EXHIBIT 3.1
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VASOGEN INC.
AND
CIBC MELLON TRUST COMPANY
AS RIGHTS AGENT
SHAREHOLDER RIGHTS PLAN AGREEMENT
Dated as of November 22, 2000
TABLE OF CONTENTS
ARTICLE 1 - INTERPRETATION.....................................................1
1.1 CERTAIN DEFINITIONS...................................................2
1.2 CURRENCY.............................................................15
1.3 HEADINGS.............................................................15
1.4 NUMBER AND GENDER....................................................15
1.5 ACTING JOINTLY OR IN CONCERT.........................................15
1.6 GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.............................16
1.7 STATUTORY REFERENCES.................................................16
ARTICLE 2 - THE RIGHTS........................................................16
2.1 LEGEND ON COMMON SHARE CERTIFICATES..................................16
2.2 INITIAL EXERCISE PRICE; EXERCISE OF RIGHTS; DETACHMENT OF RIGHTS.....17
2.3 ADJUSTMENTS TO EXERCISE PRICE; NUMBER OF RIGHTS......................20
2.4 DATE ON WHICH EXERCISE IS EFFECTIVE..................................26
2.5 EXECUTION, AUTHENTICATION, DELIVERY AND DATING OF RIGHTS
CERTIFICATES.........................................................27
2.6 REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE..................27
2.7 MUTILATED, DESTROYED, LOST AND STOLEN RIGHT CERTIFICATES.............28
2.8 PERSONS DEEMED OWNERS................................................29
2.9 DELIVERY AND CANCELLATION OF RIGHTS CERTIFICATES.....................29
2.10 AGREEMENT OF RIGHTS HOLDERS..........................................29
2.11 RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER...................31
ARTICLE 3 - ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS....31
3.1 FLIP-IN EVENT........................................................31
ARTICLE 4 - THE RIGHTS AGENT..................................................33
4.1 GENERAL..............................................................33
4.2 MERGER OR AMALGAMATION OR CHANGE OF NAME OF RIGHTS AGENT.............34
4.3 DUTIES OF RIGHTS AGENT...............................................34
4.4 CHANGE OF RIGHTS AGENT...............................................37
ARTICLE 5 - MISCELLANEOUS.....................................................37
5.1 REDEMPTION AND WAIVER................................................37
5.2 EXPIRATION...........................................................40
5.3 ISSUANCE OF NEW RIGHT CERTIFICATES...................................40
5.4 SUPPLEMENTS AND AMENDMENTS...........................................40
5.5 FRACTIONAL RIGHTS AND FRACTIONAL SHARES..............................43
5.6 RIGHTS OF ACTION.....................................................43
5.7 REGULATORY APPROVALS.................................................43
5.8 DECLARATION AS TO NON-CANADIAN HOLDERS...............................44
5.9 NOTICE OF PROPOSED ACTIONS...........................................44
5.10 NOTICES..............................................................44
5.12 SUCCESSORS...........................................................46
5.13 BENEFITS OF THIS AGREEMENT...........................................46
5.14 GOVERNING LAW........................................................47
5.15 SEVERABILITY.........................................................47
5.16 EFFECTIVE DATE.......................................................47
5.17 DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS.................47
5.18 RIGHTS OF BOARD, CORPORATION AND OFFEROR.............................47
5.19 REGULATORY APPROVALS.................................................48
5.20 TIME OF THE ESSENCE..................................................48
5.21 EXECUTION IN COUNTERPARTS............................................48
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5.22 EXPIRATION TIME......................................................48
SHAREHOLDER RIGHTS PLAN AGREEMENT
THIS AGREEMENT dated as of the 22nd day of November, 2000 between
Vasogen Inc. (the "Corporation"), a corporation incorporated under the CANADA
BUSINESS CORPORATIONS ACT , and CIBC Mellon Trust Company, a trust company
incorporated under the laws of Canada, as Rights Agent (the "Rights Agent"),
which term shall include any successor Rights Agent hereunder.
WHEREAS the Board of Directors has determined that it is advisable and
in the best interests of the Corporation to adopt a shareholder rights plan (the
"Rights Plan") to ensure, to the extent possible, that all shareholders of the
Corporation are treated fairly in connection with any take-over offer for the
Corporation and, due to the uniqueness of the Corporation's business, to ensure
that the Board of Directors is provided with sufficient time to evaluate
unsolicited take-over bids and to explore and develop alternatives to maximize
shareholder value;
AND WHEREAS in order to implement the adoption of the Rights Plan the
Board of Directors has
(a) authorized the issuance of one Right effective the Record Time
in respect of each Common Share outstanding at the Record
Time; and
(b) authorized the issuance of one Right in respect of each Common
Share issued after the Record Time and prior to the earlier of
the Separation Time and the Expiration Time;
AND WHEREAS each Right entitles the holder thereof, after the
Separation Time, to purchase securities of the Corporation (or, in certain
cases, of certain other entities) pursuant to the terms and subject to the
conditions set forth herein;
AND WHEREAS the Corporation desires to appoint the Rights Agent to act
on behalf of the Corporation, and the Rights Agent is willing to so act, in
connection with the issuance, transfer, exchange and replacement of Rights
Certificates, the exercise of Rights, and other matters referred to herein;
AND WHEREAS the term of the Rights Plan ends on the date of the
Corporation's Annual Meeting of Shareholders to be held in 2003, at which time
the Rights expire unless they are terminated, redeemed or exchanged earlier by
the Board of Directors;
NOW THEREFORE in consideration of the foregoing premises and the
respective covenants and agreements set forth herein the parties hereby agree as
follows:
ARTICLE 1 - INTERPRETATION
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1.1 CERTAIN DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
indicated:
(a) "1933 SECURITIES ACT" means the SECURITIES ACT OF 1933 of the
United States, as amended, and the rules and regulations
thereunder, and any comparable or successor laws or
regulations thereto.
(b) "1934 EXCHANGE ACT" means the SECURITIES EXCHANGE ACT OF 1934
of the United States, as amended, and the rules and
regulations thereunder, and any comparable or successor laws
or regulations thereto.
(c) "ACQUIRING PERSON" means, any Person who is the Beneficial
Owner of twenty percent (20%) or more of the outstanding
Voting Shares of the Corporation; provided, however, that the
term "Acquiring Person" shall not include:
(i) the Corporation or any Subsidiary of the Corporation;
(ii) any Person who becomes the Beneficial Owner of twenty
percent (20%) or more of the outstanding Voting
Shares of the Corporation as a result of (A)
Corporate Acquisitions, (B) Permitted Bid
Acquisitions, (C) Corporate Distributions or (D)
Exempt Acquisitions; provided, however, that if a
Person shall become the Beneficial Owner of twenty
percent (20%) or more of the Voting Shares of the
Corporation then outstanding by reason of one or more
or any combination of the operation of a Corporate
Acquisition, Permitted Bid Acquisition, Corporate
Distribution or Exempt Acquisition and, after such
Corporate Acquisition, Permitted Bid Acquisition,
Corporate Distribution or Exempt Acquisition, becomes
the Beneficial Owner of an additional one percent
(1%) or more of the outstanding Voting Shares of the
Corporation other than pursuant to Corporate
Acquisitions, Permitted Bid Acquisitions, Corporate
Distributions or Exempt Acquisitions, then as of the
date of such acquisition, such Person shall become an
"Acquiring Person";
(iii) for a period of ten (10) days after the
Disqualification Date (as hereinafter defined), any
Person who becomes the Beneficial Owner of twenty
percent (20%) or more of the outstanding Voting
Shares of the Corporation as a result of such Person
becoming disqualified from relying on Clause
1.1(g)(vii) hereof solely because such Person makes
or announces an intention to make a Take-over Bid in
respect of securities of the Corporation alone or by
acting jointly or in concert with any other Person
(the first date of public announcement (which, for
the purposes of this definition, shall include,
without limitation, a report filed pursuant to
Section 101 of the SECURITIES ACT (Ontario)) by such
Person or the
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Corporation of the intent to commence such a
Take-over Bid being herein referred to as the
"Disqualification Date");
(iv) an underwriter or member of a banking or selling
group which acquires Voting Shares of the Corporation
from the Corporation in connection with a
distribution of securities of the Corporation; and
(v) a Person (a "Grandfathered Person") who is the
Beneficial Owner of more than 20% of the outstanding
Voting Shares determined as at the Record Time,
provided, however, that this exception shall not be,
and shall cease to be, applicable to a Grandfathered
Person in the event that such Grandfathered Person
shall, after the Record Time: (1) cease to
Beneficially Own more than 20% of the outstanding
Voting Shares; or (2) through the acquisition of
additional Voting Shares, become the Beneficial Owner
of any additional Voting Shares that increases its
Beneficial Ownership of Voting Shares by more than 1%
of the number of Voting Shares outstanding as at the
Record Time, other than through an acquisition
pursuant to which a Person becomes a Beneficial Owner
of additional Voting Shares by reason of one or any
combination of the operation of Paragraphs 1.1(c)
(ii)(A), (B), (C) or (D).
(d) "AFFILIATE" when used to indicate a relationship with a
specified corporation or body corporate, means a Person that
directly or indirectly through one or more controlled
intermediaries, controls, or is controlled by, or is a
corporation or body corporate under common control with, such
specified corporation or body corporate.
(e) "AGREEMENT" means this agreement as amended, modified or
supplemented from time to time.
(f) "ASSOCIATE" when used to indicate a relationship with a
specified Person, means any relative of such specified Person
who has the same residence as such specified Person, a spouse
of that Person, any person of the same or opposite sex with
whom such specified Person is living in a conjugal
relationship outside marriage, or any relative of such spouse
or other Person who has the same residence as such specified
Person.
(g) a Person shall be deemed the "BENEFICIAL OWNER", and to have
"BENEFICIAL OWNERSHIP" of, and to "BENEFICIALLY OWN":
(i) any securities as to which such Person or any
Affiliate or Associate of such Person is the owner at
law or in equity;
(ii) any securities as to which such Person or any
Affiliate or Associate of such Person has the right
to acquire (whether such right is exercisable
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immediately or within a period of 60 days thereafter
or upon the occurrence of a contingency or otherwise)
pursuant to any agreement, arrangement, pledge or
understanding, whether or not in writing (other than
customary agreements with and between underwriters or
banking group or selling group members with respect
to a distribution to the public or pursuant to a
private placement of securities and other than
pledges of securities in the ordinary course of
business) or upon the exercise of any conversion
right, exchange right, share purchase right (other
than a Right), warrant or option or otherwise; and
(iii) any securities which are Beneficially Owned within
the meaning of the foregoing provisions of this
Subsection 1.1(g) by any other Person with whom such
Person is acting jointly or in concert;
provided, however, that a Person shall not be deemed the
"BENEFICIAL OWNER", or to have "BENEFICIAL OWNERSHIP" of, or
to "BENEFICIALLY OWN", any security because:
(iv) such security has been deposited or tendered pursuant
to any Take-over Bid made by such Person or made by
any Affiliate or Associate of such Person or made by
any other Person acting jointly or in concert with
such Person, unless such deposited or tendered
security has been taken up or paid for, whichever
shall first occur; or
(v) (A) such Person or any Affiliate or Associate of such
Person or any other Person acting jointly or in
concert with such Person, holds such security;
provided that the ordinary business of any such
Person (the "Fund Manager") includes the management
of investment funds for others and such security is
held by the Fund Manager in the ordinary course of
such business in the performance of such Fund
Manager's duties for the account of any other Person
(a "Client"), (B) such Person (the "Trust Company")
is licensed to carry on the business of a trust
company under applicable law and, as such, acts as
trustee or administrator or in a similar capacity in
relation to the estates of deceased or incompetent
Persons or in relation to other accounts and holds
such security in the ordinary course of such duties
for the estate of any such deceased or incompetent
Person (each an "Estate Account") or for such other
accounts (each an "Other Account"), (C) such Person
is established by statute for purposes that include,
and the ordinary business or activity of such Person
includes, the management of investment funds for
employee benefit plans, pension plans, insurance
plans or various public bodies; (D) the ordinary
business of any such Person includes acting as an
agent of the Crown in the management of public assets
(the "Crown Agent"), or (E) the Person, any of such
Person's Affiliates or Associates or any other Person
acting jointly or in concert with such Person holds
such security, provided that the Person holding
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such security is the administrator or the trustee of
one or more pension funds or plans (each a "Pension
Fund") registered under the laws of Canada or any
province thereof or the United States or any state
thereof (or is a Pension Fund) (the "Independent
Person") and holds such securities solely for the
purposes of its activities as an Independent Person,
and further provided that such Person does not hold
more than thirty percent (30%) of the Voting Shares
of the Corporation, provided, however, that in any of
the foregoing cases no one of the Fund Manager, the
Trust Company, the Crown Agent, Pension Fund or the
Independent Person makes or proposes to make a
Take-over Bid in respect of securities of the
Corporation alone or by acting jointly or in concert
with any other Person (other than by means of
ordinary market transactions (including prearranged
trades) executed through the facilities of a stock
exchange or organized over-the-counter market); or
(vi) such security has been agreed to be deposited or
tendered pursuant to a Lock-up Agreement; or
(vii) such Person is a Client of the same Fund Manager as
another Person on whose account the Fund Manager
holds or exercises dispositive power over such
security, or such Person is an Estate Account or an
Other Account of the same Trust Company as another
Person on whose account the Trust Company holds or
exercises dispositive power over such security, or
such Person is a Pension Fund with the same
Independent Person as another Pension Fund;
(viii) such Person is a Client of a Fund Manager and such
security is owned at law or in equity by the Fund
Manager, or such Person is an Estate Account or an
Other Account of a Trust Company and such security is
owned at law or in equity by the Trust Company, or
such Person is a Pension Fund and such security is
owned at law or in equity by the Independent Person
of the Pension Fund; or
(ix) such Person is the registered holder of securities as
a result of carrying on the business of, or acting as
a nominee of a securities depository.
For purposes of this Agreement, the percentage of Voting
Shares Beneficially Owned by any Person, shall be and be
deemed to be the product of one hundred (100) and the number
of which the numerator is the number of votes for the election
of all directors generally attaching to the Voting Shares
Beneficially Owned by such Person and the denominator of which
is the number of votes for the election of all directors
generally attaching to all outstanding Voting Shares. Where
any Person is deemed to Beneficially Own unissued Voting
Shares, such Voting Shares shall be deemed to be issued and
outstanding for the purpose of calculating the percentage of
Voting Shares Beneficially Owned by such Person.
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(h) "BOARD OF DIRECTORS" means, at any time, the duly constituted
board of directors of the Corporation.
(i) "BUSINESS DAY" means any day other than a Saturday, a Sunday
or a day on which banking institutions in Toronto or New York
are authorized or obligated by law to close.
(j) "CANADA BUSINESS CORPORATIONS ACT" means the CANADA BUSINESS
CORPORATIONS ACT, as amended, and the regulations thereunder,
and any comparable or successor laws or regulations thereto.
(k) "CANADIAN DOLLAR EQUIVALENT" means any amount which is
expressed in United States dollars shall mean on any day the
Canadian dollar equivalent of such amount determined by
reference to the U.S. Canadian Exchange Rate on such date.
(l) "CLOSE OF BUSINESS" on any given date means the time on such
date (or, if such date is not a Business Day, the time on the
next succeeding Business Day) at which the offices of the
transfer agent for the Common Shares (or, after the Separation
Time, the offices of the Rights Agent) is closed to the public
in the city in which such transfer agent or Rights Agent has
an office for the purposes of this Agreement.
(m) "COMMON SHARES" when used with reference to the Corporation,
means the common shares in the capital of the Corporation and,
when used with reference to any Person other than the
Corporation, means the class or classes of shares (or similar
equity interest) with the greatest per share voting power
entitled to vote generally in the election of all directors of
such other Person or the equity securities or other equity
interest having power (whether or not exercised) to control or
direct the management of such other Person or, if such other
Person is a Subsidiary of another Person, the Person or
Persons which ultimately control such first-mentioned Person.
(n) "COMPETING PERMITTED BID" means a Take-over Bid which: (i) is
made after a Permitted Bid has been made and prior to the
expiry of the Permitted Bid; (ii) satisfies all the components
of the definition of a Permitted Bid, except that the
requirements set out in Clause (ii) of the definition of a
Permitted Bid shall be satisfied if the Take-over Bid shall
contain, and the take up and payment for securities tendered
or deposited thereunder shall be subject to, an irrevocable
and unqualified condition that no Voting Shares shall be taken
up or paid for pursuant to the Competing Permitted Bid prior
to the close of business on the date that is no earlier than
the later of: (A) the sixtieth (60th) day after the date on
which the earliest Permitted Bid which preceded the Competing
Permitted Bid was made; and (B) thirty-five (35) days after
the date of the Take-over Bid constituting the
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Competing Permitted Bid; and only if at that date, more than
fifty percent (50%) of the then outstanding Voting Shares held
by Independent Shareholders have been deposited to the
Competing Permitted Bid and not withdrawn.
(o) "CONTROLLED": a corporation is "controlled" by another Person
or two or more Persons if:
(i) securities entitled to vote in the election of
directors carrying more than fifty percent (50%) of
the votes for the election of directors are held,
directly or indirectly, by or for the benefit of the
other Person or Persons; and
(ii) the votes carried by such securities are entitled, if
exercised, to elect a majority of the board of
directors of such corporation;
and "CONTROLS", "CONTROLLING" AND "UNDER COMMON CONTROL WITH"
shall be interpreted accordingly.
(p) "CORPORATE ACQUISITION" means an acquisition by the
Corporation or a Subsidiary of the Corporation or the
redemption by the Corporation of Voting Shares of the
Corporation which by reducing the number of Voting Shares of
the Corporation outstanding increases the proportionate number
of Voting Shares Beneficially Owned by any Person.
(q) "CORPORATE DISTRIBUTION" means an acquisition of Voting Shares
of the Corporation as a result of:
(i) a stock dividend or a stock split or other event
pursuant to which a person receives or acquires
Voting Shares on the same PRO RATA basis as all other
holders of the same class of Voting Shares;
(ii) any dividend reinvestment plan or other plan made
available by the Corporation to holders of all of its
Voting Shares (other than holders resident in any
jurisdiction where participation in such plan is
restricted or impractical to the Corporation as a
result of applicable law);
(iii) the receipt and/or exercise of rights issued by the
Corporation to purchase Voting Shares distributed to
all the holders of a series or class of Voting Shares
of the Corporation to subscribe for or purchase
Voting Shares of the Corporation, (other than holders
resident in any jurisdiction where the distribution
or exercise of such rights is restricted or
impractical as a result of applicable law), provided
that such rights are acquired directly from the
Corporation and not from any other Person; or
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(iv) a distribution of Voting Shares, or securities
convertible into, exchangeable for or carrying the
right to acquire Voting Shares (and the conversion or
exchange of such convertible or exchangeable
securities or the exercise of the right to acquire
Voting Shares carried by such securities), made
pursuant to a distribution to the public by the
Corporation made pursuant to a prospectus provided
that the Person does not thereby acquire a greater
percentage of Voting Shares or such securities than
the Person's percentage of Voting shares or
securities beneficially owned immediately prior to
such acquisition or pursuant to a distribution by the
Corporation by way of a private placement by the
Corporation or upon the exercise by an individual
employee of stock options granted under a stock
option plan of the Corporation or rights to purchase
securities granted under a share purchase plan of the
Corporation, provide that (i) all necessary stock
exchange approvals for such private placement, stock
option plan or share purchase plan have been obtained
and such private placement, stock option plan or
share purchase plan complies with the terms and
conditions of such approvals and (ii) such Person
does not become the Beneficial Owner of more than 25%
of the Voting Shares outstanding prior to the
distribution, and in making this determination the
Voting Shares to be issued to such Person in the
distribution shall be deemed to be held by such
Person but shall not be included in the aggregate
number of outstanding Voting Shares immediately prior
to the distribution.
(r) "DISQUALIFICATION DATE" has the meaning ascribed thereto in
Clause 1.1(c)(iii).
(s) "EFFECTIVE DATE" has the meaning ascribed thereto in Section
5.16.
(t) "ELECTION TO EXERCISE" has the meaning ascribed thereto in
Subsection 2.2(d).
(u) "EXEMPT ACQUISITION" means an acquisition of Voting Shares of
the Corporation, in respect of which the Board of Directors
has waived the application of Section 3.1 hereof pursuant to
the provisions of Subsections 5.1(b), (c) or (f) hereof or
which was made on or prior to the Record Time.
(v) "EXERCISE PRICE" means, as of any date, the price at which a
holder may purchase the securities issuable upon exercise of
one whole Right. Until adjustment thereof in accordance with
the terms hereof, the Exercise Price shall be $200.00.
(w) "EXPANSION FACTOR" has the meaning ascribed thereto in
Subsection 2.3(a)(v).
(x) "EXPIRATION TIME" means the earlier of: (i) the Termination
Time, and (ii) the close of business on the date of the
Corporation's annual meeting of Shareholders in 2003.
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(y) "FLIP-IN EVENT" means a transaction in or pursuant to which
any Person becomes an Acquiring Person.
(z) "HOLDER" has the meaning ascribed thereto in Section 2.8.
(aa) "INDEPENDENT SHAREHOLDERS" means holders of Voting Shares of
the Corporation, but shall not include: (i) any Acquiring
Person; (ii) any Offeror (including an Offeror who has
announced an intention to make or who makes a Permitted Bid or
Competing Permitted Bid); (iii) any Affiliate or Associate of
such Acquiring Person or Offeror; (iv) any Person acting
jointly or in concert with such Acquiring Person or Offeror;
or (v) any employee benefit plan, stock purchase plan,
deferred profit sharing plan or any similar plan or trust for
the benefit of employees of the Corporation or a Subsidiary of
the Corporation, unless the beneficiaries of any such plan or
trust direct the manner in which the Voting Shares are to be
voted or direct whether the Voting Shares are to be tendered
to a Take-over Bid.
(bb) "LOCK-UP AGREEMENT" means an agreement between an Offeror, any
of its Affiliates or Associates or any other Person acting
jointly or in concert with the Offeror and a Person (the
"Locked-up Person") who is not an Affiliate or Associate of
the Offeror or a Person acting jointly or in concert with the
Offeror whereby the Locked-up Person agrees to deposit or
tender the Voting Shares held by the Locked-up Person to the
Offeror's Take-over Bid or to any Take-over Bid made by any of
the Offeror's Affiliates or Associates or made by any other
Person acting jointly or in concert with the Offeror (the
"Lock-up Bid"), provided that:
(i) the agreement:
A. permits the Locked-up Person to withdraw the
Voting Shares from the agreement in order to
tender or deposit the Voting Shares to
another Take-over Bid or to support another
transaction that contains an offering price
for each Voting Share that is higher than
the offering price contained in or proposed
to be contained in the Lock-up Bid; or
B. (a) permits the Locked-up Person to
withdraw the Voting Shares from the
agreement in order to tender or
deposit the Voting Shares to another
Take-over Bid or to support another
transaction that contains an
offering price for each Voting Share
that exceeds by as much as or more
than a specified amount (the
"Specified Amount") the offering
price for each Voting Share
contained in or proposed to be
contained in the Lock-up Bid; and
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(b) does not by its terms provide for a
Specified Amount that is greater
than 7% of the offering price
contained in or proposed to be
contained in the Lock-up Bid;
and, for greater clarity, an agreement may
contain a right of first refusal or require
a period of delay to give an offeror an
opportunity to match a higher price in
another take-over bid or other similar
limitation on a Locked-up Person as long as
the Locked-up Person is not precluded
indefinitely from accepting another bid or
tendering to another transaction; and
(ii) no "break-up" fees, "top-up" fees, penalties or other
amounts that exceed in the aggregate one-half of the
cash equivalent of any amount in excess of the amount
offered under the Lock-up Bid that the Locked-up
Person receives pursuant to another Take-over Bid or
transaction shall be payable pursuant to the
agreement in the event that the Locked-up Person
fails to tender Voting Shares pursuant thereto in
order to accept the other Take-over Bid or support
another transaction.
(cc) "MARKET PRICE" per share of any securities on any date of
determination means the average of the daily closing prices
per share of such securities (determined as described below)
on each of the twenty (20) consecutive Trading Days through
and including the Trading Day immediately preceding such date;
provided, however, that if an event of a type analogous to any
of the events described in Section 2.3 hereof shall have
caused the closing prices used to determine the Market Price
on any Trading Days not to be fully comparable with the
closing price on such date of determination or, if the date of
determination is not a Trading Day, on the immediately
preceding Trading Day, each such closing price so used shall
be appropriately adjusted in a manner analogous to the
applicable adjustment provided for in Section 2.3 hereof in
order to make it fully comparable with the closing price on
such date of determination or, if the date of determination is
not a Trading Day, on the immediately preceding Trading Day.
The closing price per share of any securities on any date
shall be (i) the closing board lot sale price or, if such
price is not available, the average of the closing bid and
asked prices, for each share as reported by The Toronto Stock
Exchange; or (ii) if for any reason none of such prices is
available on such day or the securities are not listed or
admitted to trading on The Toronto Stock Exchange, the closing
board lot sale price or, if such price is not available, the
average of the closing bid and asked prices, for each share as
reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to
trading on the principal national securities exchange in the
United States on which the securities are listed or admitted
to trading; or (iii) if for any reason none of such prices is
available on such day or the securities are not listed or
admitted to trading on The Toronto Stock Exchange or a
national securities exchange in the United States, the last
quoted price, or if not so quoted, the average of the high
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bid and low asked prices for each share of such securities in
the over-the-counter market, as reported by The Canadian
Dealing Network Inc. or such other comparable system then in
use; or (iv) if on any such date the securities are not quoted
by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker
making a market in the securities selected in good faith by
the Board of Directors; provided, however, that if on any such
date the securities are not traded on any stock exchange or in
the over-the-counter market, the closing price per share of
such securities on such date shall mean the fair value per
share of such securities on such date as determined by a
nationally or internationally recognized investment dealer or
investment banker.
The Market Price shall be expressed in Canadian dollars and if
initially determined in respect of any day forming part of the
twenty (20) consecutive trading day period in United States
dollars, such amount shall be translated into Canadian dollars
at the Canadian Dollar Equivalent thereof.
(dd) "OFFER TO ACQUIRE" shall include:
(i) an offer to purchase, a public announcement of an
intention to make an offer to purchase, or a
solicitation of an offer to sell, Voting Shares of
the Corporation; and
(ii) an acceptance of an offer to sell Voting Shares of
the Corporation, whether or not such offer to sell
has been solicited;
or any combination thereof, and the Person accepting an offer
to sell shall be deemed to be making an Offer to Acquire to
the Person that made the offer to sell.
(ee) "OFFEROR" means a Person who has announced a current intention
to make, or who is making, a Take-over Bid (including a
Permitted Bid or Competing Permitted Bid but excluding an
offer to acquire Voting Shares or other securities of the
Corporation made by a Fund Manager, Trust Company, Crown
Agent, Pension Fund or other Person referred to in subsection
1.1(c)(v) of the definition of Beneficial Ownership pursuant
to a distribution by the Corporation or by means of ordinary
market transactions (including pre-arranged trades entered
into in the ordinary course of business of such Person in the
circumstances contemplated in said subsection 1.1(g)(v)) but
only for so long as the Take-over Bid so announced or made has
not been withdrawn or terminated and has not expired.
(ff) "OFFEROR'S SECURITIES" means Voting Shares of the Corporation
Beneficially Owned by an Offeror, any Affiliate or Associate
of such Offeror, any Person acting jointly or in concert with
the Offeror or with any Affiliate of the Offeror and any
Affiliates or Associates of such Person so acting jointly or
in concert.
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(gg) "PERMITTED BID" means a Take-over Bid made by an Offeror which
is made by means of a Take-over Bid circular and which also
complies with the following additional provisions:
(i) the Take-over Bid shall be made to all holders of
record of Voting Shares wherever resident as
registered on the books of the Corporation, other
than the Offeror;
(ii) the Take-over Bid shall contain, and the take up and
payment for securities tendered or deposited
thereunder shall be subject to, an irrevocable and
unqualified condition that no Voting Shares shall be
taken up or paid for pursuant to the Take-over Bid
prior to the close of business on the date which is
not less than sixty (60) days following the date of
the Take-over Bid, and only if at such date, more
than fifty percent (50%) of the then outstanding
Voting Shares held by Independent Shareholders shall
have been deposited to the Take-over Bid and not
withdrawn;
(iii) the Take-over Bid shall contain an irrevocable and
unqualified provision that, unless the Take-over Bid
is withdrawn in accordance with applicable law,
Voting Shares of the Corporation may be deposited
pursuant to such Take-over Bid at any time during the
period of time described in Clause (ii) of this
Subsection 1.1(gg) and that any Voting Shares
deposited pursuant to the Take-over Bid may be
withdrawn at any time until taken up and paid for;
and
(iv) the Take-over Bid shall contain an irrevocable and
unqualified provision that if, on the date on which
Voting Shares may be taken up and paid for, more than
fifty percent (50%) of the then outstanding Voting
Shares held by Independent Shareholders have been
deposited to the Take-over Bid and not withdrawn, (A)
the Offeror will make a public announcement of that
fact on the date the Take-over Bid would otherwise
expire; and (B) the Take-over Bid will be extended
for a period of not less than ten (10) Business Days
from the date it would otherwise expire.
(hh) "PERMITTED BID ACQUISITIONS" means share acquisitions made
pursuant to a Permitted Bid or a Competing Permitted Bid.
(ii) "PERSON" means any individual, firm, partnership, association,
trust, trustee, executor, administrator, legal or personal
representative, government, governmental body, entity or
authority, group, body corporate, corporation, unincorporated
organization or association, syndicate, joint venture or any
other entity, whether or not having legal personality, and any
of the foregoing in any derivative, representative or
fiduciary capacity, and pronouns have a similar extended
meaning.
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(jj) "RECORD TIME" means 5:00 p.m. (Toronto time) on November 22,
2000.
(kk) "REDEMPTION PRICE" has the meaning ascribed thereto in
Subsection 5.1(a).
(ll) "REGULAR PERIODIC CASH DIVIDENDS" means cash dividends paid at
regular intervals in any fiscal year of the Corporation to the
extent that such cash dividends do not exceed, in the
aggregate, the greatest of
(i) two hundred percent (200%) of the aggregate amount of
cash dividends declared payable by the Corporation on
its Common Shares in its immediately preceding fiscal
year;
(ii) three hundred percent (300%) of the arithmetic
average of the aggregate amounts of cash dividends
declared payable by the Corporation on its Common
Shares in its three immediately preceding financial
years; and
(iii) one hundred percent (100%) of the aggregate
consolidated net income of the Corporation, before
extraordinary items, for its immediately preceding
fiscal year.
(mm) "RIGHT" means a right issued pursuant to this Agreement.
(nn) "RIGHTS AGENT" means CIBC Mellon Trust Company, a trust
company incorporated under the laws of Canada or any successor
Rights Agent appointed pursuant to Subsection 4.1(a).
(oo) "RIGHTS CERTIFICATE" has the meaning ascribed thereto in
Subsection 2.2(c).
(pp) "RIGHTS HOLDERS' SPECIAL MEETING" means a meeting of the
holders of Rights called by the Board of Directors for the
purpose of approving a supplement or amendment to this
Agreement pursuant to Subsection 5.4(c).
(qq) "RIGHTS REGISTER" has the meaning ascribed thereto in
Subsection 2.6(a).
(rr) "SECURITIES ACT (ONTARIO)" means the SECURITIES ACT, R.S.O.
1990, c. S.5. as amended, and the regulations, rules,
policies, and notices thereunder, and any comparable or
successor laws, regulations, rules, policies or notices
thereto.
(ss) "SEPARATION TIME" means the close of business on the eighth
(8th) Trading Day after the earlier of (i) the Stock
Acquisition Date, and (ii) the date of the commencement of, or
first public announcement of the intent of any person (other
than the Corporation or any Subsidiary of the Corporation) to
commence, a Take-over Bid (other than a Permitted Bid or
Competing Permitted Bid) or such later date as may be
determined by the Board of Directors provided that, if any
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Take-over Bid referred to in Clause (ii) of this Subsection
1.1(tt) expires, is cancelled, terminated or otherwise
withdrawn prior to the Separation Time, such Take-over Bid
shall be deemed, for the purposes of this Subsection 1.1(tt),
never to have been made and provided further that if the Board
of Directors determines pursuant to Subsections 5.1(b), (c) or
(f) hereof to waive the application of Section 3.1 hereof to a
Flip-in Event, the Separation Time in respect of such Flip-in
Event shall be deemed never to have occurred.
(tt) "STOCK ACQUISITION DATE" means the first date of public
announcement (which, for purposes of this definition, shall
include, without limitation, a report filed pursuant to
Section 101 of the SECURITIES ACT (Ontario) or Section 13(d)
of the 1934 Exchange Act) by the Corporation or an Offeror or
Acquiring Person of facts indicating that a Person has become
an Acquiring Person.
(uu) "SUBSIDIARY": a corporation shall be deemed to be a Subsidiary
of another corporation if:
(i) it is controlled by:
(A) that other; or
(B) that other and one or more corporations each
of which is controlled by that other; or
(C) two or more corporations each of which is
controlled by that other; or
(ii) it is a Subsidiary of a corporation that is that
other's Subsidiary.
(vv) "TAKE-OVER BID" means an Offer to Acquire Voting Shares of the
Corporation or securities convertible into or exchangeable for
or carrying a right to purchase Voting Shares of the
Corporation where the Voting Shares of the Corporation subject
to the Offer to Acquire, together with the Voting Shares of
the Corporation into which the securities subject to the Offer
to Acquire are convertible, exchangeable or exercisable, and
the Offeror's Securities, constitute in the aggregate twenty
percent (20%) or more of the outstanding Voting Shares of the
Corporation at the date of the Offer to Acquire.
(ww) "TERMINATION TIME" means the time at which the right to
exercise Rights shall terminate pursuant to Subsection 5.1(h)
hereof.
(xx) "TRADING DAY", when used with respect to any securities, means
a day on which the principal Canadian stock exchange or
American stock exchange or market on which such securities are
listed or admitted to trading is open for the transaction
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of business or, if the securities are not listed or admitted
to trading on any Canadian stock exchange or American stock
exchange or market, a Business Day.
(yy) "U.S. - CANADIAN EXCHANGE RATE" means on any date:
(i) if on such date the Bank of Canada sets an average
noon spot rate of exchange for the conversion of one
United States dollar into Canadian dollars, such
rate; and
(ii) in any other case, the rate for such date for the
conversion of one United States dollar into Canadian
dollars which is calculated in the manner which shall
be determined by the Board of Directors from time to
time acting in good faith.
(zz) "VOTING SHARES" means, with respect to any Person, the Common
Shares of such Person and any other shares of capital stock or
voting interests of such Person entitled to vote generally in
the election of all directors.
1.2 CURRENCY
All sums of money which are referred to in this Agreement are expressed
in lawful money of Canada, unless otherwise specified.
1.3 HEADINGS
The division of this Agreement into Articles, Sections, Subsections,
Clauses and Subclauses and the insertion of headings, subheadings and a table of
contents are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement.
1.4 NUMBER AND GENDER
Wherever the context so requires, terms used herein importing the
singular number only shall include the plural and vice-versa and words importing
only one gender shall include all others.
1.5 ACTING JOINTLY OR IN CONCERT
For the purposes of this Agreement, a Person is acting jointly or in
concert with every Person who is a party to an agreement, commitment or
understanding, whether formal or informal, with the first Person or any
Associate or Affiliate of such Person to acquire or make an Offer to Acquire
Voting Shares of the Corporation (other than customary agreements with and
between underwriters and banking group or selling group members with respect to
a distribution of securities by way of prospectus or private placement or
pursuant to a pledge of securities in the ordinary course of business).
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1.6 GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
Wherever in this Agreement reference is made to generally accepted
accounting principles, such reference shall be deemed to be the recommendations
at the relevant time of the Canadian Institute of Chartered Accountants, or any
successor institute, applicable on a consolidated basis (unless otherwise
specifically provided herein to be applicable on an unconsolidated basis) as at
the date on which a calculation is made or required to be made in accordance
with generally accepted accounting principles. Where the character or amount of
any asset or liability or item of revenue or expense is required to be
determined, or any consolidation or other accounting computation is required to
be made for the purpose of this Agreement or any document, such determination or
calculation shall, to the extent applicable and except as otherwise specified
herein or as otherwise agreed in writing by the parties, be made in accordance
with generally accepted accounting principles applied on a consistent basis.
1.7 STATUTORY REFERENCES
Unless the context otherwise requires or except as expressly provided
herein, any reference herein to a specific part, section, subsection, clause or
Rule of any statute or regulation shall be deemed to refer to the same as it may
be amended, re-enacted or replaced or, if repealed and there shall be no
replacement therefor, to the same as it is in effect on the date of this
Agreement.
ARTICLE 2 - THE RIGHTS
2.1 LEGEND ON COMMON SHARE CERTIFICATES
(a) Certificates issued for Common Shares after the Record Time
but prior to the close of business on the earlier of the
Separation Time and the Expiration Time shall evidence one
Right for each Common Share represented thereby and shall have
impressed on, printed on, written on or otherwise affixed to
them, a legend in substantially the following form:
UNTIL THE SEPARATION TIME (AS DEFINED IN THE RIGHTS PLAN
REFERRED TO BELOW), THIS CERTIFICATE ALSO EVIDENCES AND
ENTITLES THE HOLDER HEREOF TO CERTAIN RIGHTS AS SET FORTH IN A
SHAREHOLDER RIGHTS PLAN AGREEMENT, DATED AS OF NOVEMBER 22,
2000 (THE "RIGHTS PLAN"), BETWEEN VASOGEN INC. (THE
"CORPORATION") AND CIBC MELLON TRUST COMPANY, AS RIGHTS AGENT
(THE "RIGHTS AGENT"), THE TERMS OF WHICH ARE HEREBY
INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH MAY BE
INSPECTED DURING NORMAL BUSINESS HOURS AT THE PRINCIPAL
EXECUTIVE OFFICE OF THE CORPORATION. UNDER CERTAIN
CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS PLAN, SUCH RIGHTS
MAY BE AMENDED OR REDEEMED, MAY EXPIRE, MAY
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BECOME NULL AND VOID (IF, IN CERTAIN CASES, THEY ARE ISSUED TO
OR "BENEFICIALLY OWNED" BY ANY PERSON WHO IS, WAS OR BECOMES
AN "ACQUIRING PERSON", AS SUCH TERMS ARE DEFINED IN THE RIGHTS
PLAN, WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR
ANY SUBSEQUENT HOLDER) OR MAY BE EVIDENCED BY SEPARATE
CERTIFICATES AND MAY NO LONGER BE EVIDENCED BY THIS
CERTIFICATE. THE CORPORATION WILL MAIL OR ARRANGE FOR THE
MAILING OF A COPY OF THE RIGHTS PLAN TO THE HOLDER OF THIS
CERTIFICATE WITHOUT CHARGE UPON RECEIPT OF A WRITTEN REQUEST
THEREFOR.
(b) Certificates representing Common Shares that are issued and
outstanding at the Record Time shall evidence one Right for
each Common Share evidenced thereby notwithstanding the
absence of the foregoing legend until the earlier of the
Separation Time and the Expiration Time.
2.2 INITIAL EXERCISE PRICE; EXERCISE OF RIGHTS; DETACHMENT OF RIGHTS
(a) RIGHT TO ENTITLE HOLDER TO PURCHASE ONE COMMON SHARE PRIOR TO
ADJUSTMENT. Subject to adjustment as herein set forth, each
Right will entitle the holder thereof, from and after the
Separation Time and prior to the Expiration Time, to purchase,
for the Exercise Price as at the Business Day immediately
preceding the date of exercise of the Right, one Common Share
of the Corporation (which price and number of Common Shares
are subject to adjustment as set forth below). Notwithstanding
any other provision of this Agreement, any Rights held by the
Corporation and any of its Subsidiaries shall be void.
(b) RIGHTS NOT EXERCISABLE UNTIL SEPARATION TIME. Until the
Separation Time, (i) the Rights shall not be exercisable and
no Right may be exercised, and (ii) for administrative
purposes, each Right will be evidenced by the certificate for
the associated Common Share registered in the name of the
holder thereof (which certificate shall also be deemed to be a
Rights Certificate) and will be transferable only together
with, and will be transferred by a transfer of, such
associated Common Share.
(c) DELIVERY OF RIGHTS CERTIFICATE AND DISCLOSURE STATEMENT. From
and after the Separation Time and prior to the Expiration
Time: (i) the Rights shall be exercisable, and (ii) the
registration and transfer of the Rights shall be separate
from, and independent of, Common Shares.
Promptly following the Separation Time, the Corporation will
prepare and the Rights Agent will mail to each holder of
record of Rights as of the Separation Time (other than an
Acquiring Person and other than in respect of any Rights
Beneficially Owned by such Acquiring Person which are not held
by such Acquiring Person, the holder of record of such Rights)
at such holder's address as
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shown by the records of the Corporation (the Corporation
hereby agreeing to furnish copies of such records to the
Rights Agent for this purpose), (A) a certificate (a "Rights
Certificate") in substantially the form of Exhibit A hereto
appropriately completed, representing the number of Rights
held by such holder at the Separation Time and having such
marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Corporation
may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply
with any law, rule, regulation or judicial or administrative
order or with any rule or regulation made pursuant thereto or
with any rule or regulation of any self-regulatory
organization, stock exchange or quotation system on which the
Rights may from time to time be listed or traded, or to
conform to usage, and (B) a disclosure statement describing
the Rights, provided that a nominee shall be sent the
materials provided for in (A) and (B) in respect of all Common
Shares held of record by it which are not Beneficially Owned
by an Acquiring Person. In order for the Corporation to
determine whether any Person is holding Common Shares which
are Beneficially Owned by another Person, the Corporation may
require such first mentioned Person to furnish it with such
information and documentation as the Corporation considers
advisable.
(d) EXERCISE OF RIGHTS. Rights may be exercised in whole or in
part on any Business Day after the Separation Time and prior
to the Expiration Time by submitting to the Rights Agent the
Rights Certificate evidencing such Rights together with an
election to exercise such Rights (an "Election to Exercise")
substantially in the form attached to the Rights Certificate
duly completed, accompanied by payment by certified cheque,
banker's draft or money order payable to the order of the
Rights Agent (on behalf of the Corporation), of a sum equal to
the Exercise Price multiplied by the number of Rights being
exercised and a sum sufficient to cover any transfer tax or
charge which may be payable in respect of any transfer
involved in the transfer or delivery of Rights Certificates or
the issuance or delivery of certificates for Common Shares in
a name other than that of the holder of the Rights being
exercised, all of the above to be received before the
Expiration Time by the Rights Agent at its principal office in
any of the cities listed on the Rights Certificate.
(e) DUTIES OF RIGHTS AGENT UPON RECEIPT OF ELECTION TO EXERCISE.
Upon receipt of a Rights Certificate, which is accompanied by
a completed Election to Exercise that does not indicate that
such Right is null and void as provided by Subsection 3.1(b)
hereof, and payment as set forth in Subsection 2.2(d) above,
the Rights Agent (unless otherwise instructed by the
Corporation) will thereupon promptly:
(i) requisition from the transfer agent for the Common
Shares certificates representing the number of Common
Shares to be purchased (the Corporation hereby
irrevocably authorizing its transfer agent to comply
with all such requisitions);
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(ii) when appropriate, requisition from the Corporation
the amount of cash to be paid in lieu of issuing
fractional Common Shares;
(iii) after receipt of such certificates, deliver the same
to or upon the order of the registered holder of such
Rights Certificate, registered in such name or names
as may be designated by such registered holder;
(iv) when appropriate, after receipt, deliver such payment
(less any amounts required to be withheld) to or to
the order of the registered holder of the Rights
Certificate; and
(v) tender to the Corporation all payments received on
exercise of the Rights.
(f) PARTIAL EXERCISE OF RIGHTS. In case the holder of any Rights
shall exercise less than all of the Rights evidenced by such
holder's Rights Certificate, a new Rights Certificate
evidencing the Rights remaining unexercised will be issued by
the Rights Agent to such holder or to such holder's duly
authorized assigns.
(g) DUTIES OF THE CORPORATION. The Corporation covenants and
agrees that it will:
(i) take all such action as may be necessary and within
its power to ensure that all Common Shares or other
securities delivered upon exercise of Rights shall,
at the time of delivery of the certificates for such
shares (subject to payment of the Exercise Price), be
duly and validly authorized, executed, issued and
delivered and fully paid and non-assessable;
(ii) take all such action as may be necessary and within
its power to ensure compliance with the provisions of
Section 3.1 hereof including, without limitation, all
such action to comply with any applicable
requirements of the CANADA BUSINESS CORPORATIONS ACT,
the SECURITIES ACT (Ontario), the 1933 Securities
Act, the 1934 Exchange Act and any applicable
comparable securities legislation of any other
applicable jurisdiction, in connection with the
issuance and delivery of the Rights Certificates and
the issuance of any Common Shares upon exercise of
Rights;
(iii) use reasonable efforts to cause all Common Shares
issued upon exercise of Rights to be listed upon
issuance on the principal stock exchanges on which
the Common Shares were traded prior to the Stock
Acquisition Date;
(iv) cause to be reserved and kept available out of its
authorized and unissued Common Shares, the number of
Common Shares that, as provided in this Agreement,
will from time to time be sufficient to permit the
exercise in full of all outstanding Rights;
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(v) pay when due and payable any and all Canadian and, if
applicable, United States, federal, provincial and
state transfer taxes and charges (but for greater
certainty, not including any income or capital taxes
of the holder or exercising holder or any liability
of the Corporation to withhold tax) which may be
payable in respect of the original issuance or
delivery of the Rights Certificates, provided that
the Corporation shall not be required to pay any
transfer tax or charge which may be payable in
respect of any transfer involved in the transfer or
delivery of Rights Certificates or the issuance or
delivery of certificates for shares or other
securities in a name other than that of the
registered holder of the Rights being transferred or
exercised; and
(vi) after the Separation Time, except as permitted by
Sections 5.1 or 5.4 hereof, not take (or permit any
Subsidiary to take) any action if at the time such
action is taken it is reasonably foreseeable that
such action will diminish substantially or otherwise
eliminate the benefits intended to be afforded by the
Rights.
2.3 ADJUSTMENTS TO EXERCISE PRICE; NUMBER OF RIGHTS
The Exercise Price, the number and kind of Common Shares or other
securities subject to purchase upon exercise of each Right and the number of
Rights outstanding are subject to adjustment from time to time as provided in
this Section 2.3.
(a) ADJUSTMENT TO EXERCISE PRICE UPON CHANGES TO SHARE CAPITAL. In
the event the Corporation shall at any time after the Record
Time:
(i) declare or pay a dividend on the Common Shares
payable in Common Shares (or other securities
exchangeable for or convertible into or giving a
right to acquire Common Shares or other securities)
other than the issue of Common Shares or such
exchangeable or convertible securities to holders of
Common Shares in lieu of but not in an amount which
exceeds the value of regular periodic cash dividends;
(ii) subdivide or change the outstanding Common Shares
into a greater number of Common Shares;
(iii) combine or change the outstanding Common Shares into
a smaller number of Common Shares or;
(iv) issue any Common Shares (or other securities
exchangeable for or convertible into or giving a
right to acquire Common Shares or other securities)
in respect of, in lieu of or in exchange for existing
Common Shares, except as otherwise provided in this
Section 2.3;
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the Exercise Price in effect at the time of the record date
for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number
and kind of Common Shares or other securities, as the case may
be, issuable on such date, shall be proportionately adjusted
so that the holder of any Right exercised after such time
shall be entitled to receive, upon payment of the Exercise
Price then in effect, the aggregate number and kind of Common
Shares or other securities, as the case may be, which, if such
Right had been exercised immediately prior to such date and at
a time when the share transfer books of the Corporation were
open, such holder would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. If an event occurs which
would require an adjustment under both this Section 2.3 and
Section 3.1 hereof, the adjustment provided for in this
Section 3.1 shall be in addition to, and shall be made prior
to, any adjustment required pursuant to Section 3.1 hereof.
If the Exercise Price and number of Rights outstanding are to
be adjusted:
(v) the Exercise Price in effect after such adjustment
will be equal to the Exercise Price in effect
immediately prior to such adjustment divided by the
number of Common Shares (or other capital stock) (the
"Expansion Factor") that a holder of one Common Share
immediately prior to such dividend, subdivision,
change, consolidation or issuance would hold
thereafter as a result thereof; and
(vi) each Right held prior to such adjustment will become
that number of Rights equal to the Expansion Factor,
and the adjusted number of Rights will be deemed to
be distributed among the Common Shares with respect
to which the original Rights were associated (if they
remain outstanding) and the shares issued in respect
of such dividend, subdivision, change, consolidation
or issuance, so that each such Common Share (or other
capital stock) will have exactly one Right associated
with it.
For greater certainty, if the securities purchasable upon
exercise of Rights are to be adjusted, the securities
purchasable upon exercise of each Right after such adjustment
will be the securities that a holder of the securities
purchasable upon exercise of one Right immediately prior to
such dividend, subdivision, change, consolidation or issuance
would hold thereafter as a result of such dividend,
subdivision, change, consolidation or issuance.
If, after the Record Time and prior to the Expiration Time,
the Corporation shall issue any shares of capital stock other
than Common Shares in a transaction of a type described in
Clause 2.3(a)(i) or (iv), shares of such capital stock shall
be treated herein as nearly equivalent to Common Shares as may
be practicable and
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appropriate under the circumstances and the Corporation and
the Rights Agent agree to amend this Agreement in order to
effect such treatment.
In the event the Corporation shall at any time after the
Record Time prior to the Separation Time issue any Common
Shares otherwise than in a transaction referred to in this
Subsection 2.3(a), each such Common Share so issued shall
automatically have one new Right associated with it, which
Right shall be evidenced by the certificate representing such
associated Common Share.
(b) ADJUSTMENT TO EXERCISE PRICE UPON ISSUE OF RIGHTS, OPTIONS AND
WARRANTS. In case the Corporation shall at any time after the
Record Time fix a record date for the issuance of rights,
options or warrants to all holders of Common Shares entitling
them (for a period expiring within forty-five (45) calendar
days after such record date) to subscribe for or purchase
Common Shares (or shares having the same rights, privileges
and preferences as Common Shares ("equivalent common shares"))
or securities convertible into or exchangeable for or carrying
a right to purchase Common Shares or equivalent common shares
at a price per Common Share or per equivalent common share (or
having a conversion price or exchange price or exercise price
per share, if a security convertible into or exchangeable for
or carrying a right to purchase Common Shares or equivalent
common shares) less than ninety percent (90%) of the Market
Price per Common Share on such record date, the Exercise Price
to be in effect after such record date shall be determined by
multiplying the Exercise Price in effect immediately prior to
such record date by a fraction, the numerator of which shall
be the number of Common Shares outstanding on such record
date, plus the number of Common Shares that the aggregate
offering price of the total number of Common Shares and/or
equivalent common shares so to be offered (and/or the
aggregate initial conversion, exchange or exercise price of
the convertible or exchangeable securities or rights so to be
offered, including the price required to be paid to purchase
such convertible or exchangeable securities or rights so to be
offered) would purchase at such Market Price per Common Share,
and the denominator of which shall be the number of Common
Shares outstanding on such record date, plus the number of
additional Common Shares and/or equivalent common shares to be
offered for subscription or purchase (or into which the
convertible or exchangeable securities are initially
convertible, exchangeable or exercisable). In case such
subscription price may be paid by delivery of consideration,
part or all of which may be in a form other than cash, the
value of such consideration shall be as determined in good
faith by the Board of Directors, whose determination shall be
described in a certificate filed with the Rights Agent and
shall be binding on the Rights Agent and the holders of the
Rights. Such adjustment shall be made successively whenever
such a record date is fixed, and in the event that such rights
or warrants are not so issued, the Exercise Price shall be
adjusted to be the Exercise Price which would then be in
effect if such record date had not been fixed.
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For purposes of this Agreement, the granting of the right to
purchase Common Shares (or equivalent common shares) (whether
from treasury shares or otherwise) pursuant to any dividend or
interest reinvestment plan and/or any Common Share purchase
plan providing for the reinvestment of dividends or interest
payable on securities of the Corporation and/or the investment
of periodic optional payments or any employee benefit, stock
option or similar plans (so long as such right to purchase is
in no case evidenced by the delivery of rights or warrants)
shall not be deemed to constitute an issue of rights, options
or warrants by the Corporation; provided, however, that, in
all such cases, the right to purchase Common Shares (or
equivalent common shares) is at a price per share of not less
than ninety percent (90%) of the current market price per
share (determined as provided in such plans) of the Common
Shares.
(c) ADJUSTMENT TO EXERCISE PRICE UPON CORPORATE DISTRIBUTIONS. In
case the Corporation shall at anytime after the Record Time
fix a record date for a distribution to all holders of Common
Shares (including any such distribution made in connection
with a merger, amalgamation, arrangement, plan, compromise or
reorganization in which the Corporation is the continuing or
successor corporation) of evidences of indebtedness, cash
(other than a regular periodic cash dividend or a regular
periodic cash dividend paid in Common Shares, but including
any dividend payable in securities other than Common Shares),
assets or subscription rights, options or warrants (excluding
those referred to in Subsection 2.3(b) above), at a price per
Common Share that is less than ninety percent (90%) of the
Market Price per Common Share on the second Trading Day
immediately preceding such record date, the Exercise Price to
be in effect after such record date shall be determined by
multiplying the Exercise Price in effect immediately prior to
such record date by a fraction, the numerator of which shall
be the Market Price per Common Share on such record date, less
the fair market value (as determined in good faith by the
Board of Directors, whose determination shall be described in
a statement filed with the Rights Agent and shall be binding
on the Rights Agent and the holders of the Rights) of the
portion of the cash, assets or evidences of indebtedness so to
be distributed or of such subscription rights, options or
warrants applicable to a Common Share and the denominator of
which shall be such Market Price per Common Share. Such
adjustments shall be made successively whenever such a record
date is fixed, and in the event that such distribution is not
so made, the Exercise Price shall be adjusted to be the
Exercise Price which would have been in effect if such record
date had not been fixed.
(d) DE MINIMIS THRESHOLD FOR ADJUSTMENT TO EXERCISE PRICE.
Notwithstanding anything herein to the contrary, no adjustment
in the Exercise Price shall be required unless such adjustment
would require an increase or decrease of at least one percent
(1%) in the Exercise Price; provided, however, that any
adjustments which by reason of this Subsection 2.3(d) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under
this Section 2.3 shall be made to the nearest cent or to the
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nearest one-hundredth of a Common Share or other share, as the
case may be. Notwithstanding the first sentence of this
Subsection 2.3(d), any adjustment required by this Section 2.3
shall be made no later than the earlier of: (i) three (3)
years from the date of the transaction which mandates such
adjustment; and (ii) the Expiration Time.
(e) CORPORATION MAY PROVIDE FOR ALTERNATE MEANS OF ADJUSTMENT.
Subject to the prior consent of the holders of Voting Shares
or Rights obtained as set forth in Subsections 5.4(b) or
5.4(c) hereof, as applicable, in the event the Corporation
shall at any time after the Record Time issue any shares of
capital stock (other than Common Shares), or rights or
warrants to subscribe for or purchase any such capital stock,
or securities convertible into or exchangeable for any such
capital stock, in a transaction referred to in Clauses
2.3(a)(i) or 2.3(a)(iv) or Subsections 2.3(b) or 2.3(c) above,
if the Board of Directors acting in good faith determines that
the adjustments contemplated by Subsections 2.3(a), (b) and
(c) above in connection with such transaction will not
appropriately protect the interests of the holders of Rights,
the Corporation shall be entitled to determine what other
adjustments to the Exercise Price, number of Rights and/or
securities purchasable upon exercise of Rights would be
appropriate and, notwithstanding Subsections 2.3(a), (b) and
(c) above, such adjustments, rather than the adjustments
contemplated by Subsections 2.3(a), (b) and (c) above, shall
be made. The Corporation and the Rights Agent shall amend this
Agreement as appropriate to provide for such adjustments.
(f) ADJUSTMENT TO RIGHTS EXERCISABLE INTO SHARES OTHER THAN COMMON
SHARES. If as a result of an adjustment made pursuant to
Section 3.1 hereof, the holder of any Right thereafter
exercised shall become entitled to receive any shares other
than Common Shares, thereafter the number of such other shares
so receivable upon exercise of any Right and the Exercise
Price thereof shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the Common Shares contained
in this Section 2.3, and the provisions of this Agreement with
respect to the Common Shares shall apply on like terms to any
such other shares.
(g) RIGHTS TO EVIDENCE RIGHT TO PURCHASE COMMON SHARES AT ADJUSTED
EXERCISE PRICE. Each Right originally issued by the
Corporation subsequent to any adjustment made to the Exercise
Price hereunder shall evidence the right to purchase, at the
adjusted Exercise Price, the number of Common Shares
purchasable from time to time hereunder upon exercise of such
Right, all subject to further adjustment as provided herein.
(h) ADJUSTMENT TO NUMBER OF COMMON SHARES PURCHASABLE UPON
ADJUSTMENT TO EXERCISE PRICE. Unless the Corporation shall
have exercised its election as provided in Subsection 2.3(i)
below, upon each adjustment of the Exercise Price as a result
of the calculations made in Subsections 2.3(b) and (c) above,
each
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Right outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to purchase, at
the adjusted Exercise Price, that number of Common Shares
(calculated to the nearest one ten-thousandth) obtained by:
(i) multiplying (A) the number of shares purchasable upon
exercise of a Right immediately prior to this adjustment by
(B) the Exercise Price in effect immediately prior to such
adjustment of the Exercise Price; and (ii) dividing the
product so obtained by the Exercise Price in effect
immediately after such adjustment of the Exercise Price.
(i) ELECTION TO ADJUST NUMBER OF RIGHTS UPON ADJUSTMENT TO
EXERCISE PRICE. The Corporation shall be entitled to elect on
or after the date of any adjustment of the Exercise Price to
adjust the number of Rights, in lieu of any adjustment in the
number of Common Shares purchasable upon the exercise of a
Right. Each of the Rights outstanding after the adjustment in
the number of Rights shall be exercisable for the number of
Common Shares for which a Right was exercisable immediately
prior to such adjustment. Each Right held of record prior to
such adjustment of the number of Rights shall become that
number of Rights (calculated to the nearest one ten
thousandth) obtained by dividing the Exercise Price in effect
immediately prior to adjustment of the Exercise Price by the
Exercise Price in effect immediately after adjustment of the
Exercise Price. The Corporation shall make a public
announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known
at the time, the amount of the adjustment to be made. This
record date may be the date on which the Exercise Price is
adjusted or any day thereafter, but, if Rights Certificates
have been issued, shall be at least ten (10) days later than
the date of the public announcement. If Rights Certificates
have been issued, upon each adjustment of the number of Rights
pursuant to this Subsection 2.3(i), the Corporation shall, as
promptly as practicable, cause to be distributed to holders of
record of Rights Certificates on such record date Rights
Certificates evidencing, subject to Section 5.5 hereof, the
additional Rights to which such holders shall be entitled as a
result of such adjustment, or, at the option of the
Corporation, shall cause to be distributed to such holders of
record in substitution and replacement for the Rights
Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, new Rights
Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates
so to be distributed shall be issued, executed and
countersigned in the manner provided for herein and may bear,
at the option of the Corporation, the adjusted Exercise Price
and shall be registered in the names of the holders of record
of Rights Certificates on the record date for the adjustment
specified in the public announcement.
(j) RIGHTS CERTIFICATES MAY CONTAIN EXERCISE PRICE BEFORE
ADJUSTMENT. Irrespective of any adjustment or change in the
Exercise Price or the number of Common Shares issuable upon
the exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to express the
Exercise Price per share and the
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number of Common Shares which were expressed in the initial
Rights Certificates issued hereunder.
(k) CORPORATION MAY IN CERTAIN CASES DEFER ISSUES OF SECURITIES.
In any case in which this Section 2.3 shall require that an
adjustment in the Exercise Price be made effective as of a
record date for a specified event, the Corporation may elect
to defer until the occurrence of such event the issuance to
the holder of any Right exercised after such record date of
the number of Common Shares and other securities of the
Corporation, if any, issuable upon such exercise over and
above the number of Common Shares and other securities of the
Corporation, if any, issuable upon such exercise on the basis
of the Exercise Price in effect prior to such adjustment;
provided, however, that the Corporation shall deliver to such
holder an appropriate instrument evidencing such holder's
right to receive such additional Common Shares (fractional or
otherwise) or other securities upon the occurrence of the
event requiring such adjustment.
(l) CORPORATION HAS DISCRETION TO REDUCE EXERCISE PRICE FOR TAX
REASONS. Notwithstanding anything in this Section 2.3 to the
contrary, the Corporation shall be entitled to make such
reductions in the Exercise Price, in addition to those
adjustments expressly required by this Section 2.3 as and to
the extent that in their good faith judgement, the Board of
Directors shall determine to be advisable in order that any:
(i) consolidation or subdivision of the Common Shares; (ii)
issuance of any Common Shares at less than the Market Price;
(iii) issuance of securities convertible into or exchangeable
for Common Shares; (iv) stock dividends; or (v) issuance of
rights, options or warrants, referred to in this Section 2.3
hereafter made by the Corporation to holders of its Common
Shares, shall not be taxable to such shareholders.
(m) ADJUSTMENT OF EXERCISE PRICE. If, as a result of an adjustment
made pursuant to Section 3.1, the holder of any Right
thereafter exercised shall become entitled to receive any
securities other than Common Shares, thereafter the number of
such other securities so receivable upon exercise of any Right
and the applicable Exercise Price thereof shall be subject to
adjustment from time to time in a manner and on terms as
nearly equivalent as may be practicable to the provisions with
respect to the Common Shares contained in the foregoing
Subsections of this Section 2.3 and the provisions of this
Agreement with respect to the Common Shares shall apply on
like terms to any such other securities.
2.4 DATE ON WHICH EXERCISE IS EFFECTIVE
Each person in whose name any certificate for Common Shares is issued
upon the exercise of Rights, shall for all purposes be deemed to have become the
holder of record of the Common Shares represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered (together with a duly completed
Election to Exercise) and payment of the Exercise Price for such Rights (and any
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applicable transfer taxes and other governmental charges payable by the
exercising holder hereunder) was made, provided, however, that if the date of
such surrender and payment is a date upon which the Common Share transfer books
of the Corporation are closed, such person shall be deemed to have become the
record holder of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the Common Share transfer books of the
Corporation are open.
2.5 EXECUTION, AUTHENTICATION, DELIVERY AND DATING OF RIGHTS CERTIFICATES
(a) The Rights Certificates shall be executed on behalf of the
Corporation by any of the Chairman, the President, the Chief
Financial Officer, or any Vice President, together with any
other of such Persons or together with any one of its
Secretary or Treasurer. The signature of any of these officers
on the Rights Certificates may be manual or facsimile. Rights
Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the
Corporation shall bind the Corporation, notwithstanding that
such individuals or any of them have ceased to hold such
offices prior to the countersignature and delivery of such
Rights Certificates.
(b) Promptly after the Corporation learns of the Separation Time,
the Corporation will notify the Rights Agent of such
Separation Time and will deliver Rights Certificates executed
by the Corporation to the Rights Agent for countersignature
together with disclosure statements, and the Rights Agent
shall manually countersign or by facsimile signature in a
manner satisfactory to the Corporation and send such Rights
Certificates and statements to the holders of the Rights
pursuant to Subsection 2.2(c) hereof. No Rights Certificate
shall be valid for any purpose until countersigned by the
Rights Agent as aforesaid.
(c) Each Rights Certificate shall be dated the date of
countersignature thereof.
2.6 REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE
(a) After the Separation Time, the Corporation will cause to be
kept a register (the "Rights Register") in which, subject to
such reasonable regulations as it may prescribe, the
Corporation will provide for the registration and transfer of
Rights. The Rights Agent is hereby appointed the "Rights
Registrar" for the purpose of maintaining the Rights Register
for the Corporation and registering Rights and transfers of
Rights as herein provided. In the event that the Rights Agent
shall cease to be the Rights Registrar, the Rights Agent will
have the right to examine the Rights Register at all
reasonable times.
After the Separation Time and prior to the Expiration Time,
upon surrender for registration of transfer or exchange of any
Rights Certificate and subject to the provisions of Subsection
2.6(c) below and the other provisions of this Agreement, the
Corporation will execute and the Rights Agent will countersign
and deliver, in
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the name of the holder or the designated transferee or
transferees as required pursuant to the holder's instructions,
one or more new Rights Certificates evidencing the same
aggregate number of Rights as did the Rights Certificates so
surrendered.
(b) All Rights issued upon any registration of transfer or
exchange of Rights Certificates shall be the valid obligations
of the Corporation, and such Rights shall be entitled to the
same benefits under this Agreement as the Rights surrendered
upon such registration of transfer or exchange.
(c) Every Rights Certificate surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to
the Corporation or the Rights Agent, as the case may be, duly
executed by the holder thereof or such holder's attorney duly
authorized in writing. As a condition to the issuance of any
new Rights Certificate under this Section 2.6, the Corporation
or the Rights Agent may require the payment of a sum
sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and the Corporation may
require payment of a sum sufficient to cover any other
expenses (including the fees and expenses of the Rights Agent)
in connection therewith.
(d) The Corporation shall not be required to register the transfer
or exchange of any Rights after the Rights have been
terminated pursuant to the provisions of this Agreement.
2.7 MUTILATED, DESTROYED, LOST AND STOLEN RIGHT CERTIFICATES
(a) If any mutilated Rights Certificate is surrendered to the
Rights Agent prior to the Expiration Time, the Corporation
shall execute and the Rights Agent shall countersign and
deliver in exchange therefor a new Rights Certificate
evidencing the same number of Rights as did the Rights
Certificate so surrendered.
(b) If there shall be delivered to the Corporation and the Rights
Agent prior to the Expiration Time: (i) evidence to their
reasonable satisfaction of the destruction, loss or theft of
any Rights Certificate; and (ii) such indemnity or other
security as may be required by them to save each of them and
any of their agents harmless, then, in the absence of notice
to the Corporation or the Rights Agent that such Rights
Certificate has been acquired by a BONA FIDE purchaser, the
Corporation shall execute and upon its request the Rights
Agent shall countersign and deliver, in lieu of any such
destroyed, lost or stolen Rights Certificate, a new Rights
Certificate evidencing the same number of Rights as did the
Rights Certificate so destroyed, lost or stolen.
(c) As a condition to the issuance of any new Rights Certificate
under this Section 2.7, the Corporation or the Rights Agent
may require the payment of a sum
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sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and the Corporation may
require payment of a sum sufficient to cover any other
expenses (including the fees and expenses of the Rights Agent)
in connection therewith.
(d) Every new Rights Certificate issued pursuant to this Section
2.7 in lieu of any destroyed, lost or stolen Rights
Certificate shall evidence an original additional contractual
obligation of the Corporation, whether or not the destroyed
lost or stolen Rights Certificate shall be at any time
enforceable by anyone, and the holder thereof shall be
entitled to all the benefits of this Agreement equally and
proportionately with any and all other holders of Rights duly
issued by the Corporation.
2.8 PERSONS DEEMED OWNERS
Prior to due presentment of a Rights Certificate (or, prior to the
Separation Time, the associated Common Share certificate) for registration of
transfer, the Corporation, the Rights Agent and any agent of the Corporation or
the Rights Agent shall be entitled to deem and treat the person in whose name a
Rights Certificate (or, prior to the Separation Time, the associated Common
Share certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby for all purposes whatsoever. As used in this Agreement, unless
the context otherwise requires, the term "holder" of any Rights shall mean the
registered holder of such Rights (or, prior to the Separation Time, the
associated Common Shares).
2.9 DELIVERY AND CANCELLATION OF RIGHTS CERTIFICATES
All Rights Certificates surrendered upon exercise or for redemption,
registration of transfer or exchange shall, if surrendered to any person other
than the Rights Agent, be delivered to the Rights Agent and, in any case, shall
be promptly cancelled by the Rights Agent. The Corporation may at any time
deliver to the Rights Agent for cancellation any Rights Certificates previously
countersigned and delivered hereunder which the Corporation may have acquired in
any manner whatsoever, and all Rights Certificates so delivered shall be
promptly cancelled by the Rights Agent. No Rights Certificate shall be
countersigned in lieu of or in exchange for any Rights Certificates cancelled as
provided in this Section 2.9 except as expressly permitted by this Agreement.
The Rights Agent shall destroy all cancelled Rights Certificates and deliver a
certificate of destruction to the Corporation.
2.10 AGREEMENT OF RIGHTS HOLDERS
Every holder of Rights, by accepting the same, consents and agrees with
the Corporation and the Rights Agent and with every other holder of Rights:
(i) to be bound by and subject to the provisions of this
Agreement, as amended or supplemented from time to time in
accordance with the terms hereof, in respect of all Rights
held;
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(ii) that prior to the Separation Time each Right will be
transferable only together with, and will be transferred by a
transfer of, the associated Common Share certificate
representing such Right;
(iii) that after the Separation Time, the Rights Certificates will
be transferable only on the Rights Register as provided
herein;
(iv) that prior to due presentment of a Rights Certificate (or,
prior to the Separation Time, the associated Common Share
certificate) for registration of transfer, the Corporation,
the Rights Agent and any agent of the Corporation or the
Rights Agent shall be entitled to deem and treat the person in
whose name the Rights Certificate (or prior to the Separation
Time, the associated Common Share certificate) is registered
as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing
on such Rights Certificate or the associated Common Share
certificate made by anyone other than the Corporation or the
Rights Agent) for all purposes whatsoever, and neither the
Corporation nor the Rights Agent shall be affected by any
notice to the contrary;
(v) that such holder of Rights has waived his or her right to
receive any fractional Rights or any fractional Common Shares
upon exercise of Rights except as provided herein;
(vi) that, subject to the provisions of Section 5.4, without the
approval of any holder of Rights and upon the sole authority
of the Board of Directors acting in good faith this Agreement
may be supplemented or amended from time to time pursuant to
and as provided herein; and
(vii) that notwithstanding anything in this Agreement to the
contrary, neither the Corporation nor the Board of Directors
nor the Rights Agent shall have any liability to any holder of
a Right or to any other Person as a result of the inability of
the Corporation, the Board of Directors or the Rights Agent to
perform any of its obligations under this Agreement by reason
of any preliminary or permanent injunction or other order,
decree or ruling issued by a court of competent jurisdiction
or by a government, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive
order promulgated or enacted by any governmental authority,
prohibiting or otherwise restraining performance of such
obligation.
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2.11 RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER
No holder, as such, of any Rights or Rights Certificate shall be
entitled to vote, receive dividends or be deemed for any purpose whatsoever the
holder of any Common Share or any other share or security of the Corporation
which may at any time be issuable on the exercise of the Rights represented
thereby, nor shall anything contained herein or in any Rights Certificate be
construed or deemed to confer upon the holder of any Right or Rights
Certificate, as such, any of the rights, titles, benefits or privileges of a
holder of Common Shares or any other shares or securities of the Corporation or
any right to vote at any meeting of shareholders of the Corporation whether for
the election of directors or otherwise or upon any matter submitted to holders
of shares of the Corporation at any meeting thereof, or to give or withhold
consent to any action of the Corporation, or to receive notice of any meeting or
other action affecting any holder of Common Shares or any other shares or
securities of the Corporation except as expressly provided herein, or to receive
dividends, distributions or subscription rights, or otherwise, until the Right
or Rights evidenced by Rights Certificates shall have been duly exercised in
accordance with the terms and provisions hereof.
ARTICLE 3 - ADJUSTMENTS TO THE RIGHTS
IN THE EVENT OF CERTAIN TRANSACTIONS
3.1 FLIP-IN EVENT
(a) Subject to Subsection 3.1(b), and Subsections 5.1(b), 5.1(c)
and 5.1(f) hereof, in the event that prior to the Expiration
Time a Flip-in Event shall occur, the Corporation shall take
such action as may be necessary to ensure and provide within
eight (8) Trading Days of such occurrence, or such longer
period as may be required to satisfy all applicable
requirements of the SECURITIES ACT (Ontario), and the
securities legislation of each other province of Canada and,
if applicable, of the United States of America that, except as
provided below, each Right shall thereafter constitute the
right to purchase from the Corporation upon exercise thereof
in accordance with the terms hereof that number of Common
Shares of the Corporation having an aggregate Market Price on
the date of the consummation or occurrence of such Flip-in
Event equal to twice the Exercise Price for an amount equal to
the Exercise Price (such Right to be appropriately adjusted in
a manner analogous to the applicable adjustment provided for
in Section 2.3 hereof in the event that after such date of
consummation or occurrence an event of a type analogous to any
of the events described in Section 2.3 hereof shall have
occurred with respect to such Common Shares).
(b) Notwithstanding anything in this Agreement to the contrary,
upon the occurrence of any Flip-in Event, any Rights that are
or were Beneficially Owned on or after the earlier of the
Separation Time, and the Stock Acquisition Date by: (i) an
Acquiring Person (or any Affiliate or Associate of an
Acquiring Person or any Person acting jointly or in concert
with an Acquiring Person or any Affiliate or Associate of such
Acquiring Person); or (ii) a transferee or other successor in
title
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directly or indirectly of Rights held by an Acquiring Person
(or of any Affiliate or Associate of an Acquiring Person or of
any Person acting jointly or in concert with an Acquiring
Person or any Associate or Affiliate of an Acquiring Person)
who becomes a transferee or successor in title concurrently
with or subsequent to the Acquiring Person becoming an
Acquiring Person; shall become null and void without any
further action, and any holder of such Rights (including
transferees or successors in title) shall not have any rights
whatsoever to exercise such Rights under any provision of this
Agreement and shall not have thereafter any other rights
whatsoever with respect to such Rights, whether under any
provision of this Agreement or otherwise.
(c) From and after the Separation Time, the Corporation shall do
all such acts and things as shall be necessary and within its
power to ensure compliance with the provisions of Section 3.1,
including without limitation, all such acts and things as may
be required to satisfy the requirements of the CANADA BUSINESS
CORPORATIONS ACT, the SECURITIES ACT (Ontario), the 1933
Securities Act, the 1934 Exchange Act and the securities laws
or comparable legislation in each of the provinces of Canada
and each of the States of the United States in respect of the
issue of Common Shares upon the exercise of Rights in
accordance with this Agreement.
(d) Any Rights Certificate that would represent Rights
Beneficially owned by a Person described in either Clause
3.1(b)(i) or (ii) or transferred to any nominee of any such
Person, and any Rights Certificate that would be issued upon
transfer, exchange, replacement or adjustment of any other
Rights Certificate referred to in this sentence, shall either
not be issued upon the instruction of the Corporation in
writing to the Rights Agent or contain the following legend:
"THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE
WERE ISSUED TO A PERSON WHO WAS AN ACQUIRING PERSON
OR AN AFFILIATE OR AN ASSOCIATE OF AN ACQUIRING
PERSON (AS SUCH TERMS ARE DEFINED IN THE SHAREHOLDER
RIGHTS PLAN AGREEMENT) OR A PERSON WHO WAS ACTING
JOINTLY OR IN CONCERT WITH AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON. THIS
RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY
ARE VOID OR SHALL BECOME VOID IN THE CIRCUMSTANCES
SPECIFIED IN SUBSECTION 3.1(b) OF THE SHAREHOLDER
RIGHTS PLAN AGREEMENT."
provided, however, that the Rights Agent shall not be under
any responsibility to ascertain the existence of facts that
would require the imposition of such legend but shall impose
such legend only if instructed to do so by the Corporation in
writing or if a holder fails to certify upon transfer or
exchange in the space provided on the Rights Certificate that
such holder is not a Person described in
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such legend. The issuance of a Rights Certificate without the
legend referred to in this Subsection 3.1(d) shall be of no
effect on the provisions of Subsection 3.1(b).
(e) If, upon the occurrence of a Flip-In Event, the aggregate
number of Common Shares issuable upon the exercise of all
Rights then outstanding would exceed the aggregate number of
Common Shares that the Corporation is then authorized to issue
pursuant to its constating documents, the number of Common
Shares acquirable pursuant to each Right shall,
notwithstanding Subsection 3.1(a), be reduced PRO RATA to the
extent necessary such that the aggregate number of Common
Shares issuable upon the exercise of all outstanding Rights
does not then exceed the aggregate number of Common Shares
that the Corporation is then authorized to issue pursuant to
its constating documents, provided that any such PRO RATA
reduction will not affect the Exercise Price or any other term
of this Agreement relating to the Rights.
ARTICLE 4 - THE RIGHTS AGENT
4.1 GENERAL
(a) The Corporation hereby appoints the Rights Agent to act as
agent for the Corporation in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such
appointment. The Corporation may from time to time appoint
such co-Rights Agents as it may deem necessary or desirable,
subject to the approval of the Rights Agent. In the event the
Corporation appoints one or more co-Rights Agents, the
respective duties of the Rights Agents and co-Rights Agents
shall be as the Corporation may determine with the prior
consent of the Rights Agent and the co-Rights Agents. The
Corporation agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and,
from time to time, on demand of the Rights Agent, its
reasonable expenses and other disbursements incurred in the
administration and execution of this Agreement and the
exercise and performance of its duties hereunder. The
Corporation also agrees to indemnify the Rights Agent, its
officers, directors and employees for, and to hold them
harmless against, any loss, liability, or expense incurred
that is not the result of negligence, bad faith or wilful
misconduct on the part of the Rights Agent, its officers or
employees, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending
against any claim of liability, which right to indemnification
will survive the termination of this Agreement and the
resignation or removal of the Rights Agent.
(b) The Rights Agent shall be protected from and shall incur no
liability for or in respect of any action taken, suffered or
omitted by it in connection with its administration of this
Agreement in reliance upon any certificate for Common Shares
or any Rights Certificate or certificate for other securities
of the Corporation, instrument of assignment or transfer,
power of attorney,
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endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by
it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or
Persons.
(c) The Corporation shall inform the Rights Agent in a reasonably
timely manner of events which may materially affect the
administration of this Agreement by the Rights Agent and, at
any time upon request, shall provide to the Rights Agent an
incumbency certificate certifying the then current officers of
the Corporation.
4.2 MERGER OR AMALGAMATION OR CHANGE OF NAME OF RIGHTS AGENT
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or amalgamated or with which it may
be consolidated, or any corporation resulting from any merger,
amalgamation, statutory arrangement or consolidation to which
the Rights Agent or any successor Rights Agent is a party, or
any corporation succeeding to the shareholder or stockholder
services business of the Rights Agent or any successor Rights
Agent, will be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided
that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 4.4
hereof. In case at the time such successor Rights Agent
succeeds to the agency created by this Agreement any of the
Rights Certificates have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature
of the predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of
the Rights Certificates have not been countersigned, any
successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all
such cases such Rights Certificates will have the full force
provided in the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent is changed
and at such time any of the Rights Certificates shall have
been countersigned but not delivered, the Rights Agent may
adopt the countersignature under its prior name and deliver
Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights
Certificates either in its prior name or in its changed name;
and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this
Agreement.
4.3 DUTIES OF RIGHTS AGENT
The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, to all of which the
Corporation and the holders of Rights Certificates, by their acceptance thereof,
shall be bound.
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(a) The Rights Agent may retain and consult with legal counsel
(who may be legal counsel for the Corporation) and the opinion
of such counsel will be full and complete authorization and
protection to the Rights Agent as to any action taken or
omitted to be taken by it in good faith and in accordance with
such opinion. The Rights Agent may also consult with such
other experts as the Rights Agent shall consider necessary to
properly carry out the duties and obligations imposed under
this Agreement (at the expense of the Corporation) and the
Rights Agent shall be entitled to act and rely in good faith
on the advice of any such expert.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent deems it necessary or desirable that any fact
or matter be proved or established by the Corporation prior to
taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively
proven and established by a certificate signed by a person
believed by the Rights Agent to be the Chairman, the
President, the Chief Financial Officer, or any Vice-President,
the Treasurer or the Secretary of the Corporation and
delivered to the Rights Agent; and such certificate will be
full authorization to the Rights Agent for any action taken or
suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent will be liable hereunder only for events
which are the result of its own negligence, bad faith or
wilful misconduct and that of its officers, employees and
other representatives.
(d) The Rights Agent will not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement
or in the certificates for Common Shares or the Rights
Certificates (except its countersignature thereof) or be
required to verify the same, but all such statements and
recitals are and will be deemed to have been made by the
Corporation only.
(e) The Rights Agent will not be under any responsibility in
respect of the validity of this Agreement or the execution and
delivery hereof (except the due authorization, execution and
delivery hereof by the Rights Agent) or in respect of the
validity or execution of any Common Share certificate or
Rights Certificate (except its countersignature thereof); nor
will it be responsible for any breach by the Corporation of
any covenant or condition contained in this Agreement or in
any Rights Certificate; nor will it be responsible for any
change in the exercisability of the Rights (including the
Rights becoming void pursuant to Subsection 3.1(b) hereof) or
any adjustment required under the provisions of Section 2.3
hereof or responsible for the manner, method or amount of any
such adjustment or the ascertaining of the existence of facts
that would require any such adjustment (except with respect to
the exercise of Rights after receipt of the certificate
contemplated by Section 2.3 hereof describing any such
adjustment); nor will it by any act hereunder be deemed to
make any representation or warranty as to the
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authorization of any Common Shares to be issued pursuant to
this Agreement or any Rights or as to whether any Common
Shares will, when issued, be duly and validly authorized,
executed, issued and delivered or fully paid and
non-assessable.
(f) The Corporation agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged, and delivered all such further and other acts,
instruments and assurances as may reasonably be required by
the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
written instructions with respect to the performance of its
duties hereunder from any person believed by the Rights Agent
to be the Chairman, the President, the Chief Financial
Officer, any Vice-President, the Treasurer or the Secretary of
the Corporation and to apply to such persons for advice or
instructions in connection with its duties, and it shall not
be liable for any action taken or suffered by it in good faith
in accordance with instructions of any such person.
(h) The Rights Agent and any shareholder or stockholder, director,
officer or employee of the Rights Agent may buy, sell or deal
in Common Shares, Rights or other securities of the
Corporation or become pecuniarily interested in any
transaction in which the Corporation may be interested or
contract with or lend money to the Corporation or otherwise
act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Corporation or
for any other legal entity.
(i) The Corporation agrees that it shall pay the Rights Agent for
the services provided hereunder in accordance with the tariff
of fees as agreed to in writing by the Corporation and the
Rights Agent and shall reimburse the Rights Agent for all
costs and expenses, including legal fees incurred in the
carrying out of duties hereunder.
(j) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder
either by itself or by or through its attorneys or agents, and
the Rights Agent will not be answerable or accountable for any
act, default, neglect or misconduct of any such attorneys as
agents or for any loss to the Corporation resulting from any
such act, default, neglect or misconduct, provided reasonable
care was exercised in the selection and continued employment
thereof.
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4.4 CHANGE OF RIGHTS AGENT
The Rights Agent may resign and be discharged from its duties under
this Agreement upon sixty (60) days' notice (or such lesser notice as is
acceptable to the Corporation) in writing mailed to the Corporation and to each
transfer agent of Voting Shares of the Corporation by registered or certified
mail, and to the holders of the Rights in accordance with Section 5.8 hereof,
all of which shall be at the expense of the Corporation. The Corporation may
remove the Rights Agent upon sixty (60) days' notice in writing, mailed to the
Rights Agent and to each transfer agent of the Voting Shares of the Corporation
by registered or certified mail and to the holders of the Rights in accordance
with Section 5.8 hereof. If the Rights Agent should resign or be removed or
otherwise become incapable of acting, the Corporation will appoint a successor
to the Rights Agent. If the Corporation fails to make such appointment within a
period of sixty (60) days after such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of any Rights (which holder shall, with such
notice, submit such holder's Rights Certificate for inspection by the
Corporation), then the holder of any Rights may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent at the Corporation's
expense. Any successor Rights Agent, whether appointed by the Corporation or by
such a court, shall be a corporation incorporated under the laws of Canada or a
province thereof authorized to carry on the business of a trust company in the
Province of Ontario. After appointment, the successor Rights Agent will be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose upon
receipt of all fees and expenses properly owing pursuant to this Agreement. Not
later than the effective date of any such appointment. the Corporation will file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Voting Shares of the Corporation, and mail a notice thereof in
writing to the holders of the Rights. The cost of giving any notice required
under this Section 4.4 shall be borne solely by the Corporation. Failure to give
any notice provided for in this Section 4.4 however, or any defect therein,
shall not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the case may
be.
ARTICLE 5 - MISCELLANEOUS
5.1 REDEMPTION AND WAIVER
(a) Subject to the prior consent of the holders of Voting Shares
or the holders of Rights obtained as set forth in Subsections
5.4(b) or 5.4(c) hereof, as applicable, the Board of Directors
acting in good faith may, at any time prior to the occurrence
of a Flip-in Event as to which the application of Section 3.1
has not been waived pursuant to this Section 5.1, elect to
redeem all but not less than all of the then outstanding
Rights at a redemption price of $0.0001 per Right
appropriately adjusted in a manner analogous to the applicable
adjustment provided for in Section 2.3 hereof in the event
that an event of the type described
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in Section 2.3 hereof shall have occurred (such redemption
price being herein referred to as the "Redemption Price").
(b) Subject to the prior consent of the holders of Voting Shares
obtained as set forth in Subsection 5.4(b) hereof, the Board
of Directors acting in good faith may, prior to the occurrence
of a Flip-in Event as to which the application of Section 3.1
has not been waived pursuant to this Section 5.1, and upon
prior written notice to the Rights Agent, determine to waive
the application of Section 3.1 hereof to a Flip-in Event which
may occur by reason of an acquisition of Voting Shares made
otherwise than pursuant to a Take-over Bid made by means of a
take-over bid circular to all holders of record of Voting
Shares (which for greater certainty shall not include the
circumstances described in Subsection 5.1(g) below). In the
event that the Board of Directors proposes such a waiver, the
Board of Directors shall extend the Separation Time to a date
subsequent to and not more than ten (10) Business Days
following the meeting of shareholders called to approve such
waiver.
(c) The Board of Directors acting in good faith may, prior to the
occurrence of a Flip-in Event as to which the application of
Section 3.1 has not been waived pursuant to this Section 5.1,
and upon prior written notice delivered to the Rights Agent,
determine to waive the application of Section 3.1 hereof to a
Flip-in Event which may occur by reason of a Take-over Bid
made by means of a take-over bid circular to all holders of
Voting Shares (which for greater certainty shall not include
the circumstances described in Subsection 5.1(g) below);
provided that if the Board of Directors waives the application
of Section 3.1 hereof to a particular Flip-in Event pursuant
to this Subsection 5.1(c), the Board of Directors shall be
deemed to have waived the application of Section 3.1 hereof to
any other Flip-in Event occurring by reason of any Take-over
Bid made by means of a take-over bid circular to all holders
of record of Voting Shares prior to the expiry of any
Take-over Bid (as the same may be extended from time to time)
in respect of which a waiver is, or is deemed to have been,
granted pursuant to this Subsection 5.1(c).
(d) The Board of Directors may, prior to the close of business on
the tenth (10th) Trading Day following a Stock Acquisition
Date or such later Business Day as they may from time to time
determine, upon prior written notice delivered to the Rights
Agent, waive the application of Section 3.1 to the related
Flip-In Event, provided that the Acquiring Person has reduced
its Beneficial Ownership of Voting Shares (or has entered into
a contractual arrangement with the Corporation, acceptable to
the Board of Directors, to do so within ten (10) calendar days
of the date on which such contractual arrangement is entered
into or such other date as the Board of Directors may have
determined) such that at the time the waiver becomes effective
pursuant to this Subsection 5.1(d) such Person is no longer an
Acquiring Person. In the event of such a waiver becoming
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effective prior to the Separation Time, for the purposes of
this Agreement, such Flip-In Event shall be deemed not to have
occurred.
(e) Where a Take-over Bid that is not a Permitted Bid Acquisition
is withdrawn or otherwise terminated after the Separation Time
has occurred and prior to the occurrence of a Flip-In Event,
the Board of Directors may elect to redeem all the outstanding
Rights at the Redemption Price. Upon the Rights being redeemed
pursuant to this Subsection 5.1(e), all the provisions of this
Agreement shall continue to apply as if the Separation Time
had not occurred and Rights Certificates representing the
number of Rights held by each holder of record of Common
Shares as of the Separation Time had not been mailed to each
such holder and for all purposes of this Agreement the
Separation Time shall be deemed not to have occurred and the
Corporation shall be deemed to have issued replacement Rights
to the holders of its then outstanding Common Shares.
(f) Notwithstanding the provisions of Subsections 5.1(b) and (c)
hereof, the Board of Directors may, prior to the close of
business on the eighth (8th) day following the Stock
Acquisition Date, determine, upon prior written notice
delivered to the Rights Agent, to waive or to agree to waive
the application of Section 3.1 hereof to a Flip-in Event,
provided that both of the following conditions are satisfied:
(i) the Board of Directors has determined that a Person
became an Acquiring Person by inadvertence and
without any intention to become, or knowledge that
Person would become, an Acquiring Person; and
(ii) such Acquiring Person has reduced its Beneficial
Ownership of Voting Shares (or has entered into a
contractual arrangement with the Corporation,
acceptable to the Board of Directors, to do so within
thirty (30) days of the date on which such
contractual arrangement is entered into) such that at
the time the waiver becomes effective pursuant to
this Subsection 5.1(f), such Person is no longer an
Acquiring Person;
and in the event of such a waiver, for the purposes of this
Agreement, the Flip-in Event shall be deemed never to have
occurred, and the Separation Time shall be deemed not to have
occurred as a result of such Person having inadvertently
become an Acquiring Person.
(g) The Board of Directors shall, without further formality, be
deemed to have elected to redeem the Rights at the Redemption
Price on the date that a Person who has made a Permitted Bid,
a Competing Permitted Bid or an Exempt Acquisition under
Subsection 5.1(c) above, takes up and pays for Voting Shares
pursuant to the terms and conditions of such Permitted Bid,
Competing Permitted Bid or Exempt Acquisition, as the case may
be.
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(h) If the Board of Directors elects or is deemed to have elected
to redeem the Rights and, in circumstances in which Subsection
5.1(a) is applicable, such redemption is approved by the
holders of Voting Shares or the holders of Rights in
accordance with Subsection 5.4(b) or (c), as the case may be,
the right to exercise the Rights will thereupon, without
further action and without notice, terminate and each Right
will after redemption be null and void and the only right
thereafter of the holders of Rights shall be to receive the
Redemption Price.
(i) Within ten (10) days after the Board of Directors electing or
having been deemed to have elected to redeem the Rights or, if
Subsection 5.1(a) applies, within ten (10) Business Days after
the holders of Voting Shares or the holders of Rights have
approved the redemption of Rights in accordance with
Subsection 5.4(b) or (c) hereof, as the case may be, the
Corporation shall give notice of redemption to the holders of
the then outstanding Rights by mailing such notice to all such
holders at their last address as they appear upon the Rights
Register or, prior to the Separation Time, on the registry
books of the Transfer Agent for the Common Shares. Any notice
which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each
such notice of redemption will state the method by which the
payment of the Redemption Price will be made. The Corporation
may not redeem, acquire or purchase for value any Rights at
any time in any manner other than that specifically set forth
in this Section 5.1 and other than in connection with the
purchase of Common Shares prior to the Separation Time.
(j) The Corporation shall give prompt written notice to the Rights
Agent of any waiver of the application of Section 3.1 pursuant
to this Subsection 5.1(k).
5.2 EXPIRATION
No person shall have any rights whatsoever pursuant to or arising out
of this Agreement or in respect of any Right after the Expiration Time, except
the Rights Agent as specified in Subsection 4.1(a) hereof.
5.3 ISSUANCE OF NEW RIGHT CERTIFICATES
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Corporation may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change in the number or kind or class of
shares purchasable upon exercise of Rights made in accordance with the
provisions of this Agreement.
5.4 SUPPLEMENTS AND AMENDMENTS
(a) The Corporation may from time to time supplement or amend this
Agreement without the approval of any holders of Rights or
Voting Shares to correct any
-41-
clerical or typographical error or to maintain the validity of
the Agreement as a result of a change in any applicable
legislation or rules or regulations thereunder. The
Corporation, at or prior to the meeting of the shareholders,
or any adjournment or postponement thereof, to be held for
shareholders of the Corporation to consider and if deemed
advisable, to adopt a resolution approving, ratifying and
confirming this Agreement and the Rights issued pursuant
thereto, may supplement or amend this Agreement without the
approval of any holders of Rights or Voting Shares in order to
make changes which the Board of Directors acting in good faith
may deem necessary or desirable.
Notwithstanding anything in this Section 5.4 to the contrary,
no supplement or amendment shall be made to the provisions of
Article 4 hereof except with the written concurrence of the
Rights Agent to such supplement or amendment.
(b) Subject to Subsection 5.4(a), the Corporation may, with the
prior consent of the holders of the Voting Shares obtained as
set forth below, at any time prior to the Separation Time,
amend, vary or rescind any of the provisions of this Agreement
and the Rights (whether or not such action would materially
adversely affect the interests of the holders of Rights
generally). Such consent shall be deemed to have been given if
provided by the holders of Voting Shares at a meeting of the
holders of Voting Shares, which meeting shall be called and
held in compliance with applicable laws and regulatory
requirements and the requirements in the articles and by-laws
of the Corporation. Subject to compliance with any
requirements imposed by the foregoing, consent shall be given
if the proposed amendment, variation or revision is approved
by the affirmative vote of a majority of the votes cast by
Independent Shareholders present in person or represented by
proxy and entitled to be voted at a meeting of the holders of
Voting Shares.
(c) Subject to Subsection 5.4(a), the Corporation may, with the
prior consent of the holders of Rights obtained as set forth
below, at any time after the Separation Time and before the
Expiration Time, amend, vary or rescind any of the provisions
of this Agreement and the Rights (whether or not such action
would materially adversely affect the interests of the holders
of Rights generally), provided that no such amendment,
variation or deletion shall be made to the provisions of
Article 4 except with the written concurrence of the Rights
Agent thereto. Such consent shall be deemed to have been given
if provided by the holders of Rights at a Rights Holders'
Special Meeting, which Rights Holders' Special Meeting shall
be called and held in compliance with applicable laws and
regulatory requirements and, to the extent possible, with the
requirements in the articles and by-laws of the Corporation
applicable to meetings of holders of Common Shares, applied
MUTATIS MUTANDIS. Subject to compliance with any requirements
imposed by the foregoing, consent shall be given if the
proposed amendment, variation or rescission is approved by the
affirmative vote of a majority of the votes cast by holders of
Rights (other than holders of Rights whose
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Rights have become null and void pursuant to Subsection
3.1(b)), represented in person or by proxy at the Rights
Holders' Special Meeting.
(d) Any approval of the holders of Rights shall be deemed to have
been given if the action requiring such approval is authorized
by the affirmative votes of the holders of Rights present in
person or represented by proxy and entitled to be voted at a
meeting of the holders of Rights and representing a majority
of the votes cast in respect thereof. For the purposes hereof,
each outstanding Right (other than Rights which are void
pursuant to the provisions hereof) shall be entitled to one
vote, and the procedures for the calling, holding and conduct
of the meeting shall be those, as nearly as may be, which are
provided in the Corporation's by-laws and the CANADA BUSINESS
CORPORATIONS ACT with respect to a meeting of shareholders of
the Corporation.
(e) Any supplements or amendments made by the Corporation to this
Agreement pursuant to Subsection 5.4(a) above which are
required to maintain the validity of this Agreement as a
result of any change in any applicable legislation or rules or
regulations thereunder shall:
(i) if made before the Separation Time, be submitted to
the shareholders of the Corporation at the next
meeting of shareholders and the shareholders may, by
the majority referred to in Subsection 5.4(b),
confirm or reject such amendment; and
(ii) if made after the Separation Time, be submitted to
the holders of Rights at a meeting to be called for
on a date not later than immediately following the
next meeting of shareholders of the Corporation and
the holders of Rights may, by resolution passed by
the majority referred to in Subsection 5.4(c),
confirm or reject such amendment.
A supplement or amendment shall be effective from the
date of the resolution of the Board of Directors
adopting such supplement or amendment until it is
confirmed or rejected or until it ceases to be
effective (as described in the next sentence) and,
where such supplement or amendment is confirmed, it
continues in effect in the form so confirmed. If such
supplement or amendment is rejected by the
shareholders or the holders of Rights or is not
submitted to the shareholders or holders of Rights as
required, then such supplement or amendment shall
cease to be effective from and after the termination
of the meeting at which it was rejected or to which
it should have been but was not submitted or from and
after the date of the meeting of holders of Rights
that should have been but was not held, and no
subsequent resolution of the Board of Directors to
amend, vary or delete any provision of this Agreement
to substantially the same effect shall be effective
until confirmed by the shareholders or holders of
Rights, as the case may be.
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(f) The Corporation shall be required to provide the Rights Agent
with notice in writing of any such amendment, recission or
variation to this Agreement as referred to in this Section 5.4
within five business days of effecting such amendment,
recission or variation.
5.5 FRACTIONAL RIGHTS AND FRACTIONAL SHARES
(a) The Corporation shall not be required to issue fractions of
Rights or to distribute Rights Certificates which evidence
fractional Rights. Any such fractional Right shall be null and
void and the Corporation will not have any obligation or
liability in respect thereof.
(b) The Corporation shall not be required to issue fractions of
Common Shares or other securities upon exercise of the Rights
or to distribute certificates which evidence fractional Common
Shares or other securities. In lieu of issuing fractional
Common Shares or other securities, the Corporation shall pay
to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided, an amount in
cash equal to the same fraction of the Market Price of one
Common Share.
5.6 RIGHTS OF ACTION
Subject to the terms of this Agreement, all rights of action in respect
of this Agreement, other than rights of action vested solely in the Rights
Agent, are vested in the respective registered holders of the Rights; and any
registered holder of any Rights, without the consent of the Rights Agent or of
the registered holder of any other Rights, may, on such holder's own behalf and
for such holder's own benefit and the benefit of other holders of Rights
enforce, and may institute and maintain any suit, action or proceeding against
the Corporation to enforce such holder's right to exercise such holder's Rights
in the manner provided in such holder's Rights Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under, and
injunctive relief against, actual or threatened violations of the obligations of
any Person subject to this Agreement.
5.7 REGULATORY APPROVALS
Any obligation of the Corporation or action or event contemplated by
this Agreement (including, without limitation, any amendments to this Agreement)
shall be subject to the receipt of any requisite approval or consent from any
governmental or regulatory authority, and without limiting the generality of the
foregoing, necessary approvals of any stock exchange shall be obtained, such as
approvals relating to the issuance of Common Shares upon the exercise of Rights
under Subsection 2.2(d).
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5.8 DECLARATION AS TO NON-CANADIAN HOLDERS
If, in the opinion of the Board of Directors (who may rely upon the
advice of counsel) any action or event contemplated by this Agreement would
require compliance by the Corporation with the securities laws or comparable
legislation of a jurisdiction outside Canada or the United States, the Board of
Directors acting in good faith shall take such actions as it may deem
appropriate to ensure that such compliance is not required, including, without
limitation, establishing procedures for the issuance to a Canadian or United
States resident trustee of Rights or securities issuable on exercise of Rights,
the holding thereof in trust for the Persons entitled thereto (but reserving to
the trustee or to the trustee and the Corporation, as the Corporation may
determine, absolution investment discretion with respect thereto) and the sale
thereof and remittance of proceeds of such sale, if any, to the Persons entitled
thereto. In no event shall the Corporation or the Rights Agent be required to
issue or deliver Rights or securities issuable on exercise of Rights to persons
who are citizens, residents or nationals of any jurisdiction other than Canada
or the United States, in which such issue or delivery would be unlawful without
registration of the relevant Persons or securities for such purposes.
5.9 NOTICE OF PROPOSED ACTIONS
In case the Corporation shall propose after the Separation Time and
prior to the Expiration Time to effect or permit (in cases where the
Corporation's permission is required) any Flip-in Event or to effect the
liquidation, dissolution or winding-up of the Corporation or the sale of
substantially all of the Corporation's assets, then, in each such case, the
Corporation shall give to each holder of a Right, in accordance with Section 5.8
hereof, a notice of such proposed action, which shall specify the date on which
such Flip-in Event, liquidation, dissolution, winding-up or sale is to take
place, and such notice shall be so given at least twenty (20) Business Days
prior to the date of taking of such proposed action.
5.10 NOTICES
Notices or demands authorized or required by this Agreement to be given
or made by the Rights Agent or by the holder of any Rights to or on the
Corporation shall be sufficiently given or made if delivered or sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) or sent by facsimile (in the case of facsimile,
an original copy of the notice or demand sent by first class mail, postage
prepaid, to the Corporation following the giving of the notice or demand by
facsimile), charges prepaid and confirmed in writing, as follows:
Vasogen Inc.
0000 Xxxxxx Xxxxx, Xxxxx 00
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
Attention: President and Chief Executive Officer
Facsimile: (000) 000-0000
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e-mail: xxxxxxx@xxxxxxx.xxx
Any notice or demand authorized or required by this Agreement to be
given or made by the Corporation or by the holder of any Rights to or on the
Rights Agent shall be sufficiently given or made if delivered or sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Corporation) or sent by facsimile (in the case of facsimile, an
original copy of the notice or demand sent by first class mail, postage prepaid,
to the Rights Agent following the giving of the notice or demand by facsimile),
or other form of recorded electronic communication, charges prepaid and
confirmed in writing, as follows:
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CIBC Mellon Trust Company
6th Floor
000 Xxx Xxxxxx
X.X. Xxx 0
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Manager, Client Services
Facsimile: (000) 000-0000
Notices or demands authorized or required by this Agreement to be given
or made by the Corporation or the Rights Agent to or on the holder of any Rights
shall be sufficiently given or made if delivered or sent by first-class mail,
postage prepaid, addressed to such holder at the address of such holder as it
appears upon the Rights Register or, prior to the Separation Time, on the
registry books of the transfer agent for the Common Shares. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice.
Any notice given or made in accordance with this Section 5.10 shall be
deemed to have been given and to have been received on the day of delivery, if
delivered, on the third Business Day (excluding each day during which there
exists any general interruption of postal service due to strike, lockout or
other cause) following the mailing thereof, if mailed, and on the day of
telegraphing, telecopying or sending of the same by other means of recorded
electronic communication (provided such sending is during the normal business
hours of the addressee on a Business Day and if not, on the first Business Day
thereafter). Each of the Corporation and the Rights Agent may from time to time
change its address for notice by notice to the other given in the manner
aforesaid.
5.11 COST OF ENFORCEMENT
The Corporation agrees that if the Corporation fails to fulfil any of
its obligations pursuant to this Agreement, then the Corporation will reimburse
the holder of any Rights for the costs and expenses (including legal fees)
incurred by such holder to enforce his, her or its rights pursuant to any Rights
or this Agreement.
5.12 SUCCESSORS
All the covenants and provisions of this Agreement by or for the
benefit of the Corporation or the Rights Agent shall bind and enure to the
benefit of their respective successors and assigns hereunder.
5.13 BENEFITS OF THIS AGREEMENT
Nothing in this Agreement shall be construed to give to any Person
other than the Corporation, the Rights Agent and the holders of the Rights any
legal or equitable right, remedy
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or claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Corporation, the Rights Agent and the holders of the
Rights.
5.14 GOVERNING LAW
This Agreement and each Right issued hereunder shall be deemed to be a
contract made under the laws of the Province of Ontario and for all purposes
shall be governed by and construed in accordance with the laws of such province
applicable to contracts to be made and performed entirely within such province.
5.15 SEVERABILITY
If any Section, Subsection, Clause, Subclause, term or provision hereof
or the application thereof to any circumstances or any right hereunder shall, in
any jurisdiction and to any extent, be invalid or unenforceable, such Section,
Subsection, Clause, Subclause, term or provision or such right shall be
ineffective only in such jurisdiction and to the extent of such invalidity or
unenforceability in such jurisdiction without invalidating or rendering
unenforceable or ineffective the remaining Sections, Subsections, Clauses,
Subclauses, terms and provisions hereof or rights hereunder in such jurisdiction
or the application of such Section, Subsection, Clause, Subclause, term or
provision or rights hereunder in any other jurisdiction or to circumstances
other than those as to which it is specifically held invalid or unenforceable.
5.16 EFFECTIVE DATE
This Agreement is effective and in full force and effect in accordance
with its terms as of the date hereof (the "Effective Date"). If the Rights Plan
is not ratified by resolution passed by a majority of the votes cast by
Independent Shareholders present or represented by proxy at a meeting of
shareholders of the Corporation to be held within six months of the Effective
Date, then, without further formality, this Agreement and all outstanding Rights
shall terminate and be void and be of no further force and effect on and from
the earlier of: (i) the close of such meeting of shareholders; and (ii) 5:00
p.m. (Toronto time) on the date which is six (6) months after the Effective
Date. The term of the Rights Plan ends on the date of the Corporation's Annual
Meeting of Shareholders to be held in 2003, at which time the Rights expire
unless they are terminated, redeemed or exchanged earlier by the Board of
Directors.
5.17 DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS
All actions, calculations and determinations (including all omissions
with respect to the foregoing) which are done or made by the Board of Directors,
in good faith, shall not subject the Board of Directors or any director of the
Corporation to any liability to the holders of the Rights.
5.18 RIGHTS OF BOARD, CORPORATION AND OFFEROR
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Without limiting the generality of the foregoing, nothing contained
herein shall be construed to suggest or imply that the Board of Directors shall
not be entitled to recommend that holders of Voting Shares reject or accept an
Take-over Bid or take any other action (including, without limitation, the
commencement, prosecution, defence or settlement of any litigation and the
submission of additional or alternative Take-over Bids or other proposals to the
Shareholders of the Corporation) with respect to any Take-over Bid or otherwise
that the Board of Directors believes is necessary or appropriate in the exercise
of its fiduciary duties.
5.19 REGULATORY APPROVALS
Any obligation of the Corporation or action or event contemplated by
this Agreement shall be subject to the prior receipt of any requisite approval
or consent from any governmental or regulatory authority including, without
limiting the generality of the foregoing, any necessary approval of any
securities regulatory authority, The Toronto Stock Exchange or any other stock
exchange.
5.20 TIME OF THE ESSENCE
Time shall be of the essence in this Agreement.
5.21 EXECUTION IN COUNTERPARTS
This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute one and the same instrument.
5.22 EXPIRATION TIME
If the Separation Time shall have occurred, then (notwithstanding
anything to the contrary in this Agreement) this Agreement and the Rights shall
continue in full force and effect until such time as there shall be no further
Rights.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
VASOGEN INC.
By: /s/ Xxxxx X. Xxxxxx
------------------------------------
By: /s/ Xxxxxxxxxxx X. Xxxxxxx
------------------------------------
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CIBC MELLON TRUST COMPANY
By: /s/ Xxxxx Xxx
------------------------------------
By: /s/ Xxxxxx Xxxxxx
------------------------------------
EXHIBIT A
[FORM OF RIGHTS CERTIFICATE]
Certificate No._________________ _____________________ Rights
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
CORPORATION, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON, ANY PERSON ACTING JOINTLY OR IN CONCERT WITH
AN ACQUIRING PERSON OR THEIR RESPECTIVE ASSOCIATES AND
AFFILIATES (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT)
AND THEIR RESPECTIVE TRANSFEREES SHALL BECOME VOID WITHOUT ANY
FURTHER ACTION.
RIGHTS CERTIFICATE
This certifies that _______________________________ or registered
assigns, is the registered holder of the number of Rights set forth above, each
of which entitles the registered holder thereof, subject to the terms,
provisions and conditions of the Shareholder Rights Plan Agreement dated as of
the 22nd day of November, 2000 (the "Rights Agreement") between Vasogen Inc., a
corporation incorporated under the CANADA BUSINESS CORPORATIONS ACT (the
"Corporation"), and CIBC Mellon Trust Company, a trust company incorporated
under the laws of Canada, as rights agent (the "Rights Agent", which term shall
include any successor Rights Agent under the Rights Agreement) to purchase from
the Corporation at any time after the Separation Time and prior to the
Expiration Time (as such terms are defined in the Rights Agreement) one fully
paid and non-assessable Common Share of the Corporation (a "Common Share") at
the Exercise Price referred to below, upon presentation and surrender of this
Rights Certificate together with the Form of Election to Exercise duly executed
and submitted to the Rights Agent at its principal office in the City of
Toronto. The Exercise Price shall initially be $200.00 (Canadian) per Right and
shall be subject to adjustment in certain events as provided in the Rights
Agreement.
In certain circumstances described in the Rights Agreement, each Right
evidenced hereby may entitle the registered holder thereof to purchase or
receive assets, debt securities or other equity securities of the Corporation
(or a combination thereof) all as provided in the Rights Agreement.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Rights Agent, the Corporation and the holders of the Rights. Copies of the
Rights
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Agreement are on file at the registered head office of the Corporation
and are available upon written request.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at any of the offices of the Rights Agent designated for such
purpose, may be exchanged for another Rights Certificate or Rights Certificates
of like tenor and date evidencing an aggregate number of Rights entitling the
holder to purchase a like aggregate number of Common Shares as the Rights
evidenced by the Rights Certificate or Rights Certificates surrendered. If this
Rights Certificate shall be exercised in part, the registered holder shall be
entitled to receive, upon surrender hereof, another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Rights Certificate (i) may be, and under certain circumstances are
required to be, redeemed by the Corporation at a redemption price of $0.0001 per
Right; and (ii) may be exchanged at the option of the Corporation for cash, debt
or equity securities or other assets of the Corporation.
No fractional Common Shares will be issued upon the exercise of any
Right or Rights evidenced hereby.
No holder of this Rights Certificate, as such, shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of Common Shares
or of any other securities of the Corporation which may at any time be issuable
upon the exercise hereof, nor shall anything contained in the Rights Agreement
or herein be construed to confer upon the holder hereof, any of the rights of a
shareholder of the Corporation or any right to vote for the election of
directors or upon any matter submitted to shareholders of the Corporation at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders of the
Corporation (except as expressly provided in the Rights Agreement), or to
receive dividends, distributions or subscription rights, or otherwise until the
Rights evidenced by this Rights Certificate shall have been exercised as
provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been manually countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Corporation.
Date:______________________________________
VASOGEN INC.
By:_____________________________________ By:________________________________
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President and Chief Executive Officer Vice President, Finance and
Chief Financial Officer
Countersigned
CIBC MELLON TRUST COMPANY
Transfer Agent and Registrar
By:_____________________________________
Authorized Signature
(To be attached to each Rights Certificate)
FORM OF ELECTION TO EXERCISE
TO: VASOGEN inc.
The undersigned hereby irrevocably elects to exercise _________________
whole Rights represented by the attached Rights Certificate to purchase the
Common Shares issuable upon the exercise of such Rights and requests that
certificates for such Shares be issued to:
__________________________________________________________
(Name)
__________________________________________________________
(Address)
__________________________________________________________
(City and State or Province)
__________________________________________________________
Social Insurance, Social Security or Other Taxpayer Number
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights shall be
registered in the name of and delivered to:
__________________________________________________________
(Name)
__________________________________________________________
(Address)
__________________________________________________________
(City and State or Province)
__________________________________________________________
Social Insurance, Social Security or Other Taxpayer Number
Date___________________________
Guaranteed by an ________________________________________
Eligible Institution: Signature
(Signature must correspond to name as
written upon the face of this Rights
Certificate in every particular.
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without alteration or enlargement or any
change whatsoever)
An "Eligible Institution" means a Canadian Schedule 1 chartered bank, a
major trust company in Canada, a member of the Securities Transfer Association
Medallion Program (STAMP), a member of the Stock Medallion Program (SEMP) or a
member of the New York Stock Exchange Inc. Medallion Signature Program (MSP).
Members of these programs are usually members of a recognized stock exchange in
Canada and the United States, members of the Investment Dealers Association of
Canada, members of the National Association of Securities Dealers or banks and
trust companies in the United States.
[To be completed if true]
The undersigned hereby represents, for the benefit of all holders of
Rights and Common Shares, that the Rights evidenced by this Rights Certificate
are not, and, to the knowledge of the undersigned, have never been, Beneficially
Owned by an Acquiring Person or an Affiliate or Associate thereof or any Person
acting jointly or in concert with any of the foregoing (as defined in the Rights
Agreement).
________________________________________
Signature
NOTICE
In the event the certification set forth in the Form of Election to
Exercise is not completed, the Corporation will deem the Beneficial Owner of the
Rights evidenced by this Rights Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and
accordingly such Rights shall be null and void.
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate)
FOR VALUE RECEIVED _____________________________________________________________
hereby sells, assigns and transfers unto _______________________________________
________________________________________________________________________________
(Please print name and address of transferee)
the Rights represented by this Rights Certificate, together with all right,
title and interest therein and does hereby irrevocably constitute and appoint
_______________ as attorney to transfer the within Rights on the books of the
Corporation, with full power of substitution.
Dated_______________________________
Guaranteed by an ________________________________________
Eligible Institution: Signature
(Signature must correspond to name as
written upon the face of this Rights
Certificate in every particular, without
alteration or enlargement or any change
whatsoever)
An "Eligible Institution" means a Canadian Schedule 1 chartered bank, a
major trust company in Canada, a member of the Securities Transfer Association
Medallion Program (STAMP), a member of the Stock Medallion Program (SEMP) or a
member of the New York Stock Exchange Inc. Medallion Signature Program (MSP).
Members of these programs are usually members of a recognized stock exchange in
Canada and the United States, members of the Investment Dealers Association of
Canada, members of the National Association of Securities Dealers or banks and
trust companies in the United States.
[To be completed if true]
The undersigned hereby represents, for the benefit of all holders of
Rights and Common Shares, that the Rights evidenced by this Rights Certificate
are not, and, to the knowledge of the undersigned, have never been, Beneficially
Owned by an Acquiring Person or an Affiliate or Associate thereof or any Person
acting jointly or in concert with any of the foregoing (as defined in the Rights
Agreement).
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________________________________________
Signature
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NOTICE
In the event the certification set forth in the Form of Assignment is
not completed, the Corporation will deem the Beneficial Owner of the Rights
evidenced by this Rights Certificate to be an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement) and accordingly such
Rights shall be null and void.
