MINORITY SHAREHOLDER PROTECTION AGREEMENT
THIS AGREEMENT made as of the 7th day of August, 1991.
AMONG:
XXXXXX COMMUNICATIONS INC., a
corporation continued under the laws of British Columbia,
(hereinafter referred to as "RCI")
OF THE FIRST PART,
-and-
XXXXXX CANTEL MOBILE
COMMUNICATIONS INC., a corporation
continued under the laws of Canada,
(hereinafter referred to as "RCMCI")
OF THE SECOND PART.
WHEREAS RCI and/or one or more wholly-owned subsidiaries propose to
sell to the public up to 16,100,000 Class B Subordinate Voting Shares of RCMCI
pursuant to a Registration Statement on Form F-l filed with the Securities and
Exchange Commission of the United States and pursuant to a prospectus filed with
securities regulatory authorities of all of the provinces of Canada;
WHEREAS RCI and RCMCI wish to provide to all holders of Class B
Subordinate Voting Shares of RCMCI, other than RCI and its affiliates and
associates, certain protections currently available to Ontario shareholders
under the Securities Act (Ontario) and applicable policies of the Ontario
Securities Commission;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
premises and agreements herein contained and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto
agree for the benefit of holders of Subordinate Voting Shares, from time to
time, other than RCI, its affiliates and associates, as follows:
INTERPRETATION
In this Agreement, the following terms shall have the following
meaning:
a. "Act" means the Securities Act, R.S.O. 1980, c.466, as amended, as in
effect on the date hereof;
b. "control block" means the holdings of a person described in paragraph
1(1)(1l)(iii) of the Act;
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c. "formal valuation" means a valuation prepared by a qualified and
independent valuer based upon techniques that are appropriate in the
circumstances subject to the guidelines of paragraph 6.1, after
considering all relevant assumptions, that arrives at an opinion as to
a value or range of values for the subject matter of the valuation
based upon such analysis;
d. "going private transaction" means an amalgamation, arrangement,
consolidation or other transaction involving RCMCI as a consequence of
which the interest of a holder of Subordinate Voting Shares therein may
be terminated without the consent of that holder and without the
substitution therefor of an interest of equivalent value in a
participating security of RCMCI or of a successor to the business of
RCMCI or of another issuer that controls RCMCI or of the successor to
the business of RCMCI but does not include the acquisition of
participating securities pursuant to a statutory right of acquisition;
e. "independent director" means a director of RCMCI other than (i) a
director who is an employee of, or an insider, associate or affiliate
of, an interested party, or has held any such position during the
previous five years, (ii) a director who may benefit from the
Transaction in a manner that is different from minority Subordinate
Voting Shareholders or it is intended that the director should have a
material interest in RCMCI or the interested party in the event the
Transaction is successful, or (iii) a director who is an employee of,
or an insider, associate or affiliate of the independent valuer or any
affiliate of the independent valuer retained to perform the formal
valuation for RCMCI or the interested party, or has held any such
position during the previous five years; provided that in respect of an
issuer bid, it is the relationship of a director to interested parties
other than RCMCI that is relevant when determining independence;
f. "independent valuer" means a valuer independent of the interested
party, as determined by the independent directors after considering all
relevant factors, including:
(i) the potential, if any, for bias on the part of the valuer as a
result of the involvement of the valuer or any of its
affiliates in an evaluation, appraisal or review of the
financial status of the interested party, RCMCI or their
affiliates or associates or as a result of the involvement of
the valuer as lead or co-lead underwriter of securities of the
interested party or RCMCI during the 24 months preceding the
date the valuer was first contacted in respect of the
valuation, and
(ii) the materiality to the valuer and its affiliates of the
financial interest of the valuer and its affiliates in
transactions during the 24 months preceding the date the
valuer was first contacted in connection with the valuation,
in the completion of the subject Transaction or in the future
business of RCMCI or an interested party in respect of which
an agreement, commitment or understanding exists, in each case
involving RCMCI, an interested parry or their affiliates or
associates;
and excludes:
(a) an insider, associate or affiliate of an interested party;
(b) an adviser to an interested party in respect of the subject
Transaction;
(c) a valuer, where the compensation of the valuer or any of its
affiliates depends in whole or in part on any arrangement or
understanding which gives the valuer or any of its affiliates
a financial incentive in respect of the conclusions reached in
the formal valuation or the outcome of the Transaction; and
(d) the auditor of RCMCI or of any interested party or any
affiliate of such auditor,
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g. "insider" means in respect of a person:
(i) every director or senior officer of the person;
(ii) every director or senior officer of a company that is itself
an insider or subsidiary of the person;
(iii) any person or company who beneficially owns, directly or
indirectly, voting securities of the person or who exercises
control or direction over voting securities of the person or a
combination of both carrying more than 10 per cent of the
voting rights attached to all voting securities of the person
for the time being outstanding other than voting securities
held by the person or company as underwriter in the course of
a distribution; and
(iv) the person, where it has purchased, redeemed or otherwise
acquired any of its securities, for so long as it holds any of
its securities;
h. "insider bid" means a take over bid for the Subordinate Voting Shares
made by RCI, by a subsidiary of RCI, or by an offeror acting jointly or
in concert with any of the foregoing while RCI or any affiliate is an
insider of RCMCI, but, for greater certainty, does not include an
issuer bid;
i. "interested party" means
(i) in respect of an insider bid, the offerer,
(ii) in respect of an issuer bid,
(a) the offeror; or
(b) any person or company which will, consequent
upon the issuer bid, be entitled to a per
security consideration greater in value than
that available to other holders of
Subordinate Voting Shares; or
(c) any person or company which, alone or in
combination with others, holds or would hold
upon completion of the issuer bid a
sufficient number of securities of the
issuer to affect materially the control of
RCMCI, other than a person or company which
affects materially the control of RCMCI
solely because the person or company is a
lender of a bona fide debt negotiated at
arm's length and holds securities as
collateral for that debt;
(iii) in respect of a going private transaction,
(a) any person or company which will, consequent
upon the transaction, be entitled to receive
(1) a per security consideration greater
than that available to other holders of
Subordinate Voting Shares or (2) a per
security consideration which includes an
interest in a participating security of
RCMCI or of a successor to the business of
RCMCI or of another issuer that controls the
issuer or the successor to the business of
RCMCI which other holders of Subordinate
Voting Shares are not entitled to receive;
or
(b) any person or company which, alone or in
combination with others, holds or would hold
upon completion of the transaction a
sufficient number of securities of RCMCI to
affect materially the control of RCMCI and
which,
Page 4
prior to distribution of the relevant
disclosure material to security holders,
entered into or has agreed to enter into an
understanding to support the transaction;
j. "issuer bid" means an issuer bid, as defined in the Act, for
Subordinate Voting Shares, without reference to the jurisdiction in
which an offeree shareholder is resident or is shown on the books of
RCMCI, but shall exclude any issuer bid which is exempt from sections
94, 95, 96, 97 and 99 of the Act;
k. "jointly or in concert" shall have the same meaning as in the Act and
includes an agreement, commitment or understanding between an offeror
and RCI or a subsidiary that RCI or such subsidiary shall not tender
into an offer or provides RCI or a subsidiary with an opportunity not
offered to all holders of Subordinate Voting Shares to maintain a
direct equity interest in the offeror, RCMCI or a material asset of
RCMCI;
l. "minority approval" means the proportion specified below of the votes
cast by holders of Subordinate Voting Shares present or represented at
a meeting which is required to be cast in favour of a going private
transaction after excluding the votes which, to the knowledge of any of
RCMCI, an interested party or any of their respective directors or
senior officers, after reasonable inquiry, attach to Subordinate Voting
Shares which are held, or are beneficially owned or over which control
or direction is exercised, directly or indirectly, by
(i) RCMCI,
(ii) any interested party,
(iii) any person or company that is a related party of an interested
party at the time the minority approval is sought,
(iv) any person or company acting jointly or in concert with any
person referred to in clause (ii) or (iii) in respect of the
going private transaction, and
(v) any affiliate of any of the foregoing;
and
where
(i) the consideration to be received by a holder of RCMCI
Restricted Voting Shares is payable wholly or partly
other than in cash or a right to receive cash within
35 days after the approval of the going private
transaction, or
(ii) payable entirely in cash and is less in amount than
the per share value or the simple average of the high
and low ends of the range of per share values arrived
at by the formal valuation.
(b) in all other cases, be the proportion of votes to be
included in the minority approval shall be a simple
majority.
m. "minority" Subordinate Voting Shareholders" means the security holders
whose votes could be included in the determination of minority approval
if cast in favour of the going private transaction;
Page 5
n. "offeror" means a person or company who makes an insider bid or an
issuer bid;
o. "Regulation" means the regulation made under the Act, R.R.O. 1980, Reg.
910, as amended, as in effect on the date hereof;
p. "related party" in respect of RCMCI or an interested party, as the case
may be, means a person or company which at the relevant time is, to
the knowledge of RCMCI or interested party, or any of its directors or
senior officers, after reasonable inquiry,
(i) a person or company which alone or in combination with others
holds a sufficient number of securities or has contractual
rights sufficient to affect materially the control of RCMCI or
the interested party;
(ii) a person or company in respect of which a person or company
referred to in clause (i) alone or in combination with others
holds a sufficient number of securities or has contractual
rights sufficient to affect materially its control;
(iii) a person or company in respect of which RCMCI or the
interested party alone or in combination with others holds a
sufficient number of securities or has contractual rights
sufficient to affect materially its control;
(iv) a person or company who beneficially owns, directly or
indirectly, voting securities of RCMCI or the interested party
or who exercises control or direction over voting securities
of RCMCI or the interested party or a combination of both
carrying more than 10 per cent of the voting rights attached
to all voting securities of RCMCI or the interested party for
the time being outstanding;
(v) a director or senior officer of RCMCI, the interested party or
a related party of either of them; or
(vi) an affiliate of any of the foregoing;
but does not include a person or company which affects materially the
control of RCMCI or the interested party, as the case may be, solely
because the person or company is a lender of a bona fide debt
negotiated at arm's length and holds securities as collateral for that
debt;
q. "statutory appraisal remedy" means the right of appraisal described in
section 190 of the Canada Business Corporations Act, as it may be
amended or substituted, or any other similar remedy under any other
statute under which RCMCI may be continued, amalgamated or
incorporated;
r. "statutory right of acquisition" means the right of acquisition
described in subsection 206(2) of the Canada Business Corporations Act,
as it may be amended or substituted, or a similar right under any other
statute under which RCMCI may be continued, amalgamated or
incorporated;
s. "Subordinate Voting Shares" means the Class B Subordinate Voting Share
of RCMCI from time to time outstanding or as they may be redesignated
and any securities into which the Class B Subordinate Voting Shares of
RCMCI are subdivided, consolidated, converted or exchanged;
t. "take over bid" shall have the same meaning as in the Act, without
reference to the jurisdiction in which an offeree shareholder is
resident or is shown on the books of RCMCI, but shall exclude any take
over bid which is exempt from sections 94 to 99 of the Act;
Page 6
u. "Transaction" means an issuer bid, insider bid or going private
transaction subject to the terms of this Agreement;
v. "value" means fair market value determined in accordance with section
6.1;
w. The terms "affiliate", "associate", "director", "participating
security", "senior officer", "subsidiary" shall have the same meanings
as in the Act or the Regulation, as the case may be.
INSIDER BIDS
1.1 RCI shall cause to be prepared a formal valuation in respect of an
insider bid at the expense of RCI or such other person who is the
offeror.
1.2 The formal valuation referred to in paragraph 1.1 must be prepared
under the supervision of a committee of independent directors delegated
by the board of directors of RCMCI to review the insider bid unless (i)
the insider bid is being made without the prior knowledge of the
directors of the RCMCI who are not insiders of or acting jointly or in
concert with the offeror, or (ii) upon informing the independent
directors of RCMCI of the proposed insider bid, the offeror has a
reasonable basis for concluding that the insider bid is being regarded
as a hostile bid by a majority of these independent directors.
1.3 RCI shall, or shall cause any offeror making an insider bid to, offer
for each Subordinate Voting Share subject to the insider bid
consideration having a value (or where such consideration is not
payable entirely in cash, the mid point of the range of values arrived
at in the formal valuation for such consideration, if applicable) of at
least 66 2/3% of the value, or of the mid point of the range of values,
arrived at in the formal valuation for such Subordinate Voting Shares.
ISSUER BIDS
2.1 RCMCI shall prepare a formal valuation at its expense in connection
with an issuer bid.
2.2 The formal valuation referred to in paragraph 2.1 must be prepared
under the supervision of a committee of independent directors delegated
by the board of directors of RCMCI to review the issuer bid.
2.3 RCMCI shall offer for each Subordinate Voting Share subject to an
issuer bid consideration having a value (or where the consideration is
not payable entirely in cash, the mid point of the range of values
determined in the formal valuation for such consideration, if
applicable) of at least 66 2/3% of the value, or of the mid point of
the range of values, arrived at in the formal valuation for such
Subordinate Voting Shares.
GOING PRIVATE TRANSACTIONS
3.1 RCMCI shall cause to be prepared a formal valuation of the Subordinate
Voting Shares in respect of any going private transaction in respect of
which RCI or any insider, affiliate or associate thereof is an
interested party.
Page 7
3.2 The formal valuation referred to in paragraph 3.1 must be prepared
under the supervision of a committee of independent directors delegated
by the board of directors of RCMCI to review the going private
transaction.
3.3 Any going private transaction in respect of which RCI or any insider,
affiliate or associate thereof is an interested party shall be subject
to minority approval; provided that minority approval shall not be
required if at the time of a going private transaction described in
paragraph 3.1 is initiated, RCI, or any affiliate thereof, jointly or
severally hold 90% or more of the Subordinate Voting Shares and a
statutory appraisal remedy is available to the minority Subordinate
Voting Shareholders is available in respect of such going private
transaction.
3.4 RCMCI shall only enter into a going private transaction if the
consideration to be paid for the Subordinate Voting Shares in such
going private transaction has a value (or where the consideration is
not payable entirely in cash, the mid point of the range of values
determined in the formal valuation for such consideration, if
applicable) equal to at least the value, or the low point of the range
of values, arrived at in the formal valuation for the Subordinate
Voting Shares.
3.5 Where an amalgamation, arrangement, consolidation or other transaction
would be a going private transaction but for the fact that the interest
of minority Subordinate Voting Shareholders in the Subordinate Voting
Shares is to be substituted for an interest of equivalent value in a
participating security of RCMCI, or of a successor to the business of
RCMCI or of another issuer that controls RCMCI or the successor to the
business of RCMCI, RCMCI shall obtain and disclose to the minority
Subordinate Voting Shareholders a formal valuation; provided that this
section shall not apply where the net assets of RCMCI would constitute
90% or more of the consolidated net assets of the issuer in which a
minority Subordinate Voting Shareholder is to receive a substituted
interest, as determined by the board of directors of RCMCI.
INDEPENDENT COMMITTEE
4.1 Every issuer bid, insider bid and going private transaction will be
reviewed by a committee of at least two independent directors.
4.2 The committee of independent directors referred to in paragraph 4.1
above shall report to the board of directors and shall be involved in
carrying out any negotiations between RCMCI and any interested party in
respect of a Transaction.
4.3 The committee of independent directors which reviews an issuer bid,
insider bid or going private transaction in accordance with the terms
of this Agreement shall be responsible for selecting and retaining the
independent valuer for the purposes of providing the formal valuation
required hereunder.
BOARD OF DIRECTORS
5.1 The directors of RCMCI shall disclose their reasonable beliefs as to
the desirability or fairness of the Transaction to shareholders of
RCMCI.
Page 8
FORMAL VALUATION
6.1 The committee of independent directors which reviews a Transaction
shall advise the independent valuer retained in respect of the
Transaction that the formal valuation should be prepared in accordance
with the following requirements:
(i) A formal valuation must value the Subordinate Voting Shares
and the value of the consideration being offered to holders of
Subordinate Voting Shares in respect of the Transaction;
(ii) A formal valuation shall be as of a date that is not more than
120 days before the date of the Transaction and shall contain
appropriate adjustments for material intervening events;
(iii) In arriving at an opinion as to the value or range of values
for the subject matter of the formal valuation, regard should
be had to the application of each valuation approach which is
appropriate in the circumstances;
(iv) Where relevant data is available, consideration should be
given to market factors such as recent purchases or sales of
comparable companies, assets, securities or liabilities,
market price earnings ratios and market yields. If the
Transaction is considered in relation to purchases or sales of
control positions of comparable companies or comparable assets
or premiums paid in similar transactions, these transactions
should be specifically identified and discussed;
(v) No downward adjustment should be made to the formal valuation
of the subject matter of the formal valuation to reflect the
liquidity of the subject matter, the effect of the Transaction
or the fact that the subject matter does not form part of a
controlling interest;
(vi) Where there is a statutory appraisal remedy available to
holders of Subordinate Voting Shares in respect of the
Transaction pursuant to which they have a right to be paid
"fair value" as referred to under the applicable statute, the
valuer should consider and disclose its view as to whether
"fair value" may be different from the value on which it is
opining;
(vii) A summary of the formal valuation must be included in the
material provided to holders of Subordinate Voting Shares in
connection with the Transaction; and
(viii) A formal valuation shall be based upon techniques that are
appropriate under the circumstances, after considering going
concern or liquidation assumptions or both, together with
other relevant assumptions, and shall not be less than the
higher of going-concern value or liquidation value.
LISTING OR QUOTATION
7.1 RCMCI undertakes to take all steps reasonably necessary to ensure that
the Subordinate Voting Shares remain;
(i) quoted on the NASDAQ National Market System or otherwise
listed and posted for trading on a stock exchange in the
United States; and
(ii) listed and posted for trading on a stock exchange in Canada;
Page 9
7.2 RCMCI shall not be subject to the requirements of paragraph 7.1 of this
Agreement if RCMCI no longer meets the minimum listing requirements of
the NASDAQ National Market System or of the stock exchanges described
in paragraph 7.1 of this Agreement, as the case may be, as a result of
a Transaction completed in accordance with the terms of this Agreement.
VALUATION EXEMPTION
8.1 The requirement to obtain a formal valuation of the Subordinate Voting
Shares as described in paragraphs 1.1, 2.1 and 3.1 of the Agreement
does not apply in respect of a Transaction where the price to be
offered to minority Subordinate Voting Shareholders was arrived at
within the twelve months immediately preceding the date of the
announcement of the subject Transaction through an arm's length
transaction or negotiation with a selling minority Subordinate Voting
Shareholder of a control block of Subordinate Voting Shares or a
selling minority Subordinate Voting Shareholder of a sizeable block of
Subordinate Voting Shares where such minority Subordinate Voting
Shareholder had full knowledge and access to information concerning
RCMCI such that the underlying value of RCMCI was a material factor
considered by such Subordinate Voting Shareholder in arriving at the
price.
ELECTION OF DIRECTORS
9.1 RCI agrees that as long as it owns, directly or indirectly, or
exercises control or direction over shares of the Company to which are
attached more than 50% of the votes attaching to all shares of the
Company, it will refrain from voting the Subordinate Voting Shares it
holds or controls in connection with the election of directors pursuant
to a class vote of the Subordinate Voting Shares provided for in the
articles of the Company. RCI agrees that if it owns any Subordinated
Voting Shares it will attend, or if it controls any other holder of
Subordinate Voting Shares it will cause such person to attend, any such
meeting of the holders of Subordinate Voting Shares so as to be counted
in the number of shareholders present at the meeting for the purpose of
determining any quorum thereof.
GENERAL
10.1 The provisions of this Agreement are in addition to and not in
substitution to any requirements under applicable laws and to the
extent the provisions of this Agreement cannot be carried out in
compliance with the requirements of applicable laws, the requirements
of applicable laws shall apply.
10.2 This Agreement may not be amended or waived without the prior approval
of a majority of the holders of Subordinate Voting Shares, excluding
affiliates of RCMCI, which approval shall be given by resolution
approved by the majority of the votes cast by holders of Subordinate
Voting Shares present or represented at a meeting thereof, excluding
the votes of any holder who is an affiliate of RCMCI.
10.3 The provisions of this Agreement shall only come into effect
contemporaneously with the issuance of Subordinate Voting Shares to the
Underwriters pursuant to the prospectus of RCMCI to be dated on or
about August 8, 1991.
10.4 This Agreement shall be governed by and construed in accordance with
the laws of the Province of Ontario and the parties hereto irrevocably
attorn to the non-exclusive jurisdiction of the courts of Ontario.
10.5 This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns, as
applicable. In addition, it is expressly acknowledged and agreed that
the rights and obligations of the parties hereto are for the express
benefit of the holders of Subordinate Voting Shares, from time to time,
other than RCI, its affiliates and associates, and each of RCI and
RCMCI agrees that it shall hold all
Page 10
rights remedies, claims and causes of action arising hereunder in trust
for the benefit of such holders of Subordinate Voting Shares. All or any
of the rights conferred upon such holders of Subordinate Voting Shares
hereunder may be enforced by such holders by appropriate legal
proceedings, but without prejudice to the right of either party hereto
to proceed in its own name to enforce the provisions hereof for its
benefit and for the benefit of such holders of Subordinate Voting
Shares.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the date first above written.
XXXXXX COMMUNICATIONS INC.
PER:
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PER:
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XXXXXX CANTEL MOBILE
COMMUNICATIONS INC.
PER:
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