. Does not include 360,399 common shares to be issued to Mr. and Mrs. Truxell for services rendered. See "Executive
Compensation" and "Proposal Number Two-Amendment to 1995 Incentive Compensation Plan - New Plan Benefits."
5 Includes currently exercisable options to purchase: (i) 400,000 common shares at $.50 U.S. per share; and (ii) 100,000 common
shares at $.75 U.S. per share. Does not include 180,200 common shares to be issued as a bonus for services rendered. See
"Executive Compensation" and "Proposal Number Two-Amendment to 1995 Incentive Compensation Plan - New Plan Benefits."
6 Ronald Waltz holds currently exercisable options to purchase 100,000 common shares at $.50 U.S. per share.
</TABLE>
To the knowledge of the Directors and Executive Officers of the Company, as of
July 8, 1996, no person beneficially owns, directly or indirectly, or exercises
control or direction over shares carrying more than 5% of the voting rights
attached to all shares of the Company, except the following:
Name and Address Amount and Nature of
of Beneficial Owner Beneficial Ownership Percent of Class
------------------- -------------------- ----------------
Robert W. and Linda C. Truxell 1,883,200 (1) 12.62%
3653 Lakecrest Drive
Bloomfield Hills, MI 48304
James Fagan 808,400 (2) 5.41%
10200 Ford Road
Dearborn, MI 48126
Alan Moore 3,600,000 (3) 19.98%
9441 LBJ Freeway
Suite 500
Dallas, TX 75243
- ----------------------------------------------
(1) Includes: (i) 1,383,200 shares held jointly with Mr. Truxell's wife; (ii)
currently exercisable options to purchase 400,000 common shares at $.50
U.S. per share; and (iii) currently exercisable options to purchase 100,000
common
-6-
<PAGE>
shares at $.75 U.S. per share. Does not include 360,399 common shares to be
issued to Mr. and Mrs. Truxell for services rendered. See "Executive
Compensation" and "Proposal Number Two-Amendment to 1995 Incentive
Compensation Plan - New Plan Benefits."
2 Includes currently exercisable options to purchase: (i) 400,000 common
shares at $.50 U.S. per share; and (ii) 100,000 common shares at $.75 U.S.
per share. Does not include 180,200 common shares to be issued as a bonus
for services rendered. See "Executive Compensation" and "Proposal Number
Two-Amendment to 1995 Incentive Compensation Plan - New Plan Benefits."
3 Consists of currently exercisable warrants to purchase 3,600,000 common
shares at $ .734 per share.
As a result of the Domestication of the Company into the State of Delaware as
proposed under Proposal Number One, there will be no change in the ownership of
the Company's common shares by principal shareholders and management.
Change of Control
Pursuant to an Agreement of Merger, executed on November 16, 1995, the Company
acquired the balance of Waste Reduction Systems' operations which it did not
previously own by merger of two of its partners, Integrated Waste Systems, Inc.,
a Michigan corporation ("IWS"), and The Powers Fagan Group, Inc., a Michigan
corporation ("Powers/Fagan"), into its third partner, the Company's wholly-owned
subsidiary, Rich Coast Resources, Inc., a Michigan corporation ("RCRI"),
effective as of October 31, 1995 (the "Merger").
In connection with the Merger, three of the six members of the Company's Board
of Directors (James G. Allison, Arne Carlson and Barry Howat) resigned, and
Robert Truxell and James Fagan, nominees of IWS and Powers/Fagan, were elected
to the Board. Currently, the Board consists of: Thornton J. Donaldson, Randall
Pow, Geoffrey Hornby, Robert Truxell and James Fagan. Also in connection with
the Merger, Thornton J. Donaldson resigned as President of the Company. The new
officers of the Company following the Merger are: Robert Truxell (Chairman and
CEO), James Fagan (President), and Ronald Waltz (CFO and Treasurer), and Randall
Pow remains as Secretary.
As consideration for entering into the Merger, the IWS and Powers/Fagan
shareholders received 859.77 shares of RCRI, representing 46% of the then
outstanding shares of RCRI. Following the Merger, RCRI shares issued in the
Merger were exchanged for restricted shares of the Company's common shares. The
rate of exchange was 3,935 common shares of the Company for each share of RCRI.
An aggregate of 3,383,200 common shares, representing at that time 26.8% of the
Company's outstanding common shares, were issued to the former IWS and
Powers/Fagan shareholders as part of the exchange.
Immediately following the Merger, there were 12,624,867 common shares of the
Company issued and outstanding. Robert and Linda Truxell received a total of
1,383,200 common shares of the Company which represented 10.96% of the
outstanding share capital of the Company at that time.
-7-
<PAGE>
James Fagan received a total of 308,400 common shares which represented 2.44% of
the Company's outstanding share capital at that time.
The Company knows of no other arrangements, the operation of which may, at a
subsequent date, result in a change of control of the Company.
VOTING OF PROXIES
A MEMBER HAS THE RIGHT TO APPOINT A PERSON (WHO NEED NOT BE A MEMBER) TO ATTEND
AND ACT FOR HIM AND ON HIS BEHALF AT THE MEETING OTHER THAN THE PERSONS
DESIGNATED IN THE ACCOMPANYING FORM OF PROXY. TO EXERCISE THIS RIGHT, THE MEMBER
MAY INSERT THE NAME OF THE DESIRED PERSON IN THE BLANK SPACE PROVIDED IN THE
PROXY AND STRIKE OUT THE OTHER NAMES OR MAY SUBMIT ANOTHER PROXY.
THE SHARES REPRESENTED BY PROXIES IN FAVOUR OF MANAGEMENT WILL BE VOTED ON ANY
BALLOT (SUBJECT TO ANY RESTRICTIONS THEY MAY CONTAIN) IN FAVOUR OF THE MATTERS
DESCRIBED IN THE PROXY.
EXECUTIVE COMPENSATION
The following table sets out the compensation received for those financial years
ending since April 30, 1993 in respect to each of the individuals who were the
Company's Chief Executive Officer and the Company's other four most highly
compensated executive officers whose total salary and bonus exceeded $100,000
(the "Named Executive Officers"). All references throughout this Proxy
Statement/Prospectus to dollars are Canadian dollars unless otherwise stated. On
July 8, 1996, the Bank of Montreal's announced rate for conversion of U.S.
dollars was U.S. $1.00 = CDN $ or CDN $1.00 = U.S. $ .
<TABLE>
<CAPTION>
Summary Compensation Table
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Compensation Long Term Compensation
- ------------------------------------------------------------------------------------------------------------------------------------
Awards Payouts
- ------------------------------------------------------------------------------------------------------------------------------------
Restricted
Securities Shares or All other
Other Annual Under Option/ Restricted LTIP Compen-
Name and Salary Bonus Compensation SAR's granted Share Units Payouts sation
Principal Position Year ($) ($) ($) (#) ($) ($) ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert W. 1996 74,917 Nil Nil 400,000 Nil Nil Nil
Truxell/ CEO
Thornton J. 1996 30,000 Nil Nil 200,000 Nil Nil Nil
Donaldson 1995 30,000 Nil Nil Nil Nil Nil Nil
President/ CEO 1994 24,000 Nil Nil Nil Nil Nil Nil
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-8-
<PAGE>
<TABLE>
<CAPTION>
Option/Stock Appreciation Rights ("SAR") Grants during the
most recently completed Financial Year
The following table sets out the stock options granted by the Company during the most recently completed financial year to the
Named Executive Officers.
Option/SAR Grants in Last Fiscal Year
Individual Grants
- ------------------------------------------------------------------------------------------------------------------------------------
Number of % of Total
Securities Options/SARs
Underlying Granted to
Options/SARs Employees in Exercise or Base Market Price on Expiration
Name Granted (#) Fiscal Year Price ($/Sh) Date of Grant Date
- ---- ------------ ------------- ----------------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
Robert W. Truxell 400,000 16.28% $ .50 $ .60 01/15/2006
Thornton J. Donaldson 200,000 8.14% $1.00 $1.00 09/08/2005
</TABLE>
Aggregated Option/SAR Exercises in Last Financial Year
and Financial Year-End Option/SAR Values
The following table sets out all Option/SAR exercises by the Named Executive
Officers during the most recently completed financial year and the Option/SAR
values for such persons as of the end of the most recently completed financial
year.
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised In-
Unexercised the-Money
Options/SARs at Options/SARs at
FY-End (#) FY-End ($)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized ($) Unexercisable Unexercisable
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert W. Truxell -0- -0- 400,000 $200,000
all exercisable
Thornton J. Donaldson -0- -0- 200,000 $ -0-
all exercisable
</TABLE>
-9-
<PAGE>
Termination of Employment, Changes in Responsibility and Employment Contracts:
Effective October 31, 1995 the Company entered into an Employment Contract with
Robert W. Truxell, the Company's Chief Executive Officer and Chairman of the
Board of Directors. Under the contract Mr. Truxell receives a salary of $150,000
per year until January 1, 1997 at which time he will resign as Chief Executive
Officer but will continue as Chairman of the Board at a salary of $50,000 per
year for an additional five years. For the fiscal year ended April 30, 1996 Mr.
Truxell received a total of $74,917 under the contract. Pursuant to the contract
in January and May 1996 Mr. Truxell was granted options to purchase an aggregate
of 500,000 common shares under the Company's 1995 Incentive Compensation Plan
(the "1995 Plan"). The contract also provides Mr. Truxell with the right to
receive up to 500,000 additional bonus shares subject to the Company achieving
positive pretax net income for a defined period and obtaining certain funding.
The contract will terminate upon the death of Mr. Truxell and may be terminated
in the event of Mr. Truxell's disability or for just cause, as defined therein.
Pursuant to the contract, as revised, in May 1996 the Board of Directors of the
Company authorized the issuance of 360,399 common shares under the 1995 Plan,
subject to certain conditions, to Robert W. Truxell and his wife, Linda C.
Truxell, for past services rendered by Mr. and Mrs. Truxell on behalf of Waste
Reduction Systems, Inc. ("WRS") prior to the Company's merger with WRS effective
October 31, 1995. Such services were valued at $234,625. The issuance of such
shares is subject to the Company first obtaining shareholder approval for an
increase in the number of shares available for issuance under the 1995 Plan and
the Company first filing a registration statement on Form S-8 with the
Securities and Exchange Commission registering such shares. See "Proposal Number
Two-Amendment to 1995 Incentive Compensation Plan."
Effective October 31, 1995 the Company entered into an Employment Contract with
James Fagan, the Company's President and Chief Operating Officer. Under the
contract Mr. Fagan receives a salary of $125,000 per year until January 1, 1997
at which time, subject to approval of the Company's Board of Directors, he will
also become the Company's Chief Executive Officer. For the fiscal year ended
April 30, 1996 Mr. Fagan received a total of $62,500 under the contract.
Pursuant to the contract in January and May 1996 Mr. Fagan was granted options
to purchase an aggregate of 500,000 common shares under the Company's 1995 Plan.
The contract also provides Mr. Fagan with the right to receive up to 500,000
additional bonus shares subject to the Company achieving positive pretax net
income for a defined period and obtaining certain funding. The contract will
terminate upon the death of Mr. Fagan and may be terminated in the event of Mr.
Fagan's disability or for just cause, as defined therein.
In May 1996 the Board of Directors of the Company authorized the issuance of
180,200 common shares under the 1995 Plan, subject to certain conditions, to
James Fagan as a bonus for services rendered by Mr. Fagan to the Company. Such
services were valued at $117,310. The issuance of such shares is subject to the
Company first obtaining shareholder approval for an increase in the number of
shares available for issuance under the 1995 Plan and the Company first filing a
registration statement on Form S-8 with the Securities and Exchange Commission
registering such shares. See "Proposal Number Two-Amendment to 1995 Incentive
Compensation Plan."
-10-
<PAGE>
Pursuant to a Management Agreement dated February 1, 1993, United Corporate
Advisers Ltd. (a private company which is owned as to 100% by Thornton J.
Donaldson) receives a monthly fee of $2,000 from the Company, commencing
February 1, 1993 (which was increased to $2,500 effective April 1, 1994), for:
a) overall management of the Company; and b) locating, evaluating and
negotiating the purchase of resource properties on behalf of the Company and its
subsidiaries; and c) developing financial plans for actual or proposed
exploration and development of resource properties of the Company and its
subsidiaries.
The Company and its subsidiaries have no compensatory plan or arrangement in
respect of compensation received or that may be received by the Named Executive
Officers in the Company's most recently completed or current financial year to
compensate such executive officers in the event of the termination of employment
(resignation, retirement, change of control) or in the event of a change in
responsibilities following a change in control, where in respect of the Named
Executive Officers the value of such compensation exceeds $100,000.
Compensation of Directors
The Company has no arrangements, standard or otherwise, pursuant to which
Directors are compensated by the Company or its subsidiaries for their services
in their capacity as Directors, or for committee participation, involvement in
special assignments or for services as consultant or expert during the most
recently completed financial year or subsequently, up to and including the date
of this Proxy Statement/Prospectus, except as described below and in Proposal
Number Two with respect to the Company's 1995 Incentive Compensation Plan.
The Company does have a formalized incentive compensation plan, the 1995
Incentive Compensation Plan (the "Plan"), for the granting of incentive and
non-qualified stock options and bonuses to the officers, employees and
Directors. The purpose of granting such options and bonuses is to assist the
Company in compensating, attracting, retaining and motivating the Directors,
officers and employees of the Company and to closely align the personal
interests of such persons to those of the shareholders. In order to provide
non-discretionary compensation for the disinterested Directors serving on the
Compensation Committee which administers the Plan, the Plan includes a "Formula
Plan" which provides for the automatic periodic grant of options to the
non-employee Directors serving on the Committee, so that these Directors have no
discretion over the timing or exercise price of options granted to them.
Pursuant to the Formula Plan as it exists prior to the proposed Amendment under
Proposal Number Two, on September 8 of each year, each Director serving on the
Committee will be granted an Option to purchase 200,000 common shares at a
purchase price equal to the fair market value per common share on the date of
grant. Pursuant to the proposed Amendment, this number of shares will be
decreased from 200,000 to 10,000 shares. See "Proposal Number Two-Amendment to
the 1995 Incentive Compensation Plan."
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<PAGE>
The following table sets forth information concerning individual grants of
options to purchase securities of the Company made during the most recently
completed financial year to the Directors and Executive Officers of the Company.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Market Value of
% of Total Options Securities
Name of Director Securities Granted to All Exercise or Underlying Options
and Officer at Under Options Employees in the Base Price on the Date of Grant Date of Expiration
Financial Year-End Granted (#)(1) Financial Year ($/Securities) ($/Security) Grant Date
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Thornton J. 200,000 8.14% $1.00 $1.00 09/08/95 09/08/2005
Donaldson
- ------------------------------------------------------------------------------------------------------------------------------------
Randall Pow 200,000 8.14% $1.00 $1.00 09/08/95 09/08/2005
- ------------------------------------------------------------------------------------------------------------------------------------
Robert W. Truxell 400,000 16.28% $ .50 $ .60 01/15/96 01/15/2006
- ------------------------------------------------------------------------------------------------------------------------------------
James Fagan 400,000 16.28% $ .50 $ .60 01/15/96 01/15/2006
- ------------------------------------------------------------------------------------------------------------------------------------
Ronald W. Waltz 100,000 4.1% $ .50 $ .60 01/15/96 01/15/2006
- ------------------------------------------------------------------------------------------------------------------------------------
Geoffrey Hornby -0- ---- ---- ---- ---- ----
- ------------------------------------------------------------------------------------------------------------------------------------
1 The options generally become exercisable on the date of grant, subject to regulatory and shareholder approval.
</TABLE>
1996 Employee Stock Option and Stock Bonus Plan
On January 12, 1996, the Company adopted the Rich Coast Resources Ltd. 1996
Employee Stock Option and Stock Bonus Plan (the "Plan") and reserved a maximum
of 1,500,000 shares of common stock to be issued as "bonus shares" or upon the
exercise of non-qualified options ("Options") granted under the Plan. The Plan
is intended to provide incentives to officers, employees and consultants of the
Company by offering them the opportunity to acquire an ownership interest in the
Company. To date, Options to purchase 800,000 shares have been granted to
employees and 405,000 bonus shares have been granted under the Plan.
Indebtedness of Directors and Officers - There is no indebtedness of any
Director or officer to the Company as at July 8, 1996.
Interest of Insiders in Material Transactions - Except as otherwise disclosed
herein, no insider of the Company has any interest in material transactions
involving the Company.
Management Contracts - No management functions of the Company are performed to
any substantial degree by a person other than the Directors or senior officers
of the Company.
-12-
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended ("the 1934 Act"), and in accordance therewith
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at its principal office at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the following Regional
Offices of the Commission: in Chicago, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661; and in New York, 7 World Trade Center, Suite 1300, New
York, New York 10048. Copies of such materials can be obtained at prescribed
rates by written request addressed to the Commission, Public Reference Section,
450 Fifth Street, N.W., Washington, D.C. 20549. In addition, copies of such
documents and other information are provided to Nasdaq and can be inspected at
the Nasdaq offices maintained at the National Association of Securities Dealers,
Inc., 1735 "K" Street, Washington, D.C. 20549.
The Company has filed with the Commission in Washington, D.C. a Registration
Statement on Form S-4 (together with all amendments, supplements, and exhibits
thereto, referred to as the "Registration Statement") under the Securities Act
of 1933, as amended, with respect to the Common Stock offered hereby. As
permitted by the rules and regulations of the Commission, this Prospectus does
not contain all of the information set forth in the Registration Statement and
the exhibits thereto. For further information with respect to the Company and
the Common Stock offered hereby, reference is made to the Registration
Statement, including the exhibits filed or incorporated as a part thereof,
copies of which can be inspected at, or obtained at prescribed rates from, the
Public Reference Section of the Commission at the address set forth above. While
statements contained in this Proxy Statement/Prospectus fully and accurately
describe the material aspects of the transactions being contemplated, statements
as to the contents of any contract or other document referred to herein or
therein are not necessarily complete, and in each instance reference is made to
the copy of such contract or other document filed as an exhibit to the
Registration Statement or such other document.
-13-
<PAGE>
SUMMARY
The following is a brief summary of certain information contained elsewhere in
this Proxy Statement/Prospectus. Reference is made to, and this summary is
qualified in its entirety by, the more detailed information contained or
incorporated by reference in this Proxy Statement/Prospectus and the Exhibits
hereto. Unless otherwise defined herein, capitalized terms used in this summary
have the respective meanings ascribed to them elsewhere in this Proxy
Statement/Prospectus. Unless otherwise indicated, all dollar amounts are stated
in Canadian dollars. On July 8, 1996, the Bank of Montreal's announced rate for
conversion of U.S. dollars was U.S. $1.00 = CDN $ or CDN $1.00 = U.S. $ .
Shareholders are urged to read this Proxy Statement/Prospectus and the exhibits
hereto in their entirety.
Extraordinary General Meeting:
Time, Date and Place .............. The Company's Extraordinary General Meeting
(the "Meeting") will be held on August 14,
1996, at 10:30 a.m., Vancouver time, at the
offices of DuMoulin Black, 10th Floor, 595
Howe Street, Vancouver, British Columbia.
Record Date, Shares Entitled
to Vote .......................... The Record Date for the Meeting is
July 8, 1996. Holders of record of the
Company's common shares at the close of
business on the Record Date are entitled
to notice of and to vote at the Meeting.
At such date, there were outstanding
14,420,843 common shares of the Company,
each of which will be entitled to one vote
on each matter to be acted upon or which
may properly come before the Meeting.
Purposes of the Extraordinary
Meeting .......................... The purposes of the Meeting are (i) to
consider and vote upon the Domestication
of the Company to the State of Delaware,
U.S.A.; (ii) to consider and vote upon an
amendment to the Company's 1995 Incentive
Compensation Plan and (iii) to consider and
vote upon such other matters as may
properly be brought before the Meeting.
-14-
<PAGE>
The Domestication:
Rich Coast Resources Ltd. ........ The Company, incorporated under the laws of
British Columbia, Canada, is a diversified
corporation with equity interests in mining,
petroleum and environmental industries. The
Company has one wholly-owned subsidiary
which holds 25 mineral claims. In 1992, the
Company, through another wholly-owned
subsidiary, and with two other entities,
formed "Waste Reduction Systems", a general
partnership. Waste Reduction Systems
operates a plant in Dearborn, Michigan,
designed to treat non-hazardous industrial
sludge produced by the many industrial
plants located in Michigan and nearby
States, and to recycle and refine waste oil
for resale. Effective October 31, 1995, the
Company acquired 100% of Waste Reduction
Systems and since that time the Company's
operations have been focused almost
exclusively on that business, with limited,
if any, effort devoted to expansion of its
mineral resource activities. The principal
executive offices of the Company are located
at 206-475 Howe Street, Vancouver, British
Columbia, Canada V6C 2B3; the telephone
number is (800) 435-4933.
Effect of the Domestication........ The Company will change its jurisdiction of
incorporation from British Columbia, Canada
to Delaware by means of a process called a
"continuance" under Canadian law and a
"domestication" under Delaware law (herein
referred to as the "Domestication"). Upon
the effectiveness of the Domestication, the
Company will become a Delaware corporation
as if it had originally been incorporated in
that jurisdiction and it will be
discontinued in British Columbia, Canada. In
connection with the Domestication, the
Company is changing its name to Rich Coast
Inc. ("RC-Delaware").
-15-
<PAGE>
Votes Required .................. The approval and adoption of the
Domestication by shareholders of the Company
will require the affirmative vote of the
holders of 75 percent of the votes cast in
respect of the resolution at the Meeting.
The presence of a shareholder(s) or
proxyholder(s) representing shareholder(s)
holding in the aggregate not less than 5% of
the issued and outstanding shares entitled
to vote, is necessary to constitute a quorum
at the Meeting.
Background of and Reasons
for the Domestication............ The Company seeks to take advantage of the
Delaware corporate law and to simplify its
tax and securities filings, accounting and
operations by becoming a Delaware
corporation. As a result of the
Domestication, the Company will no longer be
obligated to comply with Canadian tax and
accounting requirements.
Recommendation of
the Board of Directors
of the Company.................. The Board of Directors of the Company
believes that the Domestication is in the
best interests of the Company and its
shareholders and unanimously recommends
approval of the Domestication to its
shareholders.
Effective Time of
The Domestication................ It is anticipated that the Domestication
will become effective as promptly as
practicable after shareholder approval of
the Domestication has been obtained. The
Domestication will become effective upon the
filing of a Certificate of Domestication and
the RC-Delaware Certificate of Incorporation
with the Secretary of State of the State of
Delaware or at any later time stated
therein.
-16-
<PAGE>
Regulatory Approval ............... Concurrently with the mailing of this
material to the Company's shareholders, the
Company will apply to the Registrar of
Companies for the Province of British
Columbia for permission to continue the
Company to the State of Delaware. Such
approval must be obtained for the
Domestication to take place. There are no
other regulatory approvals necessary for
consummation of the Domestication.
Appraisal Rights With Respect
to the Domestication.............. Under Canadian law, holders of Company
Common Stock who do not vote for the
Domestication may elect to have the fair
value of their shares determined in
accordance with Section 231 of the Company
Act (British Columbia) and paid to them, if
the Domestication is consummated and if they
comply with the provisions of said Section
231. See "Particulars of Matters to be Acted
Upon, Proposal Number One - Domestication to
the State of Delaware - Right of Dissent."
Certain Canadian Income Tax
Consequences of the
Domestication ................... Canadian shareholders will not incur any
income tax liability solely by reason of the
Domestication unless such shareholder
exercises dissenters' rights in which case
dividend and capital gain taxes will apply.
Certain United States Federal
Income Tax Consequences of the
Domestication...................... The Domestication, if approved, has been
structured as a tax-free reorganization
under the Code with respect to which the
shareholders of the Company and the Company
itself, are not expected to recognize gain
or loss.
-17-
<PAGE>
Comparison of Shareholder
Rights .......................... See "Particulars of Matters to be Acted Upon
- Proposal Number One - Domestication to the
State of Delaware - Corporate Governance
Differences."
Amendment to the Company's
1995 Incentive Compensation Plan:
Effect of the Amendment ........... The Company proposes to amend its 1995
Incentive Compensation Plan (the "Plan") to
(i) increase the number of shares reserved
thereunder; and (ii) decrease the number of
shares to be automatically granted to
disinterested Directors under the formula
provisions of the plan (the "Amendment")
Votes Required .................... The approval and adoption of the Amendment
by shareholders of the Company will require
the affirmative vote of the holders of a
majority of the votes cast in respect of the
resolution at the Meeting. The presence of a
shareholder(s) or proxyholder(s)
representing shareholder(s) holding in the
aggregate not less than 5% of the issued and
outstanding shares entitled to vote, is
necessary to constitute a quorum at the
Meeting.
Recommendation of the Board of
Directors of the Company.......... The Board of Directors of the Company
believes that the Amendment is in the best
interests of the Company and its
shareholders and unanimously recommends
approval of the Amendment to its
shareholders
-18-
<PAGE>
PARTICULARS OF MATTERS TO BE ACTED UPON
Proposal Number One
Domestication to the State of Delaware
The Company is presently a British Columbia company ("RC-BC").
The shareholders of the Company will be asked at the Meeting to pass a Special
Resolution authorizing the Company to continue under the General Corporation Law
of the State of Delaware (the "Delaware GCL") pursuant to Section 388 of the
Delaware GCL, thereby continuing RC-BC as if it had been incorporated under the
Delaware GCL as a Delaware corporation ("RC- Delaware"). The Special Resolution
also alters the Company's share capital from 100,000,000 shares without par
value to 100,000,000 shares with a par value of $.001 U.S. per share and changes
the Company's name to Rich Coast Inc. (or such other name as the Board of
Directors may approve), both of these matters to be effective as at the date of
continuance under Delaware GCL. The Company's shareholders at a Meeting held
October 18, 1995 authorized the change of the Company's name to such name as may
be acceptable to the Company's Board of Directors. To effect the Special
Resolution authorizing the continuance of the Company, the Special Resolution
must be passed by at least three-fourths of the votes cast at the Meeting in
respect to the proposal.
Upon continuance under the Delaware GCL, the Company Act of British Columbia
(the "B.C. Act") ceases to apply, and the Delaware GCL becomes applicable to
RC-Delaware as if it had been incorporated under the Delaware GCL.
The continuance will not result in any change in the business of the Company or
its assets, liabilities or net worth, nor in the persons who constitute the
Company's Board of Directors and management. It will not be necessary for
shareholders to exchange their existing share certificates and their holdings
will not change. The trading of the Company's shares on the Small Cap NASDAQ
Market will not be in any way affected by the continuance. The continuance is
not a reorganization, an amalgamation or a merger.
The continuance gives rise to the Right of Dissent (see "Right of Dissent"
hereunder). If the Right of Dissent is exercised by any of the Company's
shareholders entitled so to do, the Company would be required to purchase the
dissenting shareholders' shares in the Company at the fair value of the shares
as at August 13, 1996. This could have an adverse effect on the Company. The
Special Resolution will, therefore, provide authority to the Board of Directors
of the Company not to proceed with the continuance if, in the Board's opinion,
it is not in the best interest of the Company so to do.
The Board of Directors of the Company has unanimously approved the continuance
of the Company under the provisions of Section 388 of the Delaware GCL and
recommends that shareholders vote FOR continuance into the State of Delaware.
-19-
<PAGE>
Principal Reasons For changing the Jurisdiction of Incorporation
For many years, Delaware has followed a policy of encouraging incorporation in
that State and, in furtherance of that policy, has adopted comprehensive, modern
and flexible corporate laws which are periodically updated and revised to meet
changing business needs. As a result, many major corporations have initially
chosen Delaware for their domicile or have subsequently reincorporated in
Delaware in a manner similar to that proposed by the Company. Because of
Delaware's long standing policy of encouraging incorporation in that State, and
consequently its preeminence as the State of incorporation for many major
corporations, the Delaware courts have developed considerable expertise in
dealing with corporate issues and a substantial body of case law has developed
construing Delaware law and establishing public policies with respect to
Delaware corporations.
As the Company's focus of business development is in the United States as a
result of the Merger, management is of the opinion that it is preferable that
its constating documents be governed according to laws of a State of the United
States. In particular, under the B.C. Act, there are requirements that a certain
numbers of the Directors of the Company must be ordinarily resident in Canada
and British Columbia. With no active business interest in Canada, it is a
continuing problem for the Company to find qualified individuals in British
Columbia who are prepared to act as Directors and assume the responsibilities
and the risks that are inherent with an individual acting as a Director.
Management is, therefore, of the opinion that it is preferable to eliminate this
Canadian residency requirement.
In addition, the Company's principal trading market is in the United States,
most of its shareholders are located in the United States and the Company's
common stock is traded on the United States NASDAQ system. Since the Company is
registered under the Securities Exchange Act of 1934 (the "1934 Act"), the
Company is subject to the 1934 Act reporting requirements. As a British Columbia
company, the Company also is subject to the reporting requirements under British
Columbia law and to Canadian tax law and accounting rules. The 1934 Act and
British Columbia reporting requirements often are in conflict and require the
Company to retain both U.S. securities counsel and British Columbia securities
counsel. By changing its jurisdiction of incorporation from British Columbia to
Delaware, the Company simplifies its securities and tax reporting requirements
and eliminates this conflict and the need to have British Columbia securities
counsel. The Company, however, will remain a reporting issuer in British
Columbia and will continue to comply with the applicable provisions of the
British Columbia Securities Act, which includes filing annual reports, quarterly
reports and news releases with the British Columbia Securities Commission.
In connection with the proposed change in the Company's jurisdiction of
incorporation from British Columbia to the State of Delaware, the Board of
Directors has proposed that the par value of the Company's common shares be
changed from no par value to $.001 par value per share. The Board of Directors
has decided to change the par value from no par to $.001 per share because the
Delaware franchise fees applicable to no par value shares are significantly
higher than
-20-
<PAGE>
those for $.001 par value shares. Par value represents the minimum consideration
which must be received by the Company for the issuance of a share of stock. The
change in par value will have no effect upon the rights of existing security
holders. Management recommends that the shareholders vote in favor of the
proposed change in the par value of the common shares. If the Proposal is
approved, the change will be reflected in the new Delaware Certificate of
Incorporation which will be filed with the Delaware Secretary of State's Office.
Other than the change in par value, no other changes will be made in the
Company's capital structure as a result of the Company's change in jurisdiction
of incorporation.
Corporate Governance Differences
Articles and Bylaws under Delaware Law
In approving the continuance, shareholders of RC-BC will be agreeing to hold
securities in a corporation governed by Delaware law and the attendant
RC-Delaware constituent documents. In exercising their vote, shareholders should
consider these distinctions.
Delaware and British Columbia Comparisons
In general terms, Delaware corporate law has a predisposition towards maximizing
flexibility of management in its control of corporations with minimal
governmental interference or regulation. While the question does not lend itself
to precise characterization, British Columbia law can be seen as having many
characteristics in common with Delaware, with more focus on stockholder and
creditor protections than upon management flexibility. Delaware law includes
provisions not contained in the B.C. Act, or contained to a more limited extent,
which permit a corporation to adopt measures designed to discourage unsolicited
or hostile takeover attempts. The Certificate of Incorporation and Bylaws for
RC-Delaware contain some of these protections.
Certain of the more important differences between the two jurisdictions are
hereafter discussed in further detail, and in the context of an assumption that
the provisions set forth in the Certificate of Domestication and Certificate of
Incorporation and Bylaws of RC-Delaware are effective under Delaware law. For
continuity, the term "shares" and "shareholders" are generally employed in the
discussion rather than the terms, "stock" and "stockholders" which are
referenced and employed in Delaware law and the constituent documents of
RC-Delaware. Under the B.C. Act, the constituent documents of RC-BC are the
Certificate of Incorporation, the Memorandum and the Articles (which are similar
to Bylaws under Delaware law).
Shareholder Quorum
Under the B.C. Act a quorum for a general meeting of shareholders of the
Corporation is two persons, unless the Articles otherwise provide. Pursuant to
the RC-BC Articles, the quorum for general meetings of shareholders of RC-BC is
a shareholder(s) or a proxyholder(s) representing shareholder(s), holding shares
representing in the aggregate at least 5% of the issued and
-21-
<PAGE>
outstanding shares of RC-BC that are entitled to attend and vote at such
meeting. Under Delaware law (and the constituent documents for RC-Delaware) a
quorum of one-third of those entitled to vote, present in person or by proxy, is
required.
Supermajority
Both jurisdictions permit the adoption of a higher requisite vote for certain
forms of corporate action, subject to certain limitations. Delaware generally
has no limit on how high a percentage the vote must be. Notwithstanding any
provision contained in a corporation's Memorandum and Articles, the B.C. Act
provides that 75% of the votes present and voting at a general meeting of
shareholders (a special resolution) is required to amend the Company's
constating documents and to remove a Director. Amending the Company's constating
documents would include changing the Company's name or altering its share
capital, or any of the rights attached thereto. Save and except for those
matters which under the B.C. Act specifically require a special resolution, the
B.C. Act does not limit the supermajority requirements, provided they are stated
in the Company's Articles. The governing documents for RC-BC and RC-Delaware do
not affect the governing law.
Required Approvals of Shareholders
The B.C. Act requires that various extraordinary corporate transactions, such as
a merger or the sale of substantially all of a corporation's assets, must be
approved by shareholders, by special resolution. Under Delaware law, such
transactions must be approved by shareholders holding a majority of the
outstanding shares entitled to vote thereon. Under the B.C. Act, a quorum is two
persons, unless the Corporation's Articles provide otherwise, as is the case
with RC-BC. (See "Shareholder Quorum" above.) As a result, shareholder action
can be taken under the B.C. Act with a smaller percentage of the shareholder
vote than is required under Delaware law. The Articles for RC-BC do not
otherwise affect the governing law. The Articles and Bylaws for RC- Delaware do
not affect the governing law.
Examination of Corporate Records
Under the B.C. Act, any person is entitled to examine the corporation's register
of shareholders, the corporation's Articles, Memorandum and all amendments
thereto, the corporations' register of indebtedness, minutes of all
shareholders' meetings, and copies of all contracts pursuant to which the
corporation issued shares for a consideration other than cash, and all documents
approved by Directors in the past ten years, upon payment of $.50 Cdn. for each
document examined. In addition, any person is entitled to a copy of the register
of shareholders on filing an Affidavit with the corporation stating that the
list is required for corporate purposes. "Corporate purposes" is defined to mean
any effort to influence the voting of shareholders at any meeting, any effort to
purchase or sell shares of the corporation, or to effect an amalgamation or
reorganization of the corporation.
-22-
<PAGE>
Under Delaware law, shareholders have the right for any proper purpose to
inspect, upon written demand under oath stating the purpose for such inspection,
the corporation's stock ledger, list of shareholders, and its other books and
records, and to make copies or extracts of the same. A proper purpose means a
purpose reasonably related to a person's interest as a shareholder.
Minority (Dissenters) Rights
Under the B.C. Act, the shareholders of RC-BC have the right to dissent from any
corporate act involving certain amendments to the Memorandum or Articles,
various forms of corporate reorganizations/amalgamations, or a sale, lease or
exchange of all or substantially all of its assets and to exercise their
statutory appraisal rights after such dissent, receiving a cash payment for the
redemption of their shares. Under Delaware law, shareholders have the right to
dissent and exercise appraisal rights only with respect to certain forms of
corporate mergers and consolidations. No appraisal rights will be available to
the shareholders of RC-Delaware unless, under the terms of an agreement of
merger or consolidation, the shareholders are required to accept for their stock
something other than: (i) shares of stock of the surviving corporation; (ii)
shares of stock of any other corporation which is listed on a national
securities exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities Dealers,
Inc. ("NASD") or which has more than 2000 shareholders of record; (iii) cash in
lieu of fractional shares; and/or (iv) any combination thereof. THEREFORE, IN
APPROVING THE ARRANGEMENT, SHAREHOLDERS WILL BE AGREEING TO FOREGO THE MORE
EXTENSIVE APPRAISAL RIGHTS UNDER THE B.C. ACT WITH RESPECT TO FUTURE ACTIONS.
Disqualification of Directors
The B.C. Act prohibits the following from serving as a Director: persons under
age 18, persons mentally infirm, corporations, undischarged bankrupts, "persons"
who have been convicted of offenses in connection with the promotion, formation
or management of a corporation or involving fraud within certain specified time
periods or in the case of a reporting company "persons" who have had their
registration under certain British Columbia statutes cancelled within certain
specified time periods. Delaware law contains no comparable direct prohibitions.
Personal Liability of Directors
The B.C. Act provides that every Director, in exercising his powers and
performing his functions, shall act honestly and in good faith and in the best
interests of the company and exercise the care, diligence and skill of a
reasonably prudent person. The B.C. Act also specifically imposes joint and
several personal liability upon Directors who vote for or consent to a
resolution which is in violation of applicable provisions of the B.C. Act
relating to the acquisition of a company's own shares, the payment of
commissions or discounts in excess of 25% on a sale of a company's shares, the
payment of dividends, financial assistance, payment of an indemnity, or payment
to a shareholder, subject to certain limited defenses. The B.C. Act provides
that such liability is
-23-
<PAGE>
in addition to and not in derogation of any liability imposed on a Director by
any other legislation, regulation or rule of law. Under the B.C. Act, Directors
have a duty to act in the best interest of the corporation, acting honestly and
in good faith, exercising the care, diligence and skill of a reasonably prudent
person.
In addition, under British Columbia law, Directors are personally liable for the
unpaid wages of employees in an amount not exceeding two months wages for each
employee in the event that the corporation failed to pay the wages.
The B.C. Act entitles a shareholder or a Director of the corporation with the
approval of the Supreme Court of British Columbia, and in the name of the
corporation, to commence legal proceedings to enforce a duty or right owed to
the corporation or to obtain monetary damages for breach of such right or duty
whether the right or duty arises under the B.C. Act or otherwise. Derivative
actions therefor may be brought by shareholders on behalf of the corporation
against the corporation's Directors for cash damages or to enforce rights or
duties owed by the Director to the corporation. Under the B.C. Act, there is no
statutory limitation in respect to the monetary liability which may be imposed
on Directors and the RC-BC constating documents contain no such limitations.
Under Delaware law, the directors of a corporation act in a fiduciary capacity
and owe the duties of loyalty and due care with respect to the corporation and
its shareholders.
Under Delaware law, shareholders may bring derivative actions against officers
and directors of the corporation for breach of their fiduciary duty to the
corporation and its shareholders or for other fraudulent misconduct. A
derivative suit by shareholders to redress an alleged breach of fiduciary duty
or other fraudulent misconduct by the directors does not require a prior demand
by the shareholder that a suit be brought by the corporation. However, in any
derivative suit brought by a shareholder, it must be alleged in the complaint
that the plaintiff was a shareholder of the corporation at the time the
transaction complained of occurred or that he/or she obtained the stock
thereafter solely by operation of law.
The RC-Delaware constituent documents contain the full protections currently
permitted by Delaware law specifying that Directors are not personally liable to
a corporation or its shareholders for monetary damages for breach of fiduciary
duty as a Director except where the liability arises (i) from a breach of the
Director's duty of loyalty to the corporation or its shareholders; (ii) from
acts or omissions not in good faith, involving intentional misconduct or a
knowing violation of law; (iii) from paying a dividend or approving certain
unauthorized stock repurchases; or (iv) from a transaction where the Director
derived an improper personal benefit. Such provisions will protect RC-Delaware
Directors from personal liability for monetary damages for breaches of their
duty of care. Under Delaware law, absent adoption of such a provision, Directors
can be held liable for gross negligence in connection with decisions made on
behalf of the corporation. The foregoing limitations on monetary damages,
however, have no effect on the standard of duty to which directors must conform
or the availability of monetary damages.
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Furthermore, causes of action under federal law, including the federal
securities laws, are not affected by the limitations that will be imposed by
RC-Delaware's Certificate of Incorporation.
Indemnification
The Delaware General Corporation Law and the Certificate of Incorporation of
RC-Delaware generally provide that RC-Delaware shall indemnify a Director
against all costs, charges and expenses, including an amount paid to settle an
action or satisfy a judgment, actually and reasonably incurred by the Director,
including an amount paid to settle an action or satisfy a judgment in a civil,
criminal or administrative action to which the Director is a party by reason of
his having been a Director, provided that the Director was acting in good faith.
The indemnification permitted under Delaware law is not substantially different
in nature or extent from that permitted under British Columbia law and currently
provided for in the constituent documents of RC-BC, save and except, the B.C.
Act provides that a company may only indemnify a Director or former Director of
the company against all costs, charges and expenses, actually or reasonably
incurred by the Director, in respect of any civil, criminal or administrative
action or proceeding, including an action brought by the company, with the
approval of the Court, if the Director acted honestly and in good faith with a
view to the best interests of the company of which he is or was a Director and
in the case of a criminal or administrative action or proceeding, he had
reasonable grounds for believing that his conduct was lawful. Insofar as
indemnification for liabilities arising under the Securities Act of 1933, as
amended (the "1933 Act") may be permitted to Directors, officers or controlling
persons, the Corporation has been informed that in the opinion of the U.S.
Securities and Exchange Commission such indemnification is against public policy
as expressed in the 1933 Act and is therefore unenforceable.
Cumulative Voting
Under the B.C. Act and Delaware law, cumulative voting is permitted only if
provided for in the Articles or Certificate of Incorporation, respectively.
Neither the RC-BC Articles nor the RC- Delaware Certificate of Incorporation
provides for cumulative voting.
Anti-Takeover Provisions
Certain provisions of the Delaware General Corporation Law and of RC-Delaware's
Certificate of Incorporation and Bylaws, summarized in the following paragraphs,
may be deemed to have an anti-takeover effect and may delay, defer or prevent a
hostile tender offer or takeover attempt that a shareholder might consider in
his or her best interest, including those attempts that might result in a
premium over the market price for the shares held by shareholders.
Despite such anti-takeover implications, this Proposal Number One is not the
result of management's knowledge of any effort to accumulate the Company's
securities or to obtain control of the Company by means of a merger, tender
offer, solicitation in opposition to management or otherwise. Except as
indicated below, management is not aware of the existence
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of any provisions in the RC-Delaware Certificate of Incorporation or Bylaws or
terms of contracts to which it is a party which may be considered to have an
anti-takeover effect. Proposal Number One is not part of a plan by management to
adopt a series of anti-takeover measures and management presently does not
intend to propose other anti-takeover measures in future proxy solicitations.
British Columbia Anti-Takeover Law
The Articles and Memorandum of RC-BC do not contain any anti-takeover
provisions. The B.C. Act does not contain any provisions which may be considered
anti-takeover provisions. In British Columbia, takeover bid matters are
legislated under the British Columbia Securities Act and the Rules thereunder. A
takeover bid made to less than five stockholders is exempt from the formal bid
provisions. Otherwise, a bid must be made on identical terms to all holders of
the class of shares that are the subject of the bid. The makers of the bid may
not purchase shares that are subject to the bid unless pursuant to a bid made to
all shareholders and the bid must be accompanied by a prescribed form of
takeover bid circular.
Delaware Anti-Takeover Law
Section 203 of the Delaware General Corporation Law (the "Delaware Takeover
Statute") applies to a Delaware corporation with a class of voting stock listed
on a national securities exchange, authorized for quotation on an interdealer
quotation system or held of record by 2,000 or more persons, and, therefore,
applies to the Company. In general, Section 203 prevents an "interested
stockholder" (defined generally as any person owning, or who is an affiliate or
associate of the corporation and has owned in the preceding three years, 15% or
more of a corporation's outstanding voting stock and affiliates and associates
of such person) from engaging in a "business combination" (as defined) with a
Delaware corporation for three years following the date such person became an
interested stockholder unless (1) before such person became an interested
stockholder, the board of Directors of the corporation approved either the
business combination or the transaction that resulted in the stockholder
becoming an interested stockholder; (2) the interested stockholder owned at
least 85% of the voting stock of the corporation outstanding at the time the
transaction commenced (excluding stock held by Directors who are also officers
of the corporation and by employee stock plans that do not provide employees
with the rights to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer); or (3) on or subsequent to
the date such person became an interested stockholder, the business combination
is approved by the board of Directors of the corporation and authorized at a
meeting of stockholders by the affirmative vote of the holders of two-thirds of
the outstanding voting stock of the corporation not owned by the interested
stockholder. Under Section 203, the restrictions described above do not apply to
certain business combinations proposed by an interested stockholder following
the announcement or notification of one of certain extraordinary transactions
involving the corporation and a person who had not been an interested
stockholder during the previous three years or who became an interested
stockholder with the approval of a majority of the corporation's Directors.
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Special Meeting of Stockholders
RC-Delaware's Bylaws provide that special meetings of the stockholders of
RC-Delaware may be called only by a majority of the Board of Directors of
RC-Delaware. This provision makes it more difficult for shareholders to take
action opposed by the Board of Directors of RC-Delaware. Under the B.C. Act,
special meetings may also be called by the Board of Directors although the
Directors must, on the requisition of one or more shareholders holding in the
aggregate not less than 1/20 of the issued voting shares of the Corporation call
a general meeting of the Corporation to be held within four (4) months after the
date of requisition.
Shareholder Action by Written Consent
RC-Delaware's Certificate of Incorporation and Bylaws provide that no action
required or permitted to be taken at an annual or a special meeting of the
shareholders of RC-Delaware may be taken without a meeting unless such action is
authorized by unanimous consent in writing of all shareholders. Under the
Articles of RC-BC, since the Company is a reporting company as defined in the
B.C. Act, all actions must be taken at a meeting and may not be taken by consent
resolution.
Advance Notice Requirements for Shareholder Proposals and Director Nominations
RC-Delaware's Bylaws provide that shareholders seeking to bring business before
an annual meeting of shareholders, or to nominate candidates for election as
Directors at an annual or a special meeting of shareholders, must provide timely
notice thereof in writing. To be timely, a shareholder's notice must be
delivered to, or mailed and received at, the principal executive offices of
RC-Delaware (i) in the case of an annual meeting that is called for a date that
is within thirty (30) days before or after the anniversary date of the
immediately preceding annual meeting of shareholders, prior to such anniversary
date, and (ii) in the case of an annual meeting that is called for a date that
is not within thirty (30) days before or after the anniversary date of the
immediately preceding annual meeting, or in the case of a special meeting of
shareholders called for the purpose of electing Directors, not later than the
close of business on the tenth day following the day on which notice of the date
of the meeting was mailed or public disclosure of the date of the meeting was
made, whichever occurs first. The Bylaws specify certain requirements for a
shareholder's notice to be in proper written form. These provisions may preclude
some shareholders from bringing matters before the shareholders at an annual or
special meeting or from making nominations for Directors at an annual or special
meeting.
Under the B.C. Act, the Corporation must, not less than 56 days before it holds
a general meeting at which a Director is to be elected, publish in a Vancouver
newspaper an advance notice of the meeting giving the date of the meeting,
inviting written nominations for Directors signed by shareholders holding in the
aggregate not less than 10% of the issued voting shares and stating that if the
nominations are received at the registered office of the Corporation not less
than thirty-five (35) days before the date of the meeting, the Corporation will
include the nominee in its information circular in respect of the meeting.
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Amendments to the Certificate of Incorporation and Bylaws
Delaware law provides that the vote of holders of a majority of the outstanding
stock entitled to vote is required to alter, amend, change or repeal the
Certificate of Incorporation and such amendment will take effect upon filing
with the Delaware Secretary of State's Office or on such later date as specified
therein. RC-Delaware's Bylaws provide that the vote of holders of 75% of the
votes cast is required to alter, amend or repeal the Bylaws.
Under the B.C. Act, the Memorandum (which contains similar provisions to a
Certificate of Incorporation under Delaware law) and the Articles may be altered
if approved by the shareholders by way of special resolution (75% of the votes
cast) and such alteration takes effect upon the later of the date a certified
copy of the special resolution is accepted for filing by the Registrar of
Companies for the Province of British Columbia and the date specified in the
special resolution.
General Effect of Anti-Takeover Provisions of Delaware Law
The foregoing anti-takeover provisions are common characteristics of public
companies presently incorporating under Delaware law, and are adopted for the
general purpose of attempting to discourage transactions that could involve an
unwanted change of control, to ensure a measure of continuity in management and
to provide the board of Directors with sufficient time to review change of
control proposals from substantial shareholders as well as any appropriate
alternatives. The "interested shareholder" provisions may, however, discourage
market purchases by persons attempting to acquire control, although such
purchases sometimes raise the market price of the stock. Therefore, the
interested shareholder provisions may, in effect, deprive RC-Delaware
shareholders of an opportunity to sell their holdings at a temporarily higher
market price. The provisions also may decrease the likelihood that a tender
offer would be made for less than two-thirds (2/3) of the voting stock and, as a
result, could adversely affect the shareholders who might desire to participate
in such a tender offer. In exercising their vote, shareholders should weigh
these competing considerations.
Regulatory Approval
Concurrently with the mailing of this material to the Company's shareholders,
the Company will apply to the Registrar of Companies for the Province of British
Columbia for permission to continue the Company to the State of Delaware. Such
approval must be obtained for the Domestication to take place. There are no
other regulatory approvals necessary for consummation of the Domestication.
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Canadian Tax Implications to Canadian Shareholders
Based upon the advice of Smythe Ratcliffe, the Company believes that the
Canadian tax implications to the Company and to Canadian shareholders as a
result of the Domestication are as follows:
The following is confined to provisions of the Income Tax Act (Canada) (the
"Act") enacted, and Regulations thereto proclaimed, or amendments thereto
proposed at this date and, where applicable, is based on our understanding of
current administrative practices of Revenue Canada, Taxation. No assurance can
be given that the consequences will not be altered by future changes to
administrative practices, judicial decisions or amendments to the law.
This discussion addresses in a general manner the more pertinent Canadian
Federal income tax consequences to shareholders of the Company, both resident
and non-resident, to whom shares of the Company constitute "capital property"
for purposes of the Act. Generally speaking, shares of the Company will be
considered capital property unless the holder is a trader or dealer in
securities, has acquired the shares as part of an adventure in the nature of
trade, or holds the shares otherwise than for investment purposes.
Consequences of Domestication
The effect of a Domestication of the Company into the State of Delaware will
have the legal effect of causing the Company to be viewed from the date of such
Domestication as if it had been incorporated under the laws of that State. This
apparent legal effect is specifically sanctioned for purposes of the Act. This
process of Domestication will only have tax consequences to the Company. It will
not result in any disposition, or deemed disposition, and reacquisition of the
shares of the Company by its shareholders, nor will it result in any other
taxable event to the shareholders. Shareholders of the Company will continue to
hold their shares of the Company following the Domestication at their adjusted
cost base of the shares immediately before the Domestication.
Consequences of Dissent to the Domestication
A shareholder who dissents to the Domestication of the Company into the State of
Delaware is entitled to require the Company to purchase all of his shares in the
Company at their fair market value. The acquisition by the Company of shares of
the Company from a dissenting shareholder will generally result in the deemed
receipt of a dividend equal to the excess of the purchase price over the paid up
capital of the purchased shares. The balance of the purchase price, i.e., an
amount equal to the paid up capital of the shares constitutes proceeds of
disposition which when measured against the shareholders' adjusted cost base for
the shares would result in capital gain or capital loss.
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Where a dissenting shareholder is a corporation resident in Canada, an
anti-avoidance provision in the Act may apply to treat the entire purchase price
as being proceeds of disposition of the shares for purposes of calculating any
capital gain or capital loss in respect of such disposition with the result that
no portion of the proceeds would be treated as a dividend.
Dividends (including deemed dividends on repurchase)
A Canadian individual shareholder who receives a dividend from the Company,
prior to Domestication, would include the dividend in income, grossed up to 125%
of the actual amount, and would claim a dividend tax credit equal to 13.33% of
the grossed up amount in calculating tax payable. A dividend received by a
corporation resident in Canada in these circumstances would not be subject to
tax (unless as discussed above, the dividend is recharacterized to be proceeds
of disposition), other than in the case of a private corporation a 331/3%
refundable tax might be exigible.
A dividend paid to a non-resident shareholder, individual or corporate, would be
subject to Canadian withholding tax of 25% or such lower rate as provided by
treaty. Pursuant to the Canada/U.S. treaty, this would be 15% when paid to
individuals, or corporate shareholders owning less than 10% and, in the case of
corporate shareholders, 5% (6% for 1996 only) if owning 10% or more.
For dividends paid or deemed paid after Domestication in the State of Delaware,
dividends paid to Canadian resident shareholders would be subject to U.S.
withholding tax at rates corresponding to the treaty rates discussed above. A
foreign tax credit or alternatively a deduction from income would be available
to Canadian shareholders in these circumstances. Dividends paid to non-residents
of Canada in these circumstances would have no Canadian tax consequences.
Canadian Tax Implications to Company
Upon domestication into the State of Delaware for purposes of the Act, the
Company is deemed to have been incorporated in that State and not to have been
incorporated elsewhere. As such, then pursuant to the Act or the bilateral
treaty, the Company will cease to be resident in Canada for purposes of the Act.
As such it would subsequently only be subject to Canadian tax in respect of
business income attributable to a permanent establishment in Canada, gains
realized on disposition of taxable Canadian property and withholding tax in
respect of Canadian source passive income.
Pursuant to the Act upon Domestication into the State of Delaware, the Company
will be deemed to have had a year end immediately before such Domestication.
Additionally, the Company will be deemed to have disposed of each of its
properties at their fair market values immediately before such time. Any
resulting gains or losses from such dispositions will be taken into account in
calculating the Company's taxable income for that fiscal period. The Company has
significant amounts of non-capital loss carry forwards and resource expenditure
balances which can be
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claimed as deductions in calculating taxable income for this fiscal period in
accordance with the provision of the Act.
The Act additionally imposes a special branch tax in these circumstances. The
base for this tax is the amount by which the aggregate fair market value of the
Company's property immediately before Domestication exceeds the aggregate of its
liabilities (including liability for income tax for the final taxation year) and
the paid up capital of all of its issued and outstanding shares. The general
rate of tax is 25% of the base but pursuant to the Canada/U.S. treaty this would
be reduced to 6% if domesticated in 1996 and 5% if domesticated thereafter.
United States Federal Income Tax Consequences
Based upon the advice of Brenman Key & Bromberg, P.C. and Pannell Kerr Forster
of Texas, P.C., the Company believes that, for United States federal income tax
purposes, assuming the Domestication takes place as described in the Proxy
Statement/Prospectus:
a. The Domestication will constitute a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the"Code");
b. No gain or loss will be recognized by the Company in the
Domestication;
c. No gain or loss will be recognized by reason of the Domestication by
the shareholders of the Company upon their exchange of Company common
stock for shares of the Delaware corporation's common stock; and
d. The basis and holding period for the shares of the Delaware
corporation common stock will be the same as the basis and holding
period for the Company common stock exchanged therefor in the
Domestication provided that the Company common stock was held as a
capital asset at the effective time of the Domestication.
In addition, cash received as a result of the exercise of appraisal rights by a
Company shareholder who dissents from the Domestication and who is subject to
federal income tax ("Dissenting Holder") will be treated as received in
redemption of the Dissenting Holder's Company common stock and, generally, a
Dissenting Holder will recognize gain or loss, measured by the difference
between the cash received and the Dissenting Holder's basis in his Company
common stock. The gain or loss will be a capital gain or loss if the Dissenting
Holder holds his stock as a capital asset.
Special tax considerations will apply to those few shareholders who acquired
their shares of Company common stock in connection with the Waste Reduction
Systems partnership interest.
THE COMPANY WILL NOT OBTAIN A REVENUE RULING OR OPINION OF COUNSEL OR OTHER
QUALIFIED TAX ADVISOR IN CONNECTION WITH THE DOMESTICATION.
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THE DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY. IT DOES
NOT ADDRESS THE STATE, LOCAL OR FOREIGN TAX ASPECTS OF THE DOMESTICATION. THE
DISCUSSION IS BASED ON CURRENTLY EXISTING PROVISIONS OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED, EXISTING AND PROPOSED TREASURY REGULATIONS THEREUNDER
AND CURRENT ADMINISTRATIVE RULINGS AND COURT DECISIONS. ALL OF THE FOREGOING IS
SUBJECT TO CHANGE AND ANY SUCH CHANGE COULD AFFECT THE CONTINUING VALIDITY OF
THE DISCUSSION. EACH COMPANY SHAREHOLDER SHOULD CONSULT HIS OWN TAX ADVISOR AS
TO THE SPECIFIC TAX CONSEQUENCES OF THE DOMESTICATION TO HIM, INCLUDING THE
APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS.
Right of Dissent
A DISSENTING SHAREHOLDER'S RIGHTS TO PAYMENT FOR THE COMPANY'S SHARES UNDER THE
B.C. ACT ARE AVAILABLE ONLY IF ALL APPLICABLE PROCEDURAL STEPS ARE PROPERLY
FOLLOWED. SUCH RIGHTS ARE NOT AVAILABLE IF, SUBSEQUENT TO A NOTICE OF DISSENT,
THE SHAREHOLDER ACTS IN A MANNER WHICH IS INCONSISTENT WITH A DISSENT. FOR
EXAMPLE, A NOTICE OF DISSENT WOULD CEASE TO BE EFFECTIVE IF THE SHAREHOLDER
VOTED IN FAVOUR OF THE CONTINUANCE RESOLUTION. IF THE AMOUNT OF SUCH DISSENT
COULD ADVERSELY AFFECT THE CONTINUANCE INTO THE STATE OF DELAWARE, THEN THE
BOARD OF DIRECTORS MAY ABANDON SUCH CONTINUANCE.
Take notice that shareholders may, until 5:00 p.m., local time, at Vancouver,
British Columbia, on Monday, August 12, 1996, give the Company a Notice of
Dissent by registered mail, addressed to the Company at 10th Floor - 595 Howe
Street, Vancouver, British Columbia, V6C 2T5, with respect to the Resolution to
continue the Company out of the Province of British Columbia under the Delaware
GCL. As a result of giving a Notice of Dissent, shareholders may, on receiving a
Notice of Intention to Act, require the Company to purchase all the shares in
respect of which the Notice of Dissent was given.
If the Domestication Resolution is passed and the Company intends to act on such
motion, the Company shall first give to the dissenting shareholder notice of its
intention to act. On receiving a Notice of Intention to Act, a dissenting
shareholder is entitled to require the Company to purchase all of his shares in
respect of which the Notice of Dissent was given. The dissenting shareholder
after receipt of the Notice of Intention to Act must, within fourteen days,
notify the Company in writing that he requires the Company to purchase all of
his shares referred to in the Notice of Dissent, and concurrently the
shareholder shall deliver to the Company the certificates representing all of
the shares referred to in the Notice of Dissent. A dissenting shareholder who
has complied with these provisions may no longer vote or exercise any rights as
a shareholder of the Company.
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The filing of a Notice of Dissent does not deprive a shareholder of his right to
vote on the Domestication Resolution. A Notice of Dissent ceases to be effective
if the dissenting shareholder consents or votes in favour of the Domestication
Resolution, except where the consent or vote is given solely as a proxyholder
for a person whose proxy required an affirmative vote. If a shareholder fails to
vote against the Domestication Resolution, it does not constitute a waiver of
his right to dissent, and a vote against the Domestication Resolution does not
perfect his right of dissent and does not constitute notice of dissent. The
return of an unmarked proxy that is not revoked prior to the meeting will
preclude a shareholder from exercising dissenters' rights, as unmarked proxies
will be voted in favor of the proposal, at the election of the proxy holders.
The price to be paid to a dissenting shareholder for his shares shall be the
fair value as of the day before the date on which the Domestication Resolution
was passed. All dissenting shareholders shall be paid the same price. The method
of determining "fair value" will vary according to the circumstances of the
case. In reported decisions, the choice of method of valuation has generally
been left to the party appointed by the court or the court itself. It has been
held in previously reported decisions that no discount is to be made to the
price of the shares merely because a minority interest is being purchased. What
is to be paid is the fair value and not the market value. The courts have
endeavored to determine what is most equitable in the circumstances, including
the tax consequences of the purchase.
In the event a shareholder elects to dissent and the Domestication resolution is
passed, and the Company acts on the resolution, the procedure which the Company
would propose to follow in order to determine the price to be paid to the
dissenting shareholders in respect to their shares of the Company is as follows:
Firstly, the Company would attempt to reach a mutually agreed on fair value in
direct negotiations with the dissenting shareholders; secondly, if such
negotiations were unsuccessful, the Company would propose to appoint a single
arbitrator, mutually agreeable to all of the dissenting shareholders, whose
decision would be final and binding on all parties; thirdly, in the event that
an acceptable arbitrator cannot be agreed upon the matter would be referred to
the Supreme Court of British Columbia. In the event of an arbitration or a court
application, all parties will have the opportunity to present evidence to the
arbitrator or court in order to establish the "fair value". The Company is not
required to notify shareholders of the amount it believes is the "fair value".
The cost of any arbitration or application to the Supreme Court of British
Columbia will be under the discretion of the arbitrator or court. In exercising
such discretion, the Company may be ordered to pay all of the costs incurred by
both the Company and the dissenting shareholders, or the dissenting shareholders
may be ordered to pay all of the costs paid by the Company and the dissenting
shareholders, or the costs may be divided on some other basis between the
parties. The final decision in respect to the same would be made by the
arbitrator or the court, as the case may be.
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The foregoing is a summary only of the Right of Dissent with respect to the
Domestication Resolutions. It is suggested that any holder of shares wishing to
avail himself/herself/themselves of the Right of Dissent under the B.C. Act
obtain their own legal advice. The full text of Section 231 of the B.C. Act is
set out in Appendix 1 to this Information Circular.
U.S. Federal Securities Law Consequences
All of the Company's common shares received by the Company shareholders in the
Domestication will be freely transferable, except as set forth under "Canadian
Securities Law Consequences" below, and except that shares received by persons
who are deemed to be "affiliates" (as such term is defined under the Securities
Act of 1933, as amended (the "Securities Act")) of the Company prior to the
Domestication may be resold by them only in transactions permitted by the resale
provisions of Rule 145 promulgated under the Securities Act (or Rule 144 or Rule
144A in the case of such persons who became affiliates of the Company) or as
otherwise permitted under the Securities Act. Persons who may be deemed to be
affiliates of the Company generally include individuals or entities that
control, are controlled by, or are under common control with, such party and may
include certain officers and directors of such party as well as principal
shareholders of such party or persons who hold restricted shares.
Canadian Securities Law Consequences
The Company's common shares held by Canadian residents are subject to any
applicable resale restrictions imposed by the securities laws of the province of
Canada in which the shareholder is resident. The Company is not aware of any
present provincial resale restrictions on the issued shares of the Company.
Description of Securities
Authorized Securities
Following completion of the Domestication, if approved, the authorized capital
of the Company will consist of 100,000,000 common shares and there will be
14,420,843 common shares outstanding. Holders of common shares are entitled to
receive dividends as may from time to time be declared by the Board of Directors
of the Company out of funds legally available therefor. Holders of common shares
are entitled to one vote per share on all matters on which the holders of common
shares are entitled to vote and do not have any cumulative voting rights.
Holders of common shares have no preemptive, conversion, redemption or sinking
fund rights. In the event of a liquidation, dissolution or winding up of the
Company, holders of common shares are entitled to share equally and ratably in
the assets of the Company, if any, remaining after the payment of all
liabilities of the Company. The outstanding common shares are fully paid and
nonassessable.
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Transfer Agent and Registrar
The transfer agent and registrar for the Company's common shares is Montreal
Trust Company, Vancouver, British Columbia.
Legal Matters
The validity of the common shares to be issued in connection with the
Domestication will be passed upon by Brenman Key & Bromberg, P.C., Denver,
Colorado, who will rely upon DuMoulin Black of Vancouver, British Columbia,
Canada with respect to matters of Canadian
Law.
The Domestication Resolution
Based on the foregoing discussion, the Company's management believes that it is
in the best interest of the Company and its members to transfer its jurisdiction
of incorporation to the State of Delaware. In order to reduce the franchise fees
payable to the Delaware corporate authorities by the Company following
Domestication into Delaware, the Company's management believe that it is in the
best interest of the Company and its members to alter the Company's authorized
capital from 100,000,000 shares without par value to 100,000,000 common shares
with a par value of $.001 U.S. per share. Other than the change in par value, no
other changes will be made to the Company's capital structure as a result of the
Company's change in jurisdiction of incorporation.
Accordingly, shareholders will be asked at the meeting to consider and if
thought fit, approve a Special Resolution (the "Domestication Resolution")
transferring the Company's jurisdiction of incorporation from British Columbia
to Delaware and altering its authorized share capital in
substantially the following terms:
"Resolved as a special resolution that:
1. the continuance of the Company's jurisdiction of incorporation from
the Province of British Columbia to the State of Delaware pursuant to
Section 388 of the Delaware General Corporation Law and any and all
amendments to the Company's Articles and Bylaws required as a result
thereof be and are hereby approved;
2. the Company obtain the approval of the Registrar of Companies for
British Columbia for approval that the Company be permitted to be
continued into and be registered as a "Corporation" in the State of
Delaware pursuant to the Delaware General Corporation Law;
3. the Company make application to the appropriate authorities in the
State of Delaware for consent to be domesticated into and registered
as a "Corporation" pursuant to the Delaware General Corporation Law;
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4. effective on the date of such domestication under the Delaware General
Corporation Law, the authorized share capital of the Company be
altered from 100,000,000 shares without par value to 100,000,000
common shares with a par value of $.001 U.S. per share;
5. effective on the date of such domestication as a Corporation under the
Delaware General Corporation Law, the Company adopt a Certificate of
Incorporation in substantially the form submitted to the meeting, in
substitution for the existing Memorandum of the Company;
6. effective on the date of such domestication as a Corporation under the
Delaware General Corporation Law, to change the Company's name to
"Rich Coast Inc." or such other name as the Board of Directors may
approve;
7. the Board of Directors of the Company be authorized to perform such
further acts and execute such further documents as may be required to
give effect to the foregoing; and
8. the Directors may, in their sole discretion, elect not to act on or
carry out this Special Resolution without further approval of the
members of the Company."
Recommendation of the Directors
Approval of the Domestication requires the affirmative vote of 75% of the votes
cast. Broker non-votes and abstentions will be counted for purposes of
determining a quorum; however, they will not be counted as votes cast.
Therefore, such votes will not affect the outcome of the voting on the
Domestication proposal. The officers and directors of the Company collectively
own 11.92% of the Company's outstanding common shares and intend to vote such
shares FOR the Domestication.
The Board of Directors of the Company has reviewed the Domestication Resolution,
and concluded it to be fair and in the best interests of the Company, the
Company's shareholders, and the Company's creditors. The Board of Directors
recommends that the members vote FOR the Domestication Resolution as set forth
herein.
Proposal Number Two
Amendment to the 1995 Incentive Compensation Plan
On September 6, 1995, the Company adopted the Rich Coast Resources Ltd. 1995
Incentive Compensation Plan (the "Plan") and reserved a maximum of 1,600,000
shares of common stock to be issued as "bonus shares" or upon the exercise of
options ("Options") granted under the Plan. The Plan includes: (i) options
intended to qualify as "incentive stock options" under Section 422 of the U.S.
Internal Revenue Code of 1986, as amended (the "Code"); (ii) non-qualified
Options
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which are not intended to qualify as "incentive stock options"; and (iii)
formula plan Options which are non-discretionary and will be granted annually to
the disinterested Directors of the Company who serve on the Compensation
Committee of the Board of Directors. The Plan was approved by the Company's
shareholders at a meeting of shareholders held on October 18, 1995. To date,
Options to purchase 1,600,000 shares have been granted and 250,000 bonus shares
have been granted under the Plan. Currently, approximately 26 persons are
eligible to participate in the Plan. See "New Plan Benefits" below for a
discussion of additional shares to be granted under the Plan.
On January 15, 1996 the Board of Directors of the Company approved an amendment
to the Plan to: (i) increase the number of shares reserved for issuance
thereunder by 1,000,000 shares to an aggregate of 2,600,000 shares; and (ii)
decrease the number of shares to be automatically granted to disinterested
Directors under the "formula provisions" of the Plan (discussed below) by
190,000 shares to 10,000 shares per grant (the "Amendment"). The shareholders
are being asked to approve the Amendment at the Meeting.
Shareholder approval of the Amendment is necessary to continue to qualify the
Plan under Rule 16b-3 of the Securities and Exchange Act of 1934, as amended
(the "Act"), and thereby render certain transactions under the Plan exempt from
certain provisions of Section 16 of the Act, and to permit the issuance of
Options to U.S. residents which will qualify as Incentive Stock Options pursuant
to the Code.
The Plan is intended to provide incentives to officers, Directors, key employees
and other persons who contribute to the success of the Company by offering them
the opportunity to acquire an ownership interest in the Company. The Board of
Directors believes that this will help to align the interests of the Company's
management and employees with the interests of the Company's shareholders. The
terms of the Plan concerning the Incentive Options and Non-Qualified Options are
substantially the same except that only employees of the Company or its
subsidiaries are eligible to receive Incentive Options; employees and other
persons are eligible to receive Non- Qualified Options. The number of shares
reserved for issuance under the Plan is a maximum aggregate so that the number
of Incentive Options and/or Non-Qualified Options that may be granted reduces
the number of Bonus Shares which may be granted, and vice versa.
Administration of the Plan
The Plan is administered by the Compensation Committee, which may consist of
either (i) the Company's Board of Directors, or (ii) a committee, appointed by
the Board of Directors, of two or more Directors who have not received grants or
awards under any discretionary plan of the Company for at least one year (which
Directors would be considered "disinterested persons" within the meaning of the
Act). In order to receive the benefits under Rule 16b-3 of the Act, grants of
Options or Bonus Shares to officers or to Directors may be made only by a
Committee consisting of two or more Directors, none of whom is eligible, nor
shall have been eligible during the preceding year, to receive grants under the
Plan (except under the non-discretionary "formula
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provisions" described below) or under any other stock plan of the Company other
than a "formula" plan. On September 8, 1996, Thornton J. Donaldson and Randall
Pow were appointed to serve on the Compensation Committee.
Concerning grants other than those made automatically pursuant to the Formula
Plan, in addition to determining who will be granted Options or Bonus Shares,
the Committee has the authority and discretion to determine when Options and
Bonus Shares will be granted and the number of Options and Bonus Shares to be
granted. The Committee also may determine a vesting and/or forfeiture schedule
for Bonus Shares and/or Options granted pursuant to the Plan, the time or times
when each Option becomes exercisable, the duration of the exercise period for
Options and the form or forms of the agreements, certificates or other
instruments evidencing grants made under the Plan. The Committee may also impose
additional conditions or restrictions not inconsistent with the provisions of
the Plan. The Committee may adopt, amend and rescind such rules and regulations
as in its opinion may be advisable for the administration of the Plan.
The Committee also has the power to interpret the Plan and the provisions in the
instruments evidencing grants made under the Plan, and is empowered to make all
other determinations deemed necessary or advisable for the administration of the
Plan. Unless sooner terminated by the Committee, the Plan will terminate on
September 8, 2005. Neither Bonus Shares nor Options can be granted after that
date, although Options granted before the Plan terminates will expire in
accordance with their terms, even if after the Plan termination date.
Formula Plan Provisions
In order to provide non-discretionary compensation for the disinterested
Directors serving on the Committee, the Plan includes a "Formula Plan" which
provides for the automatic periodic grant of options to the non-employee
Directors serving on the Committee, so that these Directors have no discretion
over the timing or exercise price of options granted to them. Pursuant to the
Formula Plan as it exists prior to the proposed amendment, on September 8 of
each year, each Director serving on the Committee will be granted an Option to
purchase 200,000 common shares at a purchase price equal to the fair market
value per common share on the date of grant. Pursuant to the proposed Amendment,
this number of shares will be decreased from 200,000 to 10,000 shares.
Eligibility
Participants in the Plan may be selected by the Committee from employees,
officers and Directors of, and consultants and advisors to, the Company and its
subsidiary and affiliated companies. The Committee may take into account the
duties of persons selected, their present and potential contributions to the
success of the Company, and such other considerations as the Committee deems
relevant to the purposes of the Plan.
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The grant of Options or Stock Bonuses under the Bonus Plan does not confer any
rights with respect to continuation of employment, and does not interfere with
the right of the recipient or the Company to terminate the recipient's
employment, although pursuant to the Plan, a specific grant of Options or Shares
may provide that termination of employment or cessation of service as an
employee, officer, Director, or consultant may result in forfeiture or
cancellation of all or a portion of the Bonus Shares or Options. In general, if
a grantee is released by the Company as an employee, officer, Director, or
consultant for cause, any unexercised Options will terminate, and any non-vested
Bonus Shares will be cancelled immediately.
Adjustment
In the event a change, such as a stock split, is made in the Company's
capitalization which results in an exchange or other adjustment of each common
share for or into a greater or lesser number of shares, appropriate adjustments
will be made to unvested Bonus Shares and in the exercise price and in the
number of shares subject to each outstanding Option. The Committee also may make
provisions for adjusting the number of Bonus Shares or underlying outstanding
Options in the event the Company effects one or more reorganizations,
recapitalizations, right offerings, or other increases or reductions of shares
of the Company's outstanding common stock. Options and Bonus Shares may provide
that in the event of the dissolution or liquidation of the Company, a corporate
separation or division or the merger or consolidation of the Company, the holder
may exercise the Option on such terms as it may have been exercised immediately
prior to such dissolution, corporate separation or division or merger or
consolidation, and that Bonus Shares will immediately vest. The Plan also
provides that in the event of a tender offer or exchange offer for the Company,
certain mergers or consolidations, or certain changes in control of the Company
or of its Board of Directors, outstanding Options and Bonus Shares previously
subject to vesting provisions will vest immediately.
Sale of Bonus Shares and Shares Underlying Options
The Company has filed a Registration Statement with the U.S. Securities and
Exchange Commission to permit public sale of the Bonus Shares and the common
shares purchased upon exercise of the Options issued under the Plan without
limitation by persons who are not "affiliates" of the Company and to permit
public sale, subject to the volume, manner and notice of sale provisions of Rule
144 under the Act, by persons who are "affiliates" of the Company. "Affiliates"
of the Company are persons who, directly or indirectly, control, are controlled
by, or are under common control with, the Company or its subsidiaries. Control
is presumed to exist in circumstances of beneficial ownership of 10% or more of
an entity's voting securities. The Company intends to file a new Registration
Statement to permit the public sale of the additional 1,000,000 shares to be
covered by the Plan.
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Other Provisions
The exercise price of any Incentive Option granted under the Plan must be no
less than 100% of the "fair market value" of the Company's common stock on the
date of grant. The exercise price of any Non-Qualified Option granted under the
Plan must be no less than 80% of the fair market value on the date of grant.
Fair market value is defined in the Plan as the most recent closing sale price
of the common stock as reported by NASDAQ.
The exercise price of an Option may be paid in cash, in common shares of the
Company or other property having a fair market value equal to the exercise price
of the Option, or in a combination of cash, shares and property. The Board of
Directors shall determine whether or not property other than cash or common
stock may be used to purchase the shares underlying an Option and shall
determine the value of the property received.
Income Tax Consequences of the Plan
Under U.S. Law
The Incentive Options issuable under the Plan are structured to qualify for
favorable tax treatment to recipients who are U.S. residents provided by Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"). Pursuant to
Section 422 of the Code, Optionees will not be subject to federal income tax at
the time of the grant or at the time of exercise of an Incentive Option. In
addition, provided that the stock underlying the Option is not sold within two
years after the grant of the Option and is not sold within one year after the
exercise of the Option, then the difference between the exercise price and the
sales price will be treated as long-term capital gain or loss. An Optionee also
may be subject to the alternative minimum tax upon exercise of his Options. The
Company will not be entitled to receive any income tax deductions with respect
to the granting or exercise of Incentive Options or the sale of the common stock
underlying the Options. The exercise price of Incentive Options granted cannot
be less than the fair market value of the underlying common stock on the date
the Options were granted. In addition, the aggregate fair market value
(determined as of the date an Option is granted) of the common stock underlying
the Options granted to a single employee which become exercisable in any single
calendar year may not exceed the maximum permitted by the Internal Revenue Code
for Incentive Stock Options. This amount currently is $100,000. No Incentive
Option may be granted to an employee who, at the time the Option would be
granted, owns more than 10% of the outstanding stock of the Company unless the
exercise price of the Options granted to the employee is at least 110% of the
fair market value of the stock subject to the Option and the Option is not
exercisable more than five years from the date of grant.
Non-Qualified Options will not qualify for the special tax benefits given to
Incentive Options under Section 422 of the Code. An Optionee does not recognize
any taxable income at the time he or she is granted a Non-Qualified Option.
However, upon exercise of the Option, the Optionee recognizes ordinary income
for federal income tax purposes measured by the excess, if any, of
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the then fair market value of the shares over the exercise price. The ordinary
income recognized by the Optionee will be treated as wages and will be subject
to income tax withholding by the Company. Upon an Optionee's sale of shares
acquired pursuant to the exercise of a Non-Qualified Option, any difference
between the sale price and the fair market value of the shares on the date when
the Option was exercised will be treated as long-term or short-term capital gain
or loss. Upon an Optionee's exercise of a Non-Qualified Option, the Company will
be entitled to a tax deduction in the amount recognized as ordinary income to
the Optionee, provided that the Company effects withholding with the respect to
the deemed compensation.
With respect to Bonus Shares, generally, a grantee will recognize as ordinary
income the fair market value of the Bonus Shares as of the date of receipt.
Under Canadian Tax Laws
The stock option benefit provisions of the Income Tax Act ("Tax Act") should
apply to employees of the Company who are granted stock Options. Generally, an
employee is not considered to have received any benefit at the time the Option
is granted. Optionees who exercise an Option granted pursuant to the Plan will
be deemed to have received a benefit equal to the difference between the value
of the shares received on the date the Option is exercised and the amount paid
to exercise the Option. The amount of the benefit will be included in the
employee's income as income from employment for the taxation year in which the
Option is exercised.
An employee who is deemed to have realized a benefit on the exercise of an
Option may be entitled to a deduction equal to 25% of the amount of the benefit
where all of the following conditions are met: the employer corporation has
agreed to sell or issue a share of its capital stock to the employee; the share
is a "prescribed share", (e.g. meets the requirements of Regulation 6204 under
the Tax Act), the amount payable by the employee to acquire the share at the
time the Option is granted must not be less than the fair market value of the
share at the time the Option is granted, and, immediately after the Option is
granted, the employee must be dealing with the employer corporation at arms'
length.
The adjusted cost base ("ACB") to the employee of a Bonus Share or share
acquired pursuant to an Option is generally equal to the exercise price paid to
the corporation to acquire the share (generally -0- for a Bonus Share and the
exercise price for Option Shares), plus the amount of the Option benefit
included in the employee's income in respect to the acquisition of the share.
The ACB is not reduced where the employee has claimed the 25% deduction in
respect of the share. Employees who dispose of Bonus Shares or shares acquired
on the exercise of an Option for proceeds of disposition greater than (less
than) their ACB will realize a capital gain (loss) on the disposition where the
shares are held as capital property. In cases where the shares would not be
considered capital property, any gain arising on disposition would be included
100% in taxable income.
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The Company will not be entitled to a deduction for Canadian income tax purposes
with respect to any benefit realized on the exercise of an Option. Generally,
the Company will be required to withhold and remit taxes and/or to file
information returns with respect to stock Option benefits.
The foregoing tax consequences apply to persons who are employees of the
Company. Concerning grants of Bonus Shares or Options to persons who are not
employees, in general, those persons will be required to include in their
taxable income the fair market value of benefits received on the date of actual
receipt.
New Plan Benefits
Upon approval of the Amendment, the Company plans to issue under the Plan: (i)
360,399 common shares to Robert and Linda Truxell for services previously
rendered to WRS; and (ii) 180,200 common shares to James Fagan as a bonus for
services rendered to the Company. Other than the foregoing, there is no specific
plan to grant additional shares or Options pursuant to the Plan to any
particular individuals or entities, except for those which will be granted
pursuant to the formula provisions of the Plan. Prior to the proposed Amendment,
disinterested Directors would receive 200,000 shares automatically each year
under the formula provisions, and under the proposed Amendment this amount will
be reduced to 10,000 shares per year.
Recommendation of the Board of Directors
Approval of the Amendment to the Plan requires the affirmative vote of the
majority of shares cast. Broker non-votes and abstentions will be counted for
purposes of determining a quorum; however, they will not be counted as votes
cast. Therefore, such votes will not affect the outcome of the voting on the
Amendment. The officers and directors of the Company collectively own 11.92% of
the Company's outstanding common shares and intend to vote such shares FOR the
Amendment.
The Board of Directors believes that it is in the Company's best interest to
amend the Plan to, (i) increase the number of shares reserved for issuance
thereunder so that the Company will have additional shares available to provide
ongoing incentives to the Company's officers, Directors and employees in the
form of options to purchase the Company's common stock and stock bonuses; and
(ii) reduce the number of shares to be granted automatically under the "formula
plan" to the non-employee Directors serving on the Committee to what the Board
believes is adequate compensation for their services, The Board of Directors
recommends that shareholders vote "FOR" the adoption of the Amendment to the
Plan.
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Other Matters
Management of the Company is not aware of any other matter to come before the
Meeting other than as set forth in the notice of Meeting. If any other matter
properly comes before the Meeting, it is the intention of the persons named in
the enclosed form of proxy to vote the shares represented thereby in accordance
with their best judgment on such matter.
SHAREHOLDER PROPOSALS
Any shareholder proposing to have any appropriate matter brought before the 1996
Annual General Meeting of Shareholders was required to submit such proposal in
accordance with the proxy rules of the Securities and Exchange Commission to the
Secretary of the Company not later than May 15, 1996 to be considered for
inclusion in the 1996 Proxy Statement.
DATED this day of July, 1996.
BY ORDER OF THE BOARD
-----------------------------
THORNTON DONALDSON
Director
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APPENDIX 1
SECTION 231 OF
THE COMPANY ACT (BRITISH COLUMBIA)
231. (1) Dissent procedure. Where,
(a) being entitled to give notice of dissent to a resolution as provided
in section 37, 127, 150, 246, 268, 273 or 313, a member of a company
(in this Act called a "dissenting member") gives notice of dissent;
(b) the resolution referred to in paragraph (a) is passed; and
(c) the company or its liquidator proposes to act on the authority of the
resolution referred to in paragraph (a),
the company or the liquidator shall first give to the dissenting member notice
of the intention to act and advise the dissenting member of his rights under
this section.
(2) On receiving a notice of intention to act in accordance with
subsection (1), a dissenting member is entitled to require the company to
purchase all his shares in respect of which the notice of dissent was given.
(3) The dissenting member shall exercise his right under subsection (2)
by delivering to the registered office of the company, within 14 days after the
company, or the liquidator, gives the notice of intention to act,
(a) a notice that he requires the company to purchase all his shares
referred to in subsection (2); and
(b) the share certificates representing all his shares referred to in
subsection (2);
and thereupon he is bound to sell those shares to the company and the company is
bound to purchase them.
(4) A dissenting member who has complied with subsection (3), the
company, or, if there has been an amalgamation, the amalgamated company, may
apply to the court, which may
(a) require the dissenting member to sell, and the company or the
amalgamated company to purchase, the shares in respect of which the
notice of dissent has been given;
(b) fix the price and terms of the purchase and sale, or order that the
price and terms be established by arbitration, in either case having
due regard for the rights of creditors;
(c) join in the application any other dissenting member who has complied
with subsection (3); and
(d) make consequential orders and give directions it considers
appropriate.
<PAGE>
(5) The price to be paid to a dissenting member for his shares shall be
their fair value as of the day before the date on which the resolution referred
to in subsection (1) was passed, including any appreciation or depreciation in
anticipation of the vote on the resolution, and every dissenting member who has
complied with subsection (3) shall be paid the same price.
(6) The amalgamation or winding up of the company, or any change in its
capital assets or liabilities resulting from the company acting on the authority
of the resolution referred to in subsection (1), shall not affect the right of
the dissenting member and the company under this section or the price to be paid
for the shares.
(7) Every dissenting member who has complied with subsection (3) may
(a) not vote, or exercise or assert any rights of a member, in respect of
the shares for which notice of dissent has been given, other than
under this section;
(b) not withdraw the requirement to purchase his shares, unless the
company consents; and
(c) until he is paid in full, exercise and assert all the rights of a
creditor of the company.
(8) Where the court determines that a person is not a dissenting member, or
is not otherwise entitled to the right provided by subsection (2), the court may
make the order, without prejudice to any acts or proceedings which the company,
its members or any class of members may have taken during the intervening
period, it considers appropriate to remove the limitations imposed on him by
subsection (7).
(9) The relief provided by this section is not available if, subsequent to
giving his notice of dissent, the dissenting member acts inconsistently with his
dissent; but a request to withdraw the requirement to purchase his shares is not
an act inconsistent with his dissent.
(10) A notice of dissent ceases to be effective if the member giving it
consents to or votes in favour of the resolution of the company to which he is
dissenting, except where the consent or vote is given solely as a proxy holder
for a person whose proxy required an affirmative vote.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
(a) The Company Act of the Province of British Columbia, Canada ("Company
Act"), provides that a company may, with the approval of the court, indemnify a
director or former director of a company against all costs, charges and expenses
in any action to which he or she is made a party by reason of being or having
been a director. The Company Act (British Columbia) contains numerous provisions
which attach liability to directors for breaching that act's requirements or the
directors fiduciary responsibilities to the Company.
The Articles of the Company provide that:
(i) the Company shall indemnify any person and the personal
representative of any deceased person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or proceeding, whether or not brought by the Company, or by a
person, or by a corporation or other legal entity or enterprise, or by
the Crown or any governmental body, as hereinafter mentioned and
whether civil, criminal or administrative, by reason of the fact that
he is or was a director, officer, employee or agent of the Company or
is or was serving at the request of the Company as a director, officer,
employee or agent of another corporation, a partnership, joint venture,
trust or other enterprise, against all costs, charges and expenses,
including legal fees and any amount paid to settle the action or
proceeding or satisfy a judgment, if he acted honestly and in good
faith with a view to the best interests of the corporation or other
legal entity or enterprise as aforesaid of which he is or was a
director, officer, employee or agent, as the case may be, and exercised
the care, diligence and skill of a reasonably prudent person, and with
respect to any criminal or administrative action or proceeding, he had
reasonable grounds for believing that his conduct was lawful; provided
that the Company shall not be bound to indemnify any such person, other
than a director, officer or an employee of the Company (who shall be
deemed to have notice of this Article and to have contracted with the
Company in the terms hereof solely by virtue of his acceptance of such
office or employment) if in acting as agent for the Company or as a
director, officer, employee or agent of another corporation or other
legal entity or enterprise as aforesaid, he does so by written request
of the Company containing an express reference to this Article; and
provided further that no indemnification of a director or former
director of the Company, or director or former director of a
corporation in which the Company is or was a shareholder, shall be made
except to the extent approved by the Court pursuant to the Company Act
or any other statute.
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(ii) the Company shall indemnify any person other than a director in
respect of any loss, damage, costs or expenses whatsoever incurred by
him while acting as an officer, employee or agent for the Company
unless such loss, damage, costs or expenses shall arise out of failure
to comply with instructions, willful act or default or fraud by such
person in any of which events the Company shall indemnify such person
only if the directors, in their absolute discretion so decide or the
Company by ordinary resolution shall so direct.
(b) Article Twelfth of RC-Delaware's Certificate of Incorporation provides
as follows:
The corporation shall, to the fullest extent permitted by the
provisions of ss.145 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented, indemnify any
and all persons whom it shall have power to indemnify under said
section from and against any and all of the expenses, liabilities, or
other matters referred to in or covered by said section, and the
indemnification provided for herein shall not be deemed exclusive of
any other rights to which those indemnified may be entitled under any
Bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action
in another capacity while holding such office, and shall continue as to
a person who has ceased to be a director, officer, employee, or agent
and shall inure to the benefit of the heirs, executors, and
administrators of such a person.
RC-Delaware may obtain insurance for the protection of its directors and
officers against any liability asserted against them in their official
capacities. The rights of indemnification described above are not exclusive of
any other rights of indemnification to which the persons indemnified may be
entitled under any bylaw, agreement, vote of shareholders or directors or
otherwise.
In addition to the foregoing indemnification rights, Article Eleventh of
RC-Delaware's Certificate of Incorporation eliminates liability of each director
to RC-Delaware and its shareholders for monetary damages to the fullest extent
permitted under the Act.
(c) Insofar as indemnification of the Company for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Company, pursuant to the foregoing provisions or
otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is therefore unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of their respective counsel the matter has been settled by a controlling
precedent and subject to possible conflict of laws questions involving Canadian
corporation law, submit to a court of appropriate jurisdiction the question
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whether such indemnification by them is against public policy as expressed in
the Act and will be governed by the final adjudication of such issue.
Item 21. Exhibits and Financial Statement Schedules.
-------------------------------------------
(a) The following exhibits are filed with or incorporated by reference in
this Registration Statement.
Exhibit
Number Description
3.1 Certificate of Incorporation of Rich Coast Inc.
3.2 Bylaws of Rich Coast Inc.
5.1 Opinion of Brenman Key & Bromberg, P.C. regarding the legality of
securities being registered
23.1 Consent of Brenman Key & Bromberg, P.C. (contained in Exhibit 5.1)
99.1 Form of Proxy Card
99.2 Consent of DuMoulin Black
99.3 1995 Incentive Compensation Plan
(b) Schedules. No supporting schedules have been included because
they are not required.
Item 22. Undertakings.
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The undersigned Registrant hereby undertakes:
(a) to respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11,
or 13 of the Form, within one business day of receipt of such
request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date
of the registration statement through the date of responding
to the request;
(b) to supply by means of a post-effective amendment all
information concerning a transaction, and the Company being
acquired involved therein, that was not the subject of and
included in the registration statement when it became
effective;
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(c) that prior to any public reoffering of the securities
registered hereunder through use of a prospectus which is a
part of this registration statement, by any person or party
which is deemed to be an underwriter within the meaning of
Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the
applicable registration form with respect to reoffering by
persons who may be deemed underwriters, in addition to the
information called for by the other Items of the applicable
form;
(d) that every prospectus (i) that is filed pursuant to paragraph
(c) immediately preceding, or (ii) that purports to meet the
requirements of section 10(a)(3) of the Act and is used in
connection with an offering of securities subject to Rule 415,
will be filed as a part of an amendment to the registration
statement and will not be used until such amendment is
effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof;
(e) (1) to file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement:
(i) to include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) to reflect in the Prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the
Registration Statement;
(iii) to include any material information with respect to
the plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement;
Provided, however, that paragraphs (e)(1)(i) and (e)(1)(ii) do
not apply if the registration statement is on Form S-3 or Form
S-8 and the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Sections
13 or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this Registration Statement;
(2) that, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new
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registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof;
(3) to remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering;
(f) Insofar as indemnification of the Company for liabilities
arising under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the Company,
pursuant to the foregoing provisions or otherwise, the Company
has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public
policy as expressed in the Act and is therefore unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person
of the Company in the successful defense of any action suit or
proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the Company will, unless in the opinion of their
respective counsel the matter has been settled by a
controlling precedent and subject to possible conflict of laws
questions involving Canadian corporation law, submit to a
court of appropriate jurisdiction the question whether such
indemnification by them is against public policy as expressed
in the Act and will be governed by the final adjudication of
such issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Vancouver,
Province of British Columbia, Canada on June 12, 1996.
RICH COAST RESOURCES LTD.,
Registrant
By /s/ James Fagan
---------------------------------
James Fagan, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- -----
/s/ Robert Truxell Chief Executive Officer, Director June 12,1996
- ------------------------ and Authorized Representative in
Robert Truxell the United States
/s/ James Fagan Director June 12, 1996
- ------------------------
James Fagan
/s/ Ronald W. Waltz Chief Financial Officer and June 12,1996
- ------------------------ Principal Accounting Officer
Ronald W. Waltz
/s/ Thornton J. Donaldson Director June 12,1996
- --------------------------
Thornton J. Donaldson
/s/ Randall Pow Director June 12,1996
- -------------------------
Randall Pow
/s/ Geoffrey Hornby Director June 12,1996
- -------------------------
Geoffrey Hornby
II-6
CERTIFICATE OF INCORPORATION
----------------------------
OF
RICH COAST INC.
---------------
The undersigned, a natural person, for the purpose of organizing a
corporation for conducting the business and promoting the purposes hereinafter
stated, under the provisions and subject to the requirements of the laws of the
State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the
acts amendatory thereof and supplemental thereto, and known, identified, and
referred to as the "General Corporation Law of the State of Delaware"), hereby
certifies that:
FIRST: The name of the corporation (hereinafter called the "corporation")
is Rich Coast Inc.
SECOND: The address, including street, number, city, and county, of the
registered office of the corporation in the State of Delaware is 1013 Centre
Road, City of Wilmington 19805, County of New Castle; and the name of the
registered agent of the corporation in the State of Delaware at such address is
Corporation Service Company.
THIRD: The nature of the business and the purposes to be conducted and
promoted by the corporation, shall be to conduct any lawful business, to promote
any lawful purpose, and to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware.
FOURTH: The total number of shares of stock which the corporation shall
have authority to issue is 100,000,000. The par value of each of such shares is
$.001. All such shares are of one class and are shares of Common Stock.
FIFTH: The name and the mailing address of the incorporator are as follows:
NAME MAILING ADDRESS
---- ---------------
Robert W. Truxell 10200 Ford Road
Dearborn, MI 48126
SIXTH: The corporation is to have perpetual existence.
SEVENTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
ss.291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers
<PAGE>
appointed for this corporation under ss.279 of Title 8 of the Delaware Code
order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this corporation, as the case may be,
to be summoned in such manner as the said court directs. If a majority in number
representing three fourths in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization of
this corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this corporation, as the case may be, and also on this
corporation.
EIGHTH: For the management of the business and for the conduct of the
affairs of the corporation, and in further definition, limitation, and
regulation of the powers of the corporation and of its directors and of its
stockholders or any class thereof, as the case may be, it is further provided:
1. The management of the business and the conduct of the
affairs of the corporation shall be vested in its Board of Directors.
The number of directors which shall constitute the whole Board of
Directors shall be fixed by, or in the manner provided in, the Bylaws.
The phrase "whole Board" and the phrase "total number of directors"
shall be deemed to have the same meaning, to wit, the total number of
directors which the corporation would have if there were no vacancies.
No election of directors need be by written ballot.
2. After the original or other Bylaws of the corporation have
been adopted, amended, or repealed, as the case may be, in accordance
with the provisions of ss.109 of the General Corporation Law of the
State of Delaware, and, after the corporation has received any payment
for any of its stock, the power to adopt, amend, or repeal the Bylaws
of the corporation may be exercised by the Board of Directors of the
corporation; provided, however, that any provision for the
classification of directors of the corporation for staggered terms
pursuant to the provisions of subsection (d) of ss.141 of the General
Corporation Law of the State of Delaware shall be set forth in an
initial Bylaw or in a Bylaw adopted by the stockholders entitled to
vote of the corporation unless provisions for such classification shall
be set forth in this certificate of incorporation.
3. Whenever the corporation shall be authorized to issue only
one class of stock, each outstanding share shall entitle the holder
thereof to notice of, and the right to vote at, any meeting of
stockholders. Whenever the corporation shall be authorized to issue
more than one class of stock, no outstanding share of any class of
stock which is denied voting power under the provisions of the
certificate of incorporation shall entitle the holder thereof to the
right to vote at any meeting of stockholders except as the provisions
of paragraph (2) of subsection (b) of ss.242 of the General Corporation
Law of the State of Delaware shall otherwise require; provided, that no
share of any such class which is otherwise denied voting power shall
entitle the holder thereof to vote upon the increase or decrease in the
number of authorized shares of said class.
2
<PAGE>
NINTH: Any action required or permitted by law or this Certificate of
Incorporation to be taken at any meeting of stockholders may be taken without a
meeting, without prior notice if a written consent, setting forth the action so
taken, shall be signed by a unanimous consent of the holders of the outstanding
stock. Such written consent shall be filed with the minutes of the meetings of
the stockholders.
TENTH: The presence in person or representation by proxy of the holders of
one-third of the shares of the capital stock of the corporation issued and
outstanding and entitled to vote shall be necessary to, and shall constitute a
quorum for, the transaction of business at all meetings of the stockholders.
ELEVENTH: The personal liability of the directors of the corporation is
hereby eliminated to the fullest extent permitted by the provisions of paragraph
(7) of subsection (b) of ss.102 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented.
TWELFTH: The corporation shall, to the fullest extent permitted by the
provisions of ss.145 of the General Corporation Law of the State of Delaware, as
the same may be amended and supplemented, indemnify any and all persons whom it
shall have power to indemnify under said section from and against any and all of
the expenses, liabilities, or other matters referred to in or covered by said
section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any Bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee, or agent and shall inure to
the benefit of the heirs, executors, and administrators of such a person.
THIRTEENTH: From time to time any of the provisions of this certificate of
incorporation may be amended, altered, or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and all
rights at any time conferred upon the stockholders of the corporation by this
certificate of incorporation are granted subject to the provisions of this
Article THIRTEENTH.
Signed on , 1996.
--------------
------------------------------
Incorporator
3
BYLAWS
------
OF
RICH COAST INC.
(a Delaware corporation)
-------------
ARTICLE I
---------
STOCKHOLDERS
------------
1. CERTIFICATES REPRESENTING STOCK. Certificates representing stock in the
corporation shall be signed by, or in the name of, the corporation by the
Chairman or Vice-Chairman of the Board of Directors, if any, or by the President
or a Vice-President and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary of the corporation. Any or all the
signatures on any such certificate may be a facsimile. In case any officer,
transfer agent, or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent, or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer, transfer agent, or
registrar at the date of issue.
Whenever the corporation shall be authorized to issue more than one class
of stock or more than one series of any class of stock, and whenever the
corportion shall issue any shares of its stock as partly paid stock, the
certificates representing shares of any such class or series or of any such
partly paid stock shall set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
The corporation may issue a new certificate of stock or uncertificated
shares in place of any certificate theretofore issued by it, alleged to have
been lost, stolen, or destroyed, and the Board of Directors may require the
owner of the lost, stolen, or destroyed certificate, or his legal
representative, to give the corporation a bond sufficient to indemnify the
corporation against any claim that may be made against it on account of the
alleged loss, theft, or destruction of any such certificate or the issuance of
any such new certificate or uncertificated shares.
2. UNCERTIFICATED SHARES. Subject to any conditions imposed by the General
Corporation Law, the Board of Directors of the corporation may provide by
resolution or resolutions that some or all of any or all classes or series of
the stock of the corporation shall be uncertificated shares. Within a reasonable
time after the issuance or transfer of
<PAGE>
any uncertificated shares, the corporation shall send to the registered owner
thereof any written notice prescribed by the General Corporation Law.
3. FRACTIONAL SHARE INTERESTS. The corporation may, but shall not be
required to, issue fractions of a share. If the corporation does not issue
fractions of a share, it shall (1) arrange for the disposition of fractional
interests by those entitled thereto, (2) pay in cash the fair value of fractions
of a share as of the time when those entitled to receive such fractions are
determined, or (3) issue scrip or warrants in registered form (either
represented by a certificate or uncertificated) or bearer form (represented by a
certificate) which shall entitle the holder to receive a full share upon the
surrender of such scrip or warrants aggregating a full share. A certificate for
a fractional share or an uncertificated fractional share shall, but scrip or
warrants shall not unless otherwise provided therein, entitle the holder to
exercise voting rights, to receive dividends thereon, and to participate in any
of the assets of the corporation in the event of liquidation. The Board of
Directors may cause scrip or warrants to be issued subject to the conditions
that they shall become void if not exchanged for certificates representing the
full shares or uncertificated full shares before a specified date, or subject to
the conditions that the shares for which scrip or warrants are exchangeable may
be sold by the corporation and the proceeds thereof distributed to the holders
of scrip or warrants, or subject to any other conditions which the Board of
Directors may impose.
4. STOCK TRANSFERS. Upon compliance with provisions restricting the
transfer or registration of transfer of shares of stock, if any, transfers or
registration of transfers of shares of stock of the corporation shall be made
only on the stock ledger of the corporation by the registered holder thereof, or
by his attorney thereunto authorized by power of attorney duly executed and
filed with the Secretary of the corporation or with a transfer agent or a
registrar, if any, and, in the case of shares represented by certificates, on
surrender of the certificate or certificates for such shares of stock properly
endorsed and the payment of all taxes due thereon.
5. RECORD DATE FOR STOCKHOLDERS. In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which record
date shall not be more than sixty nor less than ten days before the date of such
meeting. If no record date is fixed by the Board of Directors. the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
In order that the corporation may determine the
2
<PAGE>
stockholders entitled to consent to corporate action in writing without a
meeting, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is adopted
by the Board of Directors, and which date shall not be more than ten days after
the date upon which the resolution fixing the record date is adopted by the
Board of Directors. If no record date has been fixed by the Board of Directors,
the record date for determining the stockholders entitled to consent to
corporate action in writing without a meeting, when no prior action by the Board
of Directors is required by the General Corporation Law, shall be the first date
on which a signed written consent setting forth the action taken or proposed to
be taken is delivered to the corporation by delivery to its registered office in
the State of Delaware, its principal place of business, or an officer or agent
of the corporation having custody of the book in which proceedings of meetings
of stockholders are recorded. Delivery made to the corporation's registered
office shall be by hand or by certified or registered mail, return receipt
requested. If no record date has been fixed by the Board of Directors and prior
action by the Board of Directors is required by the General Corporation Law, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting shall be at the close of business on the day on
which the Board of Directors adopts the resolution taking such prior action. In
order that the corporation may determine the stockholders entitled to receive
payment of any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion, or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than sixty days prior to such action. If
no record date is fixed, the record date for determining stockholders for any
such purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
6. MEANING OF CERTAIN TERMS. As used herein in respect of the right to
notice of a meeting of stockholders or a waiver thereof or to participate or
vote thereat or to consent or dissent in writing in lieu of a meeting, as the
case may be, the term "share" or "shares" or "share of stock" or "shares of
stock" or "stockholder" or "stockholders" refers to an outstanding share or
shares of stock and to a holder or holders of record of outstanding shares of
stock when the corporation is authorized to issue only one class of shares of
stock, and said reference is also intended to include any outstanding share or
shares of stock and any holder or holders of record of outstanding shares of
stock of any class upon which or upon whom the certificate of incorporation
confers such rights where there are two or more classes or series of shares of
stock or upon which or upon whom the General Corporation Law confers such rights
notwithstanding that the certificate of incorporation may provide for more than
one class or series of shares of stock, one or more of which are limited or
denied such rights thereunder; provided, however, that no such right shall vest
in the event of an increase or a decrease in the authorized number of shares of
stock of any class or series which is otherwise denied voting rights under the
3
<PAGE>
provisions of the certificate of incorporation, except as any provision of law
may otherwise require.
7. STOCKHOLDER MEETINGS.
- TIME. The annual meeting shall be held on the date and at the time fixed,
from time to time, by the directors, provided, that the first annual meeting
shall be held on a date within thirteen months after the organization of the
corporation, and each successive annual meeting shall be held on a date within
thirteen months after the date of the preceding annual meeting. A special
meeting shall be held on the date and at the time fixed by the directors.
- PLACE. Annual meetings and special meetings shall be held at such place,
within or without the State of Delaware, as the directors may, from time to
time, fix. Whenever the directors shall fail to fix such place, the meeting
shall be held at the registered office of the corporation in the State of
Delaware.
- CALL. Annual meetings and special meetings may be called by the directors
or by any officer instructed by the directors to call the meeting.
- NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall be
given, stating the place, date, and hour of the meeting and stating the place
within the city or other municipality or community at which the list of
stockholders of the corporation may be examined. The notice of an annual meeting
shall state that the meeting is called for the election of directors and for the
transaction of other business which may properly come before the meeting, and
shall (if any other action which could be taken at a special meeting is to be
taken at such annual meeting) state the purpose or purposes. The notice of a
special meeting shall in all instances state the purpose or purposes for which
the meeting is called. The notice of any meeting shall also include, or be
accompanied by, any additional statements, information, or documents prescribed
by the General Corporation Law. Except as otherwise provided by the General
Corporation Law, a copy of the notice of any meeting shall be given, personally
or by mail, not less than ten days nor more than sixty days before the date of
the meeting, unless the lapse of the prescribed period of time shall have been
waived, and directed to each stockholder at his record address or at such other
address which he may have furnished by request in writing to the Secretary of
the corporation. Notice by mail shall be deemed to be given when deposited, with
postage thereon prepaid, in the United States Mail. If a meeting is adjourned to
another time, not more than thirty days hence, and/or to another place, and if
an announcement of the adjourned time and/or place is made at the meeting, it
shall not be necessary to give notice of the adjourned meeting unless the
directors, after adjournment, fix a new record date for the adjourned meeting.
Notice need not be given to any stockholder who submits a written waiver of
notice signed by him before or after the time stated therein. Attendance of a
stockholder at a meeting of stockholders shall constitute a waiver of notice of
such
4
<PAGE>
meeting, except when the stockholder attends the meeting for the express purpose
of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the stockholders need be specified in any written waiver of notice.
- STOCKHOLDER LIST. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city or other municipality or community where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock lodger, the list required by this
section or the books of the corporation, or to vote at any meeting of
stockholders.
- CONDUCT OF MEETING. Meetings of the stockholders shall be presided over
by one of the following officers in the order of seniority and if present and
acting the Chairman of the Board, if any, the Vice-Chairman of the Board, if
any, the President, a Vice-President, or, if none of the foregoing is in office
and present and acting, by a chairman to be chosen by the stockholders. The
Secretary of the corporation, or in his absence, an Assistant Secretary, shall
act as secretary of every meeting, but if neither the Secretary nor an Assistant
Secretary is present the Chairman of the meeting shall appoint a secretary of
the meeting.
- PROXY REPRESENTATION. Every stockholder may authorize another person or
persons to act for him by proxy in all matters in which a stockholder is
entitled to participate, whether by waiving notice of any meeting, voting or
participating at a meeting, or expressing consent or dissent without a meeting.
Every proxy must be signed by the stockholder or by his attorney-in-fact. No
proxy shall be voted or acted upon after three years from its date unless such
proxy provides for a longer period. A duly executed proxy shall he irrevocable
if it states that it is irrevocable and, if, and only as long as, it is coupled
with an interest sufficient in law to support irrevocable power. A proxy may be
made irrevocable regardless of whether the interest with which it is coupled is
an interest in the stock itself or an interest in the corporation generally.
- INSPECTORS. The directors, in advance of any meeting may, but need not,
appoint one or more inspectors of election to act at the meeting or any
adjournment
5
<PAGE>
thereof. If an inspector or inspectors are not appointed, the person presiding
at the meeting may, but need not, appoint one or more inspectors. In case any
person who may be appointed as an inspector fails to appear or act, the vacancy
may be filled by appointment made by the directors in advance of the meeting or
at the meeting by the person presiding thereat. Each inspector, if any, before
entering upon the discharge of his duties, shall take and sign an oath
faithfully to execute the duties of inspectors at such meeting with strict
impartiality and according to the best of his ability. The inspectors, if any,
shall determine the number of shares of stock outstanding and the voting power
of each, the shares of stock represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes, ballots, or
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots, or consents,
determine the result, and do such acts as are proper to conduct the election or
vote with fairness to all stockholders. On request of the person presiding at
the meeting, the inspector or inspectors, if any, shall make a report in writing
of any challenge, question, or matter determined by him or them and execute a
certificate of any fact found by him or them. Except as otherwise required by
subsection (e) of Section 231 of the General Corporation Law, the provisions of
that Section shall not apply to the corporation.
- QUORUM. The holders of one-third of the outstanding shares of stock shall
constitute a quorum at a meeting of stockholders for the transaction of any
business. The stockholders present may adjourn the meeting despite the absence
of a quorum.
- VOTING. Each share of stock shall entitle the holder thereof to one vote.
Directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy at the meeting and entitled to vote on the
election of directors. Any other action shall be authorized by a majority of the
votes cast except where the General Corporation Law prescribes a different
percentage of votes and/or a different exercise of voting power, and except as
may be otherwise prescribed by the provisions of the certificate of
incorporation and these Bylaws. In the election of directors, and for any other
action, voting need not be by ballot.
- STOCKHOLDER PROPOSALS. Any business to be proposed by a stockholder to be
conducted at any meeting shall be specified in a written notice given to the
Secretary of the corporation, by or on behalf of any stockholder who shall have
been a stockholder of record on the record date for such meeting and who shall
continue to be entitled to vote thereat (the "Stockholder Notice"), in
accordance with all of the following requirements: (1) each Stockholder Notice
must be delivered to, or mailed and received at, the principal executive offices
of the corporation (i) in the case of an annual meeting that is called for a
date that is within 30 days before or after the anniversary date of the
immediately preceding annual meeting of stockholders prior to such anniversary
date, and (ii) in the case of an annual meeting that is called for a date that
is not within 30 days before or after the anniversary date of the immediately
preceding annual meeting, not later than the close
6
<PAGE>
of business on the tenth day following the day on which notice of the date of
the meeting was mailed or public disclosure of the date of the meeting was made,
whichever occurs first; and (2) each such Stockholder Notice must set forth: (i)
the name and address of the stockholder who intends to bring the business before
the meeting; (ii) the general nature of the business which such stockholder
seeks to bring before the meeting and, if a specific action is to be proposed,
the text of the resolution or resolutions which the proposing stockholder
proposes that the stockholders adopt; and (iii) a representation that the
stockholder is a holder of record of the stock of the corporation entitled to
vote at such meeting and intends to appear in person or by proxy at the meeting
to bring the business specified in the notice before the meeting. The presiding
officer of the meeting may, in his or her sole discretion, refuse to acknowledge
any business proposed by a stockholder not made in compliance with the foregoing
procedure.
8. STOCKHOLDER ACTION WITHOUT MEETINGS. Any action required or permitted by
law or the Certificate of Incorporation to be taken at any meeting of
stockholders may be taken without a meeting, without prior notice if a written
consent, setting forth the action so taken, shall be signed by a unanimous
consent of the holders of the outstanding stock. Such written consent shall be
filed with the minutes of the meetings of the stockholders.
ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITION. The business and affairs of the corporation
shall be managed by or under the direction of the Board of Directors of the
corporation. The Board of Directors shall have the authority to fix the
compensation of the members thereof. The use of the phrase "whole board" herein
refers to the total number of directors which the corporation would have if
there were no vacancies.
2. QUALIFICATIONS AND NUMBER. A director need not be a stockholder, a
citizen of the United States, or a resident of the State of Delaware. The
initial Board of Directors shall consist of five persons. Thereafter the number
of directors constituting the whole board shall be at least one. Subject to the
foregoing limitation and except for the first Board of Directors, such number
may be fixed from time to time by action of the stockholders or of the
directors, or, if the number is not fixed, the number shall be five. The number
of directors may be increased or decreased by action of the stockholders or of
the directors.
3. ELECTION AND TERM. The first Board of Directors, unless the members
thereof shall have been named in the certificate of incorporation, shall be
elected by the incorporator or incorporators and shall hold office until the
first annual meeting of stockholders and until their successors are elected and
qualified or until their earlier
7
<PAGE>
resignation or removal. Any director may resign at any time upon written notice
to the corporation. Thereafter, directors who are elected at an annual meeting
of stockholders, and directors who are elected in the interim to fill vacancies
and newly created directorships, shall hold office until the next annual meeting
of stockholders and until their successors are elected and qualified or until
their earlier resignation or removal. Except as the General Corporation Law may
otherwise require, in the interim between annual meetings of stockholders or of
special meetings of stockholders called for the election of directors and/or for
the removal of one or more directors and for the filling of any vacancy in that
connection, newly created directorships and any vacancies in the Board of
Directors, including unfilled vacancies resulting from the removal of directors
for cause or without cause, may he filled by the vote of a majority of the
remaining directors then in office, although less than a quorum, or by the sole
remaining director
4. MEETINGS.
- TIME. Meetings shall be held at such time as the Board shall fix, except
that the first meeting of a newly elected Board shall be held as soon after its
election as the directors may conveniently assemble.
- PLACE. Meetings shall be held at such place within or without the State
of Delaware as shall be fixed by the Board.
- CALL. No call shall be required for regular meetings for which the time
and place have been fixed. Special meetings may be called by or at the direction
of the Chairman of the Board, if any, the Vice-Chairman of the Board, if any,
the President, or a majority of the directors in office.
- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required for
eegular meetings for which the time and place have been fixed. Written, oral, or
any other mode of notice of the time and place shall be given for special
meetings in sufficient time for the convenient assembly of the directors
thereat. Notice need not be given to any director or to any member of a
committee of directors who submits a written waiver of notice signed by him
before or after the time stated therein. Attendance of any such person at a
meeting shall constitute a waiver of notice of such meeting, except when he
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the directors need be specified in any
written waiver of notice.
- QUORUM AND ACTION. A majority of the whole Board shall constitute a
quorum except when a vacancy or vacancies prevents such majority, whereupon a
majority of the directors in office shall constitute a quorum, provided, that
such majority shall constitute at least one-third of the whole Board. A majority
of the directors present, whether or not
8
<PAGE>
a quorum is present, may adjourn a meeting to another time and place. Except as
herein otherwise provided, and except as otherwise provided by the General
Corporation Law, the vote of the majority of the directors present at a meeting
at which a quorum is present shall be the act of the Board. The quorum and
voting provisions herein stated shall not be construed as conflicting with any
provisions of the General Corporation Law and these Bylaws which govern a
meeting of directors held to fill vacancies and newly created directorships in
the Board or action of disinterested directors.
Any member or members of the Board of Directors or of any committee
designated by the Board, may participate in a meeting of the Board, or any such
committee, as the case may be, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other.
- CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if present
and acting, shall preside at all meetings. Otherwise, the Vice-Chairman of the
Board, if any and if present and acting, or the President, if present and
acting, or any other director chosen by the Board, shall preside.
5. REMOVAL OF DIRECTORS. Except as may otherwise be provided by the General
Corporation Law, any director or the entire Board of Directors may be removed,
with or without cause, by the holders of a majority of the shares then entitled
to vote at an election of directors.
6. COMMITTEES. The Board of Directors way, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation. The Board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. In
the absence or disqualification of any member of any such committee or
committees, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he/she or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board, shall have and
may exercise the powers and authority of the Board of Directors in the
management of the business and affairs of the corporation with the exception of
any authority the delegation of which is prohibited by Section 141 of the
General Corporation Law, and may authorize the seal of the corporation to be
affixed to all papers which may require it.
7. WRITTEN ACTION. Any action required or permitted to be taken at any
meeting of the Board of Directors or any committee thereof may be taken without
a meeting if all members of the Board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the Board or committee.
9
<PAGE>
ARTICLE III
OFFICERS
The officers of the corporation shall consist of a President, a Secretary,
a Treasurer, and, if deemed necessary, expedient, or desirable by the Board of
Directors, a Chairman of the Board, a Vice-Chairman of the Board, an Executive
Vice-President, one or more other Vice-Presidents, one or more Assistant
Secretaries, one or more Assistant Treasurers, and such other officers with such
titles as the resolution of the Board of Directors choosing them shall
designate. Except as may otherwise be provided in the resolution of the Board of
Directors choosing him, no officer other than the Chairman or Vice-Chairman of
the Board, if any, need be a director. Any number of offices may be held by the
same peron, as the directors may determine.
Unless otherwise provided in the resolution choosing him, each officer
shall be chosen for a term which shall continue until the meeting of the Board
of Directors following the next annual meeting of stockholders and until his
successor shall have been chosen and qualified.
All officers of the corporation shall have such authority and perform such
duties in the management and operation of the corporation as shall be prescribed
in the resolutions of the Board of Directors designating and choosing such
officers and prescribing their authority and duties, and shall have such
additional authority and duties as are incident to their office except to the
extent that such resolutions may be inconsistent therewith. The Secretary or an
Assistant Secretary of the corporation shall record all of the proceedings of
all meetings and actions in writing of stockholders, directors, and committees
of directors, and shall exercise such additional authority and perform such
additional duties as the Board shall assign to him/her. Any officer may be
removed, with or without cause, by the Board of Directors. Any vacancy in any
office may be filled by the Board of Directors.
ARTICLE IV
CORPORATE SEAL
The corporate seal shall be in such form as the Board of Directors shall
prescribe.
10
<PAGE>
ARTICLE V
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall be subject to
change, by the Board of Directors.
ARTICLE VI
CONTROL OVER BYLAWS
Subject to the provisions of the certificate of incorporation and the
provisions of the General Corporation Law, the power to amend, alter, or repeal
these Bylaws and to adopt new Bylaws may be exercised by the affirmative vote of
the stockholders holding 75% of the votes cast.
I HEREBY CERTIFY that the foregoing is a full, true, and correct copy of
the Bylaws of Rich Coast Inc., a Delaware corporation, as in effect on the date
hereof.
Dated:
----------------------------------------
Secretary of Rich Coast Inc.
(SEAL)
11
Brenman Key & Bromberg, P.C.
Mellon Financial Center o 1775 Sherman Street o Suite 1001
Denver, Colorado 80203 - 4313
303-894-0234 o Fax 303-839-1633
June 12, 1996
Board of Directors
RICH COAST RESOURCES LTD.
206-475 Howe Street
Vancouver, British Columbia V6C 2B3
Re: Rich Coast Resources Ltd.
Registration Statement on Form S-4
Gentlemen:
We have acted as counsel to Rich Coast Resources Ltd., a British Columbia
company (the "Company"), in connection with the preparation and filing with the
U.S. Securities and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended (the "Act"), of the Company's registration statement on
Form S-4 (the "Registration Statement"). This Registration Statement relates to
the registration under the Act of 14,420,843 shares of the Company's common
stock, $.001 par value (the "Common Stock"), which may be issued in connection
with the Domestication of the Company from the Province of British Columbia to
the State of Delaware pursuant to Section 388 of the Delaware General
Corporation Law. The shares of the Common Stock to be issued pursuant to the
Registration Statement will be issued by the Company as a Delaware company
pursuant to the Domestication.
In rendering this opinion, we have reviewed the Registration Statement, as
well as a copy of the Company's governing documents, each as amended to date. We
have also reviewed such documents and such statutes, rules and judicial
precedents as we have deemed necessary for the opinions expressed herein.
In rendering this opinion, we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of documents
submitted to us as originals, the conformity to original documents of documents
submitted to us as certified or photostatic copies, and the authenticity of
originals of such photostatic copies.
Based upon and in reliance upon the foregoing and the statements in the
Registration Statement, and subject to the qualifications and limitations herein
set forth, we are of the opinion that the shares of Common Stock issuable
pursuant to the Registration Statement will be duly and validly authorized and,
when issued in the manner contemplated by the Registration Statement, will be
validly issued, fully paid and nonassessable.
<PAGE>
The opinion set forth in this letter is limited by, subject to and based on
the following:
1. We are admitted to practice before the Bar of the State of Colorado
and are not admitted to practice in any other jurisdiction, including
the Province of British Columbia or the State of Delaware.
2. The foregoing opinion is limited in all respects to the laws of the
State of Colorado and applicable federal securities laws of the United
States.
3. With respect to matters of British Columbia law, we are relying upon
the opinion of DuMoulin Black, Barristers & Solicitors, of Vancouver,
British Columbia.
4. To the extent such opinion relates to the laws of other jurisdictions,
such opinion is based upon an examination of relevant authorities and
is believed to be correct, but, except as set forth in paragraph 3
above, we have obtained no legal opinions as to such matters from
attorneys licensed to practice in such other jurisdictions.
We consent to the filing of this opinion with the Commission as an exhibit
to the Registration Statement and to the use of our name as "experts" in the
Legal Matters section of the Registration Statement.
This opinion may not be used, circulated, quoted or otherwise referred to
for any other purpose without prior written consent and may not be relied upon
by any person or entity other than the Company and its successors and assigns.
This opinion is based upon our knowledge of law and facts as of its date. We
assume no duty to communicate to you with respect to any matter which comes to
our attention hereafter.
Very truly yours,
/s/ Brenman Key & Bromberg, P.C.
<TABLE>
<S> <C>
Type of Meeting: Extraordinary General Meeting
Name of Company: RICH COAST RESOURCES LTD.
Meeting Date: August 14, 1996
Meeting Time: 10:30 A.M. (Vancouver time)
Meeting Location: 10th Floor - 595 Howe Street, Vancouver, British Columbia
The undersigned member of RICH COAST RESOURCES LTD. (the "Company") hereby appoints THORNTON J. DONALDSON, a Director of the
Company, or, failing this person, RANDALL POW, a Director of the Company, or in the place of the foregoing, , (Please Print the
Name) as proxyholder for and on behalf of the member with the power of substitution to attend, act and vote for and on behalf of
the member in respect of all matters that may properly come before the Meeting of the members of the Company and at every
adjournment thereof, to the same extent and with the same powers as if the undersigned member were present at the said Meeting, or
any adjournment thereof.
Resolutions (for full detail of each item, please see the enclosed Notice of Meeting and Information Circular)
FOR AGAINST
1. To approve a series of Special Resolutions, particulars of which
are more fully set out in the Information Circular accompanying
this proxy form. ______ ______
2. To approve amendments to the Company's 1995 Incentive Compensation
Plan, particulars of which are more fully set out in the Information
Circular accompanying this proxy form.
------ ------
3. To transact such further or other business as may properly come
before the Meeting and any adjournments thereof. ______ ______
Affix Label Here The undersigned member hereby revokes any proxy previously given to attend and
vote at said meeting.
Name of Proxy Holder Please sign here: __________________________________________
Address of Proxy Holder Date: ___________________________________________
Number of Securities Represented by Proxy This proxy form is not valid unless it is signed and dated. If someone other
than the member of the Company signs this proxy form on behalf of the named
member of the Company, documentation acceptable to the Chairman of the Meeting
must be deposited with this proxy form authorizing the signing person to do such.
To be represented at the meeting, this proxy form must be received at the office
of Montreal Trust Company of Canada by mail or by fax no later than forty-eight
(48) hours prior to the time of the Meeting. The mailing address of Montreal
Trust Company of Canada, 510 Burrard Street, Vancouver, B.C., V6c 3B9, and its
fax number is (604) 683-3694. The Chairman of the Meeting has the discretion to
accept proxies deposited less than forty-eight hours prior to the time of the
Meeting.
<PAGE>
1. This Proxy is solicited by the Management of the Company.
2. (i) If the member wishes to attend the meeting to vote on the resolutions in person, please register your attendance
with the Company's scrutineers at the meeting.
(ii) If the member has its securities held by its financial institution and wishes to attend the meeting to vote on the
resolutions in person, please cross off the management appointee name or names, insert the member's name in the blank
space provided, do not indicate a voting choice by any resolution, sign and date the proxy form and return the proxy
form. At the meeting, a vote will be taken on each of the resolutions as set out on this proxy form and the member's
vote will be counted at that time.
3. If the member cannot attend the meeting but wishes to vote on the resolutions, the member can appoint another person,
who need not be a member of the Company, to vote according to the member's instructions. To appoint someone other than
the person named, please cross off the management appointee name or names and insert your appointed proxyholder's name
in the space provided, sign and date the proxy form and return the proxy form. Where no choice on a resolution is
specified by the member, this proxy form confers discretionary authority upon the member's appointed proxyholder.
4. If the member cannot attend the meeting but wishes to vote on the resolutions and to appoint one of the management
appointees named, please leave the wording appointing a nominee as shown, sign and date the proxy form and return the
proxy form. Where no choice is specified by a member on a resolution shown on the proxy form, a nominee of management
acting as proxyholder will vote the securities as if the member had specified an affirmative vote.
5. The securities represented by this proxy form will be voted or withheld from voting in accordance with the instructions
of the member on any ballot of a resolution that may be called for and, if the member specifies a choice with respect to
any matter to be acted upon, the securities will be voted accordingly. With respect to any amendments or variations in
any of the resolutions shown on the proxy form, or matters which may properly come before the Meeting, the securities
will be voted by the nominee appointed as the nominee in its sole discretion sees fit.
6. If the member votes on the resolutions and returns the proxy form, the member may still attend the meeting and vote in
person should the member later decide to do so. To attend the meeting, the member must revoke the proxy form by sending
a new proxy form with the revised instructions.
</TABLE>
DuMoulin Black
10th Floor
595 Howe Street
Vancouver, Canada
V6C 2T5
June 11, 1996
United States Securities
and Exchange Commission
450 - 5th Street, N.W.
Judiciary Plaza
Washington, D.C.
20549
Dear Sirs:
Re: Rich Coast Resources Ltd.
We consent to the use of our name as "experts" in the Legal Matters section of
the Reigstration Statement on Form S-4 of Rich Coast Resources Ltd. filed with
the Securities and Exchange Commission on or about June 13, 1996.
Yours truly,
DuMOULIN BLACK
Per:
/s/ George R. Brazier
GRB/sc
RICH COAST INC.
1995 INCENTIVE COMPENSATION PLAN
1. Purpose; Restrictions on Amount Available Under the Plan. This 1995
Incentive Compensation Plan (the "Plan") is intended to encourage stock
ownership by employees, consultants, advisers, officers and directors of Rich
Coast Inc. (the "Corporation"), its divisions and Subsidiary Corporations, so
that they may acquire or increase their proprietary interest in the Corporation,
and to induce qualified persons to become employees, consultants, advisers,
officers or directors (whether or not they become employees) of or consultants
to the Corporation; to encourage such employees, officers and directors (whether
or not they are employees) and consultants to remain in the employ of or
associated with the Corporation and to put forth maximum efforts for the success
of the business. It is further intended that options granted by the Committee
pursuant to Section 6 of this Plan shall constitute "incentive stock options"
("Incentive Stock Options") within the meaning of Section 422 of the Internal
Revenue Code, and the regulations issued thereunder, and options granted by the
Committee pursuant to Sections 7 and 18 of this Plan shall constitute
"non-qualified stock options" ("Non-qualified Stock Options").
2. Definitions. As used in this Plan, the following words and phrases shall
have the meanings indicated:
(a) "Disability" shall mean an Optionee's inability to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death or that has lasted or
can be expected to last for a continuous period of not less than 12 months.
(b) "Fair Market Value" per share as of a particular date shall mean the
last sale price of the Corporation's Common Stock as reported on a national
securities exchange or on the NASDAQ National Market System or, if last sale
reporting quotation is not available for the Corporation's Common Stock, the
average of the bid and asked prices of the Corporation's Common Stock as
reported by NASDAQ or on the electronic bulletin board, or if none, National
Quotation Bureau, Inc.'s "Pink Sheets" or, if such quotations are unavailable,
the value determined by the Committee (as hereinafter defined) in accordance
with their discretion in making a bona fide, good faith determination of fair
market value. Fair Market Value shall be determined without regard to any
restriction other than a restriction which, by its terms, will never lapse.
(c) "Internal Revenue Code" shall mean the United States Internal
Revenue Code of 1986, as amended from time to time (codified at Title 26 of the
United States Code) (the Internal Revenue Code"), and any successor legislation.
(d) "Parent Corporation" shall mean any corporation (other than the
employer corporation) in an unbroken chain of corporations ending with the
employer corporation if, at the time of granting an Option, each of the
corporations other than the employer corporation owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
<PAGE>
(e) "Subsidiary Corporation" shall mean any corporation (other than the
employer corporation) in an unbroken chain of corporations beginning with the
employer corporation if, at the time of granting an Option, each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
3. Administration.
(a) The Plan shall be administered by the Compensation Committee (the
"Committee"), consisting of not less than two members of the Board of Directors
of the Corporation (the "Board"), each of whom must be "disinterested" within
the meaning of Rule 16b-3(c)(2)(i) under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), or alternatively, in the absence of a designated and
qualified committee, the entire Board shall serve as the Committee. Options
granted hereunder at any time when any Committee member is not "disinterested"
within the meaning of Rule 16b-3(c)(2)(i) under the Securities Exchange Act of
1934, as amended (the "1934 Act") shall not qualify as exempt purchases under
Rule 16b-3 of the 1934 Act.
(b) The Committee shall have the authority in its discretion, subject to
and not inconsistent with the express provisions of the Plan, to administer the
Plan and to exercise all the powers and authorities either specifically granted
to it under the Plan or necessary or advisable in the administration of the
Plan, including (without limitation): the authority to grant Options; to
determine which Options shall constitute Incentive Stock Options and which
Options shall constitute Non-qualified Stock Options; to determine the purchase
price of the shares of Common Stock covered by each Option (the "Option Price")
other than Formula Plan Options granted pursuant to the Formula Plan provisions
of this Plan; to determine the persons to whom, and the time or times at which,
Options shall be granted; to determine the number of shares to be covered by
each Option; to determine Fair Market Value per share; to interpret the Plan; to
prescribe, amend and rescind rules and regulations relating to the Plan; to
determine the terms and provisions of the Option Agreements (which need not be
identical) entered into in connection with Options granted under the Plan; and
to make all other determinations deemed necessary or advisable for the
administration of the Plan. The Committee may delegate to one or more of its
members or to one or more agents such administrative duties as it may deem
advisable, and the Committee or any person to whom it has delegated duties as
aforesaid may employ one or more persons to render advice with respect to any
responsibility the Committee or such person may have under the Plan.
(c) The Board shall fill all vacancies, however caused, in the
Committee. The Board may from time to time appoint additional members to the
Committee, and may at any time remove one or more Committee members and
substitute others. One member of the Committee shall be selected by the Board as
chairman. The Committee shall hold its meetings at such times and places as it
shall deem advisable. Except as otherwise provided in the Formula Plan
provisions of this Plan, Options and bonuses granted under the Plan shall be
evidenced by duly adopted resolutions of the Committee included in the minutes
of the meeting at which they are adopted or in a unanimous written consent.
-2-
<PAGE>
(d) The Committee shall endeavor to administer the Plan and grant
Options hereunder in a manner that is compatible with the obligations of persons
subject to Section 16 of the 1934 Act, although compliance with Section 16 is
the obligation of the Optionee, not the Corporation. Neither the Board nor the
Corporation can assume any legal responsibility for a Recipient's compliance
with his obligations under Section 16 of the 1934 Act.
(e) No member of the Board or Committee shall be liable for any action
taken or determination made in good faith with respect to the Plan or any Option
granted hereunder.
4. Eligibility.
(a) Subject to certain limitations hereinafter set forth, Options may be
granted to employees of (including officers) and consultants to and directors
(whether or not they are employees) of the Corporation or its present or future
divisions and Subsidiary Corporations provided, however, that directors who are
designated by the Board from time to time as the Disinterested Directors under
Section 18 hereof shall not be eligible to participate in this Plan so long as
they are serving as members of the Compensation Committee except pursuant to
Section 18 hereof, which provides for the non-discretionary grant of Formula
Plan Options to such persons in accordance with a "formula" which is intended to
comply with the provisions of Section 16b-3. In determining the persons to whom
Options shall be granted and the number of shares to be covered by each Option,
the Committee shall take into account the duties of the respective persons,
their present and potential contributions to the success of the Corporation and
such other factors as the Committee shall deem relevant in connection with
accomplishing the purpose of the Plan. A person to whom an Option has been
granted hereunder is sometimes referred to herein as an "Optionee."
(b) Any eligible person shall be eligible to receive more than one grant
during the term of the Plan, on the terms and subject to the restrictions herein
set forth.
5. Stock Reserved.
(a) The stock subject to Options hereunder shall be shares of the
Corporation's $.001 par value Common Stock (the "Common Stock"). Such shares
may, in whole or in part, be authorized but unissued shares or shares that shall
have been or that may be reacquired by the Corporation. The aggregate number of
shares of Common Stock as to which Options may be granted from time to time
under the Plan shall not exceed 2,600,000. The limitation established by the
preceding sentences shall be subject to adjustment as provided in Section 8(i)
hereof.
(b) In the event that any outstanding Option under the Plan for any
reason expires or is terminated without having been exercised in full the shares
of Common Stock allocable to the unexercised portion of such Option (unless the
Plan shall have been terminated) shall become available for subsequent grants of
options under the Plan.
-3-
<PAGE>
6. Incentive Stock Options.
(a) Options granted pursuant to this Section 6 are intended to
constitute Incentive Stock Options and shall be subject to the following special
terms and conditions, in addition to the general terms and conditions specified
in Section 8 hereof. Only employees of the Corporation shall be entitled to
receive Incentive Stock Options.
(b) The aggregate Fair Market Value (determined as of the date the
Incentive Stock Option is granted) of the shares of Common Stock with respect to
which Incentive Stock Options granted under this and any other plan of the
Corporation or any Parent Corporation or Subsidiary Corporation are exercisable
for the first time by an Optionee during any calendar year may not exceed the
amount set forth in Section 422(d) of the Internal Revenue Code.
(c) Incentive Stock Options granted under this Plan are intended to
satisfy all requirements for incentive stock options under Section 422 of the
Internal Revenue Code and the Treasury Regulations thereunder and,
notwithstanding any other provision of this Plan, the Plan and all Incentive
Stock Options granted under it shall be so construed, and all contrary
provisions shall be so limited in scope and effect and, to the extent they
cannot be so limited, they shall be void.
7. Non-qualified Stock Options. Options granted pursuant to this Section 7
are intended to constitute Non-qualified Stock Options and shall be subject only
to the general terms and conditions specified in Section 8 hereof.
8. Terms and Conditions of Options. Each Option granted pursuant to the
Plan shall be evidenced by a written Option Agreement between the Corporation
and the Optionee, which agreement shall be substantially in the form of Exhibit
"A" attached hereto as modified from time to time by the Committee in its
discretion, and which shall comply with and be subject to the following terms
and conditions:
(a) Number of Shares. Each Option Agreement shall state the number of
shares of Common Stock to which the Option relates.
(b) Type of Option. Each Option Agreement shall specifically identify
the portion, if any, of the Option which constitutes an Incentive Stock Option
and the portion, if any, which constitutes a Non-qualified Stock Option.
(c) Option Price. Except as provided for with respect to Formula Plan
Options in Section 18 hereof:
(i) Each Option Agreement shall state the Option Price, which
(except as otherwise set forth in paragraphs 8(c)(ii) and 8(c)(iii) hereof)
shall be not less than 100% of the Fair Market Value per share on the date of
grant of the Option.
-4-
<PAGE>
(ii) Any Incentive Stock Option granted under the Plan to a person
owning more than ten percent of the total combined voting power of the Common
Stock shall be at a price no less than 110% of the Fair Market Value per share
on the date of grant of the Incentive Stock Option.
(iii) Any Non-qualified Stock Option granted under the Plan shall be
at a price no less than 80% of the Fair Market Value per share on the date of
grant of the Non-qualified Stock Option.
(iv) The Option Price shall be subject to adjustment as provided in
Section 8(i) hereof.
(v) The date on which the Committee adopts a resolution expressly
granting an Option shall be considered the day on which such Option is granted,
unless a future date is specified in the resolution.
(d) Term of Option. Each Option shall be exercisable over the exercise
period as and at the times the Committee, in its sole discretion, may determine,
as reflected in the Option Agreement; provided, however:
(i) The exercise period shall not exceed ten years from the date of
grant of the Option.
(ii) Incentive Stock Options granted to a person owning more than
ten percent of the total combined voting power of the Common Stock of the
Corporation shall be for no more than five years;
(iii) The Committee shall have the authority to accelerate or extend
the exercisability of any outstanding Option at such time and under such
circumstances as it, in its sole discretion, deems appropriate. No exercise
period may be extended to increase the term of the option beyond ten years from
the date of the grant.
(iv) The exercise period shall be subject to earlier termination as
provided in Sections 8(f) and 8(g) hereof, and furthermore shall be terminated
upon surrender of the option by the holder thereof if such surrender has been
authorized in advance by the Committee.
(e) Method of Exercise and Medium and Time of Payment.
(i) An Option may be exercised, as to any or all whole shares of
Common Stock as to which the Option has become exercisable; provided, however,
that an Option may not be exercised at any one time as to fewer than 100 shares
(or such number of shares as to which the Option is then exercisable if such
number of shares is less than 100).
-5-
<PAGE>
(ii) Each exercise of an Option granted hereunder, whether in whole
or in part, shall be by written notice to the Secretary of the Corporation
designating the number of shares as to which the Option is exercised, and shall
be accompanied by payment in full of the Option Price (in cash, shares or
property) for the number of shares so designated, together with any written
statements required by any applicable securities laws.
(iii) The Option Price shall be paid in cash, in shares of Common
Stock having a Fair Market Value equal to such Option Price or in property or in
a combination of cash, shares and property, and (subject to approval of the
Board of Directors) may be effected in whole or in part (A) with monies received
from the Corporation at the time of exercise as a compensatory cash payment, or
(B) with monies borrowed from the Corporation pursuant to repayment terms and
conditions as shall be determined from time to time by the Committee, in its
discretion, separately with respect to each exercise of Options and each
Optionee; provided, however, that each such method and time for payment and each
such borrowing and terms and conditions of repayment shall be permitted by and
be in compliance with applicable law.
(iv) The Board of Directors shall have the sole and absolute
discretion to determine whether or not property other than cash or Common Stock
may be used to purchase the shares of Common Stock hereunder and, if so, to
determine the value of the property received.
(f) Termination. Except as provided in this Section 8(f) and in Section
8(g) hereof, an Option may not be exercised unless the Optionee is then an
employee or director of or consultant to the Corporation or a division or
Subsidiary Corporation thereof (or a corporation or a Parent or Subsidiary
Corporation of such corporation issuing or assuming the option in a transaction
to which Section 424(a) of the Internal Revenue Code applies), and unless the
Optionee has remained continuously as an employee or director of or consultant
to the Corporation since the date of grant of the Option.
(i) If the Optionee ceases to be an employee or director of or
consultant to the Corporation (other than by reason of death, Disability or
retirement), all Options of such Optionee that are exercisable at the time of
such cessation may, unless earlier terminated in accordance with their terms, be
exercised within one month after such cessation; provided, however, that if the
employment or consulting relationship of an Optionee shall terminate, or if a
director shall be removed, for cause, all Options theretofore granted to such
Optionee shall, to the extent not theretofore exercised, terminate forthwith.
(ii) Nothing in the Plan or in any Option granted pursuant hereto
shall confer upon an individual any right to continue in the employ of the
Corporation or any of its divisions or Subsidiary Corporations or interfere in
any way with the right of the Corporation or its shareholders or any such
division or Subsidiary Corporation to terminate such employment or other
relationship between the individual and the Corporation or any of its divisions
and subsidiary corporations.
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(g) Death, Disability or Retirement of Optionee. If an Optionee shall
die while a director of, or employed by, or a consultant to, the Corporation or
a Subsidiary Corporation thereof, or within three months after the termination
of such Optionee's employment or directorship or consulting relationship, other
than termination for cause, or if the Optionee's employment or directorship or
consulting relationship, shall terminate by reason of Disability or retirement,
all Options theretofore granted to such Optionee (whether or not otherwise
exercisable) unless earlier terminated in accordance with their terms, may be
exercised by the Optionee or by the Optionee's estate or by a person who
acquired the right to exercise such Option by bequest or inheritance or
otherwise by reason of the death or Disability of the Optionee, at any time
within one year after the date of death, Disability or retirement of the
Optionee; provided, however, that in the case of Incentive Stock Options such
one-year period shall be limited to three months in the case of retirement.
(h) Transferability Restriction. (i) Options granted under the Plan
shall not be transferable other than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined by
the Internal Revenue Code or Title I of the Employee Retirement Income Security
Act, or the rules thereunder. Options may be exercised, during the lifetime of
the Optionee, only by the Optionee and thereafter only by his legal
representative.
(ii) Any attempted sale, pledge, assignment, hypothecation or other
transfer of an Option contrary to the provisions hereof and the levy of any
execution, attachment or similar process upon an Option shall be null and void
and without force or effect and shall result in a termination of the Option.
(iii) (A) As a condition to the transfer of any shares of Common
Stock issued upon exercise of an Option granted under this Plan, the Corporation
may require an opinion of counsel, satisfactory to the Corporation, to the
effect that such transfer will not be in violation of the Securities Act of 1933
or any other applicable securities laws or that such transfer has been
registered under federal and all applicable state securities laws. (B) Further,
the Corporation shall be authorized to refrain from delivering or transferring
shares of Common Stock issued under this Plan until the Board of Directors
determines that such delivery or transfer will not violate applicable securities
laws and the Optionee has tendered to the Corporation any federal, state or
local tax owed by the Optionee as a result of exercising the Option, or
disposing of any Common Stock, when the Corporation has a legal liability to
satisfy such tax. (C) The Corporation shall not be liable for damages due to
delay in the delivery or issuance of any stock certificate for any reason
whatsoever, including, but not limited to, a delay caused by listing
requirements of any securities exchange or any registration requirements under
the Securities Act of 1933, the 1934 Act, or under any other state or federal
law, rule or regulation. (D) The Corporation is under no obligation to take any
action or incur any expense in order to register or qualify the delivery or
transfer of shares of Common Stock under applicable securities laws or to
perfect any exemption from such registration or qualification. (E) Furthermore,
the Corporation will have no liability to any Optionee for refusing to deliver
or transfer shares of Common Stock if such refusal is based upon the foregoing
provisions of this Paragraph.
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(i) Effect of Certain Changes.
(i) If there is any change in the number of shares of Common Stock
through the declaration of stock dividends, or through recapitalization
resulting in stock splits, or combinations or exchanges of such shares, the
number of shares of Common Stock available for Options, the number of such
shares covered by outstanding Options, and the price per share of such Options,
shall be proportionately adjusted by the Committee to reflect any increase or
decrease in the number of issued shares of Common Stock; provided, however, that
any fractional shares resulting from such adjustment shall be eliminated.
(ii) In the event of the proposed dissolution or liquidation of the
Corporation, in the event of any corporate separation or division, including,
but not limited to, split-up, split-off or spin-off, or in the event of a merger
or consolidation of the Corporation with another corporation, the Committee may
provide that the holder of each Option then exercisable shall have the right to
exercise such Option (at its then Option Price) solely for the kind and amount
of shares of stock and other securities, property, cash or any combination
thereof receivable upon such dissolution, liquidation, or corporate separation
or division, or merger or consolidation by a holder of the number of shares of
Common Stock for which such Option might have been exercised immediately prior
to such dissolution, liquidation, or corporate separation or division, merger or
consolidation; or the Committee may provide, in the alternative, that each
Option granted under the Plan shall terminate as of a date to be fixed by the
Committee; provided, however, that not less than 30 days' written notice of the
date so fixed shall be given to each Optionee, who shall have the right, during
the period of 30 days preceding such termination, to exercise the Options as to
all or any part of the shares of Common Stock covered thereby, including shares
as to which such Options would not otherwise be exercisable.
(iii) Paragraph (ii) of this Section 8(i) shall not apply to a
merger or consolidation in which the Corporation is the surviving corporation
and shares of Common Stock are not converted into or exchanged for stock,
securities of any other corporation, cash or any other thing of value.
Notwithstanding the preceding sentence, in case of any consolidation or merger
of another corporation into the Corporation in which the Corporation is the
surviving corporation and in which there is a reclassification or change
(including a change to the right to receive cash or other property) of the
shares of Common Stock (other than a change in par value, or from par value to
no par value, or as a result of a subdivision or combination, but including any
change in such shares into two or more classes or series of shares), the
Committee may provide that the holder of each Option then exercisable shall have
the right to exercise such Option solely for the kind and amount of shares of
stock and other securities (including those of any new direct or indirect parent
of the Corporation), property, cash or any combination thereof receivable upon
such reclassification, change, consolidation or merger by the holder of the
number of shares of Common Stock for which such Option might have been
exercised.
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(iv) In the event of a change in the Common Stock of the Corporation
as presently constituted, which is limited to a change of all of its authorized
shares with par value into the same number of shares with a different par value
or without par value, the shares resulting from any such change shall be deemed
to be the Common Stock within the meaning of the Plan.
(v) To the extent that the foregoing adjustments relate to stock or
securities of the Corporation, such adjustments shall be made by the Committee,
whose determination in that respect shall be final, binding and conclusive,
provided that each Incentive Stock Option granted pursuant to this Plan shall
not be adjusted in a manner that causes such option to fail to continue to
qualify as an Incentive Stock Option within the meaning of Section 422 of the
Internal Revenue Code, and provided further that each Stock Option granted
pursuant to the Formula Plan provisions of this Plan shall not be adjusted in a
manner that causes such option to fail to continue to qualify as a grant
pursuant to a "formula plan" within the meaning of Rule 16b-3 of the 1934 Act.
(vi) Except as expressly provided in this Section 8(i), the Optionee
shall have no rights by reason of any subdivision or consolidation of shares of
stock of any class or the payment of any stock dividend or any other increase or
decrease in the number of shares of stock of any class or by reason of any
dissolution, liquidation, merger, or consolidation or spin-off of assets or
stock of another corporation; and any issue by the Corporation of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall not affect, and no adjustment by reason thereof shall be made with respect
to, the number or price of shares of Common Stock subject to the Option. The
grant of an Option pursuant to the Plan shall not affect in any way the right or
power of the Corporation to make adjustments, reclassifications, reorganizations
or changes of its capital or business structures or to merge or to consolidate
or to dissolve, liquidate or sell, or transfer all or part of its business or
assets.
(j) No Rights as Shareholder - Non-Distributive Intent.
(i) Neither a person to whom an Option is granted, nor such person's
legal representative, heir, legatee or distributee, shall be deemed to be the
holder of, or to have any rights of a holder with respect to, any shares subject
to such Option, until after the Option is exercised and the shares are issued to
the person exercising such Option.
(ii) Upon exercise of an Option at a time when there is no
registration statement in effect under the Securities Act of 1933 relating to
the shares issuable upon exercise, shares may be issued to the Optionee only if
the Optionee represents and warrants in writing to the Corporation that the
shares purchased are being acquired for investment and not with a view to the
distribution thereof.
(iii) No shares shall be issued upon the exercise of an Option
unless and until there shall have been compliance with any then applicable
requirements of any securities authority or stock exchange on which the Common
Stock is listed for trading and the rules and regulations of the Securities and
Exchange Commission, or any other regulatory agencies having jurisdiction over
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the Corporation and any approval which may be required in connection with the
authorization, issuance or sale of Common Stock by the Corporation.
(iv) No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or distribution or
other rights for which the record date is prior to the date such stock
certificate is issued, except as provided in Section 8(i) hereof.
(k) Other Provisions. Option Agreements authorized under the Plan shall
contain such other provisions, including, without limitation, (i) the imposition
of restrictions upon the exercise of an Option, and (ii) in the case of an
Incentive Stock Option, the inclusion of any condition not inconsistent with
such Option qualifying as an Incentive Stock Option, as the Committee shall deem
advisable.
9. Agreement by Optionee Regarding Withholding Taxes. If the Committee
shall so require, as a condition of exercise, each Optionee shall agree that:
(a) No later than the date of exercise of any Option granted hereunder,
the Optionee will pay to the Corporation or make arrangements satisfactory to
the Corporation regarding payment of any federal, state or local taxes of any
kind required by law to be withheld upon the exercise of such Option; and
(b) The Corporation shall, to the extent permitted or required by law,
have the right to deduct federal, state and local taxes of any kind required by
law to be withheld upon the exercise of such Option from any payment of any kind
otherwise due to the Optionee.
(c) The Corporation shall not be obligated to advise any Optionee of the
existence of any tax or the amount which the Corporation will be so required to
withhold.
10. Term of Plan. Options may be granted pursuant to the Plan from time to
time within a period of ten years from the date the Plan is adopted by the
Board, or the date the Plan is approved by the shareholders of the Corporation,
whichever is earlier.
11. Amendment and Termination of the Plan.
(a) (i) Subject to the policies, rules and regulations of any lawful
authority having jurisdiction (including any exchange with which the shares of
the Corporation are listed for trading), the Board of Directors may at any time,
without further action by the shareholders, amend the Plan or any option granted
hereunder in such respects as it may consider advisable and, without limiting
the generality of the foregoing, it may do so to ensure that options granted
hereunder will comply with any provisions respecting stock options in the income
tax and other laws in force in any country or jurisdiction of which from time to
time be resident or citizen or it may at any time, without action by
shareholders, terminate the Plan.
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(ii) provided, however, that any amendment that would: (A)
materially increase the number of securities issuable under the Plan to persons
who are subject to Section 16(a) of the 1934 Act; or (B) grant eligibility to a
class of persons who are subject to Section 16(a) of the 1934 Act and are not
included within the terms of the Plan prior to the amendment; (C) materially
increase the benefits accruing to persons who are subject to Section 16(a) of
the 1934 Act under the Plan; or (D) require shareholder approval under
applicable state law, the rules and regulations of any national securities
exchange on which the Corporation's securities then may be listed, the Internal
Revenue Code or any other applicable law, shall be subject to the approval of
the shareholders of the Corporation as provided in Section 12 hereof;
(iii) provided further that any such increase or modification that
may result from adjustments authorized by Section 8(i) hereof or which are
required for compliance with the 1934 Act, the Internal Revenue Code, the
Employee Retirement Income Security Act of 1974, their rules or other laws or
judicial order, shall not require such approval of the shareholders;
(iv) provided further that the provisions of Section 18 hereof may
not be amended more than once every six months, other than to comport with
changes in the Internal Revenue Code, the Employee Retirement Income Security
Act, or the rules thereunder.
(b) Except as provided in Section 8 hereof, no suspension, termination,
modification or amendment of the Plan may adversely affect any Option previously
granted, unless the written consent of the Optionee is obtained.
12. Approval of Shareholders. The Plan shall take effect upon its adoption
by the Board but shall be subject to approval at a duly called and held meeting
of stockholders in conformance with the vote required by the Corporation's
Charter documents, resolution of the Board, any other applicable law and the
rules and regulations thereunder, or the rules and regulations of any national
securities exchange upon which the Corporation's Common Stock is listed and
traded, each to the extent applicable.
13. Assumption. The terms and conditions of any outstanding Options granted
pursuant to this Plan shall be assumed by, be binding upon and inure to the
benefit of any successor corporation to the Corporation, but only to the extent
provided for in Section 8(i) hereof, and shall continue to be governed by, to
the extent applicable, the terms and conditions of this Plan. Such successor
corporation shall not otherwise be obligated to assume this Plan.
14. Termination of Right of Action. Every right of action arising out of or
in connection with the Plan by or on behalf of the Corporation or of any
Subsidiary, or by any shareholder of the Corporation or of any Subsidiary
against any past, present or future member of the Board, or against any
employee, or by an employee (past, present or future) against the Corporation or
any Subsidiary, will, irrespective of the place where an action may be brought
and irrespective of the place of residence of any such shareholder, director or
employee, cease and be barred by the expiration of three years from the date of
the act or omission in respect of which such right of action is alleged to have
risen.
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15. Tax Litigation. The Corporation shall have the right, but not the
obligation, to contest, at its expense, any tax ruling or decision,
administrative or judicial, on any issue which is related to the Plan and which
the Board believes to be important to holders of Options issued under the Plan
and to conduct any such contest or any litigation arising therefrom to a final
decision.
16. Adoption.
(a) This Plan was approved by resolution of the Board of Directors of
the Corporation on September 8, 1995 and was approved by resolution of the
Shareholders of the Corporation on October 18, 1995. The Plan was amended by the
Board of Directors on January 15, 1996.
(b) Prior to the date this Plan is approved by shareholders of the
Corporation as required by Section 16b-3, all options granted hereunder to
directors of the Corporation shall be contingent upon shareholder approval of
those options and the Plan.
17. Grant of Stock Bonuses. In addition to, or in lieu of, the grant of an
Option, the Committee may grant Bonuses.
(a) At the time of grant of a Bonus, the Committee may impose a vesting
period of up to five years, and such other restrictions which it deems
appropriate. Unless otherwise directed by the Committee at the time of grant of
a Bonus, the Recipient shall be considered a shareholder of the Corporation as
to the Bonus shares which have vested in the grantee at any time regardless of
any forfeiture provisions which have not yet arisen.
(b) The grant of a Bonus and the issuance and delivery of shares of
Common Stock pursuant thereto shall be subject to approval by the Corporation's
counsel of all legal matters in connection therewith, including compliance with
the requirements of the 1933 Act, the 1934 Act, other applicable securities
laws, rules and regulations, and the requirements of any stock exchanges upon
which the Common Stock then may be listed. Any certificates prepared to evidence
Common Stock issued pursuant to a Bonus grant shall bear legends as the
Corporation's counsel may seem necessary or advisable. Included among the
foregoing requirements, but without limitation, any Recipient of a Bonus at a
time when a registration statement relating thereto is not effective under the
1933 Act shall execute a Subscription Agreement substantially in the form of
Exhibit B.
18. Formula Plan Grants to Disinterested Directors.
(a) Options granted pursuant to this Section 18 are intended to
constitute Options granted in accordance with a formula plan as defined in Rule
16b-3 of the 1934 Act (the "Formula Plan Options"), and shall not be subject to
the exercise of any discretion by the Compensation Committee which is otherwise
charged with administering this Plan. Options granted pursuant to this Section
18 shall be evidenced by Stock Option Agreements and need not be evidenced by
resolutions of the Board or of the Committee. Options granted pursuant to this
Section 18 shall be
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subject to the following special terms and conditions, in addition to the
general terms and conditions specified in Section 8 hereof.
(b) Each director of the corporation who is a disinterested person of
the Corporation as defined under Rule 16b-3(c)(2)(i) of the 1934 Act and as
determined by the Board from time to time (the "Disinterested Directors") on the
8th day of September ("Automatic Grant Date") in any year during the term of
this Plan shall automatically be granted an Option to acquire 10,000 shares of
the Corporation's Common Stock at the Option Price described in paragraph (c) of
this Section 18, exercisable for a period of ten years from the date of grant
(the "Formula Plan"), and subject to the other terms and conditions of this
Plan.
(c) (i) Options granted to Disinterested Directors as of any Automatic
Grant Date during the term of the Plan shall have an exercise price equal to
100% of the Fair Market Value of the Common Stock on the day immediately
preceding the Automatic Grant Date. (ii) The Option Prices for Options granted
under this Section 18 shall be subject to adjustment as provided in Section 8(i)
hereof.
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