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Exhibit 4.1
EXCHANGE AGENT AGREEMENT
TRANSECURITIES INTERNATIONAL, INC.
2510 N. Pines Road, Suite 202
Spokane, Washington 99206-7624
November 17, 1998
Gold Reserve Corporation
Gold Reserve Inc.
601 West Riverside Drive, Suite 1940
Spokane, Washington 99201
Dear Sirs:
It is our understanding that Gold Reserve Corporation, a Montana corporation
("GR-Montana"), is currently seeking shareholder approval for a reorganization
transaction (the "Reorganization"). As a result of the Reorganization,
GR-Canada, a Yukon corporation ("GR-Canada"), will become the new parent company
of GR-Montana. The Reorganization will take place pursuant to a Merger Agreement
(the "Merger Agreement") dated as of October 5, 1998, among GR-Montana,
GR-Canada and its wholly owned subsidiary, GR Merger Corp. It is our further
understanding that the Reorganization will involve an exchange of share
certificates by the GR-Montana shareholders for GR-Canada Class A Shares in the
ordinary course of business (no mandatory exchange), and an election right by
U.S. Holders of GR-Montana Common Stock to receive Equity Units instead of
GR-Canada Class A Shares.
The purpose of this letter is to set forth the terms by which TranSecurities
International, Inc. will serve as exchange agent for the exchange ("Exchange
Agent") and provide other services in connection with the Reorganization.
Capitalized terms used in this letter, but not defined, have the meaning for
them set forth in the Merger Agreement.
The Exchange Agent has previously contracted with GR-Montana to provide stock
transfer and registrar services, and the terms of the Stock Transfer and
Registrar Agreement, dated April 1, 1992, are incorporated herein by reference,
as well as GR-Canada's Stock Transfer and Registrar Agreement with the Exchange
Agent dated November 17, 1998.
In connection with the Reorganization, the Exchange Agent will perform the
following services. Certain additional obligations of the parties are set forth
in more detail below.
General
Upon approval of the Reorganization, the Exchange Agent will record the
conversion of all GR-Montana Common Stock into GR-Canada Class A Common Shares
or Equity Units, as appropriate, but not Dissenting Shares.
Upon receipt of GR-Montana Common Stock for transfer following the
Reorganization, the Exchange Agent will issue the appropriate denominations of
GR-Canada Class A Shares in substitution thereof for any transaction not
involving a Gold Reserve shareholder electing Equity Units.
Upon receipt of GR-Montana Common Stock from an electing shareholder prior to
the Election Date along with an appropriately completed Form of Election
(attached as Exhibit A hereto), the Exchange Agent will, following the Effective
Time, cancel the GR-Montana Common Stock certificates, make a book entry of the
election to exchange, and issue one GR-Canada Class B Share and one share of
GR-Montana Class B Stock, which will be paired as an Equity Unit, for each share
surrendered with the Form of Election. At that time, the Equity Units will be
deemed to have been deposited with the Exchange Agent (including the shares of
GR-Montana Class B Stock, the GR-Canada Class B Shares and dividends and cash
received in respect thereof, "Deposited Securities").
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In exchange for the GR-Montana Common Stock converted into an Equity Unit, the
Exchange Agent shall deliver a Unit Share in lieu of the Deposited Securities to
the holder thereof. Unit Shares shall be substantially in the form set forth in
Exhibit B attached hereto, with appropriate insertions, modifications and
omissions as hereinafter provided.
The procedures for exchanging shares, making an election, and converting shares
are set forth in the Merger Agreement describing this transaction, and are
incorporated herein by reference.
The Exchange Agent will maintain appropriate stock transfer and registrar books
for all shareholders of GR-Canada Class A Shares and GR-Canada Class B Shares.
The Exchange Agent will also maintain appropriate stock transfer and registrar
books for all shareholders of GR-Montana Class B Stock. This includes the Equity
Units and Unit Shares.
Upon further election of an electing shareholder to convert Equity Units into
GR-Canada Class A Shares following the Reorganization, the Exchange Agent will
notify GR-Canada and GR-Montana. The Equity Units will be converted as provided
below, but the Exchange Agent will await specific instructions from an
authorized person regarding this further exchange. The form of authorization is
attached hereto as Exhibit C.
Upon approval of the Reorganization, GR-Canada will require a Canadian transfer
agent and the Exchange Agent will become co-agent. The parties agree that an
appropriate co-agent agreement will be prepared at that time.
Fees for the above services shall be billed by the Exchange Agent at rates
agreed to prior to the shareholder meeting being held to obtain approval of the
Reorganization.
Additional Obligations
At any time following the Reorganization, Equity Units may be converted into
GR-Canada Class A Shares. In order for a holder of Unit Shares to convert Equity
Units into GR-Canada Class A Shares, such holder shall surrender the
certificate(s) representing the Unit Shares, duly endorsed, to the Exchange
Agent, accompanied by a notice stating the number of GR-Canada Class B Shares
and shares of GR-Montana Class B Stock which such holder desires to convert into
GR-Canada Class A Shares. The person entitled to receive the GR-Canada Class A
Shares issuable upon such conversion shall be treated for all purposes as the
record holder of such GR-Canada Class A Shares on the date of conversion. For
Equity Units represented by a Unit Share, the Exchange Agent will present each
share of GR-Montana Class B Stock to GR-Montana for conversion into a 99%
fractional GR-Canada Class A Share and simultaneously present each GR-Canada
Class B Share to GR-Canada for conversion into a 1% fractional GR-Canada Class A
Share unless otherwise instructed in the Form of Authorization. The sum of the
fractional GR-Canada Class A Shares received for the Equity Unit will equal one
GR-Canada Class A Share.
While Unit Shares remain outstanding, the GR-Canada Class B Shares are
transferable with the GR-Montana Class B Stock component of the Equity Unit;
provided, however, the Exchange Agent may not register the transfer of any
GR-Canada Class B Shares or GR-Montana Class B Stock (or fractions of shares)
comprising a part of any Equity Unit unless there is produced to the Exchange
Agent such evidence as it may in its discretion require to ensure that on the
same occasion there is also being transferred to the same person the GR-Montana
Class B Stock or GR-Canada Class B Shares, respectively, comprising part of the
Equity Unit. For purposes of this letter, a transfer means a transfer, sale,
encumbrance or other disposal of a component of an Equity Unit.
The Unit Shares are transferable on the register maintained by the Exchange
Agent; provided, however, that the Exchange Agent may close the register at any
time or from time to time when deemed expedient by it in connection with the
performance of its duties or at the request of GR-Canada or GR-Montana. As a
condition precedent to the execution and delivery, registration, registration of
transfer, split-up or combination of any Equity Unit, the delivery of any
distribution thereon (including any distributions on GR-Canada Class B Shares or
GR-Montana Class B Stock) or the withdrawal of Deposited Securities, the
Exchange Agent, GR-Canada or GR-Montana may require (a) payment of any stock
transfer or other tax or other governmental charge with respect to GR-Canada
Class B Shares or GR-Montana Class B Stock and any stock transfer or
registration fee with respect thereto; (b) the production of proof satisfactory
to it of the identity and genuineness of any signature and of such other
information as it may deem necessary or proper or as GR-Canada or GR-Montana may
require; and (c) compliance with such additional regulations as the Exchange
Agent may establish.
Whenever any distribution shall be made upon GR-Canada Class B Shares or
GR-Montana Class B Stock, or whenever the Exchange Agent shall receive notice of
any meeting of holders of GR-Canada Class B Shares or GR-Montana Class B Stock,
or whenever the Exchange Agent shall find it necessary or convenient in
connection with the giving of any notice, solicitation
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or any consent or any other matter, the record date for the determination of the
holders of Unit Shares who are entitled to receive such distribution or net
proceeds of the sale thereof, to give instructions for the exercise of voting
rights at any such meeting, to receive such notice or solicitation, or to act in
respect of such other matter shall be identical to that fixed by GR-Canada or
GR-Montana with respect to GR-Canada Class B Shares or GR-Montana Class B Stock,
unless otherwise agreed by GR-Canada or GR-Montana, as the case may be.
(i) The Exchange Agent will keep, at its transfer office in
Spokane, Washington, a register for the registration of
Unit Shares and their transfer that at all reasonable
times will be open for inspection by the holders of Unit
Shares, GR-Canada and GR-Montana, provided that such
inspection shall not be for the purpose of communicating
with holders of Unit Shares in the interest of a
business or object other than the business of GR-Canada
and GR-Montana or a matter related to this letter
agreement or the Unit Shares.
(ii) Upon any split-up, division, subdivision, consolidation,
cancellation or any other reclassification of the
Deposited Securities, or upon any recapitalization,
reorganization, merger or consolidation or sale of
assets affecting GR-Canada or GR-Montana or to which
either is a party, any securities that shall be received
by the Exchange Agent in exchange for, or in conversion,
replacement, or otherwise in respect of, the Deposited
Securities shall be treated as Deposited Securities
under this letter agreement, and the Unit Shares shall
thenceforth represent the right to receive the Deposited
Securities including the securities so received. In any
such case, the Exchange Agent may with GR-Canada's
and/or GR-Montana's approval, and shall if GR- Canada
and/or GR-Montana shall so request, subject to this
letter agreement, call for the surrender of outstanding
Equity Units to be exchanged for new Equity Units
specifically describing such newly received Deposited
Securities.
(iii) The Exchange Agent may at any time resign as Exchange
Agent by written notice of its election to do so
delivered to GR-Canada and GR-Montana or be removed as
Exchange Agent by the joint action of GR-Canada and
GR-Montana by written notice of such removal delivered
to the Exchange Agent, such resignation or removal to
take effect upon the appointment of, and acceptance by,
a successor exchange agent.
(iv) The Unit Shares and this letter agreement may at any
time be amended by agreement among GR-Canada, GR-
Montana and the Exchange Agent. Any amendment that
imposes or increases any fees, taxes or charges (other
than charges referred to in clauses (a) and (b) in
Section 10 below relating to charges of the Exchange
Agent), or that otherwise prejudices any substantial
existing right of holders of Unit Shares, will not take
effect as to outstanding Unit Shares until the
expiration of 30 days after notice of such amendment has
been given to the record holders of outstanding Unit
Shares. Every holder of a Unit Share at the expiration
of such 30 day period will be deemed by continuing to
hold such Unit Share to consent and agree to such
amendment and to be bound by this letter agreement or
the Unit Share as amended thereby.
(v) Whenever so directed by GR-Canada and GR-Montana, the
Exchange Agent will terminate this letter agreement by
mailing notice of such termination to the record holders
of all Unit Shares then outstanding at least 30 days
prior to the date fixed in such notice for such
termination.
(vi) GR-Canada and GR-Montana will pay all charges and
expenses of the Exchange Agent and those of any
registrar or co-registrar under this letter agreement in
accordance with agreements between the Exchange Agent,
GR-Canada and GR-Montana from time to time, but will not
pay (a) stock transfer or other taxes and other
governmental charges (which are payable by holders of
Unit Shares or persons depositing Unit Shares) or (b)
any applicable share transfer or registration fees on
deposits or withdrawals of Unit Shares.
(vii) As soon as practicable after receipt of notice that
GR-Canada is exercising its right to call all or part of
the Equity Units, the Exchange Agent shall surrender the
Equity Units pursuant to the terms as found in such
notice and mail to the holders of Unit Shares a notice
containing (a) such information as is contained in such
notice of call and (b) a statement that, on and after a
date specified by the Exchange Agent in such notice,
each holder shall be entitled to receive, upon
presentation of the Unit Shares held by such holder at
the Exchange Agent's office, one GR-Canada Class A Share
for each Equity Unit being called less any amount
required to be withheld by GR-Canada or the Exchange
Agent from any such exercise of call rights in respect
of taxes. The Exchange Agent shall, as directed by
GR-Canada, mail to each holder, first class postage
prepaid, the notice of the call of Equity Units, not
less than 7 and not more than 60 days prior to the date
fixed for call (the "call date") of such Equity Units.
Neither failure to mail any such notice to one or more
such
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holders nor any defect in any notice shall affect the
sufficiency of the proceedings for the call of Equity
Units by GR-Canada.
(viii) Notice having been mailed by the Exchange Agent, from
and after the call date (unless GR-Canada shall have
failed to call the Equity Units to be called by it as
set forth in its notice provided for above), the Equity
Units called shall be deemed no longer to be outstanding
and all rights of the holders of Unit Shares evidencing
the Equity Units called shall, to the extent of such
Equity Units called, cease and terminate.
(ix) (a) All notices, requests, claims, demands and other
communications under this letter agreement shall be in
writing and shall be deemed given if delivered
personally, via facsimile (which is confirmed) or sent
by overnight courier (providing proof of delivery) to
GR-Montana, GR-Canada and the Exchange Agent at the
following addresses (or at such other address for a
party as shall be specified by like notice):
(i) if to GR-Montana:
Gold Reserve Corporation
601 West Riverside Avenue, Suite 1940
Spokane, Washington 99201
Attn: Rockne J. Timm
(ii) if to GR-Canada:
Gold Reserve Inc.
3081-3rd Avenue
Whitehorse, Yukon
Y1A 4Z7
Attn: Rockne J. Timm
(iii) if to the Exchange Agent:
TranSecurities International, Inc.
2510 N. Pines Road, Suite 202
Spokane, Washington 99206-7624
(b) All notices, requests, claims, demands and other
communications under this letter agreement shall be in
writing and shall be deemed given if delivered
personally, via facsimile (which is confirmed) or sent
by overnight delivery (providing proof of delivery) to
holders of Unit Shares at the address of such holder as
it appears on the transfer books for Unit Shares of the
Exchange Agent (or at such other address for a holder as
shall be specified by like notice).
This letter agreement may be executed in any number of counterparts, each of
which shall be deemed an original and all of such counterparts shall constitute
one and the same instrument.
THIS LETTER AGREEMENT SHALL BE INTERPRETED AND ALL RIGHTS HEREUNDER AND
THEREUNDER AND PROVISIONS HEREOF AND THEREOF SHALL BE GOVERNED BY THE LAWS OF
THE STATE OF WASHINGTON, WITHOUT REGARD FOR THE CHOICE OF LAW DOCTRINES OF SUCH
STATE.
If you are in agreement with the foregoing, please execute this letter agreement
below and return a signed original to me. Holders of Unit Shares, by electing to
receive Equity Units, shall be deemed to be parties to this letter agreement and
bound by its terms and provisions. Any questions as to the administration and
interpretation of this letter agreement shall be made by GR-Montana and
GR-Canada following consultation with the Exchange Agent and shall be binding on
the holders of Unit Shares.
TRANSECURITIES INTERNATIONAL, INC.
/s/ CAROLYN S. TEDESCO
- ---------------------------------------------------------
Carolyn S. Tedesco, President
Agreed and Accepted:
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GOLD RESERVE INC.
/s/ ROBERT A. MCGUINNESS
- ------------------------------------------
Robert A. McGuinness
Chief Financial Officer
Date: November 17, 1998
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GOLD RESERVE CORPORATION
/s/ ROBERT A. MCGUINNESS
- ------------------------------------------
Robert A. McGuinness
Chief Financial Officer
Date: November 17, 1998
-------------------------------------
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EXHIBIT A
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EQUITY UNIT ELECTION FORM
TO BE COMPLETED BY U.S. HOLDERS OF COMMON STOCK OF GOLD RESERVE CORPORATION ONLY
WHO WISH TO MAKE AN EQUITY UNIT ELECTION IN LIEU OF RECEIVING CLASS A COMMON
SHARES OF GOLD RESERVE INC.
This Form is to accompany certificates for shares of GR-Montana Common
Stock when submitted by a U.S. holder pursuant to an Equity Unit Election to
receive an equity unit comprised of (1) one share of GR-Montana Class B Stock
and (2) one GR-Canada Class B Share for GR-Montana Common Stock in connection
with the proposed Merger of GR Merger Corp. with and into GR-Montana. U.S.
HOLDERS OF GR-MONTANA COMMON STOCK WHO DO NOT WISH TO MAKE THE EQUITY UNIT
ELECTION (A "NON-ELECTING HOLDER") NEED NOT SUBMIT THIS FORM. CANADIAN HOLDERS
OF GR-MONTANA COMMON STOCK ARE NOT ELIGIBLE TO MAKE AN EQUITY UNIT ELECTION. If
the Merger is approved, each share of GR-Montana Common Stock owned by a
Non-Electing Holder or a Canadian Holder will automatically be converted into
one fully paid and non-assessable GR-Canada Class A Share. For more information,
you should carefully review the enclosed Proxy Statement/Joint Prospectus.
TO: TRANSECURITIES INTERNATIONAL, INC., EXCHANGE AGENT
Attention: Stock Transfer Department
(509) 927-1255
BY MAIL: BY OVERNIGHT COURIER: BY HAND:
2510 N. Pines Road, Suite 202 2510 N. Pines Road, Suite 202 2510 N. Pines Road, Suite 202
Spokane, Washington 99206-7624 Spokane, Washington 99206-7624 Spokane, Washington 99206-7624
BY FACSIMILE: CONFIRM BY TELEPHONE TO:
(For Eligible Institutions Only)
(509) 928-6449 (509) 927-1255
DELIVERY OF THIS FORM TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS VIA A
FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE, DOES NOT CONSTITUTE A VALID
DELIVERY.
Ladies and Gentlemen:
In connection with the reorganization of Gold Reserve Corporation
("GR-Montana") pursuant to the merger (the "Merger") of GR Merger Corp., a
wholly-owned subsidiary of Gold Reserve Inc. ("GR-Canada"), with and into
GR-Montana, the undersigned hereby submits the certificates for shares of common
stock, no par value per share ("GR-Montana Common Stock"), of GR-Montana listed
below and elects, subject as set forth below, to have all or a portion of the
shares of GR-Montana Common Stock represented by such certificates as set forth
below converted into equity units on the basis of one share of GR-Montana Common
Stock for one equity unit ("Equity Unit") comprised of (1) one share of Class B
common stock, no par value per share ("GR-Montana Class B Stock"), of GR-Montana
and (2) one Class B common share, no par value per share ("GR-Canada Class B
Share"), of GR-Canada.
It is understood that the following election is subject to (1) the terms,
conditions and limitations set forth in the Proxy Statement/Joint Prospectus,
dated , 1998, relating to the Merger (the "Proxy
Statement/Joint Prospectus"), receipt of which is acknowledged by the
undersigned, (2) the terms of the Agreement and Plan of Merger, dated as of
October 5, 1998 (the "Merger Agreement"), a copy of which appears as Annex I to
the Proxy Statement/Joint Prospectus, and (3) the accompanying Instructions.
The undersigned authorizes and instructs you, as Exchange Agent, to deliver
such certificates of GR-Montana Common Stock to GR-Montana and GR-Canada and to
receive on behalf of the undersigned, in exchange for the shares of GR-Montana
Common Stock represented thereby, a unit share ("Unit Share") representing
Equity Units issuable in the Merger pursuant to the Merger Agreement. The
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undersigned represents that he has full authority to surrender the accompanying
certificates and that he will, upon request, execute and deliver any additional
documents reasonably deemed appropriate or necessary by the Exchange Agent in
connection with the surrender thereof. All authority granted by this Equity Unit
Election Form shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
Unless otherwise indicated under Special Issuance Instructions below,
please issue any Unit Share representing Equity Units issuable in exchange for
the shares of GR-Montana Common Stock represented by the certificates submitted
hereby in the name of the registered holder(s) of such GR-Montana Common Stock.
Similarly, unless otherwise indicated under Special Delivery Instructions,
please mail any Unit Share representing Equity Units issuable in exchange for
the shares of GR-Montana Common Stock represented by the certificates submitted
hereby to the registered holder(s) of the GR-Montana Common Stock at the address
or addresses shown below.
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PLEASE READ CAREFULLY THE ACCOMPANYING INSTRUCTIONS
PRIOR TO COMPLETING THIS EQUITY UNIT ELECTION FORM
BOX I
SHARES SUBMITTED
(ATTACH ADDITIONAL LIST IF NECESSARY)
----------------------------------------------------------------
CERTIFICATE TOTAL NUMBER NUMBER OF
NUMBER(S) FOR OF SHARES SHARES TO BE
GR-MONTANA REPRESENTED BY CONVERTED TO
NAME AND ADDRESS OF REGISTERED HOLDER* COMMON STOCK CERTIFICATE(S) EQUITY UNITS**
- -------------------------------------- -------------------- -------------------- --------------------
- ------------------------------------------ ------------------- ------------------- -------------------
- ------------------------------------------ ------------------- ------------------- -------------------
- ------------------------------------------ ------------------- ------------------- -------------------
TOTAL
SHARES
- ---------------------------------------------------------------------------------------------------------------
* Only certificates registered in a single form may be deposited with this
Form of Election. If certificates are registered in different forms (e.g., John
R. Doe and J.R. Doe), it will be necessary to fill in, sign and submit as many
separate Forms of Election as there are different registrations of certificates.
** UNLESS OTHERWISE INDICATED, IT WILL BE ASSUMED THAT ALL SHARES SUBMITTED
ARE TO BE TREATED AS HAVING MADE AN EQUITY UNIT ELECTION.
BOX II
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS D(6) AND D(7))
To be completed ONLY if the Unit Shares representing Equity Units are to be
registered in the name of someone other than the registered holder(s) of shares
of GR-Montana Common Stock.
New Issuance Name:
- ---------------------------
- ---------------------------------------------------
(PLEASE PRINT)
Address:
- ----------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
(INCLUDING ZIP CODE)
- ---------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL
SECURITY NUMBER)
BOX III
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTION D(8))
To be completed ONLY if the Unit Shares representing Equity Units are to be
in the name of the registered holder(s) of shares of GR-Montana Common Stock,
but are to be sent to someone other than the registered holder(s) or to an
address other than the address of the registered holder(s) set forth above.
Special Delivery Name:
- ------------------------
- ---------------------------------------------------
(PLEASE PRINT)
Special Delivery Address:
- ----------------------
- ---------------------------------------------------
- ---------------------------------------------------
(INCLUDING ZIP CODE)
- ---------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL
SECURITY NUMBER)
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BOX IV
- --------------------------------------------------------------------------------
SIGN HERE
(You Must Also Complete the Substitute Form W-9)
NAME(S)
- --------------------------------------------------------------------------------
(PLEASE PRINT)
- --------------------------------------------------------------------------------
SIGNATURE(S) OF OWNER(S)
NAME(S)
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(PLEASE PRINT)
- --------------------------------------------------------------------------------
SIGNATURE(S) OF OWNER(S)
(Must be signed by registered holder(s) exactly as name(s) appear(s) on the
stock certificates or by persons authorized to become registered holder(s) by
certificates and documents transmitted herewith. If signature is by trustees,
executors, administrators, guardians, attorneys-in-fact, agents, officers of
corporations or others acting in a fiduciary or representative capacity, please
provide the following information.)
NAME(S)
- --------------------------------------------------------------------------------
(PLEASE PRINT)
NAME(S)
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title)
- --------------------------------------------------------------------------------
Address (including zip code)
- ---------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Area Code and Telephone Number
- ---------------------------------------------------------------------
Taxpayer Identification or
Social Security No.
- --------------------------------------------------------------------------------
MEDALLION SIGNATURE GUARANTEE
By:
- --------------------------------------------------------------------------------
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTIONS
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT
TO RULE 17Ad OF THE EXCHANGE ACT OF 1934, AS AMENDED.
(DO NOT WRITE IN SPACES BELOW)
- ------------------------------------------------------------------------------------------------------------------
SHARES
SHARES CONVERTED
CONVERTED INTO
SHARES SHARES INTO GR-CANADA
SURRENDERED ACCEPTED EQUITY UNITS RECEIPT NO. BLOCK NO. CLASS A SHARES CERTIFICATE NO. BLOCK NO.
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
DELIVERY PREPARED BY: CHECKED BY: DATE:
- ------------------------------------------------------------------------------------------------------------------
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INSTRUCTIONS
You should read the accompanying Proxy Statement/Joint Prospectus in conjunction
with these Instructions.
A. SPECIAL CONDITIONS
1. Time in Which to Elect. To be effective, an election (an "Election")
pursuant to the terms and conditions set forth herein on this Equity Unit
Election Form (this "Form") or a facsimile hereof, accompanied by the
above-described certificates representing shares of GR-Montana Common Stock or a
proper guarantee of delivery thereof, must be received by the Exchange Agent, at
any of the addresses set forth above, NO LATER THAN 5:00 P.M., SPOKANE,
WASHINGTON TIME, ON DECEMBER 17, 1998 (the "Election Date"). Each share of
GR-Montana Common Stock outstanding at the Effective Time (as defined in the
Proxy Statement/Joint Prospectus) of the Merger with respect to which the
Exchange Agent shall have not received an effective Election prior to the
Election Date will be automatically converted into one fully paid and
non-assessable GR-Canada Class A Share. See Instruction B.
2. Revocation of Election. Any Election may be revoked by the person who
submitted this Form to the Exchange Agent and the certificate(s) for shares
withdrawn by written notice duly executed and received by the Exchange Agent (a)
prior to 5:00 p.m., Spokane, Washington time, on the Election Date or (b) such
later date prior to the Effective Time of the Merger as required by law. Such
notice must specify (a) the person in whose name the shares of GR-Montana Common
Stock to be withdrawn had been deposited, (b) the number of shares to be
withdrawn, (c) the name of the registered holder thereof and (d) the serial
numbers shown on the certificate(s) representing the shares to be withdrawn. If
an Election is revoked, and the certificate(s) for shares withdrawn, the
GR-Montana Common Stock certificate(s) submitted therewith will be promptly
returned by the Exchange Agent to the person who submitted such certificate(s).
3. Termination of Right to Elect. If for any reason the Merger is not
consummated or is abandoned, all Forms will be void and of no effect.
Certificate(s) for GR-Montana Common Stock previously received by the Exchange
Agent will be returned promptly by the Exchange Agent to the person who
submitted such certificate(s).
B. ELECTION PROCEDURES
A description of the election procedures is set forth in the Proxy
Statement/Joint Prospectus in the "Reorganization" section under "Equity Unit
Election" and "Equity Unit Election Procedure" and elsewhere therein. A full
statement of the election procedures is also contained in the Merger Agreement
and all Elections are subject to compliance with such procedures. IN CONNECTION
WITH MAKING ANY ELECTION, SHAREHOLDERS SHOULD READ CAREFULLY, AMONG OTHER
MATTERS, THE AFORESAID DESCRIPTION AND STATEMENT AND THE INFORMATION CONTAINED
IN THE PROXY STATEMENT/JOINT PROSPECTUS UNDER "RISK FACTORS," "CERTAIN UNITED
STATES FEDERAL INCOME TAX CONSIDERATIONS" AND "CERTAIN CANADIAN FEDERAL INCOME
TAX CONSEQUENCES." By completing this Form and returning it to the Exchange
Agent, each shareholder agrees with GR-Montana and GR-Canada that a portion of
any GR-Montana Common Stock exchanged for Equity Units pursuant to an Election
will be transferred to GR-Montana as consideration for the issuance of the
shares of GR-Montana Class B Stock and that the remaining portion of the
GR-Montana Common Stock so exchanged will be transferred to GR-Canada as
consideration for the issuance of the GR-Canada Class B Shares and that the
allocation of such consideration shall be determined based on the respective
fair market values of the shares of GR-Montana Class B Stock and the GR-Canada
Class B Shares as estimated by GR-Montana on the Effective Time of the Merger.
C. RECEIPT OF EQUITY UNITS OR CONVERSION INTO GR-CANADA CLASS A SHARES
As soon as practicable after the Effective Time of the Merger and after the
Election Date, the Exchange Agent will mail Unit Shares representing Equity
Units to the holders of GR-Montana Common Stock with respect to each share of
GR-Montana Common Stock which is included in any effective
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Election. Each share of GR-Montana Common Stock with respect to which an
Election is not made, or with respect to which an Election fails to be
effective, will be automatically converted into one fully paid and
non-assessable GR-Canada Class A Share in accordance with the Merger Agreement.
D. GENERAL
1. Execution and Delivery. This Form or a facsimile hereof must be properly
filled in, dated and signed in Box IV, and must be delivered (together with
stock certificates representing the shares of GR-Montana Common Stock as to
which the Election is made) to the Exchange Agent at any of the addresses set
forth above. THE METHOD OF DELIVERY OF ALL DOCUMENTS IS AT THE OPTION AND RISK
OF THE SHAREHOLDER, BUT IF SENT BY MAIL, REGISTERED MAIL, RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS SUGGESTED.
2. Inadequate Space. If there is insufficient space on this Form to list
all your certificates being submitted to the Exchange Agent, please attach a
separate list.
3. Signatures. The signature (or signatures, in the case of certificates
owned by two or more joint holders) on this Form should correspond EXACTLY with
the name(s) as written on the face of the certificate(s) submitted unless the
shares of GR-Montana Common Stock described on this Form have been assigned by
the registered holder(s), in which event this Form should be signed in exactly
the same form as the name of the last transferee indicated on the transfers
attached to or endorsed on the certificates.
If this Form is signed by a person or persons other than the registered
owners of the certificates listed, the certificates must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered owner(s) appear on the certificates.
If this Form or any stock certificate(s) or stock power(s) are signed by a
trustee, executor, administrator, guardian, officer of a corporation,
attorney-in-fact or any other person acting in a representative or fiduciary
capacity, the person signing must give such person's full title in such capacity
and appropriate evidence of authority to act in such capacity must be forwarded
with this Form.
4. Partial Exchanges. If fewer than all the shares represented by any
certificate delivered to the Exchange Agent are to be submitted for exchange,
fill in the number of shares which are to be submitted in the box entitled
"Shares Submitted." In such case, each share of GR-Montana Common Stock not so
exchanged will be automatically converted into one fully paid and non-assessable
GR-Canada Class A Share. ALL SHARES REPRESENTED BY CERTIFICATES SUBMITTED
HEREUNDER WILL BE DEEMED TO HAVE BEEN SUBMITTED UNLESS OTHERWISE INDICATED.
5. Lost or Destroyed Certificates. If your stock certificate(s) has been
either lost or destroyed, please make note of this fact on the front of this
Form opposite your name and address and the appropriate forms for replacement
will be sent to you. You will then be instructed as to the steps you must take
in order to receive a Unit Share representing Equity Units in accordance with
the Merger Agreement.
6. New Certificates in Same Name. If any Unit Share representing Equity
Units in respect of an Election is to be registered in, or payable to the order
of, exactly the same name(s) that appears on the certificate(s) representing
shares of GR-Montana Common Stock submitted with this Form, no endorsement of
certificate(s) or separate stock power(s) is required.
7. New Certificates in Different Name. If any Unit Share representing
Equity Units in respect of an Election is to be registered in other than exactly
the name that appears on the certificate(s) representing shares of GR-Montana
Common Stock submitted for exchange herewith, such exchange shall not be made by
the Exchange Agent UNLESS the certificates submitted are endorsed, BOX II is
completed and the signature is medallion guaranteed in BOX IV by an eligible
guarantor institution (banks, stockbrokers, savings and loan associations and
credit unions with membership in an approved medallion guarantee program),
pursuant to Rule 17Ad-15 of the Exchange Act of 1934, as amended
8. Special Delivery Instructions. If the Unit Shares representing Equity
Units are to be registered in the name of the registered holder(s) of shares of
GR-Montana Common Stock, but are to be sent to
13
someone other than the registered holder(s) or to an address other than the
address of the registered holder, it will be necessary to indicate such person
or address in BOX III.
9. Single Unit Share. A single Unit Share representing Equity Units will be
issued.
10. Determination. All questions with respect to this Form and the Election
(including, without limitation, questions relating to the timeliness or
effectiveness of revocation of any Election) will be determined by the Exchange
Agent, which determination shall be conclusive and binding. The Exchange Agent
may be contacted by calling the Stock Transfer Department at (509) 927-1255.
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EXHIBIT B
12
15
================================================================================
NUMBER SEE REVERSE SIDE OF THIS CERTIFICATE FOR CERTAIN RESTRICTIONS ON
TRANSFER AND OTHER LEGENDED INFORMATION
UNIT SHARES
- ----------- ------------
38068P 10 3 GOLD RESERVE INC. GOLD RESERVE CORPORATION
(Organized under the laws of the Yukon Territory) (Organized under the laws of the State of Montana)
- ----------- ------------
NO PAR VALUE
THIS UNIT SHARE CERTIFICATE CERTIFIES THAT IS THE REGISTERED
HOLDER OF EQUITY UNITS ("EQUITY UNITS") deposited with the
Exchange Agent, each Equity Unit consisting of one Class B common share, no par
value per share ("GR-Canada Class B Share"), of Gold Reserve Inc., a company
incorporated in the Yukon Territory under the Business Corporations Act
("GR-Canada"), and one share of Class B common stock, no par value per share
("GR-Montana Class B Stock"), of Gold Reserve Corporation, a corporation
organized under the laws of the State of Montana ("GR-Montana," and together
with GR-Canada, the "Issuers"), each as adjusted from time to time for
distributions, changes in capitalization, business combinations or otherwise.
(1) THE EXCHANGE AGENT AGREEMENT. This unit share is one of the unit shares
(the "Unit Shares") executed and delivered pursuant to the Exchange Agent
Agreement, dated as of November 17, 1998 (as amended from time to time,
the "Exchange Agent Agreement"), by and among the Issuers, the Exchange
Agent and all registered holders ("Holders") from time to time of Unit
Shares, each of whom by accepting a Unit Share becomes a party thereto,
bound by all applicable terms and provisions thereof and hereof. The
Exchange Agent Agreement sets forth certain rights of Holders and the
rights and duties of the Exchange Agent in respect of the Equity Units
deposited thereunder and any and all GR-Canada Class B Shares, shares of
GR-Montana Class B Stock, dividends and cash, from time to time received
in respect of such Equity Units, GR-Canada Class B Shares, shares of
GR-Montana Class B Stock, dividends and cash held thereunder (such Equity
Units, GR-Canada Class B Shares, shares of GR-Montana Class B Stock,
dividends and cash, collectively, the "Deposited Securities"). Copies of
the Exchange Agent Agreement and of each Issuer's provisions of or
governing Deposited Securities are on file at the Exchange Agent's office
and at any other designated transfer offices. The Exchange Agent makes no
representation or warranty as to the validity or worth of the Deposited
Securities. The statements made on the face and the reverse of this Unit
Share are summaries of certain provisions of the Exchange Agent Agreement,
the Articles of Incorporation of GR-Canada and the Restated Articles of
Incorporation of GR-Montana and are qualified by and subject to the
detailed provisions thereof.
(2) TRANSFER OF EQUITY UNITS. Equity Units are not listed for trading on any
stock exchange, but, subject to compliance with applicable federal and
state securities laws, the Exchange Agent Agreement and this Unit Share,
may be transferred.
(3) CONVERSION OF EQUITY UNITS. Equity Units are convertible into Class A
common shares, no par value per share ("GR-Canada Class A Shares") of
GR-Canada. To convert Equity Units into GR-Canada Class A Shares, Holders
of Unit Shares shall surrender the certificate(s) representing the Unit
Shares, duly endorsed, to the Exchange Agent, accompanied by a notice
stating the number of GR- Canada Class B Shares and shares of GR-Montana
Class B Stock which such Holder desires to convert into GR-Canada Class A
Shares. The Exchange Agent shall present each share of GR-Montana Class B
Stock to GR-Montana for delivery against a 99% fractional GR-Canada Class
A Share and simultaneously present each GR-Canada Class B Share to
GR-Canada for conversion into a 1% fractional GR-Canada Class A Share.
Thereupon, GR-Canada shall promptly issue and deliver and GR-Montana may
deliver to such a Holder a certificate(s) for the number of GR-Canada
Class A Shares to which such Holder is entitled, registered in the name of
such Holder or designee of such Holder. The person entitled to receive the
GR-Canada Class A Shares issuable upon such conversion shall be treated
for all purposes as the record holder of such GR-Canada Class A Shares on
the date of conversion. If, for any reason, GR-Montana does not deliver
GR-Canada Class A Shares in the exchange, the holders of GR-Montana Class
B Stock may present the shares of GR-Montana Class B Stock to GR-Canada
and GR-Canada shall exchange such shares of GR-Montana Class B Stock for
GR-Canada Class A Shares.
(4) CALL RIGHTS. Each Equity Unit is callable by GR-Canada in exchange for one
GR-Canada Class A Share upon the earlier of (1) the liquidation,
dissolution or winding up of GR-Montana or GR-Canada and (2) the
expiration of three years from the date of the original issuance of the
Equity Units if 95% or more of such Equity Units have been exchanged for
GR-Canada Class A Shares.
This Certificate shall not be valid unless countersigned by the Exchange Agent. DATE:
EXCHANGE AGENT AND REGISTRAR:
TRANSECURITIES INTERNATIONAL, INC.
2510 N. PINES ROAD SUITE 202
PRESIDENT: SPOKANE, WA 99206
CORPORATE SECRETARY:
- ---------------------------- --------
Authorized Signature
================================================================================
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- --------------------------------------------------------------------------------
THE ISSUERS ARE AUTHORIZED TO ISSUE SHARES OF MORE THAN ONE CLASS OF STOCK AND
TO ISSUE SHARES IN MORE THAN ONE SERIES OF AT LEAST ONE CLASS OF STOCK. THE
ISSUERS WILL FURNISH WITHOUT CHARGE TO EACH SHAREHOLDER WHO SO REQUESTS IN
WRITING A STATEMENT OF THE DESIGNATIONS, RELATIVE RIGHTS, PREFERENCES AND
LIMITATIONS APPLICABLE TO EACH CLASS; THE VARIATIONS IN RIGHTS, PREFERENCES AND
LIMITATIONS DETERMINED FOR EACH SERIES; AND THE AUTHORITY OF THE BOARDS OF
DIRECTORS TO DETERMINE VARIATIONS FOR FUTURE SERIES.
THE SECURITIES REPRESENTED BY THIS UNIT SHARE CERTIFICATE ARE SUBJECT TO THE
TERMS OF THE ARTICLES OF INCORPORATION OF GR-CANADA, THE RESTATED ARTICLES OF
INCORPORATION OF GR-MONTANA AND AN EXCHANGE AGENT AGREEMENT DATED NOVEMBER 17,
1998, AMONG THE ISSUERS, THE EXCHANGE AGENT AND THE HOLDERS OF UNIT SHARES,
WHICH CONTAIN, AMONG OTHER PROVISIONS, RESTRICTIONS ON THE TRANSFER, SALE OR
OTHER DISPOSITION OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE, OR THE
REGISTRATION OF THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE.
A COPY OF SUCH EXCHANGE AGENT AGREEMENT IS AVAILABLE FOR REVIEW BY THE
REGISTERED HOLDER OF THIS CERTIFICATE AT THE ISSUERS' PRINCIPAL EXECUTIVE
OFFICES. A COPY OF THE ARTICLES OF INCORPORATION OF GR-CANADA AND THE RESTATED
ARTICLES OF INCORPORATION OF GR-MONTANA ARE AVAILABLE FOR REVIEW BY THE
REGISTERED HOLDER OF THIS CERTIFICATE AT THE PRINCIPAL EXECUTIVE OFFICES OF
GR-CANADA AND GR-MONTANA, RESPECTIVELY.
- --------------------------------------------------------------------------------
FORM OF CONVERSION
(Form of exercise to be executed by the Holder at the time of conversion)
TO , the Exchange Agent:
-----------------------
The undersigned, the Holder of this Unit Share Certificate, hereby exercises his
right to convert the Equity Units underlying the Unit Shares to GR-Canada Class
A Shares, no par value, which the undersigned is entitled to under the terms of
the stock underlying the Equity Units.
Please issue a certificate for ___________ shares of GR-Canada Class A Shares in
the name of:
- ----------------------------------- ------------------------------------------------------
Print or Type Name Tax Identification Number (i.e. Social Security Number)
- ----------------------------------- ------------------ ------------------- ---------------
Street Address or PO Box City State or Province ZIP Code
and, if said number of shares shall not be all the Equity Units represented
hereunder, please issue a new Unit Share Certificate for the unexercised portion
of the underlying Equity Units to:
- ----------------------------------- ------------------------------------------------------
Print or Type Name Tax Identification Number (i.e. Social Security Number)
- ----------------------------------- ------------------ ------------------- ---------------
Street Address or PO Box City State or Province ZIP Code
Signed: Dated:
---------------------------- -----------------------------
(Signature must conform in all respects
to the name of the Holder as specified
on the face of the Equity Unit Share
Certificate). The signature(s) must be
guaranteed by an eligible guarantor
institution (banks, stock brokers, savings
and loan associations, and credit unions
with membership in an approved
Signature Guarantee Medallion Program),
pursuant to S.E.C. Rule 17Ad. 15.
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17
(Form of Assignment to be executed if Holder desires to transfer Equity Units)
FOR VALUE RECEIVED, _________________________________ hereby sells, assigns, and
transfers unto ____________________________ the rights represented by the Unit
Share Certificate to which the underlying Equity Units relate and appoints
______________________________ attorney to transfer such right on the books of
the Exchange Agent with full power of substitution in the premises.
Signed: Dated:
---------------------------- -----------------------------
(Signature must conform in all respects to the name of the Holder as specified
on the face of the Equity Unit Share Certificate). The signature(s) must be
guaranteed by an eligible guarantor institution (banks, stock brokers, savings
and loan associations, and credit unions with membership in an approved
Signature Guarantee Medallion Program), pursuant to S.E.C. Rule 17Ad. 15.
15
18
EXHIBIT C
16
19
Date:
------------------------
TO: TranSecurities International, Inc.
N 2510 Pines Road, Suite 202
Spokane, WA 99206
RE: Gold Reserve Inc. and Gold Reserve Corporation Conversion of Equity Units
Dear TranSecurities:
The owner of Equity Units shown below has submitted his Unit Share certificate
representing Equity Units for conversion to Class A shares of Gold Reserve. Inc.
Please issue certificates of Gold Reserve Inc. Class A shares as follows:
Name of Equity Unit Holder:
-----------------------------------
Address of Equity Unit Holder:
----------------------------------
Tax Identification Number of Equity Unit Holder:
-----------------
Number of Class A shares to be issued:
-------------------
The shares are to be original issues and are not subject to restrictions.
Please deliver the certificates to:
-----------------------------------
Thank you for your prompt assistance.
Very truly yours,
- -----------------------
for Gold Reserve Inc.
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