Exhibit 4.13
SAND TECHNOLOGY INC.
AND
CIBC MELLON TRUST COMPANY
AS RIGHTS AGENT
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SHAREHOLDER RIGHTS PLAN AGREEMENT
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November 17, 2003
TABLE OF CONTENTS
ARTICLE 1 INTERPRETATION......................................................................................... 2
1.1 CERTAIN DEFINITIONS................................................................................. 2
1.2 CURRENCY............................................................................................16
1.3 DESCRIPTIVE HEADINGS................................................................................16
1.4 REFERENCES TO AGREEMENT.............................................................................16
1.5 CALCULATION OF NUMBER AND PERCENTAGE OF BENEFICIAL OWNERSHIP OF OUTSTANDING VOTING SHARES...........16
1.6 ACTING JOINTLY OR IN CONCERT........................................................................17
ARTICLE 2 THE RIGHTS.............................................................................................17
2.1 LEGEND ON CERTIFICATES..............................................................................17
2.2 EXECUTION, AUTHENTICATION, DELIVERY AND DATING OF RIGHTS CERTIFICATES...............................18
2.3 REGISTRATION, TRANSFER AND EXCHANGE.................................................................18
2.4 MUTILATED, DESTROYED, LOST AND STOLEN RIGHTS CERTIFICATES...........................................19
2.5 PERSONS DEEMED OWNERS OF RIGHTS.....................................................................20
2.6 DELIVERY AND CANCELLATION OF CERTIFICATES...........................................................20
2.7 AGREEMENT OF RIGHTS HOLDERS.........................................................................21
2.8 RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER..................................................22
ARTICLE 3 EXERCISE OF THE RIGHTS.................................................................................22
3.1 INITIAL EXERCISE PRICE; EXERCISE OF RIGHTS; DETACHMENT OF RIGHTS....................................22
3.2 ADJUSTMENTS TO EXERCISE PRICE: NUMBER OF RIGHTS.....................................................26
3.3 DATE ON WHICH EXERCISE IS EFFECTIVE.................................................................32
ARTICLE 4 ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS.........................................32
4.1 FLIP-IN EVENT.......................................................................................32
ARTICLE 5 THE RIGHTS AGENT.......................................................................................34
5.1 GENERAL.............................................................................................34
5.2 MERGER OR AMALGAMATION OR CHANGE OF NAME OF RIGHTS AGENT............................................35
5.3 DUTIES OF RIGHTS AGENT..............................................................................36
5.4 CHANGE OF RIGHTS AGENT..............................................................................38
ARTICLE 6 MISCELLANEOUS..........................................................................................39
6.1 REDEMPTION AND WAIVER...............................................................................39
6.2 EXPIRATION..........................................................................................41
6.3 ISSUANCE OF NEW RIGHTS CERTIFICATES.................................................................41
6.4 FRACTIONAL RIGHTS AND FRACTIONAL SHARES.............................................................41
6.5 SUPPLEMENTS AND AMENDMENTS..........................................................................41
6.6 RIGHTS OF ACTION....................................................................................44
6.7 NOTICE OF PROPOSED ACTIONS..........................................................................44
6.8 NOTICES.............................................................................................44
6.9 COSTS OF ENFORCEMENT................................................................................46
6.10 SUCCESSORS..........................................................................................46
6.11 BENEFITS OF THIS AGREEMENT..........................................................................46
6.12 GOVERNING LAW.......................................................................................46
6.13 COUNTERPARTS........................................................................................46
6.14 SEVERABILITY........................................................................................46
6.15 EFFECTIVE DATE......................................................................................47
6.16 SHAREHOLDER APPROVAL................................................................................47
6.17 DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS................................................47
6.18 TIME OF THE ESSENCE.................................................................................47
6.19 REGULATORY APPROVALS................................................................................47
6.20 DECLARATION AS TO NON-CANADIAN AND NON-UNITED STATES HOLDERS........................................48
6.21 FIDUCIARY DUTIES OF THE BOARD OF DIRECTORS..........................................................48
6.22 LANGUAGE............................................................................................48
THIS SHAREHOLDER RIGHTS PLAN AGREEMENT is dated as of November 17, 2003.
BETWEEN: SAND TECHNOLOGY INC., a corporation existing
under the laws of Canada
(hereinafter referred to as the "CORPORATION")
AND: CIBC MELLON TRUST COMPANY, a trust company
existing under the laws of Canada, as
rights agent
(hereinafter referred to as the "RIGHTS AGENT")
RECITALS:
A. The Board of Directors of the Corporation has determined that it is
advisable for and in the best interests of the Corporation to adopt a
shareholder rights plan (the "RIGHTS PLAN").
B. In order to implement the Rights Plan, the Board of Directors of the
Corporation has authorized:
(i) the issuance, effective at 4:00 p.m. (Eastern time) on
November 17, 2003, of one right (a "RIGHT") in respect of each
Common Share of the Corporation outstanding at 4:00 p.m.
(Eastern time) on November 17, 2003 (the "RECORD TIME"); and
(ii) the issuance of one Right in respect of each Common Share
issued after the Record Time and prior to the earlier of the
Separation Time and the Expiration Time.
C. Each Right entitles its holder, after the Separation Time, to purchase
securities of the Corporation pursuant to the terms and subject to the
conditions set forth in this agreement.
D. The Corporation wishes to appoint the Rights Agent to act on behalf of
the Corporation and holders of Rights, and the Rights Agent is willing
to so act, in connection with the issuance, transfer, exchange and
replacement of Rights Certificates, the exercise of Rights and other
matters referred to in this agreement.
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NOW THEREFORE, in consideration of the premises and the respective covenants and
agreements set forth in this agreement, the parties agree as follows:
ARTICLE 1
INTERPRETATION
1.1 CERTAIN DEFINITIONS
For the purpose of this agreement:
(a) "ACQUIRING PERSON" means any Person who is or becomes the
Beneficial Owner of 20% or more of the outstanding Voting
Shares; provided, however, that the term "ACQUIRING PERSON"
will not include:
(i) the Corporation or any Subsidiary of the Corporation;
(ii) any Person who becomes the Beneficial Owner of 20% or
more of the outstanding Voting Shares of the
Corporation as a result of any one or any combination
of:
(A) a Voting Share Reduction;
(B) a Permitted Bid Acquisition;
(C) an Exempt Acquisition;
(D) a Pro Rata Acquisition; or
(E) a Convertible Security Acquisition;
provided, however, that if a Person becomes the
Beneficial Owner of 20% or more of the Voting Shares
then outstanding by reason of one or any combination
of a Voting Share Reduction, a Permitted Bid
Acquisition, an Exempt Acquisition, a Pro Rata
Acquisition or a Convertible Security Acquisition and
thereafter such Person, while such Person is the
Beneficial Owner of 20% or more of the Voting Shares
then outstanding, increases the number of Voting
Shares beneficially owned by such Person by more than
1.0% of the number of Voting Shares outstanding
(other than pursuant to one or any combination of a
Voting Share Reduction, a Permitted Bid Acquisition,
an Exempt Acquisition, a Pro Rata Acquisition or a
Convertible Security Acquisition) then, as of the
date such Person becomes the Beneficial Owner of such
additional outstanding Voting Shares, such Person
will be an "ACQUIRING PERSON";
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(iii) an underwriter or member of a banking or
selling group acting in such capacity that
becomes the Beneficial Owner of 20% or more
of the Voting Shares in connection with a
distribution of securities of the
Corporation;
(b) "AFFILIATE", when used to indicate a relationship with a
specified corporation, means a Person who directly, or
indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such specified
corporation;
(c) "ASSOCIATE", when used to indicate a relationship with a
Person, means a spouse of that Person, any Person who resides
in the same home as that Person and to whom that Person is
married or with whom that Person is living in a conjugal
relationship outside marriage, a child of that Person or a
relative of that Person if the relative has the same home as
that Person;
(d) a Person will be deemed the "BENEFICIAL OWNER" of, and to have
"BENEFICIAL OWNERSHIP" of, and to "BENEFICIALLY OWN":
(i) any securities as to which such Person or any of such
Person's Affiliates or Associates is the owner at law
or in equity;
(ii) any securities as to which such Person or any of such
Person's Affiliates or Associates has the right to
acquire (whether such right is exercisable
immediately or within a period of 60 days thereafter
and whether or not upon the occurrence of a
contingency) pursuant to any agreement, arrangement,
pledge or understanding, whether or not in writing,
(other than customary agreements with and between
underwriters or banking group or selling group
members with respect to a distribution of securities
and other than pledges of securities in the ordinary
course of the pledgee's business) or upon the
exercise of any conversion right, exchange right,
share purchase right (other than a Right), warrant or
option; and
(iii) any securities which are Beneficially Owned within
the meaning of clauses (i) or (ii) by any other
Person with whom such Person is acting jointly or in
concert;
provided, however, that a Person will not be deemed
the "BENEFICIAL OWNER" of, or to have "BENEFICIAL
OWNERSHIP" of, or to "BENEFICIALLY OWN", any security
because:
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(iv) such security has been or agreed to be deposited or
tendered pursuant to a Lock-up Agreement or is
otherwise deposited or tendered pursuant to any
Take-over Bid made by such Person, any Affiliate or
Associate of such Person or any Person acting jointly
or in concert with such Person until such deposited
security has been taken up or paid for, whichever
occurs first;
(v) such Person or any Affiliate or Associate of such
Person or any other Person acting jointly or in
concert with such Person holds such security and:
(A) the ordinary business of any such Person
(the "FUND MANAGER") includes the management
of investment funds for others and such
security is held by the Fund Manager in the
ordinary course of such business in the
performance of the Fund Manager's duties for
the account of any other Person (a
"CLIENT"), including a non-discretionary
account held on behalf of a Client by a
broker or dealer registered under applicable
laws;
(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 Estate Accounts or Other
Accounts;
(C) such Person (the "PLAN ADMINISTRATOR") is
the administrator or the trustee of one or
more pension funds or plans (a "PLAN")
registered under the laws of Canada or any
province thereof or the laws of the United
States of America or any state thereof and
such security is held by the Plan
Administrator or the Plan in the ordinary
course of the Plan Administrator's or Plan's
activities;
(D) such Person (the "STATUTORY BODY") is
established by statute for purposes that
include, and the ordinary business or
activity of such Person includes, the
management of investment funds for employee
benefit plans, pension plans and insurance
plans of various public bodies and such
security is held by the Statutory Body in
the ordinary course of the management of
such investment funds;
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(E) such Person is a Crown Agent or agency (a
"CROWN AGENT"); or
(F) such Person is a Plan;
provided, however, that in any of the foregoing
cases, the Fund Manager, the Trust Company, the Plan
Administrator, the Statutory Body, the Crown Agent or
the Plan, as the case may be, is not then making a
Take-over Bid, has not then announced an intention to
make a Take-over Bid and is not then acting jointly
or in concert with any other Person who is making a
Take-over Bid or who has announced a current
intention to make a Take-over Bid, other than an
Offer to Acquire Voting Shares or other securities
(1) pursuant to a distribution by the Corporation,
(2) by means of a Permitted Bid or a Competing
Permitted Bid or (3) by means of market transactions
made in the ordinary course of business of such
Person (including pre-arranged trades entered into in
the ordinary course of business of such Person)
executed through the facilities of a stock exchange
or organized over-the-counter market;
(vi) such Person is (A) a Client of the same Fund Manager
as another Person on whose account the Fund Manager
holds such security, (B) an Estate Account or Other
Account of the same Trust Company as another Person
on whose account the Trust Company holds such
security or (C) a Plan with the same Plan
Administrator as another Plan on whose account the
Plan Administrator holds such security;
(vii) such Person is (A) a Client of a Fund Manager and
such security is owned at law or in equity by the
Fund Manager, (B) an Estate Account or 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
Plan Administrator; or
(viii) because such Person is the registered holder of
securities as a result of carrying on the business of
or acting as a nominee of a securities depositary.
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(e) "BOARD OF DIRECTORS" means the board of directors of the
Corporation or, if duly constituted and whenever duly
empowered, any committee of the board of directors of the
Corporation;
(f) "BUSINESS DAY" means any day other than a Saturday, a Sunday
or a day on which banking institutions in Montreal, Quebec are
authorized or obligated by law to close;
(g) "CLOSE OF BUSINESS" on any given date means the time on such
date (or, if such date is not a Business Day, the time on the
next Business Day) at which the principal office in Montreal,
Quebec of the transfer agent for the Common Shares (or, after
the Separation Time, the office of the Rights Agent) is closed
to the public;
(h) "COMMON SHARE" means the Class A Common Shares of the
Corporation and any other shares of the Corporation into which
such shares may be subdivided, consolidated, reclassified or
changed;
(i) "COMMON SHARES", when used with reference to any Person other
than the Corporation, means the class or classes of shares (or
similar equity interest) with the greatest per share (or
similar interest) voting power entitled to vote generally in
the election of all directors of such other Person;
(j) "COMPETING PERMITTED BID" means a Take-over Bid that:
(i) is made after a Permitted Bid or another Competing
Permitted Bid has been made and prior to the expiry
of that Permitted Bid or Competing Permitted Bid (in
this definition, the "PRIOR BID");
(ii) satisfies all components of the definition of
Permitted Bid other than the requirement set out in
clause (ii) of that definition; and
(iii) contains, and the take up and payment for securities
rendered or deposited under the Take-over Bid is
subject to, irrevocable and unqualified conditions
that:
(A) no Voting Shares will be taken up or paid
for pursuant to the Take-over Bid (1) prior
to the close of business on a date that is
no earlier than the later of the date which
is 35 days (or such other minimum deposit
period for a take-over bid as is provided in
the Securities Act) after the date the
Take-over Bid is made and the 60th day after
the date of the Prior Bid that is then
outstanding and (2) then only if, at the
close of
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business on the date Voting Shares are first
taken up or paid for, more than 50% of the
then outstanding Voting Shares held by
Independent Shareholders have been deposited
or tendered pursuant to such Take-over Bid
and not withdrawn; and
(B) if the requirement in clause (iii)(A)(2) is
satisfied, the Offeror will make a public
announcement of that fact and the Take-over
Bid will remain open for deposits and
tenders of Voting Shares for a period of at
least 10 Business Days after the date of the
announcement;
(k) "CONTROLLED": a corporation is controlled by another Person or
two or more Persons acting jointly or in concert if:
(i) securities entitled to vote in the election of
directors carrying more than 50% of the votes for the
election of the directors are held, directly or
indirectly, by or for the benefit of the other Person
or two or more Persons acting jointly or in concert;
and
(ii) the votes carried by such securities are entitled, if
exercised, to elect a majority of the board of
directors of such corporation;
and "CONTROLS", "CONTROLLING" and "UNDER COMMON CONTROL WITH"
will be interpreted accordingly;
(l) "CONVERTIBLE SECURITIES" means any securities issued by the
Corporation (including rights, warrants and options, but
excluding the Rights) carrying any purchase, exercise,
conversion or exchange rights, pursuant to which the holder of
Convertible Securities may acquire Voting Shares or other
securities convertible into or exercisable or exchangeable for
Voting Shares (in each case, whether such right is exercisable
immediately or after a specified period and whether or not on
condition or the happening of any contingency);
(m) "CONVERTIBLE SECURITY ACQUISITION" means the acquisition of
Voting Shares on the exercise, conversion or exchange of
Convertible Securities acquired by any Person pursuant to a
Permitted Bid Acquisition, Exempt Acquisition or Pro Rata
Acquisition;
(n) "CO-RIGHTS AGENT" has the meaning ascribed to it in subsection
5.1.(a);
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(o) "CORPORATIONS ACT" means the CANADA BUSINESS CORPORATIONS ACT,
as it may be amended, and the regulations made thereunder, and
any successor laws or regulations thereto;
(p) "DIVIDEND PAID IN THE ORDINARY COURSE" means cash dividends
paid in any financial 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 the Common
Shares in its immediately preceding financial year;
(ii) 300% of the arithmetic average of the aggregate
amounts f cash dividends declared payable by the
Corporation on the Common Shares in its three
immediately preceding financial years; and
(iii) 100% of the aggregate consolidated net income of the
Corporation, before extraordinary items, for its
immediately preceding financial year;
(q) "ELECTION TO EXERCISE" has the meaning ascribed to it in
clause 3.1(e)(ii);
(r) "EXEMPT ACQUISITION" means an acquisition of Voting Shares:
(i) in respect of which the Board of Directors has waived
the application of section 4.1 pursuant to section
6.1;
(ii) pursuant to a distribution by the Corporation of
Voting Shares or Convertible Securities (and the
conversion or exchange of such securities) pursuant
to a prospectus, registration statement or similar
document (provided that the purchaser does not
thereby Beneficially Own a greater percentage of the
Voting Shares or Convertible Securities so offered
than the percentage of Voting Shares or Convertible
Securities beneficially owned by the purchaser
immediately prior to that distribution) or by way of
private placement provided that, in the case of a
private placement, all necessary stock exchange
approvals for the private placement have been
obtained and the private placement complies with the
terms and conditions of those approvals and the
purchaser does not become the Beneficial Owner of
more than 25% of the Voting Shares outstanding
immediately prior to the private placement (and in
making this determination, the securities to be
issued to that purchaser pursuant to the private
placement will be deemed to be held by that purchaser
but will not be included in the aggregate
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number of outstanding Voting Shares immediately prior
to the private placement); and
(iii) pursuant to an amalgamation, merger or other
statutory procedure requiring shareholder approval;
(s) "EXERCISE PRICE" means, as of any date, the price at which a
holder of a Right may purchase the securities issuable upon
exercise of such Right and, until adjustment thereof in
accordance with the terms hereof, the Exercise Price will be
$100;
(t) "EXPANSION FACTOR" has the meaning ascribed to it in
subsection 3.2(a);
(u) "EXPIRATION TIME" means earlier of:
(i) the Termination Time; and
(ii) subject to section 6.15, the close of the annual
meeting of shareholders of the Corporation in 2005
and every two-year anniversary thereafter and so on
unless the continuation of this agreement for each
such two-year period (or other period approved by the
Independent Shareholders) is approved in accordance
with section 6.16;
(v) "FLIP-IN EVENT" means a transaction in or pursuant to which
any Person becomes an Acquiring Person;
(w) "HOLDER" has the meaning ascribed to it in section 2.5;
(x) "INDEPENDENT SHAREHOLDERS" means holders of Voting Shares
other than Voting Shares Beneficially Owned by:
(i) an Acquiring Person;
(ii) an Offeror, other than a Person described in any one
or more of paragraphs (A) through (E) of clause
1.1(d)(v);
(iii) any Associate or Affiliate of such Acquiring Person
or Offeror;
(iv) any Person acting jointly or in concert with such
Acquiring Person or Offeror; and
(v) any employee benefit plan, stock purchase plan,
deferred profit sharing plan and any other similar
plan or trust for the benefit of
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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;
(y) "LOCK UP AGREEMENT" means an agreement between an Offeror, any
Affiliate or Associate of the Offeror or any other Person
acting jointly or in concert with the Offeror and a Person
(the "LOCKED-UP PERSON") who is not an Affiliate or Associate
of the Offeror or a Person acting jointly or in concert with
the Offeror whereby the Locked-up Person agrees to deposit or
tender Voting Shares held by the Locked-up Person to the
Offeror's Take-over Bid or to any Take-over Bid made by an
Affiliate or Associate of the Offeror 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; or
(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") where the
Specified Amount is not greater than 7% of the
offering price that is contained or proposed to be
contained in the Lock-up Bid; and
(ii) does not provide for any "break-up fees", "top-up
fees", "termination fees", penalties, expenses or
other amounts that exceed in the aggregate the
greater of (A) the cash equivalent of 2.5% of the
price or value payable to the Locked-up Person under
the Take-over Bid and (B) one-half of the increased
price or value that is paid pursuant to another
Take-over Bid or transaction, if the Locked-up Person
fails to tender Voting Shares pursuant thereto or
withdraws Voting Shares previously tendered in order
to accept the other Take-over Bid or support the
other 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
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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 for acceptance of the other Take-over Bid or
transaction;
(z) "MARKET PRICE" per share of any securities on any date of
determination means the average of the weighted average sale
price per share of such securities (determined as described
below) for 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 3.2 have caused the sale
prices in respect of any Trading Day used to determine the
Market Price not to be fully comparable with the sale prices
on such date of determination or, if the date of determination
is not a Trading Day, on the immediately preceding Trading
Day, each such sale price so used will be appropriately
adjusted in a manner analogous to the applicable adjustment
provided for in section 3.2 in order to make it fully
comparable with the sale price on such date of determination
or, if the date of determination is not a Trading Day, on the
immediately preceding Trading Day. The weighted average sale
price per share of any securities on any date will be
determined by dividing the aggregate sale price of all
securities sold on the principal stock exchange in Canada on
which such securities are listed and posted for trading
divided by the total number of securities so sold except that:
(i) if for any reason such prices are not available on
such day or the securities are not listed and posted
for trading on any stock exchange in Canada, the
Market Price will be calculated using the sale prices
for such securities as reported in the principal
consolidated transaction reporting system with
respect to securities listed or admitted to trading
on the principal national securities exchange in the
United States on which such securities are listed or
admitted to trading;
(ii) if for any reason such prices are not available on
such day or the securities are not listed and posted
for trading on a stock exchange in Canada or a
national securities exchange in the United States,
the Market Price will be calculated using the sale
prices for such securities in the over-the-counter
market, as reported by The Canadian Dealing Network
Inc., or such other comparable system then in use; or
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(iii) if on any such date the securities are not quoted by
any such organization, the Market Price will be
calculated using the average of the closing bid and
asked prices as furnished by a professional market
maker making a market in the securities;
provided, however, that if on any such date the securities are
not traded on any exchange or in the over-the-counter market
and the price referred to in clause (iii) is not available,
the weighted average trading price per share of such
securities on such date will mean the fair value per share of
such securities on such date as determined by a nationally or
internationally recognized investment dealer or investment
banker chosen by the Board of Directors;
(aa) "NOMINEE" has the meaning attributed to it in subsection
3.1(d);
(bb) "OFFER TO ACQUIRE" includes:
(i) an offer to purchase, or a solicitation of an offer
to sell; and
(ii) an acceptance of an offer to sell, whether or not
such offer to sell has been solicited,
or any combination thereof, and the Person accepting an offer
to sell will be deemed to be making an offer to acquire to the
Person who made the offer to sell;
(cc) "OFFEROR" means a Person who has announced a current intention
to make or who is making a Take-over Bid;
(dd) "OFFEROR'S SECURITIES" means Voting Shares Beneficially Owned
by an Offeror on the date of a Take-over Bid;
(ee) "PERMITTED BID" means a Take-over Bid which is made by means
of a take-over bid circular and which also complies with the
following additional provisions:
(i) the Take-over Bid is made to all holders of Voting
Shares other than the Offeror;
(ii) the Take-over Bid contains, and the take-up and
payment for securities tendered or deposited
thereunder is subject to, an irrevocable and
unqualified condition that no Voting Shares will be
taken-up or paid for pursuant to the Take-over Bid
prior to the close of business on the date which is
not less than 60 days after the
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date of the Take-over Bid and only if at such date
more than 50% of the Voting Shares held by
Independent Shareholders have been deposited or
tendered pursuant to the Take-over Bid and not
withdrawn;
(iii) the Take-over Bid contains an irrevocable and
unqualified provision that, unless the Take-over Bid
is withdrawn, Voting Shares may be deposited pursuant
to such Take-over Bid at any time during the period
of time between the date of the Take-over Bid and the
date on which the Voting Shares subject to the
Take-over Bid may be taken-up and paid for and that
any Voting Shares deposited pursuant to the Take-over
Bid may be withdrawn until taken-up and paid for; and
(iv) the Take-over Bid contains an irrevocable and
unqualified provision that, if on the date on which
Voting Shares may be taken up and paid for more than
50% of the Voting Shares held by Independent
Shareholders have been deposited or tendered pursuant
to the Take-over Bid and not withdrawn, the Offeror
will make a public announcement of that fact and the
Take-over Bid will remain open for deposits and
tenders of Voting Shares for not less than 10
Business Days from the date of such public
announcement;
(ff) "PERMITTED BID ACQUISITION" means an acquisition of Voting
Shares made pursuant to a Permitted Bid or a Competing
Permitted Bid;
(gg) "PERSON" includes any individual, body corporate, firm,
partnership, association, trust, trustee, executor,
administrator, legal personal representative, group,
unincorporated organization, syndicate, government or
governmental agency or instrumentality or other entity;
(hh) "PRO RATA ACQUISITION" means:
(i) the acquisition of Voting Shares as a result of a
stock dividend, a stock split or other event pursuant
to which a Person receives or acquires Voting Shares
on the same proportionate basis as all other holders
of the same class of Voting Shares;
(ii) the acquisition of Voting Shares pursuant to any
dividend reinvestment plan or other plan made
available by the Corporation to holders of all its
Voting Shares (other than holders resident in any
jurisdiction where participation in such plan is
restricted or impractical to the Corporation as a
result of applicable law); or
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(iii) the receipt and/or exercise of rights (other than the
Rights) issued by the Corporation to all the holders
of a class of Voting Shares to subscribe for or
purchase Voting Shares (other than holders resident
in any jurisdiction where the distribution or
exercise of such rights is restricted or impractical
as a result of applicable law), provided that such
rights are acquired directly from the Corporation and
not from any other Person.
(ii) "RECORD TIME" has the meaning ascribed to it in the recitals;
(jj) "REDEMPTION PRICE" has the meaning ascribed to it in
subsection 6.1(a);
(kk) "RIGHT" has the meaning ascribed to it in the recitals;
(ll) "RIGHTS CERTIFICATES" means the certificates representing the
Rights after the Separation Time, which are to be
substantially in the form attached as Exhibit A;
(mm) "RIGHTS PLAN" has the meaning ascribed to it in the recitals;
(nn) "RIGHTS REGISTER" and "RIGHTS REGISTRAR" have the respective
meanings ascribed to them in subsection 2.3(a);
(oo) "SECURITIES ACT" means the Securities Act (Quebec), as
amended, and the regulations and rules thereunder, and any
comparable or successor laws or regulations thereto;
(pp) "SEPARATION TIME" means, subject to subsection 6.1(c), the
close of business on the tenth Trading Day after the earlier
of:
(i) the Stock Acquisition Date; and
(ii) the date of the commencement of, or first public
announcement of the intent of any Person (other than
the Corporation or any Subsidiary of the Corporation)
to commence, a Take-over Bid (other than a Permitted
Bid or a Competing Permitted Bid);
or such later time as may be determined by the Board of
Directors; provided that (x) if the foregoing results in the
Separation Time being prior to the Record Time, the Separation
Time will be the Record Time, (y) if any Take-over Bid
referred to in clause (ii) expires or is cancelled, terminated
or otherwise withdrawn prior to the Separation Time, such
Take-over Bid will be deemed, for the purposes of this
definition, never to have been made, (z) if the Board of
Directors determines pursuant to
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section 6.1 to waive the application of section 4.1 to have a
Flip-in Event, the Separation Time in respect of that Flip-in
Event will be deemed never to have occurred ;
(qq) "STOCK ACQUISITION DATE" means the date of the first public
announcement (which, for purposes of this definition, includes
the filing of a report pursuant to section 147.11 of the
Securities Act or section 13(d) of the U.S. Exchange Act) by
the Corporation or an Acquiring Person of facts indicating
that a Person has become an Acquiring Person;
(rr) "SUBSIDIARY" of a Person has the meaning ascribed to it in the
Corporations Act;
(ss) "TAKE-OVER BID" means an Offer to Acquire Voting Shares or
securities convertible into or exchangeable for 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 or
exchangeable, together with the Offeror's Securities,
constitute, in the aggregate, 20% or more of the Voting Shares
outstanding on the date of the Offer to Acquire;
(tt) "TERMINATION TIME" means the time at which the right to
exercise Rights will terminate pursuant to subsection 6.1(f);
(uu) "TRADING DAY", when used with respect to any securities, means
a day on which the principal Canadian securities exchange on
which such securities are listed or admitted to trading is
open for the transaction of business or, if the securities are
not listed or admitted to trading on any Canadian securities
exchange, a Business Day;
(vv) "U.S. EXCHANGE ACT" means the United States Securities
Exchange Act of 1934, as amended, and the rules and
regulations thereunder as from time to time in effect;
(ww) "VOTING SHARES" means the Common Shares and any other shares
in the capital of the Corporation to which are attached a
right to vote for the election of directors generally; and
(xx) "VOTING SHARE REDUCTION" means an acquisition or redemption by
the Corporation or a Subsidiary of the Corporation of Voting
Shares which, by reducing the number of Voting Shares
outstanding, increases the percentage of outstanding Voting
Shares Beneficially Owned by any Person to 20% or more of the
Voting Shares outstanding.
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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 DESCRIPTIVE HEADINGS
Descriptive headings are for convenience only and are not to affect the
meaning or construction of any of the provisions of this agreement.
1.4 REFERENCES TO AGREEMENT
References to "THIS AGREEMENT", "HERETO", "HEREIN", "HEREBY",
"HEREUNDER", "HEREOF" and similar expressions refer to this agreement,
as amended or supplemented from time to time, and not to any particular
Article, section, subsection, clause or other portion hereof and
include any and every instrument supplemental or ancillary hereto.
1.5 CALCULATION OF NUMBER AND PERCENTAGE OF BENEFICIAL OWNERSHIP OF
OUTSTANDING VOTING SHARES
(a) For the purposes of this agreement, in determining the
percentage of the outstanding Voting Shares of the Corporation
with respect to which a Person is or is deemed to be the
Beneficial Owner, all unissued Voting Shares of the
Corporation of which such Person is deemed to be the
Beneficial Owner will be deemed to be outstanding.
(b) The percentage of outstanding Voting Shares of the Corporation
Beneficially Owned by any Person, for the purposes of this
agreement, will be deemed to be the product determined by the
formula:
100 x A
-------
B
where:
A = the aggregate number of votes for the
election of all directors generally
attaching to the outstanding Voting Shares
Beneficially Owned by such Person; and
b = the aggregate number of votes for the
lection of all directors generally
attaching to all outstanding Voting Shares.
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1.6 ACTING JOINTLY OR IN CONCERT
For purposes of this agreement, a Person is acting jointly or in
concert with every other Person who has any agreement, arrangement,
commitment or understanding (whether formal or informal and whether or
not in writing) with the first Person, or with any other Person acting
jointly or in concert with the first Person, to acquire or Offer to
Acquire any Voting Shares or securities convertible into or
exchangeable for Voting Shares (other than customary agreements with
and between underwriters or banking group members or selling group
members with respect to a distribution of securities and other than
pledges of securities in the ordinary course of the pledgee's
business).
ARTICLE 2
THE RIGHTS
2.1 LEGEND ON CERTIFICATES
Certificates for Common Shares issued after the Record Time but prior
to the earlier of the Separation Time and the Expiration Time will
evidence, in addition to the Common Shares, but subject to section 3.2,
one Right for each Common Share evidenced thereby and will have
impressed, printed or written on or otherwise affixed to them
substantially the following legend:
UNTIL THE SEPARATION TIME (AS DEFINED IN THE RIGHTS AGREEMENT
REFERRED TO BELOW), THIS CERTIFICATE ALSO EVIDENCES AND
ENTITLES THE HOLDER OF THIS CERTIFICATE TO CERTAIN RIGHTS AS
SET FORTH IN A SHAREHOLDER RIGHTS PLAN AGREEMENT DATED AS OF
NOVEMBER 17, 2003 (AS THE SAME MAY BE AMENDED OR SUPPLEMENTED
FROM TIME TO TIME IN ACCORDANCE WITH THE TERMS THEREOF, THE
"RIGHTS AGREEMENT") BETWEEN SAND TECHNOLOGY INC. (THE
"CORPORATION") AND CIBC MELLON TRUST COMPANY, AS RIGHTS AGENT,
THE TERMS OF WHICH ARE INCORPORATED HEREIN BY REFERENCE AND A
COPY OF WHICH MAY BE INSPECTED DURING NORMAL BUSINESS HOURS AT
THE PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION. UNDER
CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT,
SUCH RIGHTS MAY BE AMENDED, REDEEMED OR TERMINATED, MAY
EXPIRE, MAY BECOME VOID (IF, IN CERTAIN CASES, THEY ARE
"BENEFICIALLY OWNED" BY AN "ACQUIRING PERSON", WHETHER
CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR ANY
SUBSEQUENT
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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
AGREEMENT TO THE HOLDER OF THIS CERTIFICATE WITHOUT CHARGE AS
SOON AS IS PRACTICABLE AFTER RECEIPT OF A WRITTEN REQUEST
THEREFOR.
Certificates representing Common Shares that are issued and outstanding
at the Record Time will evidence one Right for each Common Share
evidenced thereby, despite the absence of the foregoing legend until
the earlier of the Separation Time and the Expiration Time.
2.2 EXECUTION, AUTHENTICATION, DELIVERY AND DATING OF RIGHTS CERTIFICATES
(a) The Rights Certificates will be executed on behalf of the
Corporation by the Chairman of the Board, the President, the
Chief Executive Officer, Chief Financial Officer or the
Secretary. The signatures of such officers may be mechanically
reproduced in facsimile on the Rights Certificates, and when
so reproduced will be valid and binding on the Corporation
even though the Persons whose signatures are so reproduced may
not hold office at the time the Rights Certificates are
issued.
(b) Promptly after the Separation Time, the Corporation will
notify the Rights Agent in writing of the Separation Time and
will deliver Rights Certificates executed by the Corporation
to the Rights Agent for countersignature and disclosure
statements describing the Rights, and the Rights Agent will
countersign such Rights Certificates in a manner satisfactory
to the Corporation and deliver such Rights Certificates and
disclosure statements to the holders of the Rights pursuant to
subsection 3.1(d). No Rights Certificate will be valid for any
purpose until countersigned by the Rights Agent.
(c) Each Rights Certificate will be dated the date it is
countersigned.
2.3 REGISTRATION, TRANSFER AND EXCHANGE
(a) After the Separation Time, the Corporation will cause a
register to be kept (the "RIGHTS REGISTER") in which, subject
to such reasonable regulations as it may prescribe, the
Corporation will provide for the registration and transfer of
Rights. The Rights Agent is hereby appointed the "RIGHTS
REGISTRAR" for the purpose of maintaining the Rights Register
for the Corporation and registering Rights and transfers of
Rights as provided in
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this agreement. If the Rights Agent ceases 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, but subject to subsection (c) and subsection
4.1(b), the Corporation will execute, and the Rights Agent
will manually countersign and deliver, in the name of the
holder or the designated transferee or transferees, as
required pursuant to the holder's instructions, one or more
new Rights Certificates evidencing the same aggregate number
of Rights as did the Rights Certificates so surrendered.
(b) All Rights issued upon any registration of transfer or
exchange of Rights Certificates will be valid obligations of
the Corporation, and such Rights will 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 will 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 2.3, 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.
2.4 MUTILATED, DESTROYED, LOST AND STOLEN RIGHTS CERTIFICATES
(a) If a mutilated Rights Certificate is surrendered to the Rights
Agent prior to the Expiration Time, the Corporation will
execute and the Rights Agent will countersign and deliver in
exchange therefor a new Rights Certificate evidencing the same
number of Rights as the Rights Certificate so surrendered.
(b) If there will 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 each of them to indemnify each of them and any of
their agents, 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
will execute, and upon its request the Rights Agent will
countersign and deliver, in lieu of any such destroyed, lost
or
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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 2.4, 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
2.4 in lieu of any destroyed, lost or stolen Rights
Certificate will evidence a contractual obligation of the
Corporation, whether or not the destroyed, lost or stolen
Rights Certificate is at any time enforceable by anyone, and
will be entitled to all the benefits of this agreement equally
and proportionately with any and all other Rights duly issued
by the Corporation under this agreement.
2.5 PERSONS DEEMED OWNERS OF RIGHTS
The Corporation, the Rights Agent and any agent of the Corporation or
the Rights Agent may deem and treat the Person in whose name a Rights
Certificate (or, prior to the Separation Time, the associated Common
Share certificate) is registered as the absolute owner thereof and of
the Rights evidenced thereby for all purposes. As used in this
agreement, unless the context otherwise requires, the term "HOLDER" of
any Rights will mean the registered holder of such Rights (or, prior to
the Separation Time, of the associated Common Shares).
2.6 DELIVERY AND CANCELLATION OF CERTIFICATES
All Rights Certificates surrendered upon exercise or for redemption,
registration of transfer or exchange, if surrendered to any Person
other than the Rights Agent, will be delivered to the Rights Agent and,
in any case, will be promptly cancelled by the Rights Agent. The
Corporation may deliver at any time 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 will be
promptly cancelled by the Rights Agent. No Rights Certificate will be
countersigned in lieu of or in exchange for any Rights Certificates
cancelled as provided for in this section 2.6, except as expressly
permitted by this agreement. The Rights Agent will destroy all
cancelled Rights Certificates and deliver a certificate of destruction
to the Corporation on request.
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2.7 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 the 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 Common Share certificate representing such
Right;
(c) after the Separation Time, the Rights Certificates will be
transferable only upon registration of the transfer on the
Rights Register as provided in this agreement;
(d) prior to due presentment of a Rights Certificate (or, prior to
the Separation Time, the associated Common Share certificate)
for registration of transfer, the Corporation, the Rights
Agent and any agent of the Corporation or the Rights Agent may
deem and treat the Person in whose name the Rights Certificate
(or, prior to the Separation Time, the associated Common Share
certificate) is registered as the absolute owner thereof and
of the Rights evidenced thereby (despite any notations of
ownership or writing on such Rights Certificate or the
associated Common Share certificate made by anyone other than
the Corporation or the Rights Agent) for all purposes, and
neither the Corporation nor the Rights Agent will be affected
by any notice to the contrary;
(e) it has waived any right and is not entitled to receive any
fractional Rights or any fractional Common Shares upon
exercise of a Right;
(f) subject to section 6.5, without the approval of the holders of
Voting Shares or Rights and on the sole authority of the Board
of Directors, this agreement may be amended or supplemented
from time to time as provided in this agreement; and
(g) notwithstanding anything in this agreement to the contrary,
neither the Corporation nor the Rights Agent will have any
liability to any holder of a Right or 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 governmental, regulatory or
administrative agency or commission, or any statute, rule,
regulation or executive order
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promulgated or enacted by a governmental authority,
prohibiting or otherwise restraining performance of such
obligations.
2.8 RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER
No holder, as such, of any Right or Rights Certificate will be entitled
to vote or receive dividends as, or be deemed for any purpose to be, a
holder of any Common Share which may at any time be issuable on the
exercise of such Right, nor will anything contained herein or in any
Rights Certificate be construed or deemed to confer on the holder of
any Right or Rights Certificate, as such, any of the rights, titles,
benefits or privileges of a shareholder of the Corporation or any right
to vote at any meeting of shareholders of the Corporation whether for
the election of directors or otherwise or on any matter submitted to
shareholders of the Corporation at any meeting thereof, or to give or
withhold consent to any action of the Corporation, or to receive notice
of any meeting or other action affecting any shareholder of the
Corporation, except as expressly provided herein, or to receive
dividends, distributions or subscription rights, or otherwise, until
the Right or Rights evidenced by any Rights Certificate will have been
duly exercised in accordance with the terms and provisions hereof.
ARTICLE 3
EXERCISE OF THE RIGHTS
3.1 INITIAL EXERCISE PRICE; EXERCISE OF RIGHTS; DETACHMENT OF RIGHTS
(a) Subject to adjustment as set forth in this agreement, from and
after the Separation Time and prior to the Expiration Time,
each Right will entitle the holder thereof to purchase one
Common Share for the Exercise Price (which Exercise Price and
number of Common Shares are subject to adjustment as set forth
below).
(b) Until the Separation Time:
(i) the Rights are not exercisable and may not be
exercised; and
(ii) each Right will be evidenced by the certificate for
the associated Common Share registered in the name of
the holder thereof (which certificate will also be
deemed to be a Rights Certificate) and will be
transferable only together with, and will be
transferred by a transfer of, such associated Common
Share.
(c) From and after the Separation Time and prior to the Expiration
Time:
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(i) the Rights will be exercisable; and
(ii) the registration and transfer of the Rights will be
separate from and independent of the Common Shares.
(d) Promptly following the Separation Time, the Corporation will
prepare and the Rights Agent will mail to each holder of
record of Common Shares as of the Separation Time (other than
an Acquiring Person and other than, in respect of any Rights
Beneficially Owned by such Acquiring Person which are not held
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 will
furnish copies of such records to the Rights Agent for this
purpose):
(i) a Rights Certificate representing the number of
Rights held by such holder at the Separation Time in
substantially the form of Exhibit A, appropriately
completed, and having such marks of identification or
designation and such legends, summaries or
endorsements printed thereon as the Corporation may
deem appropriate and as are not inconsistent with the
provisions of this agreement, or as may be required
to comply with any law, rule, regulation or judicial
or administrative order or with any rule or
regulation made pursuant thereto or with any rule or
regulation of any stock exchange or quotation system
on which the Rights may be listed or traded from time
to time, or to conform to usage; and
(ii) a disclosure statement prepared by the Corporation
describing the Rights;
provided that a Nominee will be sent the materials provided
for in clauses (i) and (ii) 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 Common Shares which
are Beneficially Owned by another Person, the Corporation may
require the first-mentioned Person to furnish any information
and documentation as the Corporation deems necessary or
appropriate to make that determination.
(e) Rights may be exercised in whole or in part on any Business
Day after the Separation Time and prior to the Expiration Time
by submitting to the Rights Agent at its principal office in
the city of Montreal or any other office of the Rights Agent
designated for that purpose from time to time by the
Corporation:
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(i) the Rights Certificate evidencing such Rights;
(ii) an election to exercise such Rights (an "ELECTION TO
EXERCISE") substantially in the form attached to the
Rights Certificate duly completed and executed by the
holder or his or her executors or administrators or
other personal representatives or his, her or their
legal attorney duly appointed by an instrument in
writing in form and executed in a manner satisfactory
to the Rights Agent; and
(iii) by certified cheque, banker's draft or money order
payable to the order of the Rights Agent, of a sum
equal to the applicable Exercise Price multiplied by
the number of Rights being exercised and an amount
sufficient to cover any tax or other governmental
charge which may be payable in respect of any
transfer or delivery of Rights Certificates or the
issuance or delivery of certificates for the relevant
Common Shares in a name other than that of the holder
of the Rights being exercised.
(f) Upon receipt of the Rights Certificate which is accompanied by
a completed Election to Exercise that does not indicate that
such Right is null and void as provided by subsection 4.1(b)
and payment as set forth in subsection 3.1(e), the Rights
Agent (unless otherwise instructed by the Corporation if the
Corporation is of the opinion that the Rights cannot be
exercised in accordance with this agreement) will promptly:
(i) requisition from the transfer agent of the Common
Shares, certificates representing the number of such
Common Shares (rounded down to the nearest whole
number of Common Shares) to be purchased (the
Corporation hereby irrevocably authorizes such
transfer agent 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 Common Shares;
(iii) after receipt of the Common Share certificates,
deliver them to, or to the order of, the registered
holder of such Rights Certificate, registered in such
name or names as may be designated by such holder;
(iv) when appropriate, after receipt, deliver such cash
referred to in clause (ii) above to or to the order
of the registered holder of the Rights Certificate;
and
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(v) tender to the Corporation all payments received on
exercise of the Rights.
(g) In case the holder of any Rights exercises 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.
(h) The Corporation covenants and agrees that it will:
(i) take all such action as may be necessary and within
its power to ensure that all Common Shares delivered
upon exercise of Rights, at the time of delivery of
the certificates representing such Common Shares
(subject to payment of the Exercise Price), will be
duly and validly authorized, issued and delivered as
fully paid and non-assessable;
(ii) take all such action as may be necessary and within
its power to comply with any applicable requirements
of the Corporations Act, the Securities Act and the
securities legislation of each of the other provinces
of Canada and any other applicable law, rule or
regulation in connection with the issuance and
delivery of the Rights Certificates and the issuance
of any Common Shares upon exercise of Rights;
(iii) use reasonable efforts to cause all Common Shares
issued on exercise of Rights to be listed on the
principal exchanges or over-the-counter markets on
which the Common Shares are then listed or traded;
(iv) cause to be reserved and kept available out of its
authorized and unissued Common Shares the number of
Common Shares that, as provided in this agreement,
will be sufficient from time to time to permit the
exercise in full of all outstanding Rights; and
(v) pay when due and payable any Canadian and United
States federal and provincial and state transfer
taxes and charges (for greater certainty, not in the
nature of income or withholding taxes) which may be
payable in respect of the original issuance or
delivery of the Rights Certificates, provided that
the Corporation will not be required to pay any tax
or other governmental charge which may be payable in
respect of any transfer or delivery of Rights
Certificates or the issuance or delivery of
certificates for Common Shares in a
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name other than that of the holder of the Rights
being transferred or exercised.
3.2 ADJUSTMENTS TO EXERCISE PRICE: NUMBER OF RIGHTS
The Exercise Price, the number of Common Shares or other securities
subject to purchase on the exercise of each Right and the number of
Rights outstanding are subject to adjustment from time to time as
provided in this section 3.2.
(a) If the Corporation at any time after the Record Time and prior
to the Expiration Time:
(i) declares or pays 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 dividend reinvestment program and other than a
dividend payable in Common Shares (or other
securities exchangeable for or convertible into or
giving a right to acquire Common Shares) in lieu of
(and having a value no greater than) a dividend paid
in the ordinary course;
(ii) subdivides or changes the outstanding Common Shares
into a greater number of Common Shares;
(iii) combines or changes the outstanding Common Shares
into a smaller number of Common Shares; or
(iv) issues any Common Shares (or other securities
exchangeable for or convertible into or giving a
right to acquire Common Shares) in respect of, in
lieu of, or in exchange for existing Common Shares;
the Exercise Price and the number of Rights outstanding (or,
if the payment or effective date therefor occurs after the
Separation Time, the securities purchasable on exercise of
Rights) will be adjusted in the following manner.
If the Exercise Price and number of Rights are to be adjusted
(y) 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 securities of the Corporation) (the "EXPANSION FACTOR")
that a holder of one Common Share immediately prior to such
dividend, subdivision, combination, change or issuance would
hold thereafter as a result thereof and (z) each Right held
prior to such adjustment will become that number of Rights
equal to the Expansion
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Factor, and the adjusted number of Rights will be deemed to be
allocated among the Common Shares with respect to which the
original Rights were associated (if they remain outstanding)
and the securities of the Corporation issued in respect of
such dividend, subdivision, consolidation, change or issuance,
so that each such Common Share (or other security of the
Corporation) will have exactly one Right associated with it.
For greater certainty, if the securities purchasable upon
exercise of Rights are to be adjusted, the securities
purchasable on exercise of each Right after such adjustment
will be the securities that a holder of the securities
purchasable on exercise of one Right immediately prior to such
dividend, subdivision, consolidation, change or issuance would
hold thereafter as a result thereof.
Adjustments pursuant to this subsection will be made
successively whenever an event referred to in this subsection
occurs.
(b) If the Corporation at any time after the Record Time and prior
to the Expiration Time fixes a record date for the issuance of
rights, options or warrants to all or substantially all
holders of Common Shares entitling them to subscribe for or
purchase (for a period expiring within 45 calendar days after
such record date) Common Shares (or securities convertible
into or exchangeable for or carrying a right to acquire Common
Shares) at a price per Common Share (or, if a security
convertible into or exchangeable for or carrying a right to
acquire 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 95% of the Market Price per Common Share
on the second Trading Day immediately preceding such record
date, the Exercise Price in respect of the Rights to be in
effect after such record date will be determined by
multiplying the Exercise Price in respect of the Rights in
effect immediately prior to such record date by a fraction (i)
the numerator of which will be the number of Common Shares
outstanding on such record date, plus the number of Common
Shares that the aggregate offering price of the total number
of Common Shares so to be offered (and/or the aggregate
initial conversion, exchange or exercise price of the
convertible or exchangeable securities or rights so to be
offered (including the price required to be paid to purchase
such convertible or exchangeable securities or rights)) would
purchase at such Market Price per Common Share and (ii) the
denominator of which will 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
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such subscription price may be paid by delivery of
consideration, part or all of which is in a form other than
cash, the value of such consideration will be as determined in
good faith by the Board of Directors, whose determination will
be described in a statement filed with the Rights Agent and
will be binding on the Rights Agent and the holders of the
Rights. Such adjustment will be made successively whenever
such a record date is fixed. To the extent that such rights,
options or warrants are not exercised prior to the expiration
thereof, the Exercise Price will be readjusted to the Exercise
Price which would then be in effect based on the number of
Common Shares (or securities convertible into or exchangeable
for Common Shares) actually issued on exercise of such rights,
options or warrants.
(c) For purpose of this agreement, the granting of the right to
purchase Common Shares (whether from treasury or otherwise)
pursuant to a dividend reinvestment plan or any employee
benefit, stock option or similar plans will be deemed not to
constitute an issue of rights, options or warrants by the
Corporation; provided, however, that, in all such cases, the
right to purchase Common Shares is at a price per share of not
less than 90% of the then current market price per share
(determined as provided in such plans) of the Common Shares.
(d) If the Corporation at any time after the Record Time and prior
to the Expiration Time fixes a record date for a distribution
to all or substantially all holders of Common Shares
(including any such distribution made in connection with a
merger in which the Corporation is the continuing corporation)
of (i) evidences of indebtedness or assets, including cash
(other than a dividend paid in the ordinary course or a
dividend paid in Common Shares, but including any dividend
payable in securities other than Common Shares), (ii) rights,
options or warrants entitling them to subscribe for or
purchase Common Shares (or securities convertible into or
exchangeable for or carrying a right to acquire Common Shares)
(excluding those referred to in subsection 3.2(b)) at a price
per Common Share (or, if a security convertible into or
exchangeable for or carrying a right to acquire 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) that is less than
95% of the Market Price per Common Share on the second Trading
Day immediately preceding such record date or (iii) other
securities of the Corporation, the Exercise Price will be
adjusted as follows. 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 determined in good faith by the Board of Directors)
of the portion of the evidences of indebtedness, assets,
rights, options or warrants or other
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securities so to be distributed applicable to the securities
purchasable on exercise of one Right. Such adjustments will be
made successively whenever such a record date is fixed and, if
such distribution is not so made, the Exercise Price in
respect of the Rights will 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.
(e) Notwithstanding anything in this agreement to the contrary, no
adjustment of the Exercise Price will be required unless such
adjustment would require an increase or decrease of at least
1% in the Exercise Price; provided, however, that any
adjustments which by reason of this subsection are not
required to be made will be carried forward and taken into
account in any subsequent adjustment. All calculations under
section 3.2 will be made to the nearest cent or to the nearest
ten-thousandth of a Common Share or other share, as the case
may be.
(f) If as a result of an adjustment made pursuant to section 4.1,
the holder of any Right thereafter exercised will become
entitled to receive any shares other than Common Shares,
thereafter the number of such other shares so receivable upon
exercise of any Right and the applicable Exercise Price
thereof will be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as is practicable to
the provisions with respect to the Common Shares contained in
this section 3.2, and the provisions of this agreement with
respect to the Common Shares will apply on like terms to any
such other shares.
(g) All Rights originally issued by the Corporation subsequent to
any adjustment made to the Exercise Price will evidence the
right to purchase, at the adjusted Exercise Price, the number
of Common Shares purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as
provided herein.
(h) Unless the Corporation has exercised its election as provided
in subsection (i), upon each adjustment of an Exercise Price
as a result of the calculations made in subsections (b) and
(d), each Right outstanding immediately prior to the making of
such adjustment will thereafter evidence the right to
purchase, at the adjusted Exercise Price, that number of
Common Shares obtained by:
(i) multiplying (A) the number of Common Shares covered
by a Right immediately prior to such adjustment by
(B) the Exercise Price in effect immediately prior to
such adjustment; and
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(ii) dividing the product so obtained by the Exercise
Price in effect immediately after such adjustment.
(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 Common
Shares purchasable upon the exercise of a Right. Each of the
Rights outstanding after the adjustment in the number of
Rights will be exercisable for the number of Common Shares for
which such a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment
of the number of Rights will 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 will 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, will 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, the Corporation,
as promptly as is practicable, will cause to be distributed to
holders of record of Rights Certificates on such record date,
Rights Certificates evidencing, subject to section 6.4, the
additional Rights to which such holders will be entitled as a
result of such adjustment, or, at the option of the
Corporation, will 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 will be entitled after such adjustment.
Rights Certificates to be so distributed will be issued,
executed and countersigned in the manner provided for herein
and may bear, at the option of the Corporation, the relevant
adjusted Exercise Price and will be registered in the names of
holders of record of Rights Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in an Exercise Price
or the number of Common Shares issuable upon the exercise of
the Rights, the Rights Certificates previously and thereafter
issued may continue to express the relevant Exercise Price per
Common Share and the number of Common Shares which were
expressed in the initial Rights Certificates issued hereunder.
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(k) In any case in which this section 3.2 requires that an
adjustment in an Exercise Price be made effective as of a
record date for a specified event, the Corporation may elect
to defer, until the occurrence of such event, the issuance to
the holder of any Right exercised after such record date of
the number of Common Shares and other securities of the
Corporation, if any, issuable upon such exercise over and
above the number of Common Shares and other securities of the
Corporation, if any, issuable upon such exercise on the basis
of the relevant Exercise Price in effect prior to such
adjustment; provided, however, that the Corporation delivers
to such holder a due xxxx or other appropriate instrument
evidencing such holder's right to receive such additional
Common Shares or other securities upon the occurrence of the
event requiring such adjustment.
(l) Notwithstanding anything in this section 3.2 to the contrary,
the Corporation will be entitled to make such reductions in
the Exercise Price, in addition to those adjustments expressly
required by this section 3.2, as and to the extent that in its
good faith judgment the Board of Directors determines to be
advisable in order that any (i) consolidation or subdivision
of Common Shares, (ii) issuance wholly for cash of any Common
Share or securities that by their terms are convertible into
or exchangeable for Common Shares, (iii) stock dividends or
(iv) issuance of rights, options or warrants referred to in
this section 3.2, hereafter made by the Corporation to holders
of its Common Shares, will not be taxable to such
shareholders.
(m) The Corporation covenants and agrees that, after the
Separation Time, except as permitted by section 6.1 or 6.5, it
will not take (or permit any Subsidiary of the Corporation to
take) any action if at the time such action is taken it is
reasonably foreseeable that such action would diminish
substantially or otherwise eliminate the benefits intended to
be afforded by the Rights.
(n) Whenever an adjustment to the Exercise Price or a change in
the securities purchasable upon exercise of the Rights is made
pursuant to this section 3.2, the Corporation will promptly:
(i) file with the Rights Agent and with the transfer
agent for the Common Shares a certificate specifying
the particulars of such adjustment or change; and
(ii) cause notice of the particulars of such adjustment or
change to be given to the holders of the Rights.
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The failure to file such certificate or cause such notice to
be given as aforesaid, or any defect therein, will not affect
the validity of any such adjustment or change.
3.3 DATE ON WHICH EXERCISE IS EFFECTIVE
Each Person in whose name any certificate for Common Shares is issued
upon the exercise of Rights will be deemed for all purposes to have
become the holder of record of the Common Share represented thereby on,
and such certificate will 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 relevant
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 Common Share transfer books
of the Corporation are closed, such Person will be deemed to have
become the holder of record of such Common Shares on, and such
certificate will be dated, the next succeeding Business Day on which
the relevant Common Share transfer books of the Corporation are open.
ARTICLE 4
ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS
4.1 FLIP-IN EVENT
(a) Subject to subsection 4.1(b) and section 6.1, if prior to the
Expiration Time a Flip-in Event occurs, each Right will
constitute, effective on and after the later of its date of
issue and the close of business on the tenth Trading Day
following the Stock Acquisition Date, the right to purchase
from the Corporation, upon payment of the relevant Exercise
Price and otherwise exercising such Right in accordance with
the terms hereof, that number of Common Shares (rounded down
to the nearest whole number of Common Shares) having an
aggregate Market Price on the date of 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
adjustments provided for in section 3.2 if, after such date of
occurrence, an event of a type analogous to any of the events
described in section 3.2 has occurred with respect to the
Common Share).
(b) Notwithstanding anything in this agreement to the contrary,
upon the occurrence of any Flip-in Event, any Rights that are
or were Beneficially Owned on or after the earlier of the
Separation Time and the Stock Acquisition Date by (i) an
Acquiring Person (or any Affiliate or Associate of
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an Acquiring Person or any Person acting jointly or in concert
with an Acquiring Person or any Affiliate or Associate of an
Acquiring Person); or (ii) a transferee or other successor in
title, directly or indirectly, (a "TRANSFEREE") of Rights held
by an Acquiring Person (or any Affiliate or Associate of an
Acquiring Person or any Person acting jointly or in concert
with an Acquiring Person or any Affiliate or Associate of an
Acquiring Person) 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 Affiliate or Associate of an
Acquiring Person) that has the purpose or effect of avoiding
clause (i), will become null and void without any further
action, and any holder of such Rights (including any
Transferee) will not have any right whatsoever to exercise
such Rights and will not have thereafter any other rights
whatsoever with respect to such Rights, whether under any
provision of this agreement or otherwise. The holder of any
Rights represented by a Rights Certificate which is submitted
to the Rights Agent on exercise or for registration of
transfer or exchange which does not contain the necessary
certifications set forth in the Rights Certificate
establishing that such Rights are not void under this
subsection will be deemed to be an Acquiring Person for the
purpose of this section 4.1 and such Rights will be null and
void.
(c) Any Rights Certificate that represents Rights Beneficially
Owned by a Person described in clause (b)(i) or (ii) or
transferred to any nominee of any such Person, and any Rights
Certificate issued on transfer, exchange, replacement or
adjustment of any other Rights Certificate referred to in this
sentence, will contain the following legend:
THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE
OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON OR A PERSON ACTING JOINTLY OR IN
CONCERT WITH ANY OF THEM (AS SUCH TERMS ARE DEFINED IN
THE SHAREHOLDER RIGHTS PLAN AGREEMENT). THIS RIGHTS
CERTIFICATE AND THE RIGHTS REPRESENTED BY THIS
CERTIFICATE WILL BE VOID IN THE CIRCUMSTANCES
SPECIFIED IN SUBSECTION 4.1(b) OF THE SHAREHOLDER
RIGHTS PLAN AGREEMENT.
The Rights Agent will not be under any responsibility to
ascertain the existence of facts that would require the
inclusion of that legend, but will be required to include the
legend only if instructed to do so by the
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Corporation in writing or if a holder fails to certify on
transfer or exchange in the space provided on the Rights
Certificate that it is not an Acquiring Person or other Person
referred to in the legend. The issuance of a Rights
Certificate without the legend referred to in this subsection
will not affect the application of subsection (b).
(d) From and after the Separation Time, the Corporation will do
all such acts and things as will be necessary and within its
power to ensure compliance with the provisions of this section
4.1, including all such acts and things as may be required to
satisfy the requirements of the Corporations Act and the
Securities Act or comparable legislation of any other
applicable jurisdiction and the rules of any stock exchange
where the Common Shares may then be listed or traded in
respect of the issuance of Common Shares upon the exercise of
Rights in accordance with this agreement.
(e) Notwithstanding any other provision of this agreement, any
Rights held by the Corporation or any of its Subsidiaries will
be void.
ARTICLE 5
THE RIGHTS AGENT
5.1 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 one or more co-rights agents
(each, a "CO-RIGHTS AGENT") as it may deem necessary or
desirable, subject to the approval of the Rights Agent. In the
event the Corporation appoints one or more Co-Rights Agents,
the respective duties of the Rights Agents and Co-Rights
Agents will be as the Corporation may determine with the
approval of the Rights Agent. 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 (including the fees and disbursements
of any expert or advisor retained by the Rights Agent with the
approval of the Corporation, acting reasonably). The
Corporation also agrees to indemnify the Rights Agent, its
officers, directors and employees for, and to hold it and them
harmless against, any loss, liability cost, claim, action,
damage or expense, incurred without negligence, bad faith or
wilful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection
with the
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acceptance and administration of this agreement, including the
costs and expenses of defending against any claim of
liability, which right to indemnification will survive the
termination of this agreement or the resignation or the
removal of the Rights Agent.
(b) The Corporation will inform the Rights Agent in a reasonably
timely manner of events which may materially affect the
administration of this agreement by the Rights Agent and at
any time, upon request, will provide to the Rights Agent an
incumbency certificate with respect to the then current
directors of the Corporation, provided that failure to inform
the Rights Agent of any such events, or any defect therein,
will not affect the validity of any action taken hereunder in
relation to such events.
(c) The Rights Agent will be protected and will incur no liability
for or in respect of any action taken, suffered or omitted by
it in connection with its administration of this agreement in
reliance upon any certificate for Common Shares, Rights
Certificate, certificate for other securities of the
Corporation, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement or other paper or document
believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper
Person or Persons.
5.2 MERGER OR AMALGAMATION OR CHANGE OF NAME OF RIGHTS AGENT
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or amalgamated or with which it may
be consolidated, or any corporation resulting from any merger,
amalgamation 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, provided that such corporation
would be eligible for appointment as a successor Rights Agent
under the provisions of section 5.4. In case at the time such
successor Rights Agent succeeds to the agency created by this
agreement any of the Rights Certificates have been
countersigned but not delivered, any such successor Rights
Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Rights Certificates so countersigned;
and in case at that time any of the Rights Certificates have
not been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the
predecessor Rights Agent or in the name of the successor
Rights Agent;
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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 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 have not 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 will have the full force
provided in the Rights Certificates and in this agreement.
5.3 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, will be bound:
(a) the Rights Agent may consult with legal counsel (who may be
legal counsel for the Corporation) and the opinion of such
counsel will be full and complete authorization and protection
to the Rights Agent as to any action taken or omitted by it in
good faith and in accordance with such opinion; the Rights
Agent may also, with the approval of the Corporation (where
such approval may reasonably be obtained and such approval not
to be unreasonably withheld), consult with such other experts
as the Rights Agent considers necessary or appropriate to
properly carry out the duties and obligations imposed under
the agreement and the Rights Agent will be entitled to rely in
good faith on the advice of any such expert;
(b) whenever in the performance of its duties under this agreement
the Rights Agent deems it necessary or desirable that any fact
or matter be proved or established by the Corporation prior to
taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof is specifically
prescribed in this agreement) may be deemed to be conclusively
proved and established by a certificate signed by a Person
believed by the Rights Agent to be a senior officer of the
Corporation and delivered to the Rights Agent; and such
certificate will be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the
provisions of this agreement in reliance upon such
certificate;
(c) the Rights Agent will be liable hereunder only for its own
negligence, bad faith or wilful misconduct;
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(d) the Rights Agent will not be liable for or by reason of any of
the statements of fact or recitals contained in this agreement
or in the certificates for Common Shares or the Rights
Certificates (except its countersignature thereof) or be
required to verify the same, but all such statements and
recitals are and will be deemed to have been made by the
Corporation only;
(e) the Rights Agent will not be under any responsibility in
respect of the validity of this agreement or the execution and
delivery hereof (except the due authorization, execution and
delivery hereof by the Rights Agent) or in respect of the
validity or execution of any Common Share certificate or
Rights Certificate (except its countersignature thereof); nor
will it be responsible for any breach by the Corporation of
any covenant or condition contained in this agreement or in
any Rights Certificate; nor will it be responsible for any
change in the exercisability of the Rights (including the
Rights becoming void pursuant to subsection 4.1(b)) or any
adjustment required under the provisions of section 3.2 or
responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the
exercise of Rights after receipt of the certificate
contemplated by section 3.2 describing any such adjustment);
nor will it by any act hereunder be deemed to make any
representation or warranty as to the authorization of any
Common Shares to be issued pursuant to this agreement or any
Rights or as to whether any Shares will, when issued, be duly
and validly authorized, executed, issued and delivered as
fully paid and non-assessable;
(f) the Corporation will perform, execute, acknowledge and deliver
or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as
may reasonably be required by the Rights Agent for the
carrying out or performing by the Rights Agent of the
provisions of this agreement;
(g) the Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties
hereunder from any Person designated in writing by the
Corporation, and to apply to such Persons for advice or
instructions in connection with its duties, and it will not be
liable for any action taken or suffered by it in good faith in
accordance with the instructions of any such Person; it is
understood that instructions to the Rights Agent will, except
where circumstances make it impracticable or the Rights Agent
otherwise agrees, be given in writing and, where not in
writing, such instructions will be confirmed in writing as
soon as reasonably possible after the giving of such
instructions;
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(h) the Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in Common
Shares, Rights or other securities of the Corporation or
become pecuniarily interested in any transaction in which the
Corporation may be interested, or contract with or lend money
to the Corporation or otherwise act as fully and freely as
though it were not the Rights Agent under this agreement.
Nothing herein will preclude the Rights Agent from acting in
any other capacity for the Corporation or for any other legal
entity; and
(i) the Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and
the Rights Agent will not be answerable or accountable for any
act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Corporation resulting from any
such act, default, neglect or misconduct, provided reasonable
care was exercised in the selection and continued employment
thereof.
5.4 CHANGE OF RIGHTS AGENT
The Rights Agent may resign and be discharged from its duties under
this agreement upon 60 days' notice in writing (or such lesser notice
as is acceptable to the Corporation) mailed to the Corporation and to
each transfer agent of Common Shares by registered or certified mail,
and to the holders of Rights in accordance with section 6.8, all of
which will be at the Corporation's expense. The Corporation may remove
the Rights Agent upon 30 days' notice in writing, mailed to the Rights
Agent and to each transfer agent of the Common Shares by registered or
certified mail, and to the holders of the Rights in accordance with
section 6.8. 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, with such notice, must submit such holder's Rights
Certificate for inspection by the Corporation), then by prior written
notice to the Corporation, the resigning Rights Agent (at the
Corporation's expense) or the holder of any Rights may apply to any
court of competent jurisdiction for the appointment of a new Rights
Agent. Any successor Rights Agent, whether appointed by the Corporation
or by such a court, must 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 Quebec. 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, upon payment by the
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Corporation to the predecessor Rights Agent of all outstanding fees and
expenses owing by the Corporation to the predecessor Rights Agent
pursuant to this agreement, will 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 Common
Shares, and mail a notice thereof in writing to the holders of the
Rights. Failure to give any notice provided for in this section 5.4,
however, or any defect therein, will not affect the legality or
validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.
ARTICLE 6
MISCELLANEOUS
6.1 REDEMPTION AND WAIVER
(a) Until the occurrence of a Flip-in Event as to which the
application of section 4.1 has not been waived pursuant to
this section 6.1, the Board of Directors may elect to redeem
all but not less than all of the then outstanding Rights at a
redemption price of $0.0001 per Right, appropriately adjusted
in a manner analogous to the applicable adjustment provided
for in section 3.2, if an event of the type analogous to any
of the events described in section 3.2 have occurred (such
redemption price being herein referred to as the "REDEMPTION
PRICE").
(b) Until the occurrence of a Flip-in Event as to which the
application of section 4.1 has not been waived pursuant to
this section 6.1, upon written notice to the Rights Agent, the
Board of Directors, may determine to waive the application of
section 4.1 to any Flip-in Event.
(c) Notwithstanding subsection (b), upon written notice to the
Rights Agent, the Board of Directors may waive the application
of section 4.1 in respect of any Flip-in Event, provided that
both of the following conditions are satisfied:
(i) the Board of Directors has determined that the Person
became an Acquiring Person by inadvertence and
without any intention to become, or knowledge that it
would become, an Acquiring Person; and
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(ii) such Person has reduced its Beneficial Ownership of
Voting Shares such that at the time of the granting
of a waiver pursuant to this subsection, such Person
is no longer an Acquiring Person;
In the event of any such waiver, for the purposes of this
agreement, such Flip-in Event will be deemed not to have
occurred and the Separation Time will be deemed not to have
occurred as a result of such Person having inadvertently
become an Acquiring Person.
(d) The Board of Directors will be deemed to have elected to
redeem, without further formality, the Rights at the
Redemption Price on the date that a Person who has made a
Permitted Bid, a Competing Permitted Bid or Take-over Bid in
respect of which the Board of Directors has waived, or is
deemed to have waived, pursuant to this section 6.1 the
application of section 4.1, takes up and pays for Voting
Shares pursuant to the terms and conditions of such Permitted
Bid, Competing Permitted Bid or Take-over Bid, as the case may
be.
(e) Where a Take-over Bid that is not a Permitted Bid 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 then outstanding Rights
without the consent of the holders of Voting Shares or the
holders of Rights, as the case may be, at the Redemption Price
and reissue Rights under this agreement to holders of record
of Common Shares immediately following the time of such
redemption and, thereafter, all of the provisions of this
agreement will continue in full force and effect and such
Rights, without any further formality, will be attached to the
outstanding Common Shares in the same manner as prior to the
occurrence of such Separation Time.
(f) If the Board of Directors elects or is deemed to have elected
to redeem the Rights, the right to exercise the Rights will
thereupon, without further action and without notice,
terminate, and the only right thereafter of the holders of
Rights will be to receive the Redemption Price.
(g) Within 10 days after the Board of Directors electing or having
been deemed to have elected to redeem the Rights, the
Corporation will give notice of redemption to the holders of
the then outstanding Rights by issuing a press release, at
least once, in both Canada and the United States. The notice
of redemption will state, among other things, that a holder of
Rights shall be entitled to its PRO RATA portion of the
Redemption Price by requesting such payment in writing from
the Corporation at the address set out in section 6.8 on or
before the expiration of one year following the giving of the
notice of redemption. The Corporation shall be
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deemed to have validly redeemed all of the Rights upon the
publication of the notice of redemption as contemplated
herein. The Corporation may not redeem, acquire or purchase
for value any Rights at any time in any manner other than that
specifically set forth in this section 6.1, and other than in
connection with the purchase of Common Shares prior to the
Separation Time.
6.2 EXPIRATION
No Person will have any rights pursuant to this agreement or in respect
of any Right after the Expiration Time, except the Rights Agent as
specified in section 5.1.
6.3 ISSUANCE OF NEW RIGHTS CERTIFICATES
Notwithstanding any of the provisions of this agreement or of the
Rights to the contrary, the Corporation, at its option, may issue new
Rights Certificates evidencing Rights in such form as may be approved
by the Board of Directors to reflect any adjustment or change in the
number or kind or class of securities purchasable upon exercise of
Rights made in accordance with the provisions of this agreement.
6.4 FRACTIONAL RIGHTS AND FRACTIONAL SHARES
(a) The Corporation will not be required to issue fractions of
Rights or to distribute Rights Certificates which evidence
fractional Rights. The number of Rights issued at any time
shall be rounded down to the nearest whole number of Rights.
(b) The Corporation will not be required to issue fractions of
Common Shares upon exercise of the Rights as all such Common
Shares will be rounded down to the nearest whole number of
Common Shares.
6.5 SUPPLEMENTS AND AMENDMENTS
(a) The Corporation may make amendments to this agreement from
time to time to correct any clerical or typographical error or
which are required to maintain the validity of this agreement
as a result of any change in any applicable legislation, rules
or regulations or decision of a court or regulatory authority.
The Corporation, at or prior to the meeting of shareholders of
the Corporation, or any adjournment or postponement thereof,
to be held for shareholders of the Corporation to consider
and, if deemed advisable, to adopt a resolution approving,
ratifying and confirming this agreement and the Rights issued
pursuant thereto, may
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supplement or amend this agreement without the approval of any
holders of Rights or Voting Shares in order to make any
changes which the Board of Directors acting in good faith may
deem necessary or desirable to make this agreement effective
(provided such action would not materially adversely affect
the interests of the holders of Rights generally).
Notwithstanding anything in this section 6.5 to the contrary,
no such supplement or amendment may be made to the provisions
of Article 5 except with the written concurrence of the Rights
Agent to such supplement or amendment.
(b) Subject to subsection (a), the Corporation, with the prior
consent of the holders of Voting Shares obtained as set forth
below, at any time prior to the Separation Time, may
supplement or amend 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 will be deemed to have been given if
the action requiring such approval is authorized by the
affirmative vote of a majority of the votes cast by
Independent Shareholders present or represented at and
entitled to vote at a meeting of the holders of Voting Shares
duly called and held in compliance with applicable laws and
the Corporation's by-laws.
(c) Subject to subsection (a), the Corporation, with the prior
consent of the holders of Rights, at any time on or after the
Separation Time, may supplement or amend any of the provisions
of this agreement and the Rights (whether or not such action
would materially adversely affect the interests of the holders
of Rights generally), provided that no such supplement or
amendment may be made to the provisions of Article 5 except
with the written concurrence of the Rights Agent thereto.
(d) Any approval of the holders of Rights will 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) will be entitled to one vote, and
the procedures for the calling, holding and conduct of the
meeting will be those, as nearly as may be, which are provided
in the Corporation's by-laws and the Corporations Act with
respect to meetings of shareholders of the Corporation.
(e) Any amendments made by the Corporation to this agreement
pursuant to subsection (a) which are required to maintain the
validity of this agreement shall:
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(i) if made before the Separation Time, be submitted to
the holders of Voting Shares of the Corporation at
the next meeting of shareholders and the holders of
Voting Shares may, by the majority referred to in
subsection (b), may confirm or reject such amendment;
and
(ii) if made after the Separation Time, be submitted to
the holders of Rights at a meeting to be called for a
date not later than immediately following the next
meeting of shareholders of the Corporation and the
holders of Rights, by resolution passed by the
majority referred to in subsection (d), may confirm
or reject such amendment.
Any such amendment will be effective from the date of the
resolution of the Board of Directors adopting such amendment,
until it is confirmed or rejected or until it ceases to be
effective (as described in the next sentence) and, where such
amendment is confirmed, it continues in effect in the form so
confirmed. If such amendment is rejected by the holders of
Voting Shares or the holders of Rights or is not submitted to
the holders of Voting Shares or holders of Rights as required,
then such amendment will 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 amendment to
this agreement to substantially the same effect will be
effective until confirmed by the shareholders or holders of
Rights, as the case may be.
(f) The Corporation will give notice in writing to the Rights
Agent of any amendment or supplement to this agreement
pursuant to this section 6.5 within five Business Days of the
date of any such amendment or supplement, provided that
failure to give such notice, or any defect therein, will not
affect the validity of any such supplement or amendment.
(g) For greater certainty, neither the exercise by the Board of
Directors of any power or discretion conferred on it under
this agreement nor the making by the Board of Directors of any
determination or the granting of any waiver it is permitted to
make or give under this agreement will constitute an
amendment, variation or rescission of the provisions of this
agreement or Rights for purposes of this section 6.5 or
otherwise.
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6.6 RIGHTS OF ACTION
Subject to the terms of this agreement, all rights of action in respect
of this agreement, other than rights of action vested solely in the
Rights Agent, are vested in the respective 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, on such holder's own behalf and for
such holder's own benefit and the benefit of other holders of Rights,
may 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 in the
manner provided in such holder's Rights Certificate and in this
agreement. Without limiting the foregoing or any remedies available to
the holders of Rights, it is specifically acknowledged that the holders
of Rights would not have an adequate remedy at law for any breach of
this agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against, actual or threatened
violations of the obligations of any Person subject to, this agreement.
6.7 NOTICE OF PROPOSED ACTIONS
If the Corporation proposes after the Separation Time and prior to the
Expiration Time 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 will
give to each holder of a Right, in accordance with section 6.8, a
notice of such proposed action. The notice must specify the date on
which such liquidation, dissolution, winding-up or sale is to take
place, and such notice must be so given at least 20 Business Days prior
to the date of taking such proposed action.
6.8 NOTICES
(a) 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 will be sufficiently given or
made if delivered or sent by facsimile or by first-class mail,
postage prepaid, addressed (until another facsimile number or
address is filed in writing with the Rights Agent) as follows:
Sand Technology Inc.
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxx X0X 0X0
Attention: Chairman of the Board
Facsimile: (000) 000-0000
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(b) Notices or demands authorized or required by this agreement to
be given or made by the Corporation or by the holder of any
Rights to or on the Rights Agent will be sufficiently given or
made if delivered or sent by facsimile or by first-class mail,
postage prepaid, addressed (until another facsimile number or
address is filed in writing with the Corporation) as follows:
CIBC Mellon Trust Company
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxx X0X 0X0
Attention: Manager, Client Relations
Facsimile: (000) 000-0000
(c) Notices or demands authorized or required by this agreement to
be given or made by the Corporation or the Rights Agent to or
on behalf of the holder of any Rights will 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 will be deemed
given, whether or not the holder receives the notice.
(d) Notices will be deemed to have been received as follows:
(i) in the case of personal delivery, on the day of
delivery, unless delivered on a day that is not a
Business Day or after 4:00 p.m. on the day of
delivery, in which case notice will be deemed to have
been received on the next Business Day;
(ii) in the case of facsimile, on the Business Day of
transmission if transmitted before 4:00 p.m. on that
Business Day or, otherwise, on the next Business Day
following the day of transmission; and
(iii) in the case of first class mail, on the fifth
Business Day following mailing.
(e) Any accidental error, omission or failure in giving or
delivering or mailing any such notice will not invalidate or
otherwise prejudicially affect any action or proceeding
founded thereon.
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6.9 COSTS OF ENFORCEMENT
The Corporation agrees that, if it or any other Person the securities
of which are purchasable upon exercise of Rights fails to fulfil 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 reasonable legal fees) incurred by such holder in
actions to enforce the holder's rights pursuant to any Rights or this
agreement.
6.10 SUCCESSORS
All the covenants and provisions of this agreement by or for the
benefit of the Corporation or the Rights Agent bind and enure to the
benefit of their respective successors and assigns hereunder.
6.11 BENEFITS OF THIS AGREEMENT
Nothing in this agreement will 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 will be for the sole and exclusive benefit of the
Corporation, the Rights Agent and the holders of the Rights.
6.12 GOVERNING LAW
This agreement and each Right issued hereunder will be deemed to be a
contract made under the laws of the Province of Quebec and for all
purposes will be governed by and construed in accordance with the laws
of such province applicable to contracts to be made and performed
entirely within such province.
6.13 COUNTERPARTS
This agreement may be executed in any number of counterparts and each
of such counterparts for all purposes will be deemed to be an original,
and all such counterparts together will constitute one and the same
instrument.
6.14 SEVERABILITY
If any term or provision hereof or the application thereof to any
circumstance is, in any jurisdiction and to any extent, invalid or
unenforceable, such term or provision will 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.
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6.15 EFFECTIVE DATE
This agreement is in force in accordance with its terms from November
17, 2003. If the Rights Plan is not ratified by resolution passed by a
majority of the votes cast by Independent Shareholders present or
represented by proxy at a meeting of shareholders of the Corporation
held on or before December 31, 2003, then, unless a Flip-in Event (as
to which the application of section 4.1 has not been waived pursuant to
section 6.1) has occurred on or prior to such date, this agreement and
any then outstanding Rights, without further formality, will be of no
further force or effect as at such date.
6.16 SHAREHOLDER APPROVAL
At each annual meeting of shareholders of the Corporation commencing in
2005 and every two-year anniversary thereafter and so on, provided that
a Flip-in Event has not occurred prior to such time (other than a
Flip-in Event in respect of which the application of section 4.1 has
been waived pursuant to section 6.1), the board of directors may submit
a resolution to the Independent Shareholders for their consideration
and approval ratifying this agreement (as may be amended and restated)
and its continued existence after each such meeting. If a majority of
the votes cast by Independent Shareholders present or represented by
proxy at any such meeting are not voted in favour of this agreement and
its continued existence, then the board of directors, immediately upon
confirmation by the chair of such shareholders meeting of the results
of the vote on such resolution, without further formality, will be
deemed to have elected to redeem the Rights at the Redemption Price.
6.17 DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS
All actions, calculations and determinations (including all omissions
with respect to the foregoing) which are done or made by the Board of
Directors in good faith in connection with this agreement will not
subject the Board of Directors or any director of the Corporation to
any liability to the holders of the Rights.
6.18 TIME OF THE ESSENCE
Time will be of the essence of this agreement.
6.19 REGULATORY APPROVALS
Any obligation of the Corporation or action contemplated by this
agreement, including any amendment hereto, will be subject to the
receipt of any requisite approval or consent from any applicable
regulatory authority, including any
-48-
necessary approvals of the Nasdaq National Market, the Toronto Stock
Exchange or any other stock exchange.
6.20 DECLARATION AS TO NON-CANADIAN AND NON-UNITED STATES HOLDERS
If in the opinion of the Board of Directors (who may rely on the advice
of legal counsel) any action or event contemplated by this agreement
would require compliance by the Corporation with the securities laws or
comparable legislation of a jurisdiction outside Canada or the United
States, the Board of Directors acting in good faith may take such
actions as it may deem appropriate to ensure that such compliance is
not required, including establishing procedures for the issuance to a
Canadian resident fiduciary of Rights or securities issuable on
exercise of Rights, the holding thereof in trust for the Persons
entitled thereto and the sale thereof and remittance of the proceeds of
such sale (if any) to the Persons entitled thereto. In no event will
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
and the United States of America in which such issue or delivery would
be unlawful without registration of the relevant Persons or securities
for such purposes.
6.21 FIDUCIARY DUTIES OF THE BOARD OF DIRECTORS
For greater certainty, this agreement will not be construed to suggest
or imply that the Board of Directors is not entitled to recommend that
holders of Voting Shares reject or accept any Take-over Bid (whether or
not such Take-over Bid is a Permitted Bid or a Competing Permitted Bid)
or take any other action (including the commencement, prosecution,
defense or settlement of any litigation) with respect to any Take-over
Bid or otherwise that the Board of Directors believes is necessary or
appropriate in the exercise of its fiduciary duties.
6.22 LANGUAGE
Les parties aux presentes ont exige que la presente convention ainsi
que tous les documents et avis qui s'y rattachent ou qui en decoulent
soient rediges en langue anglaise. The parties hereto have required
that this agreement and all documents and notices related thereto
and/or resulting therefrom be drawn up in the English language.
-49-
IN WITNESS WHEREOF, the parties have caused this agreement to be duly executed
as of the date first written above.
SAND TECHNOLOGY INC. CIBC MELLON TRUST COMPANY
By: /s/ Xxxxxx Xxxxxxx By: /s/ X. Xxxxx
------------------------------- -------------------------------
Xxxxxx Xxxxxxx, Authorized Signatory
Chairman of the Board, Xxxxxx Xxxxx
President and Chief Executive
Officer
Date: December 9, 2003
Date: December 8, 2003 By: /s/ Xxxxx Xxxxxxx
-------------------------------
Authorized Signatory
Xxxxx Xxxxxxx
Date: December 9, 2003
EXHIBIT A
FORM OF RIGHTS CERTIFICATE
Certificate No.______________ ___________ Rights
RIGHTS CERTIFICATE
This certifies that __________________ is the registered holder of the number of
Rights set forth above, each of which entitles the registered holder thereof,
subject to the terms, provisions and conditions of the Shareholder Rights Plan
Agreement dated as of April o, 2003, as the same may be amended, restated or
supplemented from time to time (the "RIGHTS AGREEMENT") between Sand Technology
Inc. (the "CORPORATION"), and CIBC Mellon Trust Company, as rights agent (the
"RIGHTS AGENT", which term includes any successor Rights Agent under the Rights
Agreement), to purchase from the Corporation at any time after the Separation
Time and prior to the Expiration Time (as such terms are defined in the Rights
Agreement), one fully paid Common Share of the Corporation (a "Common Share") at
the Exercise Price referred to below, upon presentation and surrender of this
Rights Certificate together with the Form of Election to Exercise and
Declaration of Ownership duly executed and submitted to the Rights Agent at its
principal office in the city of Montreal or any other office of the Rights Agent
designated for that purpose from time to time by the Rights Agent. The Exercise
Price initially is $100 per Right and will be subject to adjustment in certain
events as provided in the Rights Agreement.
In certain circumstances described in the Rights Agreement, each Right evidenced
hereby may entitle the registered holder thereof to purchase or receive assets,
debt securities or shares in the capital of the Corporation other than Common
Shares, or more or less than one Common Share, all as provided in the Rights
Agreement.
This Rights Certificate is subject to all of the terms and conditions of the
Rights Agreement which terms and conditions are incorporated in this Rights
Certificate by reference and made a part of this Rights Certificate and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Rights Agent, the Corporation and the holders of the Rights Certificates. Copies
of the Rights Agreement are on file at the 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 Certificates 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 will be entitled to receive, upon surrender of this Rights Certificate,
another Rights Certificate or Rights Certificates for the number of whole Rights
not exercised.
-2-
Subject to the provisions of the Rights Agreement, the Rights evidenced by this
Rights Certificate may be, and under certain circumstances are required to be,
redeemed by the Corporation at a redemption price of $0.0001 per Right, subject
to adjustment in certain events.
Fractional Common Shares will not be issued upon the exercise of any Right or
Rights evidenced hereby as all such Common Shares will be rounded down to the
nearest whole number of Common Shares.
No holder of this Rights Certificate, as such, will be entitled to vote or
receive dividends or be deemed for any purpose the holder of Common Shares or of
any other shares of the Corporation which may at any time be issuable upon the
exercise hereof, nor will anything contained in the Rights Agreement or in this
Rights Certificate be construed to confer upon the holder of this Rights
Certificate, 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 of the Corporation at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting shareholders of the Corporation (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Rights evidenced by this Rights Certificate have been exercised as
provided in the Rights Agreement.
This Rights Certificate will not be valid or obligatory for any purpose until it
will have been manually countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Corporation.
Date: _________________
SAND TECHNOLOGY INC.
By: ________________________________
By: ________________________________
Countersigned:
CIBC MELLON TRUST COMPANY
By: ________________________________
Authorized Signature
FORM OF ELECTION TO EXERCISE
(to be attached to each Rights Certificate)
TO: Sand Technology Inc.
The undersigned hereby irrevocably elects to exercise ___________________ whole
Rights represented by the attached Rights Certificate to purchase the Common
Shares issuable upon the exercise of such Rights and requests that certificates
for such Common Shares be issued to:
_______________________________________________________________
Name
_______________________________________________________________
Address
_______________________________________________________________
City and Province
_______________________________________________________________
Social Insurance Number or other taxpayer identification number
If such number of Rights are not 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 Number or other taxpayer identification number
Dated:
__________________________________ ___________________________________
Signature
-2-
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 an Eligible Institution being either a Canadian
Schedule I chartered bank or major trust company in Canada, a member of the
Securities Transfer Agents Medallion Program (STAMP), a member of the Stock
Exchange Medallion Program (SEMP) or a member of the New York Stock Exchange,
Inc. Medallion Signature Program (MSP). Members of these programs are usually
members of a recognized stock exchange in Canada and the United States, members
of the Investment Dealers Association of Canada, member of the National
Association of Securities Dealers of banks and trust companies in the United
States.
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, an Affiliate or Associate of an
Acquiring Person or any Person acting jointly or in concert with an Acquiring
Person or with an Associate or Affiliate of an Acquiring Person (as such terms
are defined in the Rights Agreement).
________________________________________
Signature
FORM OF ASSIGNMENT
FOR VALUE RECEIVED _____________________________________________
hereby sells, assigns and transfers unto________________________________________
________________________________________________________________________________
(please print name and address of transferee)
________________________________________________________________________________
the Rights represented by this Rights Certificate, together with all right,
title and interest therein.
Dated: ____________________________
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 an Eligible Institution being either a Canadian
Schedule I chartered bank or major trust company in Canada, a member of the
Securities Transfer Agents Medallion Program (STAMP), a member of the Stock
Exchange Medallion Program (SEMP) or a member of the New York Stock Exchange,
Inc. Medallion Signature Program (MSP). Members of these programs are usually
members of a recognized stock exchange in Canada and the United States, members
of the Investment Dealers Association of Canada, member of the National
Association of Securities Dealers of banks and trust companies in the United
States.
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, an Affiliate or Associate of an
Acquiring Person or any Person acting jointly or in concert with an Acquiring
Person or with an Associate or Affiliate of an Acquiring Person (as such terms
are defined in the Rights Agreement).
________________________________________
Signature
NOTICE
If the certification set forth above in the Form of Election to Exercise or the
Form of Assignment is not completed, the Corporation reserves the right to treat
the Beneficial Owner of the Rights evidenced by this Rights Certificate to be an
Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement) and accordingly such Rights will be null and void.
