MFC BANCORP LTD.
AMENDED AND RESTATED SHAREHOLDER RIGHTS PLAN AGREEMENT
dated for reference and effective as of May 16, 2003
(amending and restating the Shareholder Protection Rights Plan Agreement
dated as of May 18, 1993 and confirmed by shareholders at the annual meeting
held on June 25, 1993.)
COMPUTERSHARE INVESTOR SERVICES INC.
as Rights Agent
SANGRA, MOLLER
Barristers & Solicitors
TABLE OF CONTENTS
ARTICLE 1. -INTERPRETATION 2
1.1. Definitions 2
1.2. Currency 15
1.3. Grandfather Provision 15
1.4. Holder 15
1.5. Acting Jointly or in Concert 16
1.6. Headings and References 16
1.7. Singular, Plural etc. 16
1.8. Schedule 16
ARTICLE 2. -THE RIGHTS 16
2.1. Legend on Certificates 16
2.2. Initial Exercise Price; Exercise of Rights; Detachment of Rights 17
2.3. Adjustments to Exercise Price; Number of Rights 19
2.4. Date on which Exercise is Effective 24
2.5. Execution, Authentication, Delivery and Dating of Rights
Certificate 24
2.6. Registration, Registration of Transfer and Exchange 25
2.7. Mutilated, Destroyed, Lost and Stolen Rights Certificates 25
2.8. Persons Deemed Owners 26
2.9. Delivery and Cancellation of Certificates 26
2.10. Agreement of Rights Holders 26
2.11. Rights Held by the Corporation and Subsidiaries 27
ARTICLE 3. -ADJUSTMENTS TO THE RIGHTS 27
3.1. Flip-in Event 27
ARTICLE 4. -THE RIGHTS AGENT 29
4.1. General 29
4.2. Merger, Amalgamation or Consolidation or Change of Name of
Rights Agent 30
4.3. Duties of Rights Agent 30
4.4. Change of Rights Agent 32
ARTICLE 5. MISCELLANEOUS 32
5.1. Redemption and Waiver 32
5.2. Expiration 34
5.3. Issuance of New Rights Certificates 34
5.4. Supplements and Amendments 34
5.5. Fractional Rights and Fractional Shares 36
5.6. Rights of Action 36
5.7. Holder of Rights Not Deemed a Shareholder 36
5.8. Notice of Proposed Actions 37
5.9. Notices 37
5.10. Costs of Enforcement 38
5.11. Successors 38
5.12. Benefits of this Agreement 38
5.13. Governing Law 38
5.14. Counterparts and Facsimile 38
5.15. Severability 38
5.16. Effective Date 38
5.17. Shareholder Review 39
5.18. Determinations and Actions by the Board of Directors 39
5.19. Declaration as to Non-Canadian Holders 39
5.20. Withholding Rights 40
5.21. Time of Essence 40
AMENDED AND RESTATED SHAREHOLDER RIGHTS PLAN AGREEMENT
THIS AMENDED AND RESTATED SHAREHOLDER RIGHTS PLAN AGREEMENT is dated for
reference and made effective as of the 16th day of May, 2003 (amending and
restating the shareholder protection rights plan agreement of the Corporation
dated as of May 18, 1993 and confirmed by shareholders at the annual meeting of
the Corporation held on June 25, 1993).
BETWEEN:
MFC BANCORP LTD., a corporation organized under the laws of
-----------------
the Yukon Territory having its registered office at Xxxxx 000
- 000 Xxxxx Xxxxxx, Xxxxxxxxxx, Xxxxx.
(the "Corporation")
OF THE FIRST PART
COMPUTERSHARE INVESTOR SERVICES INC., a trust company existing
------------------------------------
under the laws of Canada having an office at 000 Xxxxxxx
Xxxxxx Xxxxx 000, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0.
(the "Rights Agent")
OF THE SECOND PART
WHEREAS:
A. The term of the shareholder rights protection plan agreement of the
Corporation, initially adopted by the Board of Directors of the Corporation on
May 17, 1993 and subsequently confirmed by shareholders at the annual meeting of
the Corporation held on June 25, 1993, expires on May 18, 2003 (the "Original
Rights Plan");
B. The Board of Directors has been advised that, based upon the experiences
of other corporations and taking into account the circumstances of the
Corporation itself including, inter alia, the regulation of significant
ownership interests of certain of its financial services businesses, the
adoption of the Rights Plan is in the best interests of the Corporation;
C. The Board of Directors has determined that it is in the best interest of
the Corporation to adopt this shareholder rights plan effective as of May 16,
2003, to amend, restate and replace the Original Rights Plan, inter alia, in
order to:
(a) facilitate the maximization of shareholder value if a substantial
portion of the Voting Shares or the assets of the Corporation are to be acquired
by any Person and, to the extent possible, ensure shareholders of the
Corporation are treated fairly in connection with any takeover bid for the
Corporation;
(b) protect the Corporation and its shareholders from abusive or coercive
acquisition tactics or acquisitions which may not be in the best interests of
the Corporation and its shareholders; and
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(c) provide a framework in which appropriate take-over bids for the
Corporation can be put before its shareholders in a fair and proper manner so
that its shareholders can make a fully informed decision with respect to such
take-over bids;
D. It is not the intention of the Board of Directors of the Corporation to
adopt the Rights Plan as a means of preventing any Person from seeking to
acquire the Voting Shares or the assets of the Corporation, provided they do so
in a manner that is fair to all shareholders, or of foreclosing the ability of
the Board of Directors to take any action that in its fiduciary capacity it
considers reasonable in the circumstances of any such transaction having regard
for the best interests of the Corporation;
E. In order to implement the Rights Plan, the Board of Directors has:
(a) authorized and declared effective immediately following the Close of
Business on May 20, 2003 a distribution of one right (a "Right") in respect of
each Common Share outstanding at the Close of Business on May 20, 2003 (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 (as
hereinafter defined) and the Expiration Time (as hereinafter defined);
F. Each Right entitles the holder thereof, after the Separation Time but
before the Expiration Time, to purchase securities of the Corporation (or, in
certain cases, of certain other entities) pursuant to the terms and subject to
the conditions set forth herein;
G. The Corporation desires to appoint Computershare Investor Services Inc.
as the Rights Agent to act on behalf of the Corporation, and the Rights Agent is
willing to so act, in connection with the issuance, transfer, exchange and
replacement of Rights Certificates (as hereafter defined), the exercise of
Rights and other matters referred to herein; and
H. The Board of Directors has determined that it is advisable to amend and
restate, effective May 16, 2003, the Original Rights Plan (such rights plan as
amended and restated hereby is herein referred to as the "Rights Plan") upon the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
set forth herein, the parties hereto hereby agree that this Agreement amends and
restates the Original Rights Plan to read in its entirety as follows:
ARTICLE 1. - INTERPRETATION
1.1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who is the Beneficial Owner of
20% or more of the outstanding Voting Shares of the Corporation provided,
however, that the term "Acquiring Person" shall not include:
(i) the Corporation or any Subsidiary or Affiliate;
(ii) any Person who becomes the Beneficial Owner of 20% or more of the
outstanding Voting Shares of the Corporation after the Record Time and such
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Person's Beneficial Ownership does not exceed the number of Voting Shares
Beneficially Owned by such Person immediately prior to the Record Time other
than as a result of any one or a combination of:
(A) acquisitions or redemptions by the Corporation of Voting Shares of
the Corporation which, by reducing the number of Voting Shares outstanding,
increases the proportionate number of Voting Shares Beneficially Owned by such
Person to 20% or more of the Voting Shares of the Corporation then outstanding
("Voting Share Reductions");
(B) share acquisitions made pursuant to a Permitted Bid or a Competing
Permitted Bid ("Permitted Bid Acquisitions");
(C) share acquisitions (1) in respect of which the Board of Directors
of the Corporation has waived the application of Section 3.1 pursuant to the
provisions of subsections 5.1(b), 5.1(c) or 5.1(d); or (2) which were made prior
to the Original Record Time or (3) pursuant to an amalgamation, merger or other
statutory procedure requiring shareholder approval ("Exempt Acquisition");
(D) the acquisition of Voting Shares upon the exercise of
Convertible Securities received by such Person pursuant to a Permitted Bid
Acquisition, Exempt Acquisition or a Pro Rata Acquisition ("Convertible Security
Acquisitions");
(E) a Pro-rata Acquisition;
provided, however, that if a Person shall become the Beneficial Owner of 20% or
more of the Voting Shares of the Corporation then outstanding by reason of any
one or a combination of (i) Permitted Bid Acquisitions, (ii) Voting Share
Reductions, (iii) Exempt Acquisitions, (iv) Convertible Security Acquisitions,
or (v) Pro-rata Acquisitions and, after such Permitted Bid Acquisitions, Voting
Share Reductions, Exempt Acquisitions, Convertible Security Acquisitions or
Pro-rata Acquisitions, and such Person is, at the time such Person becomes the
Beneficial Owner of 20% or more of the outstanding Voting Shares, or becomes, at
any time thereafter while such Person is the Beneficial Owner of 20% or more of
the Voting Shares of the Corporation then outstanding, the Beneficial Owner of
any additional Voting Shares constituting more than 1% of the Voting Shares then
outstanding of the Corporation (other than pursuant to any one or combination of
Permitted Bid Acquisitions, Voting Share Reductions, Exempt Acquisitions,
Convertible Security Acquisitions or Pro-rata Acquisitions) then as of the date
such Person becomes the Beneficial Owner of 20% or more of the outstanding
Voting Shares while holding such additional Voting Shares, or becomes the
beneficial holder of such additional Voting Shares, while the Beneficial Owner
of 20% or more of the Voting Shares, as the case may be, such Person shall be
deemed to be an "Acquiring Person";
(iii) for the period of 10 days after the Disqualification Date (as
hereinafter defined), any Person who becomes the Beneficial Owner of 20% or more
of the outstanding Voting Shares of the Corporation as a result of such Person
becoming disqualified from relying on paragraph 1.1(g)(vi) hereof solely because
such Person has made or proposes to make a tender or exchange offer or
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Take-over Bid in respect of securities of the Corporation alone or by acting
jointly or in concert with any other Person; the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 111 of the Securities Act
(British Columbia), Section 176 of the Securities Act (Alberta), Sections
147.11 and 147.12 of the Securities Act (Quebec) or Section 13(d) under
the Exchange Act) by such Person or the Corporation of the intent to commence
such a tender or exchange offer or Take-over Bid (or pursuant to any
comparable or successor laws, rules or regulations) being herein referred
to as the "Disqualification Date"; or
(iv) an underwriter or member of a banking or selling group that becomes the
Beneficial Owner of 20% or more of the Voting Shares in connection with a
distribution of securities by way of prospectus or private placement.
(b) "Adjusted Exercise Price" means the price at which a holder may purchase
the securities issuable upon exercise of Rights pursuant to the terms of
paragraph 3.1(a)(ii) which, until adjustment thereof in accordance with the
terms hereof, shall be equal to the Exercise Price multiplied by a fraction in
which:
(i) the numerator is the number of Shares per Right that may be
purchased pursuant to paragraph 3.1(a)(ii); and
(ii) the denominator is the number of Shares per Right that could have been
purchased pursuant to paragraph 3.1(a)(i) in the event that there had been
sufficient authorized but unissued Common Shares to permit each holder of a
Right (other than an Acquiring Person or a transferee of the kind described in
paragraph 3.1(b)(ii)) to purchase the number of Common Shares to which they
would have been entitled under paragraph 3.1(a)(i);
(c) "Adjustment Factor" shall mean a fraction in which:
(i) the numerator is equal to the Corporation's authorized but unissued
Voting Shares; and
(ii) the denominator is equal to the Corporation's issued and outstanding
Voting Shares minus those Voting Shares that the Acquiring Person Beneficially
owns;
(d) "Affiliate" shall mean, when used to indicate a relationship with a
specified body corporate, a Person that directly or indirectly through one or
more intermediaries controls, or is a body corporate controlled by, or under
common control with, such specified body corporate;
(e) "Agreement" means this Rights Plan as amended, modified or supplemented
from time to time;
(f) "Associate" shall mean, when used to indicate a relationship with a
specified Person, (i) a spouse of that Person, (ii) any Person of the same or
opposite sex with whom that Person is living in a conjugal relationship outside
marriage, (iii) any relative of that Person if that relative has the same
residence as that Person or (iv) any relative of such spouse or other Person
referred to in the immediately preceding clauses (i), (ii) or (iii) above, if
that relative has the same residence as the specified Person;
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(g) Subject to Section 1.3, a Person shall be deemed the "Beneficial Owner",
and to have "Beneficial Ownership", of, and to "Beneficially Own":
(i) any securities of which such Person or any such Person's Affiliates or
Associates is, directly or indirectly, an owner at law or in equity;
(ii) any securities which such Person or any such Person's Affiliates or
Associates, directly or indirectly, has a right to vote or dispose or has
"beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General
Rules and Regulations under the Exchange Act), including pursuant to any
agreement, arrangement or understanding, whether or not in writing;
(iii) any securities as to which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has: (A) the right to acquire
upon the exercise of Convertible Securities; or (B) the right to acquire
(whether such right is exercisable immediately or the lapse or after the passage
of time or upon the occurrence of a contingency or otherwise) pursuant to any
agreement, arrangement, pledge or understanding (whether or not in writing),
in either case where such right is exercisable within 60 days and whether or not
on condition or the happening of any contingency (other than customary
agreements with and between underwriters and banking group or selling group
members with respect to a distribution of securities and other than pledges of
securities in the ordinary course of business); or
(iv) any securities which are Beneficially Owned, directly or indirectly,
within the meaning of paragraphs 1.1(g)(i), (ii) or (iii) by any other Person
with which such Person or any of such Person's Affiliates or Associates in
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;
(v) because such security has been agreed to be deposited or tendered
pursuant to a Permitted Lock-up Agreement, or is otherwise deposited or
tendered, to any Take-over Bid made by such Person, made by any of such Person's
Affiliates or Associates or made by any other Person acting jointly or in
concert with such Person until such deposited or tendered security has been
taken up or paid for, whichever shall first occur;
(vi) because such Person, or any of such Persons' Affiliates or Associates
or any other Person referred to in paragraph l.1(g)(iv), holds such security
provided that:
(A) the ordinary business of any such Person (the "Investment Manager")
includes the management of investment funds for others (which, without
limitation, may include or be limited to one or more employee benefit plans or
pension plans) and such security is held by the Investment Manager in the
ordinary course of such business in the performance of such Investment Manager's
duties for the account of any other Person, including the acquisition or holding
of securities for non-discretionary accounts on behalf of a client by a broker
or dealer registered under applicable securities laws (a "Client");
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(B) such Person (the "Trust Company") is licensed to carry on the
business of a trust company under applicable laws 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 Account") or in relation to other
accounts (each an "Other Account") and holds such security in the ordinary
course of such duties for such Estate Accounts or Other Accounts;
(C) the ordinary business of such person includes, acting as an agent
of the Crown in the management of public assets (the "Crown Agent");
(D) the Person is an independent person (the "Independent Person")
established by statute for, among other things, and the ordinary business or
activity of such Person includes, the administration of investment funds for
employee benefit plans, pension plans, insurance plans or various public bodies;
or
(E) such Person (the "Administrator") is the administrator or trustee
of one or more pension funds, plans or related trusts (a "Plan")
registered or qualified under the laws of Canada or any Province
thereof or the laws of the United States of America or any State
thereof or is a Plan;
provided that the Investment Manager, the Trust Company, the Crown Agent, the
Independent Person, the Administrator and the Plan, as the case may be, is not
then exercising or threatening to exercise control, proposing, in respect of the
Corporation, an amalgamation, merger, arrangement or sale of all or
substantially all of the assets of the Corporation or making, or has not
announced an intention to make, a Take-over Bid or proposal, in respect of the
Corporation, for any amalgamation, merger, arrangement or sale of all or
substantially all of the assets of the Corporation, alone or by acting jointly
or in concert with any other Person;
(vii) because such Person is (1) a Client of the same Investment Manager as
another Person on whose account the Investment Manager holds such security, (2)
because such Person is an Estate Account or an Other Account of the same Trust
Company as another Person on whose account the Trust Company holds such security
or (3) a Plan with the same Administrator as another Plan on whose account the
Administrator holds such security;
(viii) where such Person is:
(A) a Client of an Investment Manager and such security is owned at
law or in equity by the Investment Manager;
(B) an Estate Account or an Other Account of a Trust Company and
such security is owned at law or in equity by the Trust Company; or
(C) a Plan and such security is owned at law or in equity by the
Administrator of the Plan;
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(ix) under subparagraph (ii) above as a result of any agreement,
arrangement or understanding to vote such securities, if such agreement,
arrangement or understanding: (A) arises solely from a revocable proxy given in
response to a public proxy made pursuant to, and in accordance with, the
applicable provisions of the Canadian Securities Laws and the general rules and
regulations under the Exchange Act, and (B) is not also then reportable by such
Person on Schedule D under the Exchange Act (or a comparable or successor
report);
(x) where such Person is a registered holder of such security as a result
of carrying on the business of, or acting as a nominee of, a securities
depository;
For the purposes of this Agreement in determining the percentage of the
outstanding Voting Shares with respect to which a Person is or is deemed to
be the Beneficial Owner, all Voting Shares as to which such Person is deemed
the Beneficial Owner shall be deemed outstanding;
(h) "Board of Directors" shall mean the board of directors of the
Corporation or, if duly constituted and whenever duly empowered, the executive
committee of the board of directors of the Corporation;
(i) "Business Day" shall mean any day other than a Saturday, Sunday or a day
that banking institutions in Vancouver, British Columbia, are authorized or
obligated by law to close;
(j) "Business Corporations Act (Yukon)" shall mean the Business Corporations
Act, R.S.Y. 1986, c.15 and the regulations promulgated thereunder, as amended or
restated, and any successor legislation thereto;
(k) "Canadian Dollar Equivalent" of any amount which is expressed in United
States dollars shall mean on any day the Canadian dollar equivalent of such
amount determined by reference to the Canadian-U.S. Exchange Rate on such date;
(l) "Canadian Securities Laws" means the Securities Act (British Columbia),
Securities Act (Alberta), Securities Act (Quebec), the regulations, rules and
applicable policies thereunder and any other securities laws, regulations or
rules of Canada or any territory thereof which may be applicable to the
Corporation from time to time;
(m) "Canadian-U.S. Exchange Rate" shall mean on any date the inverse of the
U.S./Canadian Exchange Rate;
(n) "Close of Business" on any given date shall mean 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 office of the transfer agent for the Common Shares in
the City of Vancouver (or, after the Separation Time, the offices of the Rights
Agent in the City of Vancouver) becomes closed to the public;
(o) "Common Shares" shall mean common shares of the Corporation and, 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 or the equity securities or other equity interest of an
entity having power (whether or not exercised) to control or direct the
management of such other Person; if such other Person is a Subsidiary of
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another person, "such other Person" as used herein shall mean the Person
or Persons which ultimately control such first-mentioned Person;
(p) "Competing Permitted Bid" means a Take-over Bid that:
(i) is made for the Voting Shares after a Permitted Bid for Voting Shares
has been made but prior to the expiry of such Permitted Bid;
(ii) satisfies all of the conditions of the definition of Permitted Bid
subject to paragraph 1.1(p)(iii) below; and
(iii) contains, and the take-up and payment for securities tendered or
deposited is subject to, an irrevocable and unqualified condition that no Voting
Shares will be taken up and paid for pursuant to the Take-over Bid prior to the
close of business on a date which is not earlier than the later of 35 days after
the date of the Take-over Bid or the 60th day following the date of the earliest
Permitted Bid;
(q) "Convertible Securities" means, at any time, any securities issued by
the Corporation from time to time (other than the Rights) carrying any exercise,
conversion or exchange right (whether such right is exercisable immediately or
upon the lapse or after the passage of time or upon the occurrence of a
contingency or otherwise) pursuant to which the holder thereof may, directly or
indirectly, acquire Voting Shares or other securities which are convertible
into, exercisable into or exchangeable for Voting Shares;
(r) "Convertible Security Acquisitions" has the meaning set forth in the
definition of "Acquiring Person" herein;
(s) "Corporation" means MFC Bancorp Ltd. a corporation duly organized under
the laws of the Yukon Territory, Canada;
(t) "Exchange Act" shall mean the Securities Exchange Act of 1934 of the
United States, and the rules and regulations promulgated thereunder, as amended
or restated, and any successor legislation thereto;
(u) "Exempt Acquisition" shall have the meaning ascribed thereto in the
definition of Acquiring Person;
(v) "Exercise Price" shall mean, as of any date, the price at which a holder
may purchase the securities issuable upon exercise of one whole Right and until
adjustment or amendment thereof in accordance with the terms hereof, the
Exercise Price shall equal $75;
(w) "Expiration Time" shall mean the earlier of:
(i) the Termination Time; or
(ii) subject to Section 5.17, the Close of Business on that date which is
the earlier of the date of termination of the meeting called to consider the
reconfirmation of this Agreement and the date of termination of the 2006 annual
meeting of shareholders of the Corporation or, if this Agreement is reconfirmed
at such meeting, the date of termination of the 2009 annual meeting of
shareholders of the Corporation;
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(x) "Flip-in Event" shall mean a transaction in which any Person shall
become an Acquiring Person;
(y) "Holder" has the meaning ascribed thereto in Section 1.4 hereof;
(z) "Independent Shareholders" shall mean holders of outstanding Voting
Shares of the Corporation excluding (i) any Acquiring Person; or (ii) any Person
(other than a Person who is deemed not to Beneficially Own such Voting Shares by
reason of paragraph 1.1(g)(vi)) that is making or has announced a current
intention to make a Take-over Bid for Voting Shares of the Corporation
(including a Permitted Bid or a Competing Permitted Bid) but excluding any such
Person if the Take-over Bid so announced or made by such Person has been
withdrawn, terminated or, expired; or (iii) any Affiliate or Associate of such
Acquiring Person or a Person referred to in paragraph (ii); or (iv) any Person
acting jointly or in concert with such Acquiring Person or a Person referred to
in paragraph (ii); or (v) a Person who is a trustee of any employee benefit
plan, share purchase plan, deferred profit sharing plan or any similar plan or
trust for the benefit of employees of the Corporation or a Subsidiary of the
Corporation, unless the beneficiaries of the plan or trust direct the manner in
which the Voting Shares are to be voted or direct whether the Voting Shares are
to be tendered to a Take-over Bid;
(aa) "Market Price" per share of any securities on any date of determination
shall mean the average of the daily Closing Price 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 hereof shall have caused the closing prices used to determine the
Market Price on any Trading Days not to be fully comparable with the closing
price on such date of determination or, if the date of determination is not a
Trading Day, on the immediately preceding Trading Day, each such closing price
so used shall be appropriately adjusted in a manner analogous to the applicable
adjustment provided for in Section 2.3 hereof in order to make it fully
comparable with the closing price on such date of determination or, if the date
of determination is not a Trading Day, on the immediately preceding Trading Day.
The "Closing Price Per Share" of any securities on any date shall be:
(i) the closing board lot sale price, or, if such price is not available,
the average of the closing bid and asked prices, for each share as reported by
the stock exchange or national securities quotation system in the United States
on which such securities are listed or quoted or admitted to trading (provided
that if at the date of determination such securities are listed or quoted or
admitted to trading on more than one stock exchange or national securities
quotation system, such price or prices shall be determined based on the stock
exchange or national securities quotation system on which such securities are
then listed or quoted or admitted to trading on which the largest number of such
securities were traded during the most recently completed calendar year);
(ii) if the securities are not listed or quoted or posted for trading on
any stock exchange or national securities quotation system in the United States,
the last sale price, regular way, or, in case no such sale takes place on such
date, the average of the closing bid and asked prices, regular way, for each
share of such securities as reported in the principal consolidated transaction
reporting system with respect to securities listed or posted for trading on the
principal national securities
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exchange in the United States on which such securities are listed or posted
for trading;
(iii) if for any reason none of such prices is available on such date or
the securities are not listed or admitted to trading on a stock exchange in the
United States or a national securities exchange in the United States, 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; or
(iv) if on any such date the securities are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the securities selected by the
Board of Directors of the Corporation;
provided, however, that if on any such date the securities are not traded in
the over-the-counter market, the closing price per share of such securities on
such date shall mean the fair value per share of such securities on such date
as determined by the Board of Directors of the Corporation, after consultation
with a nationally and internationally recognized investment banking firm 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 question
in United States dollars, such amount shall be translated into Canadian
dollars at the Canadian Dollar Equivalent thereof;
(bb) "Offer to Acquire" shall include:
(i) an offer to purchase, or a solicitation of an offer to sell, Voting
Shares; and
(ii) an acceptance of an offer to sell Voting Shares, 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;
(cc) "Offeror" shall mean a Person who has announced, and has not withdrawn,
an intention to make or who has made or is making a Take-over Bid;
(dd) "Offeror's Securities" means Voting Shares Beneficially Owned by an
Offeror and any Person acting jointly or in concert with such Person on the date
of an Offer to Acquire;
(ee) "Original Record Time" means the time that is the Close of Business on
May 18, 1993;
(ff) "Permitted Bid" means a Take-over Bid made by means of a Take-over Bid
Circular and which also complies with the following additional provisions:
(i) the Take-over Bid is made to all holders of record of Voting Shares
wherever resident as registered on the books of the Corporation, on identical
terms;
(ii) the Take-over Bid contains irrevocable and unqualified provisions that
all Voting Shares may be deposited pursuant to the Take-over Bid at any time
prior to the Close of Business on the date referred to in paragraph 1.1(ee)(iii)
and that all
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Voting Shares deposited pursuant to the Take-over Bid may
be withdrawn at any time prior to the Close of Business on such date;
(iii) the Take-over Bid contains, and the take up and payment for
securities tendered or deposited is subject to, 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 which is not less than 60
days following the date of the Take-over Bid and that Voting Shares shall not be
taken up and paid for by the Offeror unless Independent Shareholders have
deposited or tendered shares representing more than 50% of the Voting Shares
then outstanding pursuant to the Take-over Bid and have not withdrawn such
shares; and
(iv) the Take-over Bid contains an irrevocable and unqualified provision
that, should the condition referred to in paragraph 1.1(ee)(iii) be met, the
Offeror will make a public announcement of that fact, the Take-over Bid will be
extended on the same terms for a period of not less than 10 days from the date
referred to in paragraph 1.1(ee)(iii) and where a greater number of such Voting
Shares is deposited pursuant thereto than the Offeror is bound or willing to
acquire under the Take-over Bid, the Voting Shares shall be taken up and paid
for on a pro rata basis;
(gg) "Permitted Bid Acquisitions" shall have the meaning ascribed thereto in
the definition of Acquiring Person;
(hh) "Permitted Lock-up Agreement" means an agreement between an Offeror,
any of its Affiliates or Associates or any other Person acting jointly or in
concert with the Offeror and a Person (the "Locked-up Person") (the terms of
which are publicly disclosed and a copy of which is made available to the public
(including the Corporation) not later than the date of the Lock-up Bid (as
defined below), or if the Lock-up Bid has been made prior to the date of the
Lock-up Agreement not later than the first Business Day following the date of
the Lock-up Agreement) who is not an Affiliate or Associate of the Offeror or a
Person acting jointly or in concert with the Offeror whereby the Locked-up
Person agrees to deposit or tender the Voting Shares held by the Locked-up
Person to the Offeror's Take-over Bid or to any Take-over Bid made by any of the
Offeror's Affiliates or Associates or made by any other Person acting jointly or
in concert with the Offeror (the "Lock-up Bid"), where the agreement:
(i) (A) permits the Locked-up Person to withdraw the Voting Shares in
order to tender or deposit the Voting Shares to another Take-over Bid or to
support another transaction that contains an offering price for each Voting
Share that exceeds, or provides a value for each Voting Share that is greater
than, the offering price contained or proposed to be contained in the Lock-up
Bid;
(B) permits the Locked-up Person to withdraw the Voting Shares in
order to tender or deposit the Voting Shares to another Take-over Bid or to
support another transaction that contains an offering price for each Voting
Share that exceeds, or provides a value for each Voting Share that is greater
than, the offering price contained in or proposed to be contained in, the
Lock-up Bid by as much or more than a specified amount (the "Specified Amount")
and the Specified Amount is not
12
greater than 5% of the offering price that is contained or proposed to be
contained in the Lock-up Bid; or
(C) permits the Locked-up Person to withdraw the Voting Shares in
order to tender or deposit the Voting Shares to another Take-over Bid for a
number of Voting Shares at least 5%greater than the number of Voting Shares that
were the subject of the Lock-up Bid at a price that is not less than the price
or value per Voting Share offered under the Lock-up Bid; and
(ii) does not provide for any "break-up fees", "top-up fees", penalties,
expenses or other amounts that exceed in the aggregate the cash equivalent of
2.5% of the price or value payable to the Locked-up Person under the Take-over
Bid or one-half of the increased price or value that is paid pursuant to another
Take-over Bid or transaction, whichever is the greater, in the event that the
Locked-up Person fails to tender Voting Shares pursuant thereto in order to
accept the other Take-over Bid or support another transaction;
and for greater clarity, the agreement may contain a right of first refusal
or require a period of delay to give the Person who made the Lock-up Bid an
opportunity to match a higher price in another Take-over Bid or other similar
limitation on a Locked-up Person's right to withdraw Voting Shares from the
agreement, so long as the limitation does not preclude the exercise by the
Locked-up Person of the right to withdraw Voting Shares during the period of the
other Take-over Bid or transaction;
(ii) "Person" shall include any individual, firm, partnership, limited
partnership, association, trust, trustee, personal representative, group, body
corporate, corporation, unincorporated organization, syndicate, governmental
entity, or other entity wherever situate or domiciled;
(jj) "Pro-Rata Acquisitions" means acquisitions by a Person of Voting Shares
pursuant to (i) any dividend reinvestment plan, share purchase plan or other
plan of the Corporation made available to all holders of Voting Shares (other
than holders resident in any jurisdiction where participation in such plan is
restricted or impractical as a result of applicable law); (ii) a stock dividend,
a stock split or other event pursuant to which such Person becomes the
Beneficial Owner of Voting Shares on the same pro rata basis as all other
holders of Voting Shares of the same class or series; (iii) the acquisition or
exercise of rights to purchase Voting Shares distributed to all holders of
Voting Shares (other than holders resident in any jurisdiction where such
distribution or exercise is restricted or impractical as a result of applicable
law) by the Corporation pursuant to a rights offering (but only if such rights
are acquired directly from the Corporation); or (iv) a distribution of Voting
Shares or Convertible Securities in respect thereof offered pursuant to a
prospectus or by way of a private placement by the Corporation or a conversion
or exchange of any such Convertible Security, provided that, in the cases of
(iii) and (iv) above, such Person does not thereby acquire a greater percentage
of Voting Shares or Convertible Securities so offered than the Person's
percentage of Voting Shares Beneficially Owned immediately prior to such
acquisition;
(kk) "Record Time" has the meaning ascribed thereto in Recital "E" hereto;
13
(ll) "Regular Periodic Cash Dividend" shall mean cash dividends paid at
regular intervals in any fiscal year of the Corporation to the extent that such
cash dividends do not exceed, in the aggregate, the greatest of:
(i) 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;
(mm) "Rights" means the rights authorized to be issued by the Board of
Directors and governed by this Agreement;
(nn) "Rights Agent" means Computershare Investor Services Inc.;
(oo) "Rights Certificate" shall mean the certificates representing the
rights after the Separation Time, which shall be in the form attached hereto as
Exhibit A;
(pp) "Securities Act" shall mean the Securities Act of 1933 of the United
States, and the rules and regulations promulgated thereunder, as amended or
restated, and any successor legislation thereto;
(qq) "Securities Act (Alberta)" shall mean the Securities Act, R.S.A. 2000,
c. S-4, and the rules and regulations promulgated thereunder, as amended or
restated, and any successor legislation thereto;
(rr) "Securities Act (British Columbia)" shall mean the Securities Act,
R.S.B.C. 1996, c.418 and the rules and regulations promulgated thereunder, as
amended or restated, and any successor legislation thereto;
(ss) "Securities Act (Quebec)" shall mean the Quebec Securities Act, LRQ, c.
V-1.1, and the rules and regulations promulgated thereunder, as amended or
restated, and any successor legislation thereto;
(tt) "Separation Time" shall mean the Close of Business on the tenth
Business Day after the earlier of:
(i) the Stock Acquisition Date; and
(ii) the date of the commencement of, or first public announcement of the
intent of any Person (other than the Corporation or any Subsidiary of the
Corporation) to commence a Take-over Bid (other than a Permitted Bid or
Competing Permitted Bid so long as such Take-over Bid continues to satisfy the
requirements of a Permitted Bid or Competing Permitted Bid); and
(iii) the date upon which a Permitted Bid or Competing Bid ceases to be
such,
14
or such later date as may be determined by the Board of Directors provided
that, if the Board of Directors determines pursuant to Section 5.1 to waive the
application of Section 3.1 to a Flip-in Event, or if any Take-over Bid referred
to in paragraph 1.1(ss)(ii) expires, is cancelled, terminated or otherwise
withdrawn prior to the Separation Time, such offer shall be deemed, for purposes
of this subsection 1.1(ss), never to have been made;
(uu) "Shares" shall mean shares in the capital of the Corporation;
(vv) "Stock Acquisition Date" means the first date of public announcement or
disclosure by the Corporation or an Acquiring Person of facts indicating that a
Person has become an Acquiring Person, which, for the purposes of
this definition, shall include, without limitation, a report filed pursuant
to Section 111 of the Securities Act (British Columbia), section 176
of the Securities Act (Alberta), Sections 147.11 and 147.12 of the Securities
Act (Quebec) or Section 13(d) of the Exchange Act announcing or disclosing
such information;
(ww) "Subsidiary" of any specified Person shall have the meaning ascribed
thereto in the Business Corporations Act (Yukon);
(xx) "Take-Over Bid" means an Offer to Acquire Voting Shares or securities
convertible into Voting Shares, where the Voting Shares subject to the Offer to
Acquire, together with the Voting Shares into which the securities subject to
the Offer to Acquire are convertible, and the Offeror's Securities, constitute
in the aggregate 20% or more of the outstanding Voting Shares at the date of the
Offer to Acquire;
(yy) "Termination Time" shall mean the time at which the right to exercise
Rights shall terminate pursuant to Sections 5.1, 5.16 or 5.17 hereof;
(zz) "Trading Day" when used with respect to any securities, shall mean a
day on which the principal securities exchange on which such securities are
listed, quoted or posted for trading is open for the transaction of business or,
if the securities are not listed, quoted or posted for trading on any securities
exchange, a Business Day;
(aaa) "U.S.-Canadian Exchange Rate" shall mean 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 of the Corporation from time
to time acting in good faith;
(bbb) "U.S. Dollar Equivalent" of any amount which is expressed in Canadian
dollars shall mean on any day the United States dollar equivalent of such amount
determined by reference to the U.S. - Canadian Exchange Rate on such date;
(ccc) "Voting Shares" shall, when used with reference to the Corporation,
mean collectively the Common Shares of the Corporation, and any other shares of
capital stock of the Corporation to which is attached a right to vote generally
for the election of directors and, when used with reference to any other Person
other than the Corporation, means a
15
Common Share of such Person and any other share of capital stock or voting
interests of such person entitled to vote generally for the election of
directors. The percentage of Voting Shares Beneficially Owned by any Person,
shall, for the purposes of this Agreement 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 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;
and 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, but no other unissued Voting Shares
which may be acquired pursuant to any other outstanding Convertible Securities
shall, for the purposes of the calculation, be deemed to be outstanding; and
(ddd) "Voting Share Reduction" shall have the meaning attributed thereto in
the definition of Acquiring 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. GRANDFATHER PROVISION
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 was the Beneficial Owner
of 20% or more of the outstanding Voting Shares of the Corporation determined as
at the Record Time, provided, however, that this exception shall not be, and
shall cease to be, applicable to a Person in the event that such Person shall,
after the Record Time, become the Beneficial Owner of additional Voting Shares
of the Corporation constituting more than 0.5% of the Voting Shares of the
Corporation then outstanding other than pursuant to Permitted Bid Acquisitions,
through Exempt Acquisitions, Voting Share Reductions or Pro-rata Acquisitions;
and provided further that, in the event that this exception shall cease to be
applicable to a Person as aforesaid, such a person shall be and shall be deemed
to be an Acquiring Person as at and from the time that this exception shall
cease to be applicable.
1.4. HOLDER
As used in this Agreement, unless the context otherwise requires the term
"Holder" when used with reference to Rights, means the registered holder of such
rights or prior to the Separation Time, the Shares with which such Rights are
associated.
16
1.5. ACTING JOINTLY OR IN CONCERT
For the purposes of this Agreement, a Person is acting jointly or in concert
with every Person who is a party to any agreement, commitment or understanding,
whether formal or informal, written or unwritten, with the first Person or any
Associate or Affiliate thereof to acquire or offer to acquire Voting Shares
(other than customary agreements with and between underwriters and/or banking
group members and/or selling group members with respect to a public offering or
private placement of securities or pledges of securities in the ordinary course
of business).
1.6. HEADINGS AND REFERENCES
The headings of the articles, sections and subsections of this Agreement and the
table of contents are inserted for convenience of reference only and shall not
affect the construction or interpretation of this Agreement. All references to
articles, sections, subsections and paragraphs are to articles, sections,
subsections and paragraphs of this Agreement. The words "Hereto", "Herein",
"Hereof", "Hereunder", "this Agreement", "the Rights Plan" and similar
expressions refer to this Agreement including the schedule attached hereto as
a whole, as the same may be amended, modified or supplemented at any time or
from time to time.
1.7. SINGULAR, PLURAL ETC.
In this Agreement, where the context so requires, words importing the singular
number include the plural and vice versa and words importing gender include the
masculine, feminine and neuter genders.
1.8. SCHEDULE
Any schedule attached hereto forms an integral part of this Agreement.
ARTICLE 2. - THE RIGHTS
2.1. LEGEND ON CERTIFICATES
Certificates for the Common Shares, including without limitation, Common Shares
issued upon the conversion of Convertible Securities, issued after the Record
Time but prior to the earlier of the Separation Time and the Expiration Time
shall evidence one Right for each Common Share represented thereby and shall
have impressed on, printed on, typewritten on or otherwise affixed to them the
following legend:
"Until the Separation Time (as defined in the Rights Plan referred to
below), this certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Amended and Restated Shareholder
Rights Plan Agreement, dated for reference and effective as of the 16th
day of May, 2003 (amending and restating the shareholder rights plan
agreement dated as of the 18th day of May 1993), as such may be from
time to time amended, restated, varied or replaced, between MFC Bancorp
Ltd. (the "Corporation") and Computershare Investor Services Inc., as
Rights Agent (the "Rights Plan"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the
principal executive offices of the Corporation. Under certain
circumstances, as set forth in the Rights Plan, such Rights may be
amended or redeemed, may expire, may become void (if, in certain
17
cases, they are "Beneficially Owned" by an "Acquiring Person", as
such terms are defined in the Rights Plan) whether currently held by
or on behalf of such Person or any subsequent holder or may be evidenced
by separate certificates and may no longer be evidenced by this
certificate. The Corporation will mail or arrange for the mailing of a
copy of the Rights Plan to the holder of this certificate without
charge within five days after the receipt of a written request
therefor."
Certificates representing Common Shares that are issued and outstanding at the
Record Time shall evidence one Right for each Common Share evidenced thereby
notwithstanding the absence of the foregoing legend until the earlier of the
Separation Time and the Expiration Time.
2.2. INITIAL EXERCISE PRICE; EXERCISE OF RIGHTS; DETACHMENT OF RIGHTS
(a) 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, or its U.S. Dollar Equivalent as at
the Business Day immediately preceding the day of exercise of the Right,
one Common Share.
(b) Until the Separation Time:
(i) no Right may be exercised; and
(ii) each Right will be evidenced by the certificate for the associated
Share (which certificates shall also be deemed to be Rights Certificates) and
will be transferable only together with, and will be transferred by a transfer
of, such associated Share.
(c) From and after the Separation Time and prior to the Expiration Time, the
Rights:
(i) may be exercised; and
(ii) will be registrable and transferable independent of Shares.
Promptly following the Separation Time the Rights Agent will mail to each
holder of record of Common Shares as of the Separation Time and, in respect
of each Convertible Security converted into Common Shares after the Separation
Time and prior to the Expiration Time promptly after such conversion to the
holder so converting (other than an Acquiring Person and other than, 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
(and the Corporation hereby agrees to furnish copies of such records to the
Rights Agent for this purpose),
(A) a Rights Certificate in substantially the form of Exhibit A hereto
appropriately completed, representing the number of Rights held by such holder
at the Separation Time and having such marks of identification or designation
and such legends, summaries or endorsements printed thereon as the Corporation
may deem appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange or quotation
18
system on which the Rights may from time to time be listed, quoted or traded,
or to conform to usage, and
(B) a disclosure statement describing the Rights;
provided that a Nominee shall be sent the materials provided for in (A) and (B)
only 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 Voting Shares which are beneficially
owned by another Person, the Corporation may require such first-mentioned Person
to furnish such information and documentation as the Corporation deems necessary
or appropriate in order to make such determination.
(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 the Rights Certificate evidencing such Rights with an Election to Exercise
(an "Election to Exercise") substantially in the form attached to the Rights
Certificate duly completed and executed by the holder or its executors or other
personal representatives or its legal attorney duly appointed by an instrument
in writing in form and manner satisfactory to the Rights Agent, accompanied by
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 of Rights Certificates or the issuance or delivery
of certificates for the relevant Shares in a name other than that of the holder
of the Rights being exercised.
(e) Upon receipt of a Rights Certificate, with a duly completed and executed
Election to Exercise accompanied by payment as set forth in subsection 2.2(d)
above, the Rights Agent will (unless otherwise instructed by the Corporation)
forthwith:
(i) requisition from a transfer agent for the relevant Shares,
certificates representing the number of Shares to be purchased (the Corporation
hereby irrevocably authorizing its transfer agents to comply with all such
requisitions);
(ii) when appropriate, requisition from the Corporation the amount of cash
to be paid in lieu of issuing fractional Shares;
(iii) after receipt of such certificates, deliver the same to or upon the
order of the registered holder of such Rights Certificate, registered in such
name or names as may be designated by such holder; and
(iv) when appropriate, after receipt, deliver such cash to or to the order
of the registered holder of the Rights Certificate.
(f) In case 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 will be issued by the Rights Agent
to such holder or to such holder's duly authorized assigns.
19
(g) The Corporation covenants and agrees that it will:
(i) take all such action as may be necessary and within its power to
ensure that all Shares delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such Shares (subject to payment of the Exercise
Price), be duly and validly authorized, executed, issued and delivered as fully
paid and non-assessable;
(ii) subject to Section 5.19, take all such action as may be necessary and
within its power to comply with any applicable requirements of the Canadian
Securities Laws or comparable legislation of each of the provinces of Canada,
the Securities Act and the Exchange Act or the rules and regulations promulgated
thereunder or any other applicable law, rule or regulation, in connection with
the issuance and delivery of the Rights Certificates and the issuance of any
Shares upon exercise of Rights;
(iii) cause to be reserved out of its authorized and unissued Voting Shares
the number of Voting Shares that, as provide in this Agreement, will from time
to time be sufficient to exercise in full all outstanding Rights;
(iv) use commercially reasonable efforts to cause all Shares issued upon
exercise of Rights to be listed on the principal exchanges on which the Shares
of such class or series were traded prior to the Stock Acquisition Date; and
(h) pay when due and payable any and all Canadian and United States federal,
provincial and state transfer taxes (for greater certainty not including any
income taxes on capital gains of the holder or exercising holder or any
liability of the Corporation to withhold tax pursuant to Section 5.20) and
charges which may be payable in respect of the original issuance or delivery of
the Rights Certificates or certificates for 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 Shares in a
name other than that of the holder of the Rights being transferred or exercised.
2.3. ADJUSTMENTS TO EXERCISE PRICE; NUMBER OF RIGHTS
The Exercise Price, the number and kind of Shares 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) In the event the Corporation shall at any time after the Record Time and
prior to the Expiration Time:
(i) declare or pay a dividend on the Common Shares payable in Common
Shares (or other securities exchangeable for or convertible into or giving a
right to acquire Common Shares) other than pursuant to any optional stock
dividend program, dividend reinvestment plan or a dividend payable in Common
Shares in lieu of a Regular Periodic Cash Dividend;
20
(ii) subdivide or change the then outstanding Common Shares into a greater
number of Common Shares;
(iii) consolidate or change the then outstanding Common Shares into a
smaller number of Common Shares; or
(iv) issue any Common Shares (or other capital stock or securities
exchangeable for or convertible into or giving a right to acquire Common Shares
or other capital stock) 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 Shares
purchasable upon exercise of Rights shall be adjusted in the manner set forth
below. If the Exercise Price and number of Rights outstanding are to be
adjusted,
(A) 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
(B) 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 allocated among the Shares with respect to which the
original Rights were associated (if they remain outstanding) and the Shares
issued in respect of such dividend, subdivision, change, combination or
issuance, so that each such Share (or other capital stock) will have exactly one
Right associated with it.
If the Shares purchasable upon exercise of Rights are to be adjusted, the Shares
purchasable upon exercise of each Right after such adjustment will be the Shares
that a holder of the Shares 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 shares of capital stock other
than Common Shares in a transaction of a type described in paragraphs 2.3(a)(i)
to (iv), shares of such capital stock 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.
In the event the Corporation shall at any time after the Record Time and prior
to the Separation Time issue any Common Shares otherwise than in a transaction
referred to in the preceding paragraph, 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 Common Share.
(b) In the event the Corporation shall at any time after the Record Time and
prior to the Separation Time fix a record date for the making of a distribution
to all holders of Common Shares of rights, options, or warrants entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Common
21
Shares (or securities convertible into or exchangeable for or carrying a right
to purchase or subscribe for 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 shall be adjusted. The Exercise
Price in effect after such record date will equal the Exercise Price in effect
immediately prior to such record date multiplied by a fraction, of which
the numerator shall be the number of Common Shares outstanding on such record
date plus the number of Common Shares which 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 and of which the denominator 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
convertible or exchangeable securities or rights so to be offered are initially
convertible, exchangeable or exercisable). In case such subscription price may
be paid in a consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be as determined by the Board
of Directors of the Corporation, 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. 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 or similar plans (so long
as such right to purchase is in no case evidenced by the delivery of rights or
or warrants) shall not be deemed to constitute an issue of rights, options or
warrants by the Corporation; provided, however, that, in the case of any
dividend or interest reinvestment plan, the right to purchase Common Shares is
at a price per share of not less than 90% of the current market price per Common
Share (determined as provided in such plans) of the Common Shares. Such
adjustment shall be made successively whenever such a record date is fixed
and, in the event that such rights, options or warrants are not so issued, the
Exercise Price in respect of the Rights shall be adjusted to be the Exercise
Price which would then be in effect if such record date had not been fixed.
(c) In the event the Corporation shall at any time after the Record Time and
prior to the Separation Time fix a record date for the making of a distribution
to all holders of Common Shares (including without limitation any distribution
made in connection with a merger in which the Corporation is the continuing
corporation) of evidences of indebtedness or assets (other than a Regular
Periodic Cash Dividend or a dividend paid in Common Shares) or rights, options
or warrants entitling them to subscribe for or purchase Common Shares (or
Convertible Securities in respect of Common Shares) at a price per Common Share
(or, in the case of a Convertible Security in respect of Common Shares having a
conversion or exercise price per share (including the price required to be paid
to purchase such Convertible Security) less than 90% of the Market Price per
Common Share on such record date (excluding those referred to in subsection
2.3(b)), the Exercise Price shall be adjusted. The Exercise Price in effect
after such record date will equal the Exercise Price in effect immediately prior
to such record date less the fair market value as shall be determined by the
Board of Directors of the Corporation, whose determination shall be described in
a statement filed with the Rights Agent and shall be binding on the
22
Rights Agent and the holders of the Rights, of the portion of the assets,
evidences of indebtedness, rights or warrants so to be distributed applicable
to the securities purchaseable upon exercise of one Right. Such adjustments
shall be made successively whenever such a record date is fixed and, in the
event that such distribution is not so made, the Exercise Price in respect
of the Rights shall be adjusted to be the Exercise Price in respect of the
Rights 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, consolidation, change, combination or issuance, in the case of an
adjustment made pursuant to subsection 2.3(a) herein; and
(ii) the record date for the applicable dividend or distribution, in the
case of an adjustment made pursuant to subsections 2.3(b) or (c) herein.
Any adjustment pursuant to subsections 2.3(a), (b), (c) and (e) hereof shall be
made successively whenever an event referred to herein shall occur, subject to
the other subsections of this Section 2.3.
(e) In the event the Corporation shall at any time after the Record Time and
prior to the Separation Time issue any Shares (other than Common Shares), or
rights, options or warrants to subscribe for or purchase any such shares, or
securities convertible into or exchangeable for any such shares, in a
transaction referred to in paragraphs 2.3(a)(i) or (iv) above, if the Board of
Directors of the Corporation determines that the adjustments contemplated by
subsections 2.3(a), (b), and (c) above in connection with such transaction will
not appropriately protect the interests of the holders of Rights, the Board of
Directors of the Corporation may determine what other adjustments to the
Exercise Price, number of Rights and/or securities purchaseable upon exercise of
Rights would be appropriate and, notwithstanding subsections 2.3(a), (b), and
(c) above, such adjustments, rather than the adjustments contemplated by
subsections 2.3(a), (b), and (c) above, shall be made with the prior approval of
the holders of shares in accordance with Section 5.4. The Corporation and the
Rights Agent shall amend this Agreement as appropriate to provide for such
adjustments.
(f) Notwithstanding anything herein to the contrary, no adjustment in an
Exercise Price shall be required unless such adjustment would require an
increase or decrease of at least one percent in such Exercise Price; provided,
however, that any adjustments which by reason of this subsection 2.3(f) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. Each adjustment to the Exercise Price made pursuant to
this Section 2.3 shall be calculated to the nearest cent or the nearest
ten-thousandth of a Common Share or other Share as the case may be. 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 a brief summary thereof to each
holder of Rights.
23
(g) Irrespective of any adjustment or change in an Exercise Price or the
number of securities purchaseable upon exercise of the Rights, the Rights
Certificates theretofor and thereafter issued may continue to express the
relevant Exercise Price per Share and the number of securities so purchaseable
which were expressed in the initial Rights Certificates issued hereunder.
(h) Unless the Corporation shall have exercised its election as provided in
subsection 2.3(i), upon each adjustment of an Exercise Price as a result of the
calculations made in subsections 2.3(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Exercise Price, that number of Common Shares
(calculated to the nearest one ten-thousandth), obtained by:
(i) multiplying (X) the number of such Shares covered by a Right
immediately prior to this adjustment by (Y) the relevant Exercise Price
in effect immediately prior to such adjustment of the relevant Exercise
Price; and
(ii) dividing the product so obtained by the relevant Exercise Price in
effect immediately after such adjustment of the relevant Exercise Price.
(i) The Corporation may elect on or after the date of any adjustment of an
Exercise Price to adjust the number of Rights, in lieu of any adjustment in the
number of Shares purchaseable upon the exercise of a Right. Each of the Rights
outstanding after the adjustment in the number of Rights shall be exercisable
for the number and kind of Shares for which such Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one ten-thousandth) obtained by dividing the relevant
Exercise Price in effect immediately prior to adjustment of the relevant
Exercise Price by the relevant Exercise Price in effect immediately after
adjustment of the relevant Exercise Price. The Corporation shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the relevant
Exercise Price is adjusted or any day thereafter but, if the Rights Certificates
have been issued, shall be at least 10 days later than the date of the public
announcement. If Rights Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this subsection 2.3(i), the Corporation shall,
as promptly as practicable, cause to be distributed to holders of record of
Rights Certificates on such record date, Rights Certificates evidencing, subject
to Section 5.5, the additional Rights to which such holders shall be entitled as
a result of such adjustment or, at the option of the Corporation, shall cause to
be distributed to such holders of record in substitution and replacement for the
Rights Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Corporation, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein and may bear, at the option
of the Corporation, tile relevant adjusted Exercise Price and shall be
registered in the names of holders of record of Rights Certificates on the
record date specified in the public announcement.
(j) In any case in which this Section 2.3 shall require that an adjustment
in an Exercise Price be made effective as of a record date for a specified
event, the Corporation may elect to
24
defer until the occurrence of such event the issuance to the holder of any Right
exercised after such record date of the number of Shares and other securities of
the Corporation, if any, issuable upon such existence over and above the number
of Shares and other securities of the Corporation, if any, issuable upon such
exercise on the basis of the relevant Exercise Price in effect prior to such
adjustment; provided, however, that the Corporation shall deliver to such holder
a due xxxx or other appropriate instrument evidencing such holder's right to
receive such additional Shares (fractional or otherwise) or other securities
upon the occurrence of the event requiring such adjustment.
(k) Notwithstanding anything in this Section 2.3 to the contrary, the
Corporation shall be entitled to make such reductions in each Exercise Price, in
addition to those adjustments expressly required by this Section 2.3, as and to
the extent that in their judgment the Board of Directors of the Corporation
shall determine to be advisable in order that any (i) consolidation or
subdivision of Shares, (ii) issuance wholly for cash of any Shares at less than
the applicable Market Price, (iii) issuance wholly for cash of any Common Shares
or securities that by their terms are convertible into or exchangeable for
Shares, (iv) stock dividends or (v) issuance of rights, options or warrants
referred to in this Section 2.3, hereafter made by the Corporation to holders of
its Shares, shall not be taxable to such shareholders.
2.4. DATE ON WHICH EXERCISE IS EFFECTIVE
Each person in whose name any certificate for Shares is issued upon the exercise
of Rights shall for all purposes be deemed to have become the holder of record
of the Shares represented thereby on, and such certificate shall be dated, the
date upon which the Rights Certificate evidencing such Rights was duly
surrendered (together with a duly completed Election to Exercise) and payment of
the Exercise Price for such Rights (and any 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 relevant Share transfer books of the Corporation are closed, such
person shall be deemed to have become the record holder of such Shares on, and
such certificate shall be dated, the next succeeding Business Day on which the
relevant 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 one of its Chairman of the Board, President or Vice-President and by its
Secretary. The signature of any of these officers on the Rights Certificates may
be manual or facsimile.
(b) Rights Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper directors or 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.
(c) Promptly after the Corporation learns of the Separation Time, the
Corporation will notify the Rights Agent of such Separation Time and will
deliver Rights Certificates executed by the Corporation to the Rights Agent for
countersignature, and the Rights Agent shall countersign (manually or by
facsimile signature in a manner satisfactory to the Corporation) and deliver
such Rights Certificates to the holders of the Rights pursuant to subsection
2.2(c) hereof. No Rights Certificate shall be valid for any purpose until
countersigned by the Rights Agent as aforesaid.
(d) Each Rights Certificate shall be dated the date of countersignature
thereof.
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2.6. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE
(a) 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 "Rights Registrar" for the purpose of maintaining the
Rights Register for the Corporation and registering Rights and transfers of
Rights as herein provided. In the event that the Rights Agent shall cease to be
the Rights Registrar, the Rights Agent will have the right to examine the Rights
Register at all reasonable times.
After the Separation Time and prior to the Expiration Time, upon surrender for
registration of transfer or exchange of any Rights Certificate, and subject to
the provisions of subsection 2.6(c) below, the Corporation will execute, and the
Rights Agent will 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.
(b) All Rights issued upon any registration of transfer or exchange of
Rights Certificates shall be valid obligations of the Corporation, and such
Rights shall be entitled to the same benefits under this Agreement as the Rights
surrendered upon such registration of transfer or exchange.
(c) Every Rights Certificate surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Corporation or the Rights Agent, as the
case may be, duly executed by the holder thereof or such holder's attorney duly
authorized in writing. As a condition to the issuance of any new Rights
Certificate under this Section 2.6, the Corporation 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) in connection therewith.
(d) The Corporation shall not be required to register the transfer or
exchange of any Rights after the Rights have been terminated under Section 5.1
hereof.
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 satisfaction of the destruction, loss or theft of
any Rights Certificate; and
(ii) such security or indemnity as may be required by them to save each of
them and any of the agents harmless,
26
then, in the absence of notice to the Corporation or the Rights Agent that such
Rights Certificate has been acquired by a bona fide purchaser, the Corporation
shall execute and upon its request the Rights Agent shall countersign and
deliver, in lieu of any such destroyed, lost or stolen Rights Certificate, a new
Rights Certificate evidencing the same number of Rights as did the Rights
Certificate so destroyed, lost or stolen.
(c) As a condition to the issuance of any new Rights Certificate under this
Section 2.7, the Corporation 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) in connection therewith.
(d) Every new Rights Certificate issued pursuant to this Section 2.7 in lieu
of any destroyed, lost or stolen Rights Certificate shall evidence an original
additional contractual obligation of the Corporation, whether or not the
destroyed, lost or stolen Rights Certificate shall be at any time enforceable by
anyone and shall be entitled to all the benefits of this Agreement equally and
proportionately with any and all other Rights duly issued hereunder.
2.8. PERSONS DEEMED OWNERS
Prior to due presentment of a Rights Certificate (or, prior to the Separation
Time, the associated 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 such Rights Certificate (or,
prior to the Separation Time, such relevant Share certificate) is registered as
the absolute owner thereof and of the Rights evidenced thereby for all purposes
whatsoever.
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 a Right consents and agrees with the
Corporation and the Rights Agent and with every other holder of Rights that:
(a) it will 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) prior to the Separation Time, each Right will be transferable only
together with, and will be transferred by a transfer of, the associated Voting
Share;
(c) after the Separation Time, the Rights Certificates shall be transferable
only upon the registration of the transfer on the Rights Register as provided
herein;
27
(d) prior to due presentment of a Rights Certificate (or, prior to the
Separation Time, the associated 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 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 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;
(e) without the approval of any holder of Rights and upon the sole authority
of the Board of Directors of the Corporation, this Agreement may be supplemented
or amended from time to time as provided herein;
(f) such holder of Rights has waived its right to receive any fractional
Rights or any fractional shares upon exercise of a Right (except as provided
herein); and
(g) that notwithstanding anything in this Agreement to the contrary, neither
the Corporation nor the Rights Agent shall have any liability to any holder of a
Right or to any other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a government, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation.
2.11. RIGHTS HELD BY THE CORPORATION AND SUBSIDIARIES
Notwithstanding any other provision of this Agreement, any Rights held by the
Corporation or any of its Subsidiaries shall not be exercisable for so long as
they are held by the Corporation or its Subsidiaries.
ARTICLE 3. - ADJUSTMENTS TO THE RIGHTS
3.1. FLIP-IN EVENT
(a) Subject to subsection 3.1(b) and Section 5.1 hereof, in the event that
prior to the Expiration Time a Flip-in Event shall occur:
(i) each Right shall thereafter constitute, effective at the close of
business on the 10th Business Day thereafter, the right to purchase from the
Corporation upon exercise thereof in accordance with the terms hereof, that
number of Common Shares of the Corporation having an aggregate Market Price on
the date of 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 such date of consummation or
occurrence an event of a type analogous to any of the events described in
Section 2.3 shall have occurred);
(ii) in the event that there are insufficient authorized but unissued
Shares to permit each holder of a Right (other than an Acquiring Person or a
transferee of the kind
28
described in paragraph 3.1(b)(ii)) to purchase from the Corporation that
number of Common Shares per Right provided for in paragraph 3.1(a)(i),
then until such time as holders of Common Shares approve an increase
in the Corporation's authorized capital such that there are sufficient
authorized but unissued Common Shares to permit each holder of a Right
(other than an Acquiring Person or a transferee of the kind described in
paragraph 3.1(b)(ii)) to purchase from the Corporation that number of
Common Shares per Right provided for in paragraph 3.1(a)(i), each whole Right
shall constitute, effective at the Close of Business on the eighth Trading
Day after the Stock Acquisition Date, the right to purchase from the
Corporation, upon exercise thereof in accordance with the terms hereof, that
number of Common Shares that is equal to one Common Share multiplied by the
Adjustment Factor for an amount in cash equal to the Adjusted 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 consummation or occurrence or event, an event of a type analogous to any of
the events described in Section 2.3 shall have 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 or 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 of
any Associate or Affiliate of an Acquiring Person); or
(ii) a transferee or other successor in title directly or indirectly (a
"Transferee") of Rights held by any Acquiring Person (or any Affiliate or
Associate of an Acquiring Person or any Person acting jointly or in concert with
an Acquiring Person or any Affiliate or Associate of an Acquiring Person) where
such transferee becomes a transferee concurrently with or subsequent to the
Acquiring Person becoming an Acquiring Person becoming such 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 void and any holder of such Rights (including Transferees) shall
thereafter have no right to exercise such Rights under any provision of this
Agreement and shall not have thereafter any other rights whatsoever with respect
to such Rights, whether under any provision of this Agreement or otherwise.
(c) Any Rights Certificate that represents Rights Beneficially Owned by a
Person described in either paragraphs (i) or (ii) of subsection 3.1(b) 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 the following legend:
"The Rights represented by this Rights Certificate were issued to a
Person who was an Acquiring Person or an Affiliate or an Associate of an
Acquiring Person or a Transferee (as such terms are defined in the Rights
Plan) or acting jointly or in concert with
29
any of them. This Rights Certificate and the Rights represented hereby
are void or shall become void in the circumstances specified in subsection
3.1(b) of the Rights Plan."
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
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 an
Acquiring Person or an Affiliate or Associate thereof or acting jointly or in
concert with any of them;
(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 provisions of this Section 3.1, including, without limitation, all such
acts and things as may be required to satisfy the requirements of the Business
Corporations Act (Yukon), the Canadian Securities Laws, the Exchange Act and the
securities laws or comparable legislation in each of the provinces of Canada and
each of the states of the Unites States in respect of the issue of shares upon
the exercise of Rights in accordance with this Agreement.
ARTICLE 4. - THE RIGHTS AGENT
4.1. GENERAL
(a) The Corporation hereby appoints the Rights Agent to act as agent for the
Corporation and the holders of Rights in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Corporation may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable. In the event the Corporation appoints one or more
co-Rights Agents, the respective duties of the Rights Agent and 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, its reasonable expenses
and counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Corporation also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted to be done by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending any claim of liability, which right to indemnification
will survive the termination of this Agreement.
(b) The Rights Agent shall be protected and shall incur no liability for or
in respect of any action taken, suffered or omitted by it in connection with its
administration of this Agreement in reliance upon any certificate for Shares,
Rights Certificates, certificate for other securities of the Corporation,
instrument of assignment of transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons.
30
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 or consolidation to which
the Rights Agent or any successor Rights Agent is a party, or any corporation
succeeding to the shareholder or stockholder services business of the Rights
Agent or any successor Rights Agent, will be the successor to the Rights Agent
under this Agreement without the execution or filing of any paper or any further
act on the part of any of the parties hereto, provided that such corporation
would be eligible for appointment as a successor Rights Agent under the
provisions of Section 4.4 hereof. In case at the time such successor Rights
Agent succeeds to the agency created by this Agreement any of the Rights
Certificates have been countersigned but not delivered, any such successor
Rights Agent may adopt the counter signature of the predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have 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 retain and consult with legal counsel (who may be
legal counsel for the Corporation), and the opinion of such counsel will be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted to be taken by it in good faith and in accordance with such
opinion and the Rights Agent may also 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 (at the Corporation's
expense) and the Rights Agent shall be entitled to act and rely in good faith on
the advice of any such expert.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent deems it necessary or desirable that any fact or matter be proved
or established by the Corporation prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved 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 and by the
Treasurer or any Assistant Treasurer or the Secretary or any Assistant Secretary
of the Corporation and delivered to the Rights Agent; and such certificate will
be full
31
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 misconduct.
(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 Shares or the Rights Certificates (except its countersignature
thereof) or be required to verify the same, but all such statements and recitals
are and will be deemed to have been made by the Corporation only.
(e) The Rights Agent will not be under any responsibility in respect of the
validity of this Agreement or the execution and delivery hereof (except the due
authorization, execution and delivery hereof by the Rights Agent) or in respect
of the validity or execution of any Share certificate or Rights Certificate
(except its countersignature thereof); nor will it be responsible for any breach
by the Corporation of any covenant or condition contained in this Agreement or
in any Rights Certificate; nor will it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void pursuant to
subsection 3.1(b) hereof) or any adjustment required under the provisions of
Section 2.3 hereof or responsible for the manner, method or amount of any such
adjustment or the ascertainment 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 Share to be issued
pursuant to this Agreement or any Rights or as to whether any Shares will,
when issued, be duly and validly authorized, executed, issued and delivered
as fully paid and nonassessable.
(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 performance by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
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, the
President, any Vice President or the Secretary of the Corporation, and to apply
to such persons for advice or instructions in connection with its duties, and it
shall not be liable for any action taken or suffered by it in good faith in
accordance with instructions of any such person.
(h) The Rights Agent and any shareholder or stockholder, director, officer
or employee of the Rights Agent may buy, sell or deal in Shares, Rights or other
securities of the Corporation or become pecuniarily interested in any
transaction in which the Corporation may be interested, or contract with or lend
money to the Corporation or otherwise act as fully and freely as though it were
not Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Corporation or for any other
legal entity.
(i) The 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
32
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 by the Rights Agent in the selection and
continued employment thereof.
4.4. CHANGE OF RIGHTS AGENT
The Rights Agent may resign and be discharged from its duties under this
Agreement upon 60 days' notice (or such lesser notice as is acceptable to the
Corporation) in writing mailed to the Corporation and to each transfer agent of
Shares by registered or certified mail 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 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 or by the holder of
any Rights (which holder shall, with such notice, submit such holder's Rights
Certificate for inspection by the Corporation), then the holder of any Rights
may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Corporation
or by such a court, shall be a corporation incorporated under the laws of Canada
or a province thereof authorized to carry on the business of a trust company in
the Province of British Columbia. After appointment, the successor Rights Agent
will be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. 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 Shares, and mail a notice thereof in writing 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 any successor Rights Agent, as the case may be.
ARTICLE 5. - MISCELLANEOUS
5.1. REDEMPTION AND WAIVER
(a) The Board of Directors shall waive the application of Section 3.1 in
respect of the occurrence of any Flip-in Event if the Board of Directors has
determined, following a Stock Acquisition Date and prior to the Separation Time,
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 this subsection 5.1(a) 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
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.
33
(b) The Board of Directors acting in good faith may, prior to a Flip-in
Event having occurred, upon prior written notice delivered to the Rights Agent,
determine to waive the application of Section 3.1 to a Flip-in Event that may
occur by reason of a Take-over Bid made by means of take-over bid circular to
all holders of record of Shares (which for greater certainty shall not include
the circumstances described in subsection 5.1(a)), provided that if the Board of
Directors waives the application of Section 3.1 to a particular Flip-in Event
pursuant to this subsection 5.1(b), 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 Take-Over Bid which is made by means of a Take-Over Bid
circular to all holders of record of Shares prior to the expiry of any Take-Over
Bid (as the same may be extended from time to time) in respect of which a waiver
is, or is deemed to have been granted under this subsection 5.1(b).
(c) In the event that prior to the occurrence of a Flip-in Event a Person
acquires, pursuant to a Permitted Bid, a Competing Permitted Bid or an Exempt
Acquisition under subsection 5.1(b), outstanding Shares, then the Board of
Directors shall, immediately upon the consummation of and acquisition without
further formality be deemed to have elected to redeem the Rights at a redemption
price of $0.001 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 have occurred
(such redemption price being herein referred to as the "Redemption Price").
(d) The Board of Directors may, with the prior approval of the holders of
Shares or Rights given in accordance with the terms of Section 5.4, 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 the Redemption Price appropriately
adjusted in a manner analogous to the applicable adjustments provided for in
Section 2.3, which adjustments shall only be made in the event that an event of
the type analogous to any of the events described in Section 2.3 shall have
occurred.
(e) The Board of Directors may, prior to the close of business on the tenth
Trading Day following a Stock Acquisition Date or such later Business Day as
they may from time to time determine, upon prior written notice delivered to the
Rights Agent, waive the application of Section 3.1 to the related Flip-in Event,
provided that the Acquiring Person has reduced its Beneficial ownership of
Shares (or has entered into a contractual arrangement with the Corporation,
acceptable to the Board of Directors, to do so within 10 calendar days of the
date on which such contractual arrangement is entered into or such other date as
the Board of Directors may have determined) such that at the time the waiver
becomes effective pursuant to this subsection 5.1(e) such Person is no longer an
Acquiring Person. In the event of such a waiver becoming effective prior to the
Separation Time, for the purposes of this Agreement, such Flip-in Event shall be
deemed not to have occurred.
(f) Where a Take-over Bid that is not a Permitted Bid Acquisition is
withdrawn or otherwise terminated after the Separation Time has occurred and
prior to the occurrence of a Flip-in Event, the Board of Directors may elect to
redeem all the outstanding Rights at the Redemption Price. Upon the Rights being
redeemed pursuant to this subsection 5.1(f), 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 or Voting Shares, as the case may be, as of the
Separation Time had not been mailed to each such holder and for all purposes of
this Agreement the Separation Time shall be deemed not to have occurred and the
Corporation shall be
34
deemed to have issued replacement Rights to the holders of its then outstanding
Common Shares or Voting Shares, as the case may be.
(g) If the Board of Directors is deemed under subsection 5.1(c) to have
elected or elects under subsections 5.1(d) or (f) 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.
(h) Within 10 Business Days after the Board of Directors is deemed under
subsection 5.1(c) to have elected or elects under subsection 5.1(d) or (f) to
redeem the Rights, the Corporation shall give notice of redemption to the
holders of the then outstanding Rights by mailing such notice to each such
holder at his last address as it appears upon the registry books of the Rights
Agent or, prior to the Separation Time, on the registry books of the transfer
agent for the Shares. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice. Each such
notice of redemption will state the method by which the payment of the
Redemption Price will be made.
(i) The Corporation shall give prompt written notice to the Rights Agent of
any waiver of the application of Section 3.1 pursuant to this subsection 5.1.
5.2. EXPIRATION
No Person shall have any rights pursuant to this Agreement or in respect of any
Right after the Expiration Time, except the Rights Agent as specified in
subsection 4.1(a) of this Agreement.
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 of
the Corporation 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
The Corporation may from time to time supplement or amend this Agreement as
follows:
(a) The Corporation may, without the consent of the holders of Voting Shares
or Rights, make any amendments to this Agreement to correct any clerical or
typographical error or cure any ambiguity or inconsistency which are required to
maintain the validity of the Agreement as a result of any change in any
applicable legislation, regulations or rules thereunder.
(b) The Corporation may, prior to the date of the shareholders' meeting
referred to in Section 5.16, supplement, amend, vary or delete this Agreement
without the approval of any of the holders of the Rights or the Voting Shares in
order to make any changes which the Board of Directors may deem necessary or
desirable.
(c) Subject to subsections 5.4(a) and (b), the Corporation may, with the
prior consent of the holders of Voting Shares given in accordance with
subsection 5.4(d), at any time prior to the Separation Time, supplement, amend,
vary or delete any of the provisions of this
35
Agreement and the Rights, which the Board of Directors may deem necessary or
desirable (whether or not such action would materially adversely affect the
interests of the holders of Rights generally).
(d) Any consent or approval of holders of Voting Shares shall be deemed to
have been given if the action requiring such consent or approval is authorized
by the affirmative vote of a majority of the votes cast by Independent
Shareholders present or represented at or entitled to be voted at a meeting of
the holders of Voting Shares duly called and held in compliance with applicable
laws and the articles of the Corporation.
(e) The Corporation may, with the prior consent of the holders of Rights, at
any time on or after the Separation Time and before the Expiration Time,
supplement, amend, vary or delete 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 such supplement, amendment, variation or deletion is
authorized in the manner specified in subsection 5.4(f).
(f) Any consent or 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 be voted at a meeting of the holders of Rights and representing a
majority of the votes cast in respect thereof. For the purposes hereof, each
outstanding Right (other than Rights which are void pursuant to the provisions
hereof) shall be entitled to one vote, and the procedures for the calling,
holding and conduct of the meeting shall be those, as nearly as may be, which
are provided in the Corporation's by-laws and the Business Corporations Act
(Yukon) with respect to meetings of the shareholders of the Corporation.
(g) Without the approval of any of the holders of the Voting Shares or the
Rights, the Corporation may supplement, amend, delete or vary any of the
provisions of this Agreement or the Rights as may be required to maintain the
validity or effectiveness of this Agreement or the Rights, including without
limitation, revising the Exercise Price of the Rights, as a result of any change
in any applicable legislation or regulation provided that:
(i) if made before the Separation Time, any such supplement, amendment,
variation or deletion shall be submitted to the shareholders of the Corporation
at the next general meeting of shareholders and the shareholders may, by the
majority referred to in subsection 5.4(d) confirm or reject such supplement,
amendment, variation or deletion; or
(ii) if made after the Separation Time, any such amendment, variation or
deletion shall 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(f) confirm or reject such
supplement, amendment, variation or deletion.
Any such supplement, amendment, variation or deletion shall be effective from
the date of the resolution of the Board of Directors adopting such supplement,
amendment, variation or deletion until it is confirmed or rejected or until it
ceases to be effective (as described in the next sentence) and, where such
supplement, amendment, variation or deletion is confirmed, it continues in
effect in the form so confirmed. If such supplement,
36
amendment, variation or deletion is rejected by the holders of Voting Shares or
Rights or is not submitted to the shareholders or holders of Rights as required,
then such supplement, amendment, variation or deletion 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 holders
of Voting Shares or Rights, as the case may be.
(h) Notwithstanding anything else in Section 5.4, no amendment shall be made
to the provisions of ARTICLE 4 without the prior written consent of the Rights
Agent.
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. After the
Separation Time there shall be paid to the registered holders of the Rights
Certificates with regard to which fractional Rights would otherwise be issuable,
an amount in cash equal to the same fraction of the Market Price of a whole
Right in lieu of such Fractional Rights.
(b) The Corporation shall not be required to issue fractional Shares upon
exercise of the Rights or to distribute certificates which evidence fractional
Shares. In lieu of issuing fractional Shares, the Corporation shall pay to the
registered holder 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 whole Share.
5.6. RIGHTS OF ACTION
Subject to the terms of this Agreement, rights of action in respect to this
Agreement, other than rights of action vested solely in the Rights Agent, are
vested in the respective holders of the Rights and any holder of any Rights,
without the consent of the Rights Agent or of the 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, as the case may be, enforce, and may
institute and maintain any suit, action or proceeding against the Corporation to
enforce, or otherwise act in respect of such holder's right to exercise such
holder's Rights, or Rights to which it is entitled, in the manner provided in
this Agreement, and in such holder's Rights Certificate. Without limiting the
foregoing or any remedies available to the holders of Rights, as the case may
be, 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 and injunctive relief against actual or threatened
violations of, the obligations of any Person subject to this Agreement.
5.7. HOLDER OF RIGHTS NOT DEEMED A SHAREHOLDER
No holder, as such, of any Rights, shall be entitled to vote, receive dividends
or be or be deemed for any purpose the holder of Shares or any other securities
which may at any time be issuable on the exercise of Rights, nor shall anything
contained herein or in any Rights Certificate confer or be construed to confer
upon the holder of any Rights, 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 Section 5.8 hereof), or to
receive dividends or subscription rights or otherwise, until such Rights, or
Rights to which such holder is entitled, shall have been exercised in accordance
with the provisions hereof.
37
5.8. NOTICE OF PROPOSED ACTIONS
In case the Corporation shall propose after the Separation Time and prior to the
Expiration Time:
(a) to effect or permit (in cases where the Corporation's permission is
required) any Flip-in Event; or
(b) to effect the liquidation, dissolution or winding up of the Corporation
or the sale of all or substantially all of the Corporation's assets;
then, in each such case, the Corporation shall give to each holder of a Right,
in accordance with Section 5.9 hereof, a notice of such proposed action, which
shall specify the date on which such Flip-in Event, liquidation, dissolution, or
winding up is to take place, and such notice shall be so given at least 20
Business Days prior to the date of the taking of such proposed action by the
Corporation.
5.9. NOTICES
Notices or demands authorized or required by this Agreement to be given or made
by the Rights Agent or by the holder of any Rights to or on the Corporation
shall be sufficiently given or made if delivered or sent by facsimile,
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
MFC Bancorp Ltd.
Xxxxx 00, Xxxxxxxxxx Xxxxx
Xxxxxxxxxx 00-00
X-0000 Xxxxxx, Xxxxxxx
Attention: President
Facsimile No.: 011 43 1 240 25 255
and to
Sangra, Moller
0000 Xxxxxxxxx Xxxxx
000 Xxxx Xxxxxxx Xx.
Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
Attention: H.S. Sangra
Facsimile No.: (000) 000-0000
Any notice or demand authorized 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 sent by facsimile, delivered or sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Corporation) as follows:
Computershare Investor Services Inc.
000 Xxxxxxx Xxxxxx Xxxxx 000
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
Attention: Manager/Client Services
Facsimile No.: (000) 000-0000
38
Notices or demands authorized or required by this Agreement to be given or made
by the Corporation or the Rights Agent to or on the holder of any Rights shall
be sufficiently given or made if delivered or sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as it appears
upon the registry books of the Rights Agent or, prior to the Separation Time, on
the registry books of the Corporation for the Common Shares. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice.
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 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 enure 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 British
Columbia and the federal laws of Canada applicable therein.
5.14. COUNTERPARTS AND FACSIMILE
This Agreement may be executed in several parts in the same form and by
facsimile and such parts as so executed shall together constitute one original
document, and such parts, if more than one, shall be read together and construed
as if all the signing parties had executed one copy of the Agreement.
5.15. SEVERABILITY
If any term or provision hereof or the application thereof to any circumstances
shall, in any jurisdiction and to any extent, be invalid or unenforceable, such
term or provision shall be ineffective as to such jurisdiction to the extent of
such invalidity or unenforceability without invalidating or rendering
unenforceable the remaining terms and provisions hereof or the application of
such term or provision to circumstances other than those as to which it is held
invalid or unenforceable.
5.16. EFFECTIVE DATE
This Agreement is and shall be effective in accordance with its terms as of the
close of business on May 16, 2003. If this Agreement is not confirmed by
resolution passed by a simple majority of the votes cast by Independent
Shareholders who vote in respect of confirmation of this Agreement at the 2003
annual
39
meeting of shareholders of the Corporation in respect of fiscal 2002 and
scheduled to be held on June 27, 2003 (or any postponement or adjournments
thereof) then this Agreement and any then outstanding Rights shall be of no
further force and effect from the Close of Business on the date of termination
of such meeting.
5.17. SHAREHOLDER REVIEW
Notwithstanding the confirmation of this Agreement pursuant to Section 5.16
above, if this Agreement is not subsequently reconfirmed by a resolution passed
by a simple majority of the votes cast by Independent Shareholders who vote in
respect of such reconfirmation of this Agreement at or prior to the annual
meeting of shareholders to be held in 2006, this Agreement and all outstanding
Rights shall terminate and be void and of no further force and effect on and
from the Close of Business on that date which is the earlier of the date of
termination of the shareholders' meeting called to consider the reconfirmation
of this Agreement and the date of termination of the 2006 annual meeting of
shareholders of the Corporation; provided, however, that no Flip-in Event has
occurred prior to the date upon which this Agreement would otherwise terminate
pursuant to this Section 5.17, which has not been waived pursuant to Section 5.1
hereof.
5.18. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS
(a) All actions, calculations, interpretations and determinations (including
all omissions with respect to the foregoing) which are done or made by the Board
of Directors pursuant to this Agreement, (i) may be relied on by the Rights
Agent; (ii) shall not subject the Board of Directors to any liability to the
holders of the Rights or to any other parties; and (iii) absent manifest error,
shall be conclusive, final and binding.
(b) Nothing contained in this Agreement shall be deemed to be in derogation
of the obligation 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 the holders of the Voting Shares reject any Permitted
Bid or any Competing Permitted Bid or any Take-over Bid, or to take any other
action (including, without limiting the generality of the foregoing, the
commencement, prosecution, defence or settlement of any litigation and the
submission of additional or alternative Permitted Bids or Competing Permitted
Bids or Take-over Bids) with respect to any Permitted Bid or any Competing
Permitted Bid or any Take-over Bid or otherwise that the Board believes is
necessary or appropriate in the exercise of its fiduciary duties.
5.19. DECLARATION AS TO NON-CANADIAN HOLDERS
If in the opinion of the Board of Directors (who may rely upon the advice
of counsel) any action or event contemplated by this Agreement would require
compliance by the Corporation with the securities laws or comparable legislation
of a jurisdiction outside Canada, the Board of Directors shall take such actions
as it may deem appropriate to ensure such compliance. In no event shall the
Corporation or the Rights Agent be required to issue or deliver Rights or
securities issuable on exercise of Rights to persons who are citizens, residents
or nationals of any jurisdiction other than Canada or the United States, in
which such issue or delivery would be unlawful without registration of the
relevant Persons or securities for such purposes.
40
5.20. WITHHOLDING RIGHTS
The Corporation and the Rights Agent shall be entitled to deduct and withhold
from any distribution or consideration otherwise payable to any holder of Rights
or to any Person on behalf of any such holder such amounts as the Corporation or
Rights Agent is (i) required to deduct and withhold with respect to such payment
under the Income Tax Act (Canada), the Internal Revenue Code of 1986 (US) or any
provision of federal, provincial, territorial, state, local or foreign tax law,
in each case, as amended or succeeded, or (ii) entitled to withhold under
Section 116 of the Income Tax Act (Canada) or any corresponding provisions of
provincial law. To the extent that amounts are so withheld, such withheld
amounts shall be treated for all purposes as having been paid to the holder of
Rights in respect of which such deduction and withholding was made, provided
that such withheld amounts are actually remitted to the appropriate taxing
authority. To the extent that the amount so required or entitled to be deducted
or withheld from any payment to a holder of Rights exceeds the cash portion of
the distribution or consideration otherwise payable to the holder, the
Corporation and Rights Agent are hereby authorized to sell or otherwise dispose
of such portion of the distribution or consideration as is necessary to provide
sufficient funds to the Corporation or Rights Agent to enable them to comply
with such deduction or withholding requirement or entitlement and the
Corporation or Rights Agent shall notify the holder of Rights thereof and remit
to such holder any unapplied balance of the net proceeds of such sale.
5.21. TIME OF ESSENCE
Time is of the essence of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and to be effective as of the date first above written.
MFC BANCORP LTD. COMPUTERSHARE INVESTOR SERVICES INC.
By: /s/ Xxxxxxx X. Xxxxx By: /s/ June X. Xxxxxx /s/ Xxx Xxxx
------------------------- ------------------------------------
Authorized Signatory Authorized Signatory
Xxxxxxx X. Xxxxx June X. Xxxxxx Xxx Xxxx
_________________________________ ____________________________________
Name Name
President and Chief Executive Acting General Manager CSO
Officer
_________________________________ _____________________________________
Title Title
EXHIBIT A
(FORM OF RIGHTS CERTIFICATE)
Certificate No. _______________ ______________ Rights
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE CORPORATION, ON THE
TERMS SET FORTH IN THE RIGHTS PLAN. UNDER CERTAIN CIRCUMSTANCES (SPECIFIED IN
SUBSECTION 3.1(b) OF THE RIGHTS PLAN), 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 PLAN) 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 Amended and
Restated Shareholder Rights Plan Agreement dated as of May 16, 2003 (amending
and restating the shareholder rights plan agreement, dated as of the 18th day of
May, 1993), as such may from time to time be amended, restated, varied or
replaced (the "Rights Plan") between MFC Bancorp Ltd., a corporation
incorporated under the laws of the Yukon Territory (the "Corporation") and
Computershare Investor Services Inc., a trust company incorporated under the
laws of Canada, as Rights Agent (the "Rights Agent") which term shall include
any successor Rights Agent under the Rights Plan, to purchase from the
Corporation at any time after the Separation Time (as such term is defined in
the Rights Plan) and prior to the Expiration Time (as such term is defined in
the Rights Plan), 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 with the Form of Election to Exercise duly executed
and submitted to the Rights Agent at its principal office in any of the cities
of Vancouver and Toronto. The Exercise Price shall initially be $75 per Right
and shall be subject to adjustment in certain events as provided in the Rights
Plan. The number of Common Shares which may be purchased for the Exercise Price
is subject to adjustment as set forth in the Rights Plan.
This Rights Certificate is subject to all the terms, provisions and conditions
of the Rights Plan which terms and provisions are hereby incorporated herein by
reference and made a part hereof and to which Rights Plan reference is hereby
made for a full description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Rights Agent, the Corporation and the
holders of the Rights Certificates. Copies of the Rights Plan are on file at the
registered office of the Corporation and are available upon written request.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at any of the offices of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or Rights Certificate of like
tenor and 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 is exercised in part, the registered
holder shall be entitled to receive, upon surrender hereof, another Rights
Certificate or Rights Certificate to the number of whole Rights not exercised:
Subject to the provisions of the Rights Plan, the Rights evidenced by this
Certificate may be redeemed by the Corporation at a redemption price of $0.001
per Right, subject to adjustment in certain events, under certain circumstances
at its option.
No fractional Common Shares will be issued upon the exercise of any Right or
Rights evidenced hereby nor will Rights Certificates be issued for less than one
whole Right. After the Separation Time, in lieu of issuing fractional Rights a
cash payment will be made as provided in the Rights Plan.
A-2
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 Plan 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 Plan), 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 Plan.
This Rights Certificate is not valid or obligatory for any purpose until it has
been countersigned by the Rights Agent.
IN WITNESS the facsimile signature of the proper officers of the
Corporation and its seal.
Date: _____________________________
ATTEST:
__________________________________ By: _________________________
Secretary
Countersigned: (By Rights Agent)
By ______________________________
Authorized Signature
A-3
FORM OF ELECTION TO EXERCISE
TO: MFC BANCORP LTD.
The undersigned hereby irrevocably elects to exercise
______________________ whole Rights represented by this Rights Certificate to
purchase the Common Shares issuable upon the exercise of such Rights and
requests that certificates for such Common Shares be issued in the name of and
delivered to:
Rights Certificate No.______
___________________________________________
Name
___________________________________________
Address
___________________________________________
City and Province or State
___________________________________________
Social Insurance No. or other Taxpayer
Identification Number
A-4
If such number of Rights shall not be all the Rights evidenced by this Rights
--------------------------------------------------------------------------------
Certificate, a new Rights Certificate for the balance of such Rights shall be
--------------------------------------------------------------------------------
registered in the name of and delivered to:
--------------------------------------------------
_________________________________________________
Name
_________________________________________________
Address
_________________________________________________
City and Province
________________________________________________
Social Insurance No. or other taxpayer
Identification number
Date:
Signature Guaranteed: ___________________________________
Signature
(Signature must correspond to name as
written upon the face of this
Rights Certificate in every
particular, without alteration or
enlargement or any change
whatsoever)
Signature must be guaranteed by a Canadian Schedule 1 Chartered Bank, a
major Canadian Trust Company, a member of a recognized stock exchange or a
member of a recognized Medallion Program (STAMP, MSP or SEMP).
________________________________________________________________________________
(To be completed by the holder if true)
The undersigned hereby represents, for the benefit of the Corporation and
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 by an Affiliate or Associate
of an Acquiring Person, any other Person acting jointly or in concert with an
Acquiring Person or any Affiliate or Associate of any such other Person (as such
terms are defined in the Rights Plan).
_________________________________________________
Signature
NOTICE
In the event that the certifications set forth above in the Form of
Election to Exercise and Assignment are not completed, the Corporation shall
deem the Beneficial Owner of the Rights represented by this Rights Certificate
to be an Acquiring Person or by an Affiliate or Associate of an Acquiring
Person, any other Person acting jointly or in concert with an Acquiring Person
or any Affiliate or Associate of any such other Person (as such terms are
defined in the Rights Plan) and, accordingly, such Rights shall be null and
void.
A-5
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned 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.
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 Canadian Schedule 1 Chartered Bank, a
major Canadian Trust Company, a member of a recognized stock exchange or a
member of a recognized Medallion Program (STAMP, MSP or SEMP).
________________________________________________________________________________
(To be completed by the assignor if true)
The undersigned hereby represents, for the benefit of the Corporation and
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 by an Affiliate or Associate
of an Acquiring Person, any other Person acting jointly or in concert with an
Acquiring Person or any Affiliate or Associate of any such other Person (as such
terms are defined in the Rights Plan).
_________________________________________
Signature
_________________________________________
(Please print name below signature)
NOTICE
In the event that the certifications set forth above in the Form of Election to
Exercise and Assignment are not completed, the Corporation shall deem the
Beneficial Owner of the Rights represented by this Rights Certificate to be an
Acquiring Person or by an Affiliate or Associate of an Acquiring Person, any
other Person acting jointly or in concert with an Acquiring Person or any such
other Person (as such terms are defined in the Rights Plan) and, accordingly,
such Rights shall be null and void.
