Exhibit 4.1
SHAREHOLDER RIGHTS PLAN AGREEMENT
MADE AS OF
DECEMBER 17, 1998
BETWEEN
MDSI MOBILE DATA SOLUTIONS INC.
AND
MONTREAL TRUST COMPANY OF CANADA
AS RIGHTS AGENT
TABLE OF CONTENTS
ARTICLE 1 ......................................................................................................2
INTERPRETATION....................................................................................................2
1.1 Certain Definitions...................................................................................2
1.2 Currency.............................................................................................18
1.3 Headings.............................................................................................18
1.4 References to Agreement..............................................................................18
1.5 Grandfathered Person.................................................................................18
1.6 Calculation of Number and Percentage
of Beneficial Ownership of Outstanding Voting Shares.................................................19
1.7 Acting Jointly or in Concert.........................................................................19
1.8 Generally Accepted Accounting Principles.............................................................20
ARTICLE 2 .....................................................................................................20
THE RIGHTS .....................................................................................................20
2.1 Legend on Common Share Certificates..................................................................20
2.2 Initial Exercise Price; Exercise of Rights; Detachment of Rights.....................................21
2.3 Adjustment to Exercise Price; Number of Rights.......................................................24
2.4 Date on Which Exercise is Effective..................................................................30
2.5 Execution, Authentication, Delivery and Dating of Rights Certificates................................30
2.6 Registration, Registration of Transfer and Exchange..................................................31
2.7 Mutilated, Destroyed, Lost and Stolen Rights Certificates............................................32
2.8 Persons Deemed Owners................................................................................32
2.9 Delivery and Cancellation of Certificates............................................................33
2.10 Agreement of Rights Holders..........................................................................33
2.11 Rights Certificate Holder not Deemed a Shareholder...................................................34
ARTICLE 3 .....................................................................................................35
ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS...................................................35
3.1 Flip-in Event........................................................................................35
3.2 Exchange Option......................................................................................37
3.3 Fiduciary Duties of the Board of Directors of the Corporation........................................38
ARTICLE 4 .....................................................................................................38
THE RIGHTS AGENT.................................................................................................38
4.1 General..............................................................................................38
4.2 Merger, Amalgamation or Consolidation or Change of Name of Rights Agent..............................39
4.3 Duties of Rights Agent...............................................................................40
4.4 Change of Rights Agent...............................................................................43
ARTICLE 5 .....................................................................................................43
MISCELLANEOUS....................................................................................................43
5.1 Redemption and Waiver................................................................................43
5.2 Expiration...........................................................................................45
5.3 Issuance of New Rights Certificates..................................................................45
5.4 Supplements and Amendments...........................................................................45
5.5 Fractional Rights and Fractional Shares..............................................................48
5.6 Rights of Action.....................................................................................48
5.7 Regulatory Approvals.................................................................................49
5.8 Unlawful Distributions...............................................................................49
5.9 Notices..............................................................................................50
5.10 Costs of Enforcement.................................................................................51
5.11 Successors...........................................................................................51
5.12 Benefits of this Agreement...........................................................................51
5.13 Governing Law........................................................................................51
5.14 Severability.........................................................................................51
5.15 Effective Date.......................................................................................52
5.16 Determinations and Actions by the Board of Directors.................................................52
5.17 Time of the Essence..................................................................................53
5.18 Execution in Counterparts............................................................................53
5.19 Language.............................................................................................53
EXHIBIT A
THIS SHAREHOLDER RIGHTS PLAN AGREEMENT made as of December 17, 1998.
BETWEEN:
MDSI MOBILE DATA SOLUTIONS INC., a corporation incorporated under the
Canada Business Corporations Act (hereinafter referred to as the
"Corporation")
OF THE FIRST PART
AND:
MONTREAL TRUST COMPANY OF CANADA, a trust company incorporated under
the laws of Canada (hereinafter referred to as the "Rights Agent")
OF THE SECOND PART
WHEREAS the Board of Directors has determined that it is in the best
interests of the Corporation and all of its shareholders to adopt a shareholder
rights plan;
AND WHEREAS in order to implement the adoption of a shareholder rights
plan the Board of Directors has:
(a) authorized the issuance and distribution, effective as of the
Record Time, of one Right 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 or other assets of the Corporation
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 holders of Rights, 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 Corporation proposes that this Agreement be in place
for a period of five years;
NOW THEREFORE, in consideration of the premises and the respective
covenants and agreements set forth herein, the preamble hereto forming an
integral part hereof, the parties hereby agree as follows:
ARTICLE 1
INTERPRETATION
1.1 Certain Definitions
In this Agreement
(a) "Acquiring Person" means, subject to Section 1.5, any Person who is
the Beneficial Owner of 20% or more of the outstanding Voting Shares;
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 20% or more of the
outstanding Voting Shares as a result of any one or any
combination of: (A) Voting Share Reductions; (B) Permitted Bid
Acquisitions; (C) Exempt Acquisitions; (D) Convertible Security
Acquisitions; or (E) Pro Rata Acquisitions; provided, however,
that if a Person shall become the Beneficial Owner of 20% or more
of the outstanding Voting Shares by reason of any one or any
combination of Voting Share Reductions, Permitted Bid
Acquisitions, Exempt Acquisitions, Convertible Security
Acquisitions or Pro Rata Acquisitions and, if thereafter, such
Person, while such Person is the Beneficial Owner of 20% or more
of the outstanding Voting Shares, becomes the Beneficial Owner of
additional Voting Shares which result in an increase of such
Person's Beneficial Ownership of Voting Shares by more than 1% of
the number of such Voting Shares outstanding as at the time of
acquisition (other than pursuant to one or any combination of
Voting Share Reductions, Permitted Bid Acquisitions, Exempt
Acquisitions, Convertible Security Acquisitions or Pro Rata
Acquisitions), then, as of the date such Person becomes the
Beneficial Owner of such additional outstanding Voting Shares,
such Person shall be an "Acquiring Person";
(iii) for the period of ten days after the Disqualification Date, any
Person who becomes the Beneficial Owner of 20% or more of the
outstanding Voting Shares as a result of such Person becoming
disqualified from relying on paragraph 1.1(d)(v) solely because
such Person makes or proposes to make a Take-over Bid alone or
acting jointly or in concert with any other Person;
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(iv) an underwriter or members of a banking or selling group that
becomes the Beneficial Owner of 20% or more of the outstanding
Voting Shares in connection with a distribution of securities; or
(v) any employee or executive or director stock ownership or other
employee or executive or director benefit plan, or trust for the
benefit of employees of the Corporation or any Subsidiary of the
Corporation or any Person organized, appointed or established by
the Corporation for or pursuant to the terms of any such plan or
trust;
(b) "Affiliate", when used to indicate a relationship with a specified
Person, means a Person that, directly or indirectly (including through
one or more intermediaries), controls, is controlled by or is under
common control with, such specified Person and a Person shall be
deemed to be controlled by another Person if controlled in any manner
whatsoever that results in control in fact by that person, whether
directly or indirectly, and whether through securities ownership, a
trust, a contract or otherwise;
(c) "Associate", when used to indicate a relationship with a specified
Person, means:
(i) any body corporate, partnership or other organization of which
such specified Person is an officer or partner;
(ii) any trust or other estate in which such specified Person has a
substantial beneficial interest or as to which such specified
Person serves as trustee or in a similar fiduciary capacity;
(iii)any relative of such specified Person if that relative has the
same residence as such specified Person, or any person to whom
such specified Person is married, or any person with whom such
specified Person is living in a conjugal relationship outside
marriage, or any relative of such spouse or other person if that
relative has the same residence as such specified Person;
(iv) any Person who is a director of, officer of, partner in or
trustee of such specified Person or of any body corporate,
partnership or other organization which is an Affiliate or
Associate of such specified Person; and
(v) any body corporate of which such specified Person beneficially
owns, directly or indirectly, shares carrying more than 10% of
the voting rights attaching to all voting securities of the body
corporate for the time being outstanding;
(d) A Person shall be deemed the "Beneficial Owner" of, and to have
"Beneficial Ownership" of, and to "Beneficially Own":
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(i) any securities as to which such Person, or any of such Person's
Affiliates or Associates is the direct or indirect owner at law
or in equity;
(ii) any securities as to which such Person or any of such Person's
Affiliates or Associates has the right to become the owner at law
or equity (within 60 days of the date of determination of
Beneficial Ownership and whether or not on condition or the
occurrence of any contingency) pursuant to any agreement,
arrangement, pledge or understanding (whether or not in writing)
(other than customary agreements with and between underwriters
and banking group or selling group members with respect to a
distribution of securities pursuant to a prospectus or by way of
private placement and other than pledges of securities in the
ordinary course of business)); and
(iii)any securities which are Beneficially Owned within the meaning of
paragraphs (i) or (ii) of this definition by any other Person
with which 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:
(iv) because such security has been or agreed to be deposited or
tendered pursuant to any Take-over Bid made by such Person, any
of such Person's Affiliates or Associates or any other Person
referred to in paragraph (iii) of this definition until such
deposited or tendered security has been unconditionally accepted
for payment or exchange or taken up and paid for, whichever shall
first occur;
(v) because such Person, any of such Person's Affiliates or
Associates or any other Person referred to in paragraph (iii) of
this definition holds such security provided that:
(A) the ordinary business of such person (the "Investment
Manager") includes the management of investment funds for
others (which others, for greater certainty, may include and
be limited to one or more employee benefit plans or pension
plans) and such security is held in the ordinary course of
such business in the performance of the duties of the
Investment Manager for the account of any other Person (the
"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 (each an "Estate
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Account") or in relation to other accounts (each an "Other
Account") and holds such security in the ordinary course of
such duties for the estate of any such deceased or
incompetent Person or for such other accounts;
(C) such Person is a Crown agent or agency (in this definition,
the "Crown Agency");
(D) the Person is established by statute for purposes that
include, and the ordinary business or activity of such
Person (in this definition, a "Statutory Body") includes,
the management of investment funds for employee benefit
plans, pension plans, insurance plans of various public
bodies and the Statutory Body holds such security for the
purposes of its activities as such; or
(E) the person (in this definition, an "Administrator") is the
administrator or trustee of one or more pension funds or
plans (each, in this definition, a "Plan") registered under
the laws of Canada or any province thereof or the
corresponding laws of the jurisdiction by which such Plan is
governed or is such a Plan and the Administrator or Plan
holds such security for the purposes of its activities as
such;
but only if the Investment Manager, the Trust Company, the Crown
Agent, the Statutory Body, the Administrator or the Plan, as the
case may be, is not then making and has not announced a current
intention to make a Take-over Bid, other than an Offer to Acquire
Common Shares or other securities pursuant to a distribution by
the Corporation or by means of ordinary market transactions
(including prearranged trades entered into in the ordinary course
of business of such Person) executed through the facilities of a
stock exchange or an organized over-the-counter market, alone or
by acting jointly or in concert with any other Person;
(vi) because such Person:
(A) is a Client of the same Investment Manager as another Person
on whose account the Investment Manager holds such security;
(B) has an Estate Account or an Other Account with the same
Trust Company as another Person on whose account the Trust
Company holds such security; or
(C) is a Plan with the same Administrator as another Plan on
whose account the Administrator holds such security;
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(vii) because such Person:
(A) is a Client of an Investment Manager and such security is
owned at law or in equity by the Investment Manager;
(B) has an Estate Account or an Other Account with a Trust
Company and such security is owned at law or in equity by
the Trust Company; or
(C) is a Plan and such security is owned at law or in equity by
the Administrator of the Plan;
(viii) because such Person is the registered holder of securities as a
result of carrying on the business of, or acting as nominee for,
a securities depositary; or
(ix) because such security is subject to a pledge, mortgage or other
encumbrance of such security for the purpose of giving collateral
for a debt (provided that realization on such collateral has not
occurred);
(e) "Board of Directors" means the board of directors of the Corporation
or any duly constituted and empowered committee thereof;
(f) "Business Day" means any day other than a Saturday, Sunday or a day on
which banking institutions in Vancouver, British Columbia are
authorized or obligated by law to close;
(g) "Canada Business Corporations Act" means the Canada Business
Corporations Act, as amended from time to time, and the regulations
made thereunder, as in effect on the date of this Agreement or as the
same may be amended, re-enacted or replaced by any comparable or
successor laws or regulations thereto;
(h) "Canadian Dollar Equivalent" of any amount which is expressed in
United States dollars means, on any date, the Canadian dollar
equivalent of such amount determined by multiplying such amount by the
U.S. - Canadian Exchange Rate in effect on such date;
(i) "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 Vancouver office of the principal transfer
agent for the Common Shares (or, after the Separation Time, the
Vancouver office of the Rights Agent) is closed to the public;
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(j) "Common Shares" means the common shares without par value in the
capital of the Corporation and any other shares in the capital of the
corporation into which such shares may be subdivided, consolidated,
reclassified or changed; provided, however, that "common shares", when
used with reference to any Person other than the Corporation, shall
mean 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;
(k) "Competing Permitted Bid" means a Take-over Bid that:
(i) is made after a Permitted Bid has been made and prior to the
expiry of the Permitted Bid;
(ii) satisfies all components of the definition of a Permitted Bid
other than the requirements set out in clause 1.1(ii)(ii)(A)(I)
of the definition of Permitted Bid; and
(iii)contains an irrevocable and unqualified provision that no Voting
Shares will be taken up or paid for pursuant to the Take-over Bid
prior to the close of business on a date that is no earlier than
the later of (A) the date on which Voting Shares may be taken up
under the Permitted Bid that preceded the Competing Permitted Bid
(determined at the date of making the Take-over Bid and assuming
no amendment or variation to the terms and satisfaction of all
conditions to the completion of the Permitted Bid) and (B) 21
days following the date of the Take-over Bid constituting the
Competing Permitted Bid;
(l) "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 50 percent of the votes for the election of directors
are held, directly or indirectly, by or on behalf 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 "control", "controls" and "controlling" shall be interpreted
accordingly;
(m) "Convertible Securities" means at any time:
(i) any right (contractual or otherwise and regardless of whether
such right constitutes a security) to acquire Common Shares from
the Corporation; and
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(ii) any securities issued by the Corporation from time to time (other
than the Rights) carrying any exercise, conversion or exchange
right;
which is then exercisable or exercisable within a period of 60 days
from that time, pursuant to which the holder thereof may acquire
Common Shares or other securities which are convertible into or
exercisable or exchangeable for Common Shares (in each case, whether
such right is then exercisable or exercisable within a period of 60
days from that time and whether or not on condition or the happening
of any contingency), including at the relevant time of determination,
any outstanding options for the purchase of Common Shares issuable
under any existing Stock Option Plans of the Corporation, which
options are exercisable at the time of determination or within 60 days
of such time;
(n) "Convertible Security Acquisition" means the acquisition of Common
Shares upon the exercise of Convertible Securities received by such
Person pursuant to a Permitted Bid Acquisition, Exempt Acquisition or
a Pro Rata Acquisition;
(o) "Co-Rights Agent" has the meaning ascribed thereto in subsection
4.1(a);
(p) "Disqualification Date" means the first date of public announcement
(which, for purposes of this definition, shall include, without
limitation, a report or filing made or filed pursuant to Section 111
of the Securities Act (British Columbia), Section 101 of the
Securities Act (Ontario) or Sections 13(d) or 14 under the 1934
Exchange Act) that any Person has made or proposes to make a Take-over
Bid alone or acting jointly or in concert with any other Person;
(q) "Dividend Reinvestment Acquisition" means an acquisition of Voting
Shares pursuant to a Dividend Reinvestment Plan;
(r) "Dividend Reinvestment Plan" means a regular dividend reinvestment or
other plan of the Corporation made available by the Corporation to
holders of its securities where such plan permits the holder to direct
that some or all of:
(i) dividends paid in respect of shares of any class of the
Corporation;
(ii) proceeds of redemption of shares of the Corporation;
(iii)interest paid on evidences of indebtedness of the Corporation; or
(iv) optional cash payments;
be applied to the purchase from the Corporation of Common Shares;
(s) "Election to Exercise" has the meaning ascribed thereto in subsection
2.2(d);
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(t) "Exempt Acquisition" means a share acquisition:
(i) in respect of which the Board of Directors has waived the
application of Section 3.1 pursuant to the provisions of
subsection 5.1(d) or 5.1(e);
(ii) which was made on or prior to the Record Time;
(iii) which was made pursuant to a Dividend Reinvestment Plan;
(iv) pursuant to the receipt or exercise of rights issued by the
Corporation to all the holders of the Common Shares to subscribe
for or purchase Common Shares or Convertible Securities, provided
that such rights are acquired directly from the Corporation and
not from any other Person;
(v) pursuant to a distribution by the Corporation of Common Shares or
Convertible Securities made pursuant to a prospectus; or
(vi) pursuant to a distribution by the Corporation of Common Shares or
Convertible Securities 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, where
(A) 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
(B) such Person does not become the Beneficial Owner of more
than 25% of the Common Shares of the Corporation outstanding
immediately prior to the distribution, and in making this
determination the Common 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 Common Shares immediately prior to the
distribution;
(u) "Exercise Price" means the price at which a holder may purchase the
securities issuable upon exercise of one whole Right and, until
adjustment thereof in accordance with the terms hereof, the Exercise
price shall be equal to one hundred and forty ($140.00) dollars;
(v) "Expansion Factor" has the meaning ascribed thereto in subsection
2.3(a);
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(w) "Expiration Time" means the earlier of:
(i) the Termination Time; or
(ii) the close of business on the fifth anniversary of the date
hereof;
(x) "Flip-in Event" means a transaction in or pursuant to which any Person
becomes an Acquiring Person;
(y) "holder" has the meaning ascribed thereto in Section 2.8;
(z) "Independent Shareholders" means holders of Voting Shares other than;
(i) any Acquiring Person;
(ii) any Offeror;
(iii)any Associate or Affiliate of any Acquiring Person or Offeror;
(iv) any Person acting jointly or in concert with any Acquiring Person
or any Offeror; and
(v) any employee benefit plan, deferred profit sharing plan, stock
participation plan or trust for the benefit of employees of the
Corporation or any Subsidiary of the Corporation but excluding in
any event a plan or trust in respect of which the employee
directs the manner in which the Voting Shares are to be voted and
directs whether the Voting Shares be tendered to a Take-over Bid;
(aa) "Market Price" per share of any securities on any date of
determination shall mean the average of the daily closing prices per
share of such securities (determined as described below) on each of
the 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
shall have caused the closing price in respect of any Trading Day used
to determine the Market Price 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 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:
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(i) the closing board lot sale price or, if no such sale takes place
on such date, the average of the closing bid and asked prices, as
reported by the principal Canadian stock exchange on which such
securities are listed or admitted to trading; 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 a
Canadian stock exchange, the closing board lot sale price or, if
no such sale takes place on such date, the average of the closing
bid and asked prices, as reported by the principal national
United States securities exchange or quotation system on which
such 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 a
Canadian stock exchange or a national United States securities
exchange or quotation system, the last quoted price, or if not so
quoted, the average of the high bid and low asked prices for each
share of such securities in the over-the-counter market, as
reported by any reporting system then in use (as determined by
the Board of Directors); or
(iv) if for any reason none of such prices is available on such day or
the securities are not listed or admitted to trading on a
Canadian stock exchange or a national United States securities
exchange or quotation system or quoted by any such reporting
system, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the
securities, selected by the Board of Directors;
provided, however, that if for any reason none of such prices is
available on any such date, 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 Canadian investment dealer or investment
banker with respect to the fair value per share of such securities.
The Market Price shall be expressed in Canadian dollars and, if
initially determined in respect of any day forming part of the 20
consecutive Trading Day period in United States dollars, such amount
shall be translated into Canadian dollars at the Canadian Dollar
Equivalent thereof on the relevant Trading Day.
Notwithstanding the foregoing, where the Board of Directors is
satisfied that the Market Price of securities as determined herein was
affected by an anticipated or actual Take-over Bid or by improper
manipulation, the Board of Directors may, acting in good faith,
determine the Market Price of securities, such determination to be
based on a finding as to the price at which a holder of securities of
that class could reasonably have expected to dispose of his, her or
its securities immediately
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prior to the relevant date excluding any change in price reasonably
attributable to the anticipated or actual Take-over Bid or to the
improper manipulation;
(bb) "1933 Securities Act" means the Securities Act of 1933 of the United
States, as amended, and the rules and regulations thereunder, as in
effect on the date of this Agreement or as the same may be amended,
re-enacted or replaced by any comparable or successor laws or
regulations thereto;
(cc) "1934 Exchange Act" means the Securities Exchange Act of 1934 of the
United States, as amended, and the rules and regulations thereunder,
as in effect on the date of this Agreement or as the same may be
amended, re-enacted or replaced by any comparable or successor laws or
regulations thereto;
(dd) "Nominee" has the meaning ascribed thereto in subsection 2.2(c);
(ee) "Offer to Acquire" shall include:
(i) an offer to purchase, or a solicitation of an offer to sell,
Voting Shares or Convertible Securities, and
(ii) an acceptance of an offer to sell Voting Shares or Convertible
Securities, 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;
(ff) "Offeror" means a Person who has announced an intention to make or who
has made a Take-over Bid (including a Permitted Bid or Competing
Permitted Bid but excluding an Offer to Acquire made by an Investment
Manager, Trust Company, Crown Agency, Statutory Body, Administrator or
Plan referred to clause 1.1(d)(v) of the definition of Beneficial
Owner 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 clause 1.1(d)(v)) but only so long as
the Take-over Bid so announced or made has not been withdrawn or
terminated or has not expired;
(gg) "Offeror's Securities" means the Voting Shares Beneficially Owned by
an Offeror on the date of an Offer to Acquire;
(hh) "ordinary course dividends" means cash dividends paid in any fiscal
year of the Corporation to the extent that such cash dividends, in the
aggregate, do not exceed the greatest of:
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(i) 200% of the aggregate amount of cash dividends declared payable
by the Corporation on its Common Shares in its immediately
preceding fiscal year;
(ii) 300% of the arithmetic mean of the aggregate amounts of cash
dividends declared payable by the Corporation on its Common
Shares in its three immediately preceding fiscal years; and
(iii)100% of the aggregate consolidated net income of the Corporation,
before extraordinary items, for its immediately preceding fiscal
year;
(ii) "Permitted Bid" means a Take-over Bid made by an Offeror by way of a
Take-over bid circular and made in compliance with, and not on a basis
which is exempt from or otherwise not subject to, sections 95 to 100
of the Securities Act (Ontario) which also complies with the following
additional provisions:
(i) the Take-over Bid is made for any and all Voting Shares 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 contains, and the take up and payment for
securities tendered or deposited thereunder shall be subject to,
an irrevocable and unqualified provision that:
(A) no Voting Shares will be taken up or paid for pursuant to
the Take-over Bid:
(I) prior to the close of business on the 60th day
following the date of the Take-over Bid; and
(II) if less than 50% of the Voting Shares held by
Independent Shareholders have been deposited pursuant
to the Take-over Bid and not withdrawn;
(B) unless the Take-over Bid is withdrawn, Voting Shares may be
deposited pursuant to such Take-over Bid at any time prior
to the close of business on the date of first take-up or
payment described in subparagraph (ii)(A)(I) of this
definition and that any Voting Shares deposited pursuant to
the Take-over Bid may be withdrawn at any time prior to the
close of business on such date; and
(C) if the condition set forth in subparagraph (ii)(A)(II) is
satisfied, the Offeror will make a public announcement of
that fact and the Take-over Bid will remain open for
deposits and tenders of Voting Shares
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for not less than ten Business Days from the date of such
public announcement;
provided that if a Take-over Bid constitutes a Competing Permitted
Bid, the term "Permitted Bid" shall also mean the Competing Permitted
Bid;
(jj) "Permitted Bid Acquisition" means an acquisition made pursuant to a
Permitted Bid or a Competing Permitted Bid;
(kk) "Person" shall include any individual, firm, partnership, association,
trust, trustee, executor, administrator, legal personal
representative, body corporate, corporation, unincorporated
organization or association, syndicate, government and its agencies or
other entity or group, whether or not having legal personality and any
of the foregoing acting in any derivative, representative or fiduciary
capacity;
(ll) "Pro Rata Acquisition" means an acquisition by a person of Beneficial
Ownership of Voting Shares as a result of: a Dividend Reinvestment
Acquisition; a stock dividend, a stock split or other event pursuant
to which a Person becomes Beneficial Owner of Voting Shares on the
same pro rata basis as all other holders of Voting Shares; the
acquisition or exercise by such Person of rights to purchase Voting
Shares distributed to such Person in the course of a distribution to
all holders of Voting Shares pursuant to a rights offering or pursuant
to a prospectus; or a distribution of Voting Shares or securities
convertible into or exchangeable for Voting Shares (and the conversion
or exchange of such convertible or exchangeable securities), made
pursuant to a prospectus or a distribution by way of a private
placement; provided that the Person does not thereby acquire a greater
percentage of such Voting Shares, or securities convertible into or
exchangeable for Voting Shares, so offered than the Person's
percentage of Voting Shares Beneficially Owned immediately prior to
such acquisition;
(mm) "Record Time" means 5:00 p.m. (Vancouver time) on December 17, 1998;
(nn) "Redemption Price" has the meaning ascribed thereto in subsection
5.1(a);
(oo) "Right" means a right to purchase a Common Share, upon the terms and
subject to the conditions set forth in this Agreement;
(pp) "Rights Agent" means Montreal Trust Company of Canada, the rights
agent appointed by the Corporation to act as agent for the Corporation
in accordance with the terms and conditions of this Agreement;
(qq) "Rights Certificate" has the meaning ascribed thereto in subsection
2.2(c) and shall be in substantially the form set out in Exhibit A to
this Agreement;
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(rr) "Rights Registrar" means Montreal Trust Company of Canada, the
registrar for the Rights appointed pursuant to subsection 2.6(a) of
this Agreement;
(ss) "Rights Register" has the meaning ascribed thereto in subsection
2.6(a);
(tt) "Securities Act (British Columbia)" shall mean the Securities Act,
S.B.C 1997, c. 418, as amended, and the rules and regulations
thereunder, as in effect on the date of this Agreement or as the same
may be amended, re-enacted or replaced by any comparable or successor
laws or regulations thereto;
(uu) "Securities Act (Ontario)" shall mean the Securities Act, R.S.O. 1990,
c. S.5, as amended, and the rules and regulations thereunder, as in
effect on the date of this Agreement or as the same may be amended,
re-enacted or replaced by any comparable or successor laws or
regulations thereto;
(vv) "Separation Time" means the close of business on the tenth Trading Day
after the earlier of:
(i) the Stock Acquisition Date;
(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); and
(iii)the date upon which a Permitted Bid ceases to be a Permitted Bid;
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or such later time as may be determined by the Board of Directors
acting in good faith provided that, if the foregoing results in
the Separation Time being prior to the Record Time, the
Separation Time shall be the Record Time, and further provided
that:
(A) if any Take-over Bid referred to in paragraph (ii) of this
definition expires, or is cancelled, terminated or otherwise
withdrawn prior to the Separation Time, such Take-over Bid
shall be deemed, for the purposes of this definition, never
to have been made; and
(B) if the Board of Directors determines pursuant to subsection
5.1(d) or (e) to waive the application of Section 3.1 to a
Flip-in Event, the Separation Time in respect of such
Flip-in Event shall be deemed never to have occurred;
(ww) "Special Meeting" means a special meeting of the holders of Voting
Shares called by the Board of Directors for the purpose of:
(i) ratifying the distribution and continued existence of the Rights
in accordance with Section 5.15; or
(ii) approving an amendment, variation or rescission of any of the
provisions of this Agreement pursuant to subsections 5.4(b),
5.4(c) or 5.4(e);
(xx) "Stock Acquisition Date" means the first date of public announcement
(which, for purposes of this definition, shall include, without
limitation, a report or filing made or filed pursuant to Section 111
of the Securities Act (British Columbia), Section 101 of the
Securities Act (Ontario) or Sections 13(d) or 14 of the 1934 Exchange
Act) by the Corporation or an Acquiring Person indicating that a
Person has become an Acquiring Person;
(yy) "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
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(ii) it is a Subsidiary of a corporation that is that other's
Subsidiary;
(zz) "Take-over Bid" means an Offer to Acquire Voting Shares or other
securities if, assuming the Voting Shares or other securities subject
to the Offer to Acquire are acquired at the date of the Offer to
Acquire by the Person making the Offer to Acquire, such Voting Shares
(including all Voting Shares that may be acquired upon exercise of all
rights of conversion, exchange or purchase attaching to the other
securities) together with the Offeror's Securities would constitute in
the aggregate 20% or more of the outstanding Voting Shares at the date
of the Offer to Acquire;
(aaa)"Termination Time" means the time at which the right to exercise
Rights shall terminate pursuant to Sections 3.2, 5.1 or 5.15;
(bbb)"Trading Day", when used with respect to any securities, means a day
on which the principal Canadian stock exchange or United States
securities exchange or quotation system on which such securities are
listed or admitted to trading is open for the transaction of business
or, if the securities are not listed or admitted to trading on any
Canadian stock exchange or United States securities exchange or
quotation system, a Business Day;
(ccc) "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;
(ddd)"U.S. Dollar Equivalent" of any amount which is expressed in Canadian
dollars means, on any date, the United States dollar equivalent of
such amount determined by multiplying such amount by the Canadian-U.S.
Exchange Rate in effect on such date;
(eee)"Voting Shares" means the Common Shares and any other shares of
capital stock or voting interests of the Corporation entitled to vote
generally in the election of all directors; and
(fff)"Voting Share Reduction" means an acquisition or redemption by the
Corporation or a Subsidiary of the Corporation of Voting Shares which,
by reducing the number
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of Voting Shares outstanding or which may be voted, increases the
proportionate number of Voting Shares Beneficially Owned by any
Person.
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,
paragraphs and subparagraphs 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 References to Agreement
References to "this Agreement", "hereto", "herein", "hereby",
"hereunder", "hereof" and similar expressions refer to this Agreement, as
amended or supplemented from time to time, and not to any particular Article,
Section, subsection, paragraph, subparagraph or other provision hereof and
include any and every instrument supplemental or ancillary hereto. Unless the
context otherwise requires, references in this Agreement to an Article, Section,
subsection, paragraph, subparagraph or Exhibit by number, letter or otherwise
refer to the Article, Section, subsection, paragraph, subparagraph or Exhibit,
respectively, bearing that designation in this Agreement.
1.5 Grandfathered Person
For the purposes of determining whether a Person is an Acquiring
Person and interpreting the definition of "Acquiring Person", a Person shall not
be and shall not be deemed to be an Acquiring Person if such Person (a
"Grandfathered Person"):
(a) is the Beneficial Owner of more than 20% of the outstanding Voting
Shares determined as at the Record Time; or
(b) becomes the Beneficial Owner of more than 20% of the outstanding
Voting Shares after the Record Time and such Person's Beneficial
Ownership of Voting Shares does not exceed the number of Voting Shares
Beneficially Owned by such Person immediately prior to the Record Time
by more than 1% of the issued and outstanding Voting Shares as at the
Record Time,
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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 become the Beneficial Owner of additional Voting
Shares constituting more than 1% of the outstanding Voting Shares otherwise than
pursuant to one or more Permitted Bid Acquisitions, Exempt Acquisitions, Pro
Rata Acquisitions or Convertible Security Acquisitions, provided further,
however, that such Grandfathered Person shall not become an Acquiring Person as
a result of one or more Voting Share Reductions; and provided further that, if
this exception shall cease to be applicable to a Grandfathered Person as
aforesaid, such a Grandfathered Person shall be and shall be deemed to be an
Acquiring Person as at and from the time that this exception shall not be so
applicable.
1.6 Calculation of Number and Percentage of Beneficial Ownership of
Outstanding Voting Shares
For purposes of this Agreement, the percentage of outstanding
Voting Shares Beneficially Owned by any Person shall be and be deemed
to be the product determined by the formula:
100 x A
---
B
where:
A= the number of votes for the election of all directors
generally attaching to the outstanding Voting Shares
Beneficially Owned by such Person; and
B= the number of votes for the election of all directors
generally attaching to all outstanding Voting Shares.
For the purpose of the foregoing formula, where any person is deemed
to Beneficially Own unissued Voting Shares which may be acquired
pursuant to Convertible Securities, such Voting Shares shall be deemed
to be outstanding for the purpose of calculating the percentage of
Voting Shares Beneficially Owned by such Person in both the numerator
and the denominator, but no other unissued Voting Shares which may be
acquired pursuant to any other outstanding Convertible Securities
shall, for the purposes of that calculation, be deemed to be
outstanding.
1.7 Acting Jointly or in Concert
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For purposes of this Agreement, a Person is acting jointly or in
concert with every other Person who is a party to any agreement, commitment or
understanding, whether formal or informal and whether or not in writing, with
the first mentioned Person for the purpose of acquiring or offering to acquire
Voting Shares (other than customary agreements with and between underwriters
and/or banking group and/or selling group members with respect to a distribution
of securities pursuant to a prospectus or by way of private placement and other
than pursuant to pledges of securities in the ordinary course of business).
1.8 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.
ARTICLE 2
THE RIGHTS
2.1 Issuance and Evidence of Rights; Legend on Common Share Certificates
(a) The Corporation shall issue one Right in respect of each Common Share
outstanding at the Record Time and one Right in respect of each Common
Share which may be issued after the Record Time and prior to the
earlier of the Separation Time and the Expiration Time in accordance
with the terms hereof. Notwithstanding the foregoing, the Corporation
may, after the Separation Time but prior to the Expiration Time, issue
one Right in respect of each Common Share which is issued after the
Record Time pursuant to the exercise of Convertible Securities which
are outstanding at the Stock Acquisition Date.
(b) Certificates representing Common Shares issued after the Record Time
but prior to the earlier of the Separation Time and the Expiration
Time shall evidence, in addition to the Common Shares, one Right for
each Common Share evidenced
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thereby and shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
"Until the Separation Time (as defined in the Rights Agreement
referred to below), this certificate also evidences and entitles the
holder hereof to certain Rights as set forth in the Shareholder Rights
Plan Agreement made as of December 17, 1998 (the "Rights Agreement"),
between MDSI Mobile Data Solutions Inc. (the "Corporation") and
Montreal Trust Company of Canada, as rights agent, as amended from
time to time, 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 office of the Corporation. Under certain
circumstances, as set out in the Rights Agreement, the Rights may be
amended, redeemed, may expire, may become null and void or may be
evidenced by separate certificates and no longer evidenced by this
certificate. The Corporation will mail or arrange for the mailing of a
copy of the Rights Agreement to the holder of this certificate without
charge as soon as practicable after the receipt of a written request
therefor."
and may also have impressed on, printed on, written on or otherwise affixed
to them, where and when required, a French language version of the above
legend. Certificates representing Common Shares that are issued and
outstanding at the Record Time shall also 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) 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, one Common
Share. Notwithstanding any other provision of this Agreement, any
Rights held by the Corporation or any of its Subsidiaries shall be
void.
(b) Until the Separation Time:
(i) the Rights shall not be exercisable and no Right may be
exercised; and
(ii) each Right will be evidenced by the certificate for the
associated Common Share and will be transferable only together
with, and will be transferred by a transfer of, such associated
Common Share.
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(c) 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 or arrange to be mailed to each holder
of record of Rights as of the Separation Time (other than an Acquiring
Person and, in respect of any Rights Beneficially Owned by such
Acquiring Person which are not held of record by such Acquiring
Person, the holder of record of such Rights (a "Nominee")), at such
holder's address as 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 rights certificate ("Rights Certificate") representing the
number of Rights held by such holder at the Separation Time
and having such markers 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 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
paragraphs (A) and (B) above 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
such information and documents as the Corporation deems necessary.
(d) 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 at its principal office in the city of Vancouver,
Toronto, Montreal or New York the Rights Certificate evidencing such
Rights together with:
(i) an election to exercise such Rights (an "Election to Exercise")
substantially in the form attached to the Rights Certificate duly
completed and executed
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by the holder or his executors or administrators or other
personal representatives or his or their legal attorney duly
appointed by an instrument in writing in form and executed in a
manner satisfactory to the Rights Agent; and
(ii) payment in cash or by certified cheque, banker's draft or money
order payable to the order 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 or 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.
(e) 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) and payment as set
forth in subsection 2.2(d), the Rights Agent (unless otherwise
instructed by the Corporation if the Corporation is of the opinion
that the Rights cannot be exercised in accordance with this Agreement)
will thereupon promptly:
(i) requisition from the transfer agent for the Common Shares
certificates representing the number of such Common Shares to be
purchased (the Corporation hereby irrevocably authorizing its
transfer agent to comply with all such requisitions);
(ii) after receipt of such certificate, 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
holder;
(iii)when appropriate, requisition from the Corporation the amount of
cash to be paid in lieu of issuing fractional Common Shares;
(iv) when appropriate, after receipt of such cash, deliver the same 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) If the holder of any Rights shall exercise less than all the Rights
evidenced by such holder's Rights Certificate, a new Rights
Certificate evidencing the Rights remaining unexercised (subject to
Section 5.5) will be issued by the Rights Agent to such holder or to
such holder's duly authorized assigns.
(g) The Corporation covenants and agrees that it will:
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(i) take all such action as may be necessary and within its power to
ensure that all securities delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such
securities (subject to payment of the Exercise Price), be duly
and validly authorized, executed, issued and delivered as fully
paid and non-assessable;
(ii) take all such action as may be necessary and within its power to
comply with any applicable requirements of the Canada Business
Corporations Act, the Securities Act (British Columbia), the
Securities Act (Ontario), the 1933 Securities Act, the 1934
Exchange Act and any other applicable laws in connection with the
issuance and delivery of the Rights, the Rights Certificates and
the issuance of any securities upon exercise of Rights;
(iii)use reasonable effects to cause all securities issued upon
exercise of Rights to be listed on the stock exchanges and/or
quotation systems on which the Common Shares were listed and
traded immediately prior to the Stock Acquisition Date;
(iv) cause to be reserved and kept available out of its authorized and
unissued classes of securities, the number of securities that, as
provided in this Agreement, will from time to time be sufficient
to permit the exercise in full of all outstanding Rights;
(v) pay when due and payable any and all Canadian and, if applicable,
United States, federal, provincial and state transfer taxes and
charges (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 or certificates
for Common Shares, 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 securities in a name other than that of the
holder of the Rights being transferred or exercised; and
(vi) after the Separation Time 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 Adjustment to Exercise Price; Number of Rights
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The Exercise Price, the number and kind of 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) If Corporation shall at any time after the Record Time and prior to
the Expiration Time:
(i) declare or pay a dividend on its Common Shares payable in Common
Shares (or other securities exchangeable for or convertible into
or giving a right to acquire Common Shares) other than pursuant
to any optional stock dividend program;
(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) in
respect of, in lieu of or in exchange for existing Common Shares;
except as otherwise provided in this Section 2.3, the Exercise Price
and the number of Rights outstanding, or, if the payment or effective
date therefor shall occur after the Separation Time, the securities
purchasable upon exercise of Rights shall be adjusted as of the
payment or effective date such that:
(A) if the Exercise Price and number of Rights outstanding are
to be adjusted,
(I) 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,
combination or issuance would hold thereafter as a
result thereof; and
(II) 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
-25-
respect of such dividend, subdivision, change, combination
or issuance, so that each such Common Share (or other
capital stock) will have exactly one Right associated with
it; and
(B) 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, combination or issuance would hold thereafter as a
result thereof.
If after the Record Time and prior to the Expiration Time the
Corporation shall issue any securities other than Common Shares in a
transaction of a type described in paragraphs 2.3(a)(i) or (iv), such
securities shall be treated herein as nearly equivalent to Common
Shares as may be practicable and appropriate under the circumstances
and the Corporation and the Rights Agent agree to amend this Agreement
in order to effect such treatment.
(b) If the Corporation shall at any time after the Record Time and prior
to the Separation 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 45 calendar days after such record date)
to subscribe for or purchase Common Shares (or securities convertible
into or exchangeable for or carrying a right to purchase Common
Shares) at a price per Common Share (or, if a security convertible
into or exchangeable for or carrying a right to purchase or subscribe
for Common Shares having a conversion, exchange or exercise price,
including the price required to be paid to purchase such convertible
or exchangeable security or right per share) less than the Market
Price per Common Share on such record date, the Exercise Price to be
in effect after such record date shall be adjusted to that price
determined by multiplying the Exercise Price in effect immediately
prior to such record date by a fraction:
(i) 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 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) would purchase at such Market Price per
Common Share; and
(ii) the denominator of which shall be the number of Common Shares
outstanding on such record date, plus the number of additional
Common Shares to be offered for subscription or purchase (or into
which the
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convertible or exchangeable securities or rights so to be offered
are initially convertible, exchangeable or exercisable).
If 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 statement
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 (or are issued but not
exercised), 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.
For purposes of this Agreement, the granting of the right to purchase
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 and/or 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 or warrants by the Corporation;
provided, however, that, in the case of any Dividend Reinvestment
Plan, the right to purchase Common Shares is at a price per share of
not less than 90 percent of the current market price per share
(determined as provided in such plans) of the Common Shares.
(c) If the Corporation shall at any time after the Record Time and prior
to the Separation Time fix a record date for a distribution to all
holders of Common Shares (including any such distribution made in
connection with a merger or amalgamation in which the Corporation is
the continuing corporation) of evidences of indebtedness, cash (other
than an ordinary course dividend or a dividend referred to in
paragraph 2.3(a)(i)), assets or rights or warrants (excluding those
referred to in subsection 2.3(b)), 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:
(i) 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 Rights), on a
per share basis, of the portion of the cash, assets, evidences of
indebtedness, rights, options or warrants so to be distributed;
and
(ii) the denominator of which shall be such Market Price per Common
Share.
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Such adjustments shall be made successively whenever such a record
date is fixed, and in the event that such a 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) Each adjustment made pursuant to this Section 2.3 shall be made as of
(i) the payment or effective date for the applicable dividend,
subdivision, change, combination or issuance, in the case of an
adjustment made pursuant to subsection (a) above; and
(ii) the record date for the applicable distribution, in the case of
an adjustment made pursuant to subsection (b) or (c) above,
subject to readjustment to reverse the same if such distribution
shall not be made.
(e) 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 in the Exercise Price;
provided, however, that any adjustments which by reason of this
subsection 2.3(e) 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
nearest hundredth of a share. Notwithstanding the first sentence of
this subsection 2.3(e), any adjustment required by this Section 2.3
shall be made no later than the earlier of (i) three years from the
date of the transaction which mandates such adjustment and (ii) the
Termination Date. Whenever an adjustment to the Exercise Price is made
pursuant to this Section 2.3, the Corporation shall:
(i) promptly prepare a certificate setting forth such adjustment and
a brief statement of the facts accounting for such adjustment;
and
(ii) promptly file with the Rights Agent and with each transfer agent
for the Common Shares a copy of such certificate and mail a brief
summary thereof to each holder of Rights.
(f) If the Corporation shall at any time after the Record Time and prior
to the Separation 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 paragraph
(a)(i) or (a)(iv) above, if the Board of Directors acting in good
faith determines that the adjustments contemplated by subsections (a),
(b) and (c) above in connection with such transaction will not
appropriately protect the interests of the holders of Rights, the
Board of Directors may determine what other adjustments to the
Exercise Price, number of Rights and/or securities purchasable upon
exercise
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of Rights would be appropriate and, notwithstanding subsections (a),
(b) and (c) above, but subject to the prior consent of the holders of
Common Shares or Rights obtained in accordance with section 5.4, such
adjustments, rather than the adjustments contemplated by subsections
(a), (b) and (c) above, shall be made. The Corporation and the Rights
Agent shall have authority without the approval of the holders of the
Common Shares or the holders of Rights to amend this Agreement as
appropriate to provide for such adjustments.
(g) 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
a Right, all subject to further adjustment as provided herein.
(h) 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 Common Share and the number of Common
Shares which were expressed in the initial Rights Certificates issued
hereunder.
(i) 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 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
shares (fractional or otherwise) or securities upon the occurrence of
the event requiring such adjustment.
(j) 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 the Board of Directors shall in
good faith determine to be advisable in order that any (i)
consolidation or subdivision of the Common Shares, (ii) issuance
wholly or in part for cash of any Common Shares or securities that by
their terms are convertible into or exchangeable for Common Shares,
(iii) stock dividends or (iv) 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.
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(k) The Corporation covenants and agrees that, after the Separation Time,
it will not, except as permitted by Section 5.1 or Section 5.4, take
(or permit any Subsidiary of the Corporation 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.
(l) If an event occurs which would require an adjustment under both this
Section 2.3 and Section 3.1, the adjustment provided for in this
Section 2.3 shall be in addition to and shall be made prior to, any
adjustment required pursuant to Section 3.1.
(m) If the Corporation shall at any time after the Record Time and prior
to the earlier of the Separation Time and the Expiration Time issue
any Common Shares otherwise than in a transaction referred to in
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 share.
2.4 Date on Which Exercise is Effective
Each Person in whose name any certificate for Common Shares or other
securities, property or assets, if applicable, is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record of
the Common Shares or other securities, property or assets, if applicable,
represented thereby on, and such certificate shall be dated, the date upon which
the Rights Certificate evidencing such Rights was duly surrendered in accordance
with subsection 2.2(d) hereof (together with a duly completed Election to
Exercise) and payment of the Exercise Price for such Rights (and any 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
Common Shares or other securities, property or assets 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 two of its Chairman, President, Vice Presidents, Secretary or
Assistant Secretary. 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.
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(b) Promptly after the Corporation learns of the Separation Time, the
Corporation will notify the Rights Agent in writing of such Separation
Time and will deliver Rights Certificates executed by the Corporation
to the Rights Agent for countersignature, and the Rights Agent shall
manually countersign and send such Rights Certificates to the holders
of the Rights pursuant to subsection 2.2(c). 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 registrar for the Rights (the "Rights Registrar") for the
purpose of maintaining the Rights Register for the Corporation and
registering Rights and transfers of Rights as herein provided and the
Rights Agent hereby accepts such appointment. If 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.
(b) 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 subsections 2.6(d) and
3.1(b), the Corporation will execute, and the Rights Agent will
manually countersign and deliver, in 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.
(c) 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.
(d) 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 may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the
Rights Agent) connected therewith.
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2.7 Mutilated, Destroyed, Lost and Stolen Rights 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 security or indemnity as may be reasonably required by them
in their sole discretion 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 the Corporation's
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 may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees
and expenses of the Rights Agent) connected 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 the contractual obligation of the Corporation, whether or not
the destroyed, lost or stolen Rights Certificate shall be at any time
enforceable by anyone, and shall be entitled to all benefits of this
Agreement equally and proportionately with any and all other Rights
duly issued by the Corporation.
2.8 Persons Deemed Owners
The Corporation, the Rights Agent and any agent of the Corporation or
the Rights Agent may 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
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thereof and 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 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:
(a) to be bound by and subject to the provisions of this Agreement, as
amended from time to time in accordance with the terms hereof, in
respect of all Rights held;
(b) 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;
(c) that after the Separation Time, the Rights Certificate will be
transferable only upon registration of the transfer on the Rights
Register as provided herein;
(d) 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 may 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;
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(e) that such holder of Rights has waived his, her or its right to receive
any fractional Rights or any fractional shares upon exercise of a
Right (except as provided herein);
(f) that, subject to the provisions of Section 5.4 hereof, 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
(g) 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 any other
Person as result of the inability of the Corporation, the Board of
Directors or the Rights Agent to perform any of their 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 governmental, 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.
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 or 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.
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ARTICLE 3
ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS
3.1 Flip-in Event
(a) Subject to subsections 3.1(b), 5.1(d) and 5.1(e), if prior to the
Expiration Time a Flip-in Event occurs, the Corporation shall take
such action as shall be necessary to ensure and provide, within ten
Business Days of such occurrence or such longer period as may be
required to satisfy the requirements of the 1933 Securities Act or
comparable legislation of each of the provinces and territories of
Canada and the states of the United States so that, except as provided
below, each Right shall thereafter constitute the right to purchase
from the Corporation, upon payment of the Exercise Price and otherwise
exercising such Right in accordance with the terms hereof, that number
of Common Shares having an aggregate Market Price on the date of
consummation or occurrence of such Flip-in Event equal to twice the
Exercise Price for an amount in cash 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 in the event that
after the Stock Acquisition Date an event of a type analogous to any
of the events described in Section 2.3 has occurred).
(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 Associate or Affiliate of an Acquiring
Person); or
(ii) a transferee of Rights, direct or indirect, of 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 in a transfer that the Board of Directors
has determined is part of a plan, arrangement or scheme of 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 Associate or Affiliate of an Acquiring
Person), that has the purpose or effect of avoiding paragraph
3.1(b)(i);
shall become null and void without any further action, and any holder
of such Rights (including any transferee of, or other successor to,
such Rights whether directly or indirectly) shall not have any right
whatsoever to exercise such Rights
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under any provision of this Agreement and shall not have thereafter
any right whatsoever with respect to such Rights, whether under any
provision of this Agreement or otherwise. The holder of any Rights
represented by a Rights Certificate which is submitted to the Right
Agent upon exercise or for registration of transfer or exchange which
does not contain the necessary certifications set forth in the Rights
Certificate establishing that such Rights are not void under this
subsection 3.1(b) shall be deemed to be an Acquiring Person for the
purposes of this subsection 3.1(b) and such Rights shall become null
and void.
(c) Any Rights Certificate that represents Rights Beneficially Owned by a
Person described in either paragraph 3.1(b)(i) or (ii) or transferred
to any Nominee of any such Person, and any Rights Certificate issued
upon transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain substantially
the following legend:
"The Rights represented by this Rights Certificate were
Beneficially Owned by a Person who was an Acquiring Person or an
Affiliate or an Associate of an Acquiring Person (as such terms
are defined in the Rights Agreement) or a Person acting jointly
or in concert with any of them. This Rights Certificate and the
Rights represented hereby are void in the circumstances specified
in subsection 3.1(b) of the Rights Agreement."
and may also contain, where and when required, a French language
version of such legend; provided 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 be required to
impose such legend only if instructed to do so in writing by the
Corporation 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 either paragraph 3.1(b)(i) or (ii).
(d) 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 provision of this 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 (British Columbia) and any other applicable laws in respect of the
issue of Common Shares upon the exercise of Rights in accordance with
this Agreement.
(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
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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.
3.2 Exchange Option
(a) The Board of Directors of the Corporation may, at its option, at any
time after a Flip-in Event has occurred, authorize the Corporation to
issue or deliver in respect of each Right which is not void pursuant
to subsection 3. l(b), either
(i) in return for the Exercise Price and the Right, debt or equity
securities or other assets (or a combination thereof) having a
value equal to twice the Exercise Price; or
(ii) in return for the Right and without further charge, subject to
any amounts that may be required to be paid under applicable law,
debt or equity securities or other assets (or a combination
thereof) having a value equal to the value of the Right, in full
and final settlement of all rights attaching to the Rights; or
where in either case the value of such debt or equity securities or
other assets (or a combination thereof) and, in the case of paragraph
(ii), the value of the Right shall be determined by a nationally
recognized investment banking firm selected by the Board of Directors
of the Corporation. To the extent that the Board of Directors of the
Corporation determines in good faith that some action need be taken
pursuant to this section 3.2, the Board of Directors of the
Corporation may suspend the exercisability of the Rights for a period
of up to 90 days following the date of the occurrence of the relevant
Flip-in Event in order to decide the appropriate form of distribution
to be made and to determine the value thereof. In the event of any
such suspension, the Corporation shall notify the Rights Agent and
issue as promptly as practicable a public announcement stating that
the exercisability of the Rights has been temporarily suspended.
(b) If the Board of Directors of the Corporation authorizes the exchange
of debt or equity securities or other assets (or a combination
thereof) for Rights pursuant to subsection 3.2(a), without any further
action or notice, the right to exercise the Rights will terminate and
the only right thereafter of a holder of Rights shall be to receive
such debt or equity securities or other assets (of a combination
thereof) in accordance with the exchange formula authorized by the
Board of Directors of the
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Corporation. Within 10 Business Days after the Board of Directors of
the Corporation has authorized the exchange of such debt or equity
securities or other assets (or a combination thereof) for Rights
pursuant to subsection 3.2(a), the Corporation shall give notice of
such exchange to the holders of such Rights by mailing such notice to
all such holders at their last addresses as they appear upon the
Rights Register maintained by the Rights Agent. Each such notice of
exchange will state the method by which the exchange of such debt or
equity securities or other assets (or a combination thereof) for
Rights will be effected.
(c) Any issue of treasury securities of the Corporation (other than Common
Shares or debt securities not convertible into equity securities)
pursuant to this Section 3.2 shall require the prior written consent
of The Toronto Stock Exchange and The Montreal Exchange.
3.3 Fiduciary Duties of the Board of Directors of the Corporation
For clarification it is understood that nothing contained in this
Article 3 shall be considered to affect the obligations of the Board of
Directors to exercise its fiduciary duties. 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
the Voting Shares reject or accept any 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.
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 ("Co-Rights
Agents") as it may deem necessary or desirable. In the event the
Corporation appoints one or more Co-Rights Agents, the respective
duties of the Rights Agents and the Co-Rights Agents shall be as the
Corporation may determine. 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, the
reasonable expenses and counsel fees and
other disbursements incurred by the Rights Agent in the administration
and execution of this Agreement and the exercise and performance of
its duties hereunder, including the reasonable fees and disbursements
of any expert retained by the Rights Agent. The Corporation also
agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, costs, claims, actions, damages or
expenses, incurred without negligence, bad faith or willful default on
the part of the Rights Agent, for anything done or suffered or omitted
to be done by the Rights Agent in connection with the acceptance,
execution and administration of this Agreement and the performance of
its duties hereunder, including the costs and expenses of defending
against any claim of liability, which right to indemnification will
survive the termination of this Agreement or the resignation of the
Rights Agent.
(b) The Rights Agent shall be protected and shall incur no liability for
or in respect of any action taken, suffered or omitted to be done by
it in connection with its acceptance, execution and administration of
this Agreement in reliance upon any certificate for Voting Shares or
Common Shares, or any Rights Certificate or certificate for other
securities of the Corporation, instrument of assignment or transfer,
power of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document believed
by it to be the 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.
4.2 Merger, Amalgamation or Consolidation 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. In case at the time each 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
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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, by all of which the
Corporation and the holders of Rights Certificates, by their acceptance thereof,
shall be bound:
(a) the Rights Agent may 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, suffered or omitted to be done by it in good
faith and in accordance with such opinion; the Rights Agent may also,
with the approval of the Corporation (such approval not to be
unreasonably withheld), consult with such other experts as the Rights
Agent shall consider necessary or appropriate to properly carry out
the duties and obligations imposed under this Agreement and the Rights
Agent shall be entitled to 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 of
the Board, the President or any Vice President, the Secretary or
Assistant 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 its own negligence,
bad faith or willful default;
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(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 Voting Shares or 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 authorization, 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)) or any adjustment
required under the provisions of Section 2.3 or be 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 describing any such
adjustment); nor will it by any act hereunder be deemed to make any
representation or warranty as to the 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 and 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 of the
Board, President, a Vice President, the Secretary or the Assistant
Secretary or any Assistant Secretary of the Corporation, and to apply
to such individual 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 reliance upon instructions of any such individual;
(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
-41-
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; and
(i) the Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either 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 or 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 90 days' notice (or such lesser notice as is acceptable to
the Corporation) in writing delivered or mailed to the Corporation and to each
transfer agent of Common Shares by registered or certified mail and to the
holders of the Rights in accordance with Section 5.9. The Corporation may remove
the Rights Agent upon 30 days' notice in writing, mailed to the Rights Agent and
to each transfer agent of the Common Shares by registered or certified mail and
to the holders of the Rights in accordance with Section 5.9. 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 30 days after such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent then the resigning Rights Agent or the
holder of any Rights may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. 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. 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 upon payment
of its outstanding fees and expenses 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 that purpose. 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 Common Shares and give
notice thereof to the holders of the Rights in accordance with Section 5.9.
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) The Board of Directors acting in good faith may, at its option, at any
time prior to the occurrence of a Flip-in Event, 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 if
an event of the type analogous to any of the events described in
Section 2.3 shall
-43-
have occurred (such redemption price being herein referred to as the
"Redemption Price").
(b) If the Board of Directors elects or is deemed to have elected to
redeem the Rights, the right to exercise the Rights will thereupon,
without further action and without notice, terminate and the only
right thereafter of the holders of Rights shall be to receive the
Redemption Price.
(c) Within ten days after the Board of Directors electing or having been
deemed to have elected to redeem the Rights, the Corporation shall
give notice of redemption to the holders of the Rights in accordance
with Section 5.9. 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 or other than in connection with the purchase of
Common Shares prior to the Separation Time.
(d) The Board of Directors may, until a Flip-in Event shall occur, upon
written notice delivered to the Rights Agent, determine to waive the
application of Section 3.1 to such particular Flip-in Event, provided
that such Flip-in Event occurs by way of a Takeover Bid made by means
of a takeover bid circular delivered to all holders of record of
Common Shares; further provided that if the Board of Directors waives
the application of Section 3.1 to a such a Flip-in Event, the Board of
Directors shall be deemed to have waived the application of Section
3.1 to any other Flip-in Event occurring by reason of any Takeover Bid
made by means of a takeover bid circular to all holders of record of
Common Shares which is made prior to the expiry of any Takeover Bid in
respect of which a waiver is, or it deemed to have been, granted under
this Section 5.1(d).
(e) The Board of Directors may waive the application of Section 3.1 in
respect of the occurrence of any Flip-in Event if the Board of
Directors has determined within eight Trading Days following a Stock
Acquisition Date that a Person became an Acquiring Person by
inadvertence and without any intention to become, or knowledge that it
would become, an Acquiring Person under this Agreement and, in the
event that such a waiver is granted by the Board of Directors, such
Stock Acquisition Date shall be deemed not to have occurred. Any such
waiver pursuant to subsection 5.1(e) must be on the condition that
such Person, within 10 days after the foregoing determination by the
Board of Directors or such earlier or later date as the Board of
Directors may determine ( the "Disposition Date"), has reduced its
Beneficial ownership of Voting Shares such that the Person is no
longer an Acquiring Person. If the Person remains an Acquiring Person
at the close of business on the Disposition Date, the Disposition Date
shall be deemed to be the date of occurrence of a further Stock
Acquisition Date and Section 3.1 shall apply thereto.
-44-
(f) If a Person makes a Permitted Bid or a Competing Permitted Bid
pursuant to which more than 50 per cent of the then outstanding Voting
Shares (other than those Voting Shares Beneficially Owned by the
Persons making the Permitted Bid or the Competing Permitted Bid, at
the date of the Permitted Bid or the Competing Permitted Bid) are
taken up and paid for by such Person, then the Board of Directors
shall, immediately upon the consummation of such acquisition, without
further formality, be deemed to have elected to redeem the Rights at
the Redemption Price on the expiry date of the Permitted Bid or
Competing Permitted Bid, as the case may be.
(g) 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.
(h) Upon the Rights being redeemed pursuant to subsection 5.1(g), 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.
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 subsections 4.1(a) and (b).
5.3 Issuance of New Rights 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 the 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) Without the approval of any holders of Voting Shares or Rights, the
Corporation may make amendments to this Agreement to correct any
clerical or typographical
-45-
error or which are required to maintain the validity of the Agreement
as a result of any change in any applicable legislation, regulations
or rules thereunder. The Corporation may, prior to the date of the
shareholders' meeting referred to in Section 5.15, supplement or amend
this Agreement without the approval of any holders of Rights or Voting
Shares in order to make any 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 except with the
written concurrence of the Rights Agent to such change, supplement or
amendment.
(b) Subject to subsection 5.4(a), the Corporation may, with the prior
consent of the holders of Voting Shares obtained as set forth below,
at any time before 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 the action requiring such approval is approved by the affirmative
vote of a majority of the votes cast by Independent Shareholders
represented in person or by proxy at the Special Meeting.
(c) The Corporation may, with the prior consent of the holders of Rights
obtained as set forth below, at any time on or after 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), 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 such amendment, variation or deletion is authorized by the
affirmative votes of the holders of Rights present or represented at
and entitled to vote at a meeting of the holders and representing 50%
plus one of the votes cast in respect thereof.
(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 or represented at
and entitled to vote 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 meetings of shareholders of the Corporation.
(e) Any amendments made by the Corporation to this Agreement pursuant to
Subsection 5.4(a) which are required to maintain the validity of this
Agreement as a result of any change in any applicable legislation,
regulation or rule thereunder shall:
-46-
(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;
-47-
(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(d) confirm or
reject such amendment.
Any such amendment shall be effective from the date of the
resolution of the Board of Directors adopting such amendment,
until it is confirmed or rejected or until it ceases to be
effective (as described in the next sentence) and, where such
amendment is confirmed, it continues in effect in the form so
confirmed. If such 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 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 this Agreement to
substantially the same effect shall be effective until confirmed
by the shareholders or holders of Rights as the case may be.
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. In
lieu of such fractional Rights, there shall be paid to the registered
holders of the Rights Certificates with regard to which such
fractional Rights would otherwise be issuable an amount in cash equal
to the same fraction of the Market Price of a whole Right determined
on the date on which such fractional Right would otherwise be
issuable.
(b) The Corporation shall not be required to issue fractions of Common
Shares upon exercise of the Rights or to distribute certificates which
evidence fractional Common Shares. Fractions of Common Shares may, at
the election of the Corporation, be evidenced by scrip certificates or
in lieu of issuing fractional Common Shares, 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 at the date
of such exercise.
5.6 Rights of Action
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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 shall be subject to the receipt of any requisite approval or
consent from any governmental or regulatory authority, including but not limited
to the approval of The Toronto Stock Exchange and The Montreal Exchange.
Notwithstanding any provision of this Agreement, any amendment to this
Agreement will be subject to the prior written consent of The Toronto Stock
Exchange and The Montreal Exchange.
5.8 Unlawful Distributions
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, absolute 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 jurisdiction such issue or delivery would be
unlawful without registration of the relevant Persons or securities for such
purposes. Notwithstanding the foregoing, to the extent that the issuance or
delivery of the Rights or securities issuable on exercise of Rights to Persons
who are citizens, residents or nationals of any such jurisdiction in which such
issue or
-49-
delivery would be so unlawful, such Rights or securities shall be issued and
delivered to such Persons to the extent the same may be so issued and delivered
in reliance upon applicable exemptions from registration requirements in such
jurisdictions.
5.9 Notices
Any notice or demand 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) as follows:
MDSI Mobile Data Solutions Inc.
00000 Xxxxxxxxxxx Xxx
Xxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Attention: Corporate Secretary
Any such notice or demand shall be deemed to have been received if delivered, on
the date of delivery, or if sent by prepaid first class mail, on the fifth
Business Day after mailing thereof, except in the case of interruption of
regular mail service, in which case such notice shall be delivered.
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 writhing with the
Corporation) as follows:
Montreal Trust Company of Canada
0xx Xxxxx, 000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Attention: Manager of Stock and Bond Transfer Department
Any such notice or demand shall be deemed to have been received if delivered, on
the date of delivery, or if sent by prepaid first class mail, on the fifth
Business Day after mailing thereof, except in the case of interruption of
regular mail service, in which case such notice shall be delivered.
Any notice or demand 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
-50-
address of such holder as it appears upon the register of the Rights Agent or,
prior to the Separation Time, on the register of the Corporation for its Common
Shares. Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. In the event of any
interruption of mail service, such notice required or permitted to be given
hereunder will be deemed to be sufficiently given by advertisement of such
notice in daily newspapers published in each of the cities of Vancouver and
Toronto.
5.10 Costs of Enforcement
The Corporation agrees that if the Corporation or any other Person the
securities of which are purchasable upon exercise of Rights fails to fulfill any
of its obligations pursuant to this Agreement, then the Corporation or such
Person will reimburse the holder of any Rights for the costs and expenses
(including legal fees) incurred by such holder in actions to enforce his, her or
its rights pursuant to any Rights or this Agreement.
5.11 Successors
All the covenants and provisions of this Agreement by or for the
benefit of the Corporation or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.
5.12 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 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.
5.13 Governing Law
This Agreement and each Right issued hereunder shall be deemed to be a
contract made under the laws of the Province of British Columbia 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.
5.14 Severability
If any Section, subsection, paragraph, subparagraph or other provision
hereof or the application hereof to any circumstances or any right hereunder
shall, in any jurisdiction and to any
-51-
extent, be invalid or unenforceable, such Section, subsection, paragraph,
subparagraph or other provision or such right shall be ineffective only as to
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, paragraphs, subparagraphs and other
provisions hereof or rights hereunder in such jurisdiction or the application of
such Section, subsection, paragraph, subparagraph or other provision or rights
hereunder in any other jurisdiction or to circumstances other than those as to
which it is specifically held invalid or unenforceable.
5.15 Effective Date
This Agreement is effective and in full force and effect in accordance
with its terms from the date hereof. If this Agreement is not confirmed by
resolution passed by a majority of greater than 50 per cent of the votes cast by
Independent Shareholders present or voting by proxy who vote in respect of
confirmation of this Agreement at a meeting of shareholders to be held not later
than the date (the "1999 AGM Date") of the 1999 annual general meeting of
shareholders of the Corporation (which date shall be no later than six months
from the date of this Agreement), then this Agreement and any then outstanding
Rights shall terminate and be void and of no further force and effect on and
from that date which is the earlier of (a) the date of such meeting and (b) the
1999 AGM Date.
5.16 Determinations and Actions by the Board of Directors
The Board of Directors of the Corporation shall have the exclusive
power and authority to administer and amend this Agreement and to exercise all
rights and powers specifically granted to the Board of Directors of the
Corporation or the Corporation, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to
(a) interpret the provisions of this Agreement; and
(b) make all determinations deemed necessary or advisable for the
administration of this Agreement (including a determination to redeem
or not to redeem the Rights or to amend the Agreement).
All actions, calculations and determinations (including, for purposes
of Clause (ii) below, all omissions with respect to the foregoing) which are
done or made be the Board of Directors in good faith, shall: (i) be final,
conclusive and binding on the Corporation, the Rights Agent, the holders of the
Rights and all other parties; and (ii) not subject the Board of Directors to any
liability to the holders of the Rights.
-52-
5.17 Time of the Essence
Time shall be of the essence in this Agreement.
5.18 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.
-53-
5.19 Language
Les parties aux presentes ont exige que la presente convention ainsi
que tous les documents et avis qui s'y rattachent et/ou que en decoulent soient
rediges en langue anglaise. The parties hereto have required that his Agreement
and all documents and notices related thereto and/or resulting therefrom be
drawn up in English.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
MDSI MOBILE DATA SOLUTIONS INC.
Per: /s/ Xxxxxxx X. Xxxxxx
--------------------------
Per: /s/ M. Xxxx Xxxxxxxx
-------------------------
MONTREAL TRUST COMPANY OF CANADA
Per: -------------------------
Per: -------------------------
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EXHIBIT A
[Form of Rights Certificate]
Certificate No. -------------Rights
THE RIGHTS ARE SUBJECT TO TERMINATION ON THE TERMS SET FORTH IN THE
SHAREHOLDER RIGHTS PLAN AGREEMENT. UNDER CERTAIN CIRCUMSTANCES
(SPECIFIED IN SECTION 3.1(b) OF THE SHAREHOLDER RIGHTS PLAN
AGREEMENT), RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR
TRANSFEREES OF AN ACQUIRING PERSON OR ITS AFFILIATES OR ASSOCIATES (AS
SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY PERSON ACTING
JOINTLY OR IN CONCERT WITH ANY OF THEM MAY 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 17th day of
December, 1998 (the "Rights Agreement") between MDSI Mobile Data Solutions Inc.,
a corporation incorporated under the Canada Business Corporations Act (the
"Corporation") and Montreal Trust Company of Canada, a trust company, 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 (as such term is defined in the Rights Agreement) and prior
to the Expiration Time (as such term is defined in the Rights Agreement), one
fully paid 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 Vancouver,
Toronto, Montreal or New York. Until adjustment thereof in certain events as
provided in the Rights Agreement, the Exercise Price is one hundred and forty
Canadian (CDN$140.00) dollars.
In certain circumstances described in the Rights Agreement, each Right evidenced
hereby may entitle the registered holder thereof to purchase or receive
securities of an entity other than the Corporation, assets, debt, equity or
other securities or property or assets of the Corporation, or more or less than
one Common Share (or a combination thereof), all as provided in the Rights
Agreement.
The 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 thereof 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 Certificates. Copies
of the Rights Agreement are on file at the principal office of the Corporation
and are available upon written request.
The 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 the date evidencing an aggregate number of Rights equal to the
aggregate number of 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
now exercised. No fractional Common Shares will be issued upon the exercise of
any Rights evidenced hereby, but in lieu thereof a cash payment will be made as
provided in the Rights Agreement.
Subject to the provisions of the Rights Agreement, the Rights evidenced by this
Certificate may be redeemed by the Corporation at a redemption price of $0.0001
per Right, subject to adjustment in certain events, under certain circumstances
at its option.
No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Common Shares or of
any other securities 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, as such, 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 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 (except as provided in the Rights Agreement), or
to receive dividends or subscription rights, or otherwise, until the Rights
evidenced by this Rights Certificate shall have been exercised as provided in
the Rights Agreement.
The Rights Certificate shall not be valid or obligatory for any purpose until it
shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Corporation and
its corporate seal.
DATE: December 17, 1998 MDSI MOBILE DATA SOLUTIONS INC.
Per: /s/ Xxxxxxx X. Xxxxxx
----------------------------
Xxxxxxx X. Xxxxxx, President
Per: /s/ M. Xxxx Xxxxxxxx
---------------------------
M. Xxxx Xxxxxxxx, Secretary
Countersigned:
MONTREAL TRUST COMPANY OF CANADA
Per:
--------------------
Authorized Signatory
-2-
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
---------------------------------------- attorney, to transfer the within Rights
Certificate on the books of the within-named Corporation, with full power of
substitution.
Date: -------------------- ----------------------------------------
Signature
Signature Guarantee: (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).
Signature must be guaranteed by a member firm of a stock exchange in Canada, a
registered national securities exchange in the United States, a member of the
Investment Dealers Association of Canada or National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in Canada or the United States.
--------------------------------------------------------------------------------
(To be completed by the assignor 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 by any Person acting
jointly or in concert therewith. Capitalized terms shall have the meaning
ascribed thereto in the Rights Agreement.
----------------------------------------
Signature
----------------------------------------
(please print name of signatory)
(To be attached to each Rights Certificate)
FORM OF ELECTION TO EXERCISE
TO:
The undersigned hereby irrevocably elects to exercise -----------------------
whole Rights represented by the Rights Certificate to purchase the Common Shares
issuable upon the exercise of such Rights and requests that certificates for
such shares be issued in the name of:
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Address
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Social Insurance, Social Security or Other Taxpayer Identification 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:
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Address
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Social Insurance, Social Security or Other Taxpayer Identification Number
Date: -------------------- ----------------------------------------
Signature
Signature Guaranteed: (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)
Signature must be guaranteed by a member firm of a recognized stock exchange in
Canada, a registered national securities exchange in the United States, a member
of the Investment Dealers Association of Canada or National Association of
Securities Dealers, Inc. or a commercial bank or trust company having an office
or correspondent in Canada or the United States.
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(To be completed by exercisor 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 by any Person acting
jointly or in concert therewith. Capitalized terms shall have the meaning
ascribed thereto in the Rights Agreement.
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Signature
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(please print name of Signatory)
NOTICE
In the event the Certificate set forth above in the applicable Forms of
Assignment or Election 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 and, in the case of an
Assignment, will affix a legend to that effect on any Rights Certificates issued
in exchange for this Rights Certificate. Capitalized terms shall have the
meaning ascribed thereto in the Rights Agreement.
