FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
For the month of May 2006
Commission File Number: 001-31819
Gold Reserve Inc.
(Exact name of registrant as specified in its charter)
926 W. Sprague Avenue, Suite 200
Spokane, Washington 99201
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F _____
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes No X
If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): 82-____________
Filed with this Form 6-K are the following, which are incorporated herein by
reference:
99.1 Notice of Special Meeting of Shareholders on March 22, 2006
99.2 Management Information and Proxy Circular
99.3 Report of Voting Results at Special Meeting of Shareholders
Certain statements included herein, including those that express management's
expectations or estimates of our future performance, constitute "forward
looking statements" within the meaning of the United States Private Securities
Litigation Reform Act of 1995. Forward looking statements are necessarily
based upon a number of estimates and assumptions that, while considered
reasonable by management are inherently subject to significant business,
economic and competitive uncertainties and contingencies. We caution that such
forward-looking statements involve known and unknown risks, uncertainties and
other risk factors that may cause the actual financial results, performance,
or achievements of Gold Reserve to be materially different from our estimated
future results, performance, or achievements expressed or implied by those
forward looking statements. Numerous factors could cause actual results to
differ materially from those in the forward-looking statements, including
without limitation, concentration of operations and assets in foreign
countries, corruption, requests for improper payments, uncertain legal
enforcement, regulatory, political and economic risks associated with
Venezuelan operations, our ability to obtain additional funding for the
development of the Brisas project, in the event any key findings or
assumptions previously determined by our experts in the final feasibility
study (including any updates thereto) significantly differ or change as a
result of actual results in our expected construction and production at the
Brisas project, risk that actual mineral reserves may vary considerably from
estimates presently made, impact of currency, metal prices and metal
production volatility, changes in proposed development plans (including
technology used), our dependence upon the abilities and continued
participation of certain key employees, and risks normally incident to the
operation and development of mining properties. These are discussed in greater
detail in Gold Reserve's filings with the U.S. Securities and Exchange
Commission at www.sec.gov and the Annual Information Form and other reports
filed with Canadian provincial securities commissions at www.sedar.com. Gold
Reserve expressly disclaims any intention or obligation to update or revise
any forward looking statement whether as a result of new information, events
or otherwise.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Gold Reserve Inc.
(Registrant)
Date: May 2, 2006
By: s/ Robert A. McGuinness
Name: Robert A. McGuinness
Title: Vice President - Finance & CFO
EXHIBIT INDEX
99.1 Notice of Special Meeting of Shareholders on March 22, 2006
GOLD RESERVE INC.
926 W. Sprague Avenue, Suite 200, Spokane, WA 99201
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that a Special Meeting (the "Meeting") of the
holders of Class A common shares and Class B common shares
(collectively, the "Shareholders") of GOLD RESERVE INC. (the
"Company") will be held at the Spokane Club, located at 1002 W.
Riverside, Spokane, Washington USA, on Wednesday, the 22nd day of March
2006 at 9:30 a.m. (Pacific time) for the following purposes:
1) To approve the continuation of and amendment to the Shareholder
Rights Plan;
2) To approve the amendments to the Equity Incentive Plan; and
3) To approve the extension of options expiring on June 8, 2006 to
December 31, 2006 and, subject to discretion of the Board, to further
extend the expiry date no later than to June 8, 2008; and
4) To conduct any other business as may properly come before the meeting
or any adjournment thereof.
Shareholders who are unable to attend the Meeting or any adjournment
thereof in person and who wish to ensure that their shares will be
voted are requested to complete, sign and mail the enclosed form of
proxy to Computershare Trust Company, Inc., P.O. Box 1596, Denver,
Colorado 80201-9975 not later than the close of business on the
business day immediately preceding the Meeting or any adjournment
thereof. An Information Circular accompanies this notice. The specific
details of the matters proposed to be put before the Meeting are set
forth in the accompanying Information Circular.
DATED at the City of Spokane, in the State of Washington, USA this 31st
day of January, 2006.
BY ORDER OF THE DIRECTORS
Rockne J. Timm
Chief Executive Officer
99.2 Management Information and Proxy Circular
GOLD RESERVE INC.
INFORMATION CIRCULAR
(Containing information as of January 31, 2006)
MANAGEMENT SOLICITATION OF PROXIES
This Management Information and Proxy Circular is furnished in
connection with the solicitation of proxies by the management of GOLD
RESERVE INC. (the "Company") to be voted at the Special Meeting of
Shareholders of the Company (the "Meeting") to be held on Wednesday,
the 22nd day of March, 2006 at 9:30 a.m. (Pacific time), at the Spokane
Club located at 1002 W. Riverside, Spokane, Washington and at any
adjournment thereof, for the purposes set forth in the accompanying
Notice of Special Meeting of Shareholders. The solicitation of proxies
will be primarily by mail but proxies may also be solicited personally
or by telephone by employees of the Company. Employees will not receive
any extra compensation for such activities. The Company may pay brokers,
nominees or other persons holding shares of the Company in their name
for others for their reasonable charges and expenses in forwarding
proxies and proxy materials to beneficial owners of such shares, and
obtaining their proxies. The Company may also retain independent proxy
solicitation agents to assist in the solicitation of proxies for the
Meeting. The cost of all solicitations of proxies will be borne by the
Company. Except where otherwise stated, the information contained
herein is given as of the 31st day of January 2006.
Unless otherwise indicated, all currency amounts referred to herein are
stated in U.S. dollars.
APPOINTMENT AND REVOCATION OF PROXIES
The individuals named in the enclosed form of proxy are Directors or
Officers of the Company.
A Shareholder submitting a proxy has the right to appoint a person or
company, who need not be a Shareholder, to represent the Shareholder at
the Meeting other than the persons designated in the form of proxy
furnished by the Company. To exercise this right, the Shareholder may
insert the name of the desired representative in the blank space
provided in the proxy or may submit another appropriate form of proxy.
The completed proxy must be deposited at the office of Computershare
Trust Company, Inc., P.O. Box 1596, Denver, Colorado 80201-9975, not
later than the close of business on the business day preceding the
day of the Meeting or any adjournment thereof, or with the Chairman
of the Meeting immediately prior to the commencement of the Meeting
or any adjournment thereof, otherwise the instrument of proxy will be
invalid.
You may revoke or change your proxy at any time before it is exercised
at the Meeting. In the case of Shareholders appearing on the registered
shareholder records of the Company, a proxy may be revoked at any time
prior to its exercise by sending or depositing a written notice of
revocation or another signed proxy bearing a later date to the
Secretary of the Company at its principal executive office located at
926 W. Sprague Avenue, Suite 200, Spokane, Washington 99201. You may
also revoke your proxy by giving notice or by voting in person at the
Meeting.
Shareholders appearing in the name of a bank, broker or other nominee
should follow the instructions provided by their bank, broker or
nominee in revoking their previously voted shares.
EXERCISE OF DISCRETION BY PROXIES
The shares represented by the proxy will be voted or withheld from
voting in accordance with the instructions of the Shareholder on any
ballot that may be called for and, if the Shareholder specifies a
choice with respect to any matter to be acted upon, the shares will be
voted accordingly. In the absence of such choice being specified, such
shares will be voted "for" the matters specifically identified in the
Notice of Special Meeting of Shareholders accompanying this Information
Circular.
The enclosed form of proxy confers discretionary authority upon the
persons named therein with respect to amendments or variations to
matters identified in the Notice of Special Meeting of Shareholders and
with respect to other matters which may properly be brought before the
Meeting. At the time of printing this Information Circular, the
management of the Company knows of no such amendments, variations or
other matters to come before the Meeting other than the matters
referred to in the Notice of Special Meeting of Shareholders.
In February 1999, Gold Reserve Corporation became a subsidiary of the
Company, the successor issuer. For the purposes of disclosure in this
Information Circular, references to the Company prior to February 4,
1999 are references to Gold Reserve Corporation.
VOTING RIGHTS AND PRINCIPAL SHAREHOLDERS
The Company's issued and outstanding shares consist of Class A common
shares (each, a "Class A Share") and Class B common shares (each, a
"Class B Share"). Unless otherwise noted, references to Common Shares
in this Information Circular include both Class A Shares and Class B
Shares. Holders of Class A Shares and holders of Class B Shares
(collectively, the "Shareholders") are entitled to one vote per share
and will vote as a single class on all matters to be considered and
voted upon at the Meeting or any adjournment thereof. As of January 31,
2006, there were 35,268,806 issued and outstanding Class A Shares and
1,110,020 issued and outstanding Class B Shares for a total of
36,378,826 Common Shares eligible to vote.
The Company has set the close of business on February 20, 2006 as the
record date for the Meeting. The Company will prepare a list of
Shareholders of record at such time. Shareholders will be entitled to
vote the shares then registered in their name at the Meeting except to
the extent that (a) the holder has transferred the ownership of any of
his shares after that date, and (b) the transferee of those shares
produces properly endorsed share certificates, or otherwise establishes
that he owns the shares, and demands, not later than 10 days before the
Meeting, that the transferee's name be included in the list of persons
entitled to vote at the Meeting, in which case the transferee will be
entitled to vote his shares at the Meeting or any adjournment thereof.
To the knowledge of the Directors and senior officers of the Company,
as of January 31, 2006, no person, firm or corporation beneficially
owned, directly or indirectly, or exercised control or direction over
more than 10% of the voting rights attached to the Common Shares.
A quorum for the transaction of business at any meeting of the
Shareholders shall be holders of at least one-third (1/3) of the
outstanding Common Shares present in person or represented by proxy.
Except as otherwise stated in this Information Circular, the
affirmative vote of the holders of a majority of the Common Shares
present at the Meeting, in person or by proxy, is required to approve
all items presented in this information Circular.
BUSINESS OF THE MEETING
Item 1. Continuation of and Amendment to the Shareholder Rights Plan
Shareholder Rights Plan Agreement
At the Meeting, Shareholders will be asked to approve the continuation
and amendment of the Company's shareholder rights plan.
The Company instituted a shareholder rights plan (the "Rights Plan") in
1999. The Rights Plan is set forth in the Shareholder Rights Plan
Agreement (the "Rights Plan Agreement") which was originally dated
October 5, 1998. Since the original approval by the Shareholders, the
Rights Plan and the Rights Plan Agreement have been amended and
continued from time to time, the most recent amendment being on March
14, 2003. Pursuant to the terms of the Rights Plan Agreement, the
Rights Plan will expire on June 30, 2006 unless the Rights Plan
Agreement is amended to extend its expiry time.
On January 30, 2005, the Board approved the extension of the expiry
date of the Rights Plan from June 30, 2006 to June 30, 2009 along with
certain other minor amendments, which the Board considers appropriate.
The rights agent of the Rights Plan Agreement will change from
Computershare Trust Company of Canada to Computershare Investor
Services Inc.
The Board has determined it appropriate and in the best interests of
the Shareholders that the Rights Plan be amended and continued for
another three years.
Background
The primary objective of the Rights Plan is to provide the Board with
sufficient time to consider and, if appropriate, to explore and develop
alternatives for maximizing shareholder value if a take-over bid is made
for the Company, and to provide every shareholder with an equal
opportunity to participate in such a bid. The Rights Plan encourages a
potential acquiror to proceed either by way of a Permitted Bid (as
defined in the Rights Plan), which requires the takeover bid to satisfy
certain minimum standards designed to promote fairness, or with the
concurrence of the Board.
Under provincial securities legislation, a take-over bid generally
means an offer to acquire voting or equity shares of a person or
persons, where the shares subject to the offer to acquire, together
with shares already owned by the bidder and certain related parties
aggregate 20% or more of the outstanding shares of a company. For the
purposes of the Rights Plan, a "Take-Over Bid" is an offer to acquire
voting shares of the Company if, assuming the voting shares of the
Company are acquired at the date of such offer, the voting shares
beneficially owned by the person making the offer would constitute in
the aggregate 15% or more of the voting shares of the Company then
outstanding.
While the Rights Plan is intended to regulate certain aspects of
take-over bids for the Company, it is not intended to deter a bona fide
attempt to acquire control of the Company if the offer is made fairly.
The Rights Plan does not affect the duty of the Board to give due and
proper consideration to any offer that is made and to act honestly, in
good faith and in the best interests of the Company and its
Shareholders. The Rights Plan utilizes the mechanism of the Permitted
Bid to ensure that a person seeking control of the Company allows
Shareholders and the Board sufficient time to evaluate the bid. The
purpose of the Permitted Bid feature is to allow a potential bidder to
avoid the dilutive features of the Rights Plan by making a bid in
conformity with the conditions specified in the Permitted Bid
provisions (as set out below).
The Rights Plan should not deter a person seeking to acquire control of
the Company if that person is prepared to make a Take-Over Bid pursuant
to the Permitted Bid requirements or is prepared to negotiate with the
Board. Otherwise, a person will likely find it impractical to acquire
15% or more of the outstanding Common Shares because the Rights Plan
will substantially dilute the holdings of a person or group that seeks
to acquire such an interest other than by means of a Permitted Bid or
on terms approved by the Board. When a person or group or their
transferees become an Acquiring Person, the Rights beneficially owned
by those persons become void thereby permitting their holdings to be
diluted. The possibility of such dilution is intended to encourage such
persons to make a Permitted Bid or to seek to negotiate with the Board
the terms of an offer which is fair to all Shareholders.
The Board's authorization of the continuation and amendment of the
Rights Plan was not in response to or in anticipation of any pending or
threatened take-over bid.
Summary of the Rights Plan
The following is a summary of the principal terms of the Rights Plan,
which is qualified in its entirety by reference to the text of the
Rights Plan.
Effective Time: The Rights were first issued under the Rights Plan on
February 4, 1999.
Term: The term of the Rights Plan, as amended, if reconfirmed at the
Meeting, will expire June 30, 2009. If not reconfirmed, the Rights Plan
will expire at the close of business on June 30, 2006. The time of
expiry of the Rights Plan is defined in the Rights Plan Agreement as
the Expiration Time.
Issue of Rights: Immediately following the Effective Time, one right (a
"Right") was issued and attached to each outstanding Common Share. One
Right will also attach to any Common Share issued after the Effective
Time and prior to the earlier of the Separation Time and the Expiration
Time.
Rights Exercise Privilege: The Rights will separate from the shares to
which they are attached and will become exercisable at the time (the
"Separation Time") that is 10 trading days after the earlier of a
person having acquired, or the commencement, announcement or other date
determined by the Board in respect of a take-over bid to acquire, 20% or
more of the Common Shares, other than by an acquisition pursuant to a
Permitted Bid or a Competing Bid (as discussed below).
The acquisition by a person (an "Acquiring Person"), including
associates and affiliates and others acting in concert, of Beneficial
Ownership (as defined in the Rights Plan) of 20% or more of the Common
Shares, other than by way of a Permitted Bid, is referred to as a
"Flip-in Event." Any Rights held by an Acquiring Person on or after the
earlier of the Separation Time or the first date of public announcement
by the Company or an Acquiring Person that an Acquiring Person has
become such, will become void upon the occurrence of a Flip-in Event.
On the tenth trading day after the occurrence of the Flip-in Event the
Rights (other than those held by the Acquiring Person) will permit the
Holder to purchase Class A Shares of the Company having a market value
of twice the Exercise Price of the Rights for an amount in cash equal
to the Exercise Price.
For example, each Right will permit the Holder to purchase Class A
shares with a total market value of $140 (Canadian), on payment of $70
(Canadian); i.e., at a 50% discount. Therefore, if, on the 10th trading
day after the Flip-in Event, the Market price per share was $10
Canadian, each Right would permit the Holder to purchase 14 Class A
shares for $70 Canadian.
The issue of the Rights is not initially dilutive. Upon a Flip-in Event
occurring and the Rights separating from the attached shares, reported
earnings per Common Share on a fully diluted or non-diluted basis may
be affected. Holders of Rights who do not exercise their Rights upon
the occurrence of a Flip-in Event may suffer substantial dilution.
Certificates and Transferability: Prior to the Separation Time, the
Rights will be evidenced by a legend imprinted on certificates for
Common Shares issued following the Effective Time. Rights are also
attached to such shares outstanding as of the Effective Time, although
share certificates issued prior to that date will not bear such a
legend. Shareholders do not have to return their certificates in order
to have the benefit of the Rights. Prior to the Separation Time, Rights
will not be transferable separately from the attached shares. From and
after the Separation Time, the Rights will be evidenced by Rights
certificates which will be transferable and traded separately from the
shares.
Permitted Bid Requirements: The requirements of a permitted bid (a
"Permitted Bid") include the following:
(i) the take-over bid must be made by way of a take-over bid circular;
(ii) the take-over bid must be made to all Holders of Common Shares
other than the offeror (the Rights Plan allows a partial bid to be a
Permitted Bid);
(iii) the take-over bid must not permit Common Shares tendered pursuant
to the take-over bid to be taken up prior to the expiry of a period of
not less than 60 days and then only if at such time more than 50% of
the Common Shares held by Shareholders other than the bidder, its
affiliates and persons acting jointly or in concert with the bidder
(the "Independent Shareholders") have been tendered pursuant to the
take-over bid and not withdrawn. The take-over bid must also provide
that any Common Shares deposited pursuant to the bid may be withdrawn
until taken up and paid for; and
(iv) if, on the date that Common Shares may be taken up and paid for,
more than 50% of the Common Shares held by Independent Shareholders are
tendered to the take-over bid and not withdrawn, the bidder must make a
public announcement of that fact and the take-over bid must remain open
for deposits of Common Shares for not less than 10 business days from
the date of such public announcement.
The Rights Plan allows a competing Permitted Bid (a "Competing
Permitted Bid") to be made while a Permitted Bid is in existence. A
Competing Permitted Bid must satisfy all the requirements of a
Permitted Bid except that, provided such offer is outstanding for a
minimum period of 21 days, it may expire on the same date as the
Permitted Bid.
Permitted Lock-Up Agreement: A Permitted Lock-Up Agreement will be an
agreement by a Shareholder to deposit or tender shares to a take-over
bid, provided that the agreement meets certain requirements. These
requirements are essentially that: (a) the terms of the agreement are
publicly disclosed and a copy of the agreement is publicly available;
(b) the Shareholder who agrees to tender shares to a take-over bid made
by the other party to the agreement (the "lock-up bid") be allowed to
terminate its obligations under the agreement in order to tender the
shares to another take-over bid or support another transaction where
the offer price under the other bid or transaction is equal to or
greater than a specified minimum which is not more than 7% higher than
the offer price under the lock-up bid; and (c) no break-up fees or
other penalties that exceed in the aggregate the greater of 2.5% of the
price or value payable under the lock-up bid and 50% of the increase in
the consideration resulting from another take-over bid or transaction
shall be payable by the Shareholder if the Shareholder fails to tender
its shares to the lock-up bid.
Waiver and Redemption: If a potential offeror does not wish to make a
Permitted Bid, it can negotiate with, and obtain the prior approval of,
the Board to make a bid by take-over bid circular to all Shareholders on
terms which the Board consider fair to all Shareholders. In such
circumstances, the Board may, prior to a Flip-in Event, waive the
dilutive effects of the Rights Plan in respect of such transaction,
thereby allowing such bid to proceed without dilution. In such event,
such waiver would be deemed also to be a waiver in respect of all other
contemporaneous bids made by way of a take-over bid circular. The Board
may also waive the Rights Plan in respect of a particular Flip-in Event
that has occurred through inadvertence, provided that the Acquiring
Person that inadvertently triggered such Flip-in Event has reduced its
beneficial holdings to less than 20% of the outstanding voting shares
of the Company. Other waivers of the Rights Plan require approval of
the Holders of Common Shares or Rights. At any time prior to the
occurrence of a Flip-in Event, the Board may with the prior consent of
the Holders of Common Shares or Rights redeem all, but not less than
all, of the outstanding Rights, as the case may be, at a price of Cdn.
$0.00001 each.
Exemptions for Investment Advisors: Investment advisors (for client
accounts) and trust companies (acting in their capacity as trustees and
administrators) acquiring more than 20% of the Common Shares are
exempted from triggering a Flip-in Event, provided that they are not
making, or are not part of a group making, a take-over bid.
Supplements and Amendments: The Company is authorized to make
amendments to the Rights Plan to correct any clerical or typographical
error or, subject to subsequent reconfirmation by Shareholders or
Rights Holders, to maintain the validity of the Rights Plan as a result
of changes in law or regulation. Other amendments or supplements to the
Rights Plan may be made with the prior approval of Shareholders or
Rights Holders.
Proposed Amendments
The Board of Directors of the Company has authorized the amendment and
restatement of the Rights Plan Agreement in the manner described below,
subject to approval of the Shareholders at the Meeting. A Shareholder or
other interested party may obtain a copy of the Amended and Restated
Rights Plan Agreement, as proposed, from the Corporate Secretary of the
Company. If the proposed resolution is passed, it is anticipated that
the Amended and Restated Rights Plan Agreement will be executed shortly
after the Meeting.
The proposed amendments to the Rights Plan Agreement are as follows:
(a) The expiry date of the Rights Plan will be changed from June 30,
2006 to June 30, 2009; and
(b) Certain minor amendments will be made which the Board considers
appropriate.
The following resolution in respect of the reconfirmation and amendment
of the Rights Plan will be proposed at the Meeting:
"BE IT RESOLVED THAT:
The Shareholder Rights Plan Agreement and the Rights Plan contained
therein originally dated October 5, 1998 and last amended on March 14,
2003, be reconfirmed, and further amended and restated as described in
this Information Circular dated January 31, 2006."
In order for the reconfirmation and amendment of the Rights Plan to be
approved, the resolution must be passed by the affirmative vote of a
majority of the votes cast on the resolution by Independent
Shareholders, as defined in the Rights Plan Agreement. "Independent
Shareholders" is defined in the Rights Plan Agreement to mean
Shareholders other than an Acquiring Person (as defined below) or any
person who has announced an intention to make a take-over bid for
Common Shares or any associates or affiliates of, or any person acting
in concert with, an Acquiring Person or any such offeror. Independent
Shareholders also excludes any employee benefit plans of the Company
unless the plan beneficiaries direct the manner in which the Common
Shares are voted or tendered to a take-over bid.
Item 2. Amendment to the Equity Incentive Plan
The Equity Incentive Plan
Current Plan Summary
The Company presently has one active stock option plan, the 1997 Equity
Incentive Plan (the "Plan"). The Plan incorporates outstanding options
issued from predecessor plans that have been terminated. The 1997
Equity Incentive Plan expires on January 30, 2007.
Employees, directors and consultants of the Company and its
subsidiaries are eligible to receive grants under the Plan. An option
may be exercised during the lifetime of the optionee only by the
optionee. At such optionee's death an option or any part thereof may
only be transferable by such optionee's will or by the laws of descent
and distribution. The Board or a committee of the Board is responsible
for the administration of the Plan.
Options, stock appreciation rights ("SARs") and restricted stock
granted under the Plan are generally granted at the United States
Dollar equivalent of the closing sales price of the Class A Shares on
the day immediately preceding the grant date, as reported on the TSX. A
SAR entitles the holder, upon exercise of the SAR, to surrender the
entire SAR or any portion thereof to the extent unexercised, and to
receive payment of an amount determined by multiplying (i) the excess
of the weighted average trading price on the open market for the Class
A Shares for the five (5) trading days immediately preceding the date
of exercise of such SAR over the exercise price under the SAR, by (ii)
the number of shares as to which such SAR has been exercised.
Notwithstanding the foregoing, the agreement evidencing the SAR may
limit in any manner the amount payable with respect to any SAR.
The maximum number of shares of Class A Shares (Shares) for which
options may be granted to any one person in any year is 300,000 Shares.
In addition, the total number of Shares reserved for issuance to any one
person pursuant to options cannot exceed 5% of Shares outstanding. Each
option grant is limited to a maximum duration of 10 years from the time
it is granted, except that an incentive stock option granted to a ten
percent shareholder shall have a maximum duration of five years from
the time it is granted and the vesting period is discretionary.
The Plan provides the following for termination of employment with
regard to the options outstanding at the date of termination:
Retirement. Any then outstanding options under the Plan may be
exercised at any time prior to the earlier of the expiration date of
the outstanding options or 12 months after the date of retirement.
For Cause. Any then outstanding options become null and void.
Involuntary Termination of Employment. Any then outstanding options
that are vested at the time of termination may be exercised at any time
prior to the earlier of the expiration date of the vested outstanding
options or 30 days after the date of termination.
Voluntary Termination of Employment. Any then outstanding options that
are vested at the time of termination may be exercised at any time
prior to the earlier of the expiration date of the vested outstanding
options or 90 days after the date of termination.
The Board may, at any time and from time to time, modify, amend,
suspend or terminate the Plan in any respect. Amendments to the Plan
are subject to stockholder approval to the extent required by
applicable securities laws.
Historical Information
The Plan currently provides for the grant of both "incentive stock
options" and "non-qualified stock options" ("NQSOs") to purchase Class
A Shares, stock appreciation rights ("SARs"), or the issuance of up to
1,050,000 Shares of restricted stock. To date, 635,350 Shares of
restricted stock have been granted and 1,663,127 options have been
exercised under the Plan totaling 2,298,477 Shares or 6.3% of the
current issued and outstanding Common Shares of the Company. Options
for the purchase of 3,082,825 Class A Shares are outstanding,
representing approximately 8.4% of the issued and outstanding Common
Shares of the Company.
Amendments to the Plan
Management of the Corporation and the Board has determined that it is
in the best interests of the Corporation to revise and amend the Plan
which expires on January 30, 2007 as follows:
1. To amend the Effective Date of the Plan from January 30, 1997 to
January 29, 2006.
The Plan expires 10 years from the Effective Date and, if approved by
the Shareholders, the Plan would expire January 29, 2016.
2. To change the number of Shares reserved pursuant to the Plan,
subject to regulatory and shareholder approval, from a set maximum
amount of 3,650,000 Shares to a rolling 10% of the
Common Shares outstanding, from time to time.
This change is intended to ensure that there will be an adequate pool
of Shares under the Plan to enable the Company to attract and retain
directors, officers, and employees of, and service providers to, the
Company and its subsidiaries and thereby advance the Company's
interests by affording such persons an opportunity to acquire an equity
interest in the Company through the exercise of stock options, stock
appreciation rights and the grant of restricted stock.
3. To limit the total number of Shares issued to all insiders, within
any one-year period, under all security based compensation
arrangements, to not more than 10% of the outstanding Common Shares on
the date of grant.
The Plan would no longer limit: a) the maximum number of stock options
issuable to any one optionee to 5% of the outstanding Shares; and b)
the number of options that may be granted to any one person in any year
to 300,000.
4. To allow grants under the Plan to include any combination
(individually or collectively) of stock options, stock appreciation
rights or restricted stock.
The maximum number of Shares reserved for issuance under the Plan is
3,650,000. The remaining number of Shares reserved for issuance under
the Plan is 3,460,412. As of January 31, 2006 an aggregate of 3,082,825
options, representing 8.4% of the outstanding share capital as of
January 31, 2006, remain outstanding and unexercised and 377,587 remain
available for grant. Since the adoption of the Plan, including options
from predecessor plans, the Corporation has granted options for the
purchase of 9,729,634 Shares, of which 1,663,127 options have been
exercised, 14,296 options have been swapped, and 4,969,386 have been
cancelled.
Assuming the resolution approving the amendments to the Plan is
approved, the maximum number of Shares issuable under the Plan, from
time to time, would be 10% of the issued and outstanding Common Shares.
As of the date of this information circular the number of Shares
issuable would be 3,637,883, or an increase of 177,421 Shares.
Other changes in the Plan include:
a) The revision of the definition of Fair Market Value (Section 2 of
the Plan) to comply with the TSX guidelines. Fair Market Value means,
From "the closing sales price or the United States Dollar equivalent
of the closing sales price at which a share of the Stock is reported to
have traded on the day immediately preceding the grant date as reported
on the Principal Market for the Stock..."
To: "subject to any applicable Exchange rules, the volume weighted
average trading price or the United States Dollar equivalent of the
Stock calculated by dividing the total value by the total volume of
Stock on the Exchange where the majority of the trading volume and
value of the Stock occurs, for the five trading days immediately
preceding the relevant date;..."
b) Rewording of the section on Trasferability and Exercisability of
Options (Section 7 of the Plan) Other changes in the Plan include:
"No Option shall be transferable by the Optionee other than (i) by will
or by the laws of descent and distribution; (ii) a qualified domestic
relations order (as defined in the Code or Title 1 of the Employee
Retirement Income Security Act of 1974, as amended, or the rules
thereunder); or (iii) gift to such Optionee's child(ren) or
grandchild(ren), whether directly or indirectly or by means of a trust,
partnership or otherwise."
The result of the amendment is that at any point in time the
Corporation may have stock options, stock appreciation rights, or
restricted stock outstanding for the purchase of up to 10% of the
outstanding share capital of the Corporation. The amended Plan must be
approved and ratified by the Shareholders every three years.
A copy of the amended Plan is available for viewing up to the date of
the Meeting at the Company's offices in Spokane, Washington and on the
Company's website at www.goldreserveinc.com .
The following is the form or ordinary resolution to be approved by the
Shareholders at the Meeting:
"BE IT RESOLVED THAT:
1. An amendment to the Plan changing the Effective Date of the Plan
from January 30, 1997 to January 29, 2006 is hereby ratified and
approved;
2. An amendment to change the number of Shares reserved pursuant to
the Plan, subject to regulatory and shareholder approval, from a set
maximum amount of 3,650,000 Shares to a rolling 10% of the Common
Shares outstanding, from time to time, is hereby ratified and approved;
3. An amendment to limit the total number of Shares issued to all
insiders, within any one-year period, under all security based
compensation arrangements, to not more than 10% of the outstanding
Common Shares on the date of grant, is hereby ratified and approved.
4. An amendment to allow grants under the Plan to include any
combination of stock options, stock appreciation rights or restricted
stock, is hereby ratified and approved.
5. The directors may revoke this resolution before it is acted upon
without further approval of the Shareholders; and
6. Any officer or director is hereby authorized to execute and deliver
any documents, instruments or other writings and to do all other acts as
may be necessary or desirable to give effect to the foregoing
resolution."
The Board has determined that the amendment to the Gold Reserve Inc.
Equity Incentive Plan is in the best interests of the Company and
recommends that the Shareholders vote in favor of the resolution
authorizing such amendment.
Item 3. Extension of Stock Options
At the Meeting, the Shareholders of the Company will be asked to
approve an ordinary resolution to extend the termination date of
1,592,862 outstanding stock options priced at $0.72, held by nine (9)
insiders of the Company set to expire on June 8, 2006, to December 31,
2006 and, subject to discretion of the Board to further extend the
expiry date no later than to June 8, 2008.
The options subject to this extension are NQSOs. The exercise of a NQSO
is a taxable event with the difference between the exercise price and
the fair market value at the date of exercise subject to regular income
tax pursuant to the U.S. Internal Revenue Code.
Tax counsel has advised Management that extending the options noted
above is not without cost to the optionee. If the term of the NQSOs are
extended beyond the 2006 calendar year, on any subsequent exercise of
those options, the difference between the exercise price and the fair
market value at the date of exercise ("spread") will be subject to an
additional 20% excise fee pursuant to section 409A of the Internal
Revenue Code. In addition, this spread will likely be considered earned
on a much earlier date resulting in substantial interest and penalties
to the optionee.
For the reasons noted above, the optionees will likely be required to
sell some or all of the shares received upon the exercise of the option
in order to meet the federal income tax requirements incurred upon the
exercise of the option. Management believes that, during a time period
when the Company is seeking additional equity and debt financing for
construction of the Brisas Project, it is not in the best interests of
the Company for Management to be forced into exercising otherwise
expiring stock options and selling the shares in the market potentially
adversely affecting Shareholder value. If permitted by final IRS
regulations without substantial additional tax burden to the option
holders, Management believes, for the above mentioned reasons, that it
is in the best interests of the Company to further extend the expiry
date of the otherwise expiring options from December 31, 2006 to no
later than June 8, 2008.
The Board unanimously recommends that Shareholders vote in favor of the
resolution: 1) to allow the Plan participants with expiring options to
maintain those options and provide the optionee the opportunity to
acquire an equity interest in the Company and to participate in the
increase in shareholder value as reflected in the growth in the price
of the shares of the Company stock; and 2) to negate the potential
adverse affect on Shareholder value if the resolution is not approved
and the options are exercised and underlying shares are sold.
Approval of this item, for the purposes of complying with the TSX's
policy limitations, requires the affirmative vote of a majority of the
Common Shares of the Company represented at the Meeting, in person or
by proxy, held by persons who are neither directors, executive
officers, or other insiders (or associates of insiders) of the Company.
As of January 31, 2006, based on information available to the Company, a
total of 2,933,127 Common Shares of the Company were held by directors,
executive officers, or other insiders (or their associates) of the
Company, representing approximately 8.1% of the total outstanding
Common Shares at such date.
The following is the form of ordinary resolution to be approved by the
Shareholders at the Meeting:
"BE IT RESOLVED THAT:
1. The expiration date of stock options, originally set to expire on
June 8, 2006, be extended to December 31,2006 and subject to discretion
of the Board to further extend the expiry date no later than to June 8,
2008;
2. The directors may revoke this resolution before it is acted upon
without further approval of the Shareholders; and
3. Any officer or director is hereby authorized to execute and deliver
any documents, instruments or other writings and to do all other acts as
may be deemed necessary or desirable to give effect to the foregoing
resolution."
The Board unanimously recommends that Shareholders vote in favor of the
resolution.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Other than as set forth in this Information Circular, no person who has
been a Director or senior officer of the Company, nor any associate or
affiliate of any of the foregoing, has any material interest, directly
or indirectly, by way of beneficial ownership of securities or
otherwise, in any matter to be acted upon.
ANY OTHER MATTERS
Management of the Company knows of no matters to come before the
Meeting other than those referred to in the Notice of Special Meeting
of Shareholders accompanying this Information Circular. However, if any
other matters properly come before the Meeting, it is the intention of
the persons named in the form of proxy accompanying this Information
Circular to vote the same in accordance with their best judgment of
such matters.
ADDITIONAL INFORMATION
Additional information about the Company may be found on the SEDAR
website at www.sedar.com on the U.S. Securities and Exchange
Commission's website at www.sec.gov and on the Company's website at
www.goldreserveinc.com. A copy of this document and other public
documents of the Company are available upon request to:
Gold Reserve Inc. 926 W. Sprague Avenue, Suite 200 Spokane, Washington
99201 Phone: (509) 623-1500 Fax: (509) 623-1634
APPROVAL AND CERTIFICATION
The contents and the sending of this Information Circular have been
approved by the Board.
The forgoing contains no untrue statement of a material fact and does
not omit to state a material fact that is required to be stated or that
is necessary to make a statement not misleading in light of the
circumstances in which it is made.
Dated at Spokane, Washington, this 31st day of January 31, 2006.
/s/Rockne J. Timm
Chief Executive Officer
Robert A. McGuinness
Vice President Finance and Chief Financial Officer
GOLD RESERVE INC.
PROXY
SPECIAL MEETING OF SHAREHOLDERS
March 22, 2006
THIS PROXY IS SOLICITED BY THE MANAGEMENT OF GOLD RESERVE INC.
The undersigned shareholder of Gold Reserve Inc. (the "Company") hereby
appoints Rockne J. Timm, Chief Executive Officer of the Company, or
failing him, Robert A. McGuinness, Vice President Finance and Chief
Financial Officer of the Company, or instead of either of them
____________________, as proxyholder for the undersigned, with power of
substitution, to attend, act and vote for and on behalf of the undersigned
at the Special Meeting (the "Meeting") of Shareholders of the Company to be
held on March 22, 2006 at 9:30 a.m. (Pacific time) and at any adjournment
thereof, in the same manner, to the same extent and with the same powers as
if the undersigned were present at the said Meeting or any adjournment or
adjournments thereof and, without limiting the general authorization given,
the person above named is specifically directed to vote on behalf of the
undersigned in the following manner:
1) On the approval of the continuation of and amendment to the Shareholders
Rights Plan:
VOTE FOR ____________ or VOTE AGAINST _________
(and, if no specification is made, to vote FOR);
2) On the approval of the Amendments to the Equity Incentive Plan:
VOTE FOR ____________ or VOTE AGAINST _________
(and, if no specification is made, to vote FOR);
3) On the approval of the extension of options expiring on June 8, 2006
to December 31, 2006 and, subject to discretion of the Board, to further
extend the expiry date no later than to June 8, 2008.
VOTE FOR ____________ or VOTE AGAINST _________
(and, if no specification is made, to VOTE FOR);
and conferring discretionary authority to vote on amendments or variations
to the matters identified in the Notice of Special Meeting relating to the
Meeting and on all other matters that may properly come before the Meeting
or any adjournment thereof in such manner as the person above named may see fit.
The undersigned hereby revokes any instrument of proxy previously given and
does hereby further ratify all the said proxy may lawfully do in the premises.
DATED this _____ day of __________, 2006.
________________________________________ _______________________________
Print Name Print Name (if held jointly)
________________________________________ _______________________________
Signature Signature (if held jointly)
99.3 Report of Voting Results at Special Meeting of Shareholders
GOLD RESERVE INC.
Special Meeting of Shareholders
March 22, 2006
REPORT OF VOTING RESULTS
Section 11.3 National Instrument 51-102 - Continuous Disclosure Obligations
March 22, 2006
Common Shares represented at the meeting 15,559,321 or 43%
Total outstanding (Class A and Class B)
Common Shares as at record date: 36,398,826
The matters voted upon at the Meeting and the results of the voting were
as follows:
Special Business Outcome of Vote Votes For Votes Against
1.Shareholder Rights
Plan
The approval of the
continuation of and
amendments to the
Shareholder Rights Plan. FOR 11,520,412 4,010,168
2.
Amendments to the
Equity Incentive Plan
The approval of the
Amendments to the
Equity Incentive Plan. FOR 11,508,579 4,050,742
3.
Option Extension
The approval of the
extension of options
expiring on June 8,
2006 to December 31,
2006 and, subject to
discretion of the Board,
to further extend the
expiry date no later than
to June 8, 2008. FOR 7,661,789 4,964,405
For additional information please see the Circular dated
January 31, 2006.
March 23, 2006
/s/ Robert A. McGuinness
Vice President Finance and CFO