<PAGE>
As filed with the Securities and Exchange Commission on August 6, 1996
File No. 333-6099
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
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>
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) Previously paid.
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
Monday, September 16, 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
Saturday, September 14, 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 August 9, 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 9th day of August, 1996.
BY ORDER OF THE BOARD
-----------------------------
THORNTON J. DONALDSON
DIRECTOR
-2-
<PAGE>
Subject to Completion - Preliminary Prospectus dated August 6, 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 SEPTEMBER 16, 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 September 16, 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 August 10, 1996.
The date of this Proxy Statement/Prospectus is August __, 1996
-2-
<PAGE>
TABLE OF CONTENTS
Page
----
SUMMARY................................................................. 5
SOLICITATION OF PROXIES................................................. 10
REVOCABILITY OF PROXY................................................... 10
VOTING SHARES AND PRINCIPAL HOLDERS .................................... 10
VOTING OF PROXIES ...................................................... 13
EXECUTIVE COMPENSATION.................................................. 13
AVAILABLE INFORMATION................................................... 18
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>
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 29, 1996, the Bank of Canada's announced
rate for conversion of U.S. dollars was U.S. $1.00 = CDN $1.372 or CDN $1.00 =
U.S. $.728. 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 September
16, 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 August 9,
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.
-5-
<PAGE>
The Domestication:
Rich Coast Resources Ltd. ........ The Company, incorporated under the laws of
British Columbia, Canada, currently
operates in the environmental industry.
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").
-6-
<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.
-7-
<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.
-8-
<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
-9-
<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 August 9, 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 August 9, 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 August 9, 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.
-10-
<PAGE>
<TABLE>
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
August 9, 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%
10200 Ford Road
Dearborn, MI 48126
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
-11-
<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.
-12-
<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 29, 1996, the Bank of Canada's announced rate for conversion of U.S.
dollars was U.S. $1.00 = CDN $1.3722 or CDN $1.00 = U.S. $.7288.
<TABLE>
Summary Compensation Table
- -----------------------------------------------------------------------------------------------------------------------------------
Annual Compensation Long Term Compensation
- -----------------------------------------------------------------------------------------------------------------------------------
Awards Payouts
- -----------------------------------------------------------------------------------------------------------------------------------
Restricted
Securities Shares or All other
Other Annual Under Option/ Restricted LTIP Compen-
Name and Salary Bonus Compensation SAR's granted Share Units Payouts sation
Principal Position Year ($) ($) ($) (#) ($) ($) ($)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert W. 1996 74,917 Nil Nil 400,000 Nil Nil Nil
Truxell/ CEO
Thornton J. 1996 30,000 Nil Nil 200,000 Nil Nil Nil
Donaldson 1995 30,000 Nil Nil Nil Nil Nil Nil
President/ CEO 1994 24,000 Nil Nil Nil Nil Nil Nil
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-13-
<PAGE>
<TABLE>
Option/Stock Appreciation Rights ("SAR") Grants during the
most recently completed Financial Year
The following table sets out the stock options granted by the Company during the most recently completed financial year to the
Named Executive Officers.
Option/SAR Grants in Last Fiscal Year
Individual Grants
- -----------------------------------------------------------------------------------------------------------------------------------
Number of % of Total
Securities Options/SARs
Underlying Granted to
Options/SARs Employees in Exercise or Base Market Price on Expiration
Name Granted (#) Fiscal Year Price ($/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 $1.00 09/08/2005
</TABLE>
Aggregated Option/SAR Exercises in Last Financial Year
and Financial Year-End Option/SAR Values
The following table sets out all Option/SAR exercises by the Named Executive
Officers during the most recently completed financial year and the Option/SAR
values for such persons as of the end of the most recently completed financial
year.
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
<TABLE>
Number of
Securities Value of
Underlying Unexercised In-
Unexercised the-Money
Options/SARs at Options/SARs at
FY-End (#) FY-End ($)
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>
-14-
<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."
-15-
<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."
-16-
<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>
- -----------------------------------------------------------------------------------------------------------------------------------
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 August 9, 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.
Management of RC-Delaware
The directors and executive officers of RC-Delaware following the
Domestication will be the same as the current directors and executive
officers of RC-BC.
-17-
<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 Commission maintains a Web
site that contains reports, proxy and information statements and information
regarding the Company and the address of such Web site is (http://www.sec.gov).
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.
-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.
Upon consummation of the Domestication RC-Delaware will file an Item 5 Form
8-K Current Report to reflect its succession to RC-BC for the purposes of
Section 15(d) of the Securities Exchange Act of 1934.
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 September 15, 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.
The following paragraphs describe all material differences between the two
jurisdictions 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 33 1/3% 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
The Company has received the opinion of Pannell Kerr Forster of Texas, P.C.,
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 due to
the Company's lack of earnings and profits; 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 the six shareholders who acquired
their shares of Company common stock in connection with the Waste Reduction
Systems partnership interest and the opinion of Pannell Kerr Forster of
Texas, P.C. does not address those cosiderations.
THE COMPANY WILL NOT OBTAIN A REVENUE RULING FROM THE INTERNAL REVENUE SERVICE
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 Saturday, September 14, 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 9th day of August, 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
5.2 Opinion of Pannell Kerr Forster of Texas, P.C. regarding U.S. federal
income tax consequences
23.1 Consent of Brenman Key & Bromberg, P.C. (contained in Exhibit 5.1)
23.2 Consent of Pannell Kerr Forster of Texas, P.C.
99.1 Form of Proxy Card
99.2 Consent of DuMoulin Black*
99.3 1995 Incentive Compensation Plan*
* Previously filed
(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
II-4
<PAGE>
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 amendment to 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 August 5, 1996.
RICH COAST RESOURCES LTD.,
Registrant
By /s/ James P. Fagan
---------------------------------
James P. Fagan, President
Pursuant to the requirements of the Securities Act of 1933, this
amendment to this Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
Signature Title Date
- ----------- ----- -----
/s/ Robert W. Truxell Chief Executive Officer, Director August 5, 1996
- - ------------------------- and Authorized Representative in
Robert Truxell the United States
/s/ James P. Fagan Director August 5, 1996
- - -------------------------
James P. Fagan
/s/ Ronald W. Waltz, Jr. Chief Financial Officer and August 5, 1996
- - ------------------------- Principal Accounting Officer
Ronald W. Waltz, Jr.
/s/ Thornton J. Donaldson Director August 2, 1996
- - -------------------------
Thornton J. Donaldson
/s/ Randall Pow Director August 2, 1996
- - -------------------------
Randall Pow
/s/ Director
- - -------------------------
Geoffrey Hornby
II-6
<PAGE>
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
August 5, 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. With respect to matters of British Columbia law, we are relying upon
the opinion of DuMoulin Black, Barristers & Solicitors, of Vancouver,
British Columbia.
3. 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 2
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.
<PAGE>
[LETTERHEAD]
August 1, 1996
Mr. Jim Fagan
Rich Coast Resources, Ltd.
c/o Waste Recovery Systems
10200 Ford Road
Dearborn, Michigan 48126
Dear Mr. Fagan:
Rich Coast Resources, Ltd. ("the Company") is presently a British Columbia
company. The shareholders of the Company will be asked to change its
jurisdiction from British Columbia, Canada to Delaware by means of a process
called a "continuance" under Canadian law and a "domestication" under
Delaware law. 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 Ltd. Also, the shareholders will be asked to alter 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.
The domestication 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.
In order for a transaction to be given nonrecognition treatment under the
reorganization provisions, it must meet several general requirements.
1. The reorganization must meet certain tests in the Regulations
regarding "continuity of interest" and "continuity of business
enterprise."
2. The reorganization must be conducted according to one of several
acceptable patterns -- there are seven qualifying forms or types of
reorganizations under Internal Revenue Code Section 368 eligible for
nonrecognition.
3. The reorganization must meet the judicially imposed condition
requiring a "business purpose" for the transaction.
4. A plan of reorganization must exist and such plan must be adopted by
each corporation involved in the transaction.
<PAGE>
Internal Revenue Code Section 368(a)(1)(F) defines the term reorganization as
a mere change in identity, form or place of organization of one corporation,
however effected. Since the Company is only changing its name and location,
"the continuity of business enterprise" and "business purpose" are not
applicable.
Internal Revenue Code Section 368(a)(1)(E) defines the term reorganization as
a recapitalization. Although not defined in the Code, the term
recapitalization refers to exchanges of stock and securities by the
corporation's shareholders and security holders for new stock and/or
securities. In essence, the "E" reorganization permits a corporation to alter
the configuration of its capital structure. Four exchanges are included under
the general heading of recapitalization. They are (1) stock for stock; (2)
bonds for stock; (3) bonds for bonds; and (4) stocks for bonds. As a general
rule only the first three exchanges qualify as "E" reorganizations. Since the
Company is only changing its par value per share (stock for stock), the
"continuity of business enterprise" and "business purpose" are not applicable.
Revenue Ruling 88-25 states the conversion of a foreign corporation to a
domestic corporation under a state domestication statute qualifies as a
reorganization under Section 368(a)(1)(F) provided the company possesses the
same assets and liabilities, continued the same business activities after the
conversion, and no alteration in shareholder continuity, asset continuity, or
business enterprise.
Internal Revenue Code Section 361(a) states as a general rule no gain or loss
shall be recognized by a corporation if such corporation is a party to a
reorganization and exchanges property, pursuant to the plan of
reorganization, solely for stock or securities in another corporation.
Internal Revenue Code Section 354(a) states as a general rule no gain or loss
shall be recognized by the shareholders if stock or securities in a
corporation which is a party to a reorganization pursuant to the plan of
reorganization, exchanged solely for stock or securities in another
corporation.
In certain circumstances, the nonrecognition treatment normally accorded to
the transferor corporation and its shareholders in an international
reorganization is over-ridden by the operation of section 367 and the
corresponding regulations. If a corporate shareholder of a foreign
corporation is a United States shareholder under section 7.367(b)-(2)(b) of
the Temporary Income Tax Regulations, then the shareholders are denied
section 354 nonrecognition treatment unless it agrees to include the "all
earnings and profits amount" in income as a dividend.
Based on our review of the income statement and balance sheet as of April 30,
1995, and discussions with Rick Henshaw at Smythe Ratcliffe in Vancouver,
B.C., there does not appear to be any earnings and profits.
<PAGE>
It is our opinion that the domestication will be treated as a reorganization
within the meaning of Section 368(a)(1)(F) of the 1986 Internal Revenue Code,
and accordingly (i) no gain or loss will be recognized by the Company as a
result of the domestication; (ii) 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 due to the lack of earnings and profits; (iii) 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.
Special tax considerations will apply to those few shareholders who acquired
their shares of Company common stock in connection with the Waste Reduction
System partnership interest.
Our opinion does not address the Canadian tax consequences.
Sincerely,
Pannell Kerr Forester of Texas, P.C.
R. Paul Ikard
RPI:mea
cc: Donna Key
Rick Henshaw
<PAGE>
Pannell Kerr Forster of Texas, P.C.
Certified Public Accountants
August 1, 1996
Board of Directors
Rich Coast Resources Ltd.
206-475 Howe Street
Vancouver, BC V6C 2B3
Gentlemen:
We consent to the filing of our letter of opinion dated August 1, 1996 as
an exhibit to the Form S-4 Registration Statement of Rich Coast Resources Ltd.
(SEC File No. 33-6099). We further consent to the use of our name and the
reference to our opinion in the section of the Registration Statement captioned
"United States Federal Income Tax Consequences."
/s/ Pannell Kerr Forster of Texas, P.C.
<PAGE>
<TABLE>
<S> <C>
Type of Meeting: Extraordinary General Meeting
Name of Company: RICH COAST RESOURCES LTD.
Meeting Date: September 16, 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 which include approving
a domestication which would change the domicile of the Company to
the State of Delaware and have certain other effects, 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 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,
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>
