SHAREHOLDER RIGHTS PLAN AGREEMENT
BETWEEN
THE DESCARTES SYSTEMS GROUP INC.
and
COMPUTERSHARE TRUST COMPANY OF CANADA
as Rights Agent
Dated as of November 29, 2004
TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINITIONS
1.1 Definitions..........................................................2
1.2 Currency 11
1.3 Acting Jointly or in Concert........................................11
1.4 Control ...........................................................11
1.5 Holder of Rights and Trust Units....................................12
1.6 References to this Agreement........................................12
ARTICLE 2
THE RIGHTS
2.1 Legend on Common Share Certificates.................................12
2.2 Initial Exercise Price; Exercise of Rights; Detachment of Rights....13
2.3 Adjustments to Exercise Price; Number of Rights.....................14
2.4 Date on Which Exercise is Effective.................................17
2.5 Execution, Authentication, Delivery and Dating of
Rights Certificates.................................................17
2.6 Registration, Registration of Transfer and Exchange.................18
2.7 Mutilated, Destroyed, Lost and Stolen Rights Certificates...........18
2.8 Persons Deemed Owners...............................................19
2.9 Delivery and Cancellation of Certificates...........................19
2.10 Agreement of Rights Holders.........................................19
ARTICLE 3
ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS
3.1 Flip-in Event.......................................................20
ARTICLE 4
THE RIGHTS AGENT
4.1 General ...........................................................21
4.2 Merger, Amalgamation or Consolidation or Change of Name
of Rights Agent.....................................................22
4.3 Duties of Rights Agent..............................................22
4.4 Change of Rights Agent..............................................23
ARTICLE 5
MISCELLANEOUS
5.1 Redemption and Termination..........................................24
5.2 Expiration..........................................................26
5.3 Issuance of New Rights Certificates.................................26
5.4 Supplements and Amendments..........................................26
5.5 Fractional Rights and Fractional Shares.............................27
5.6 Rights of Action....................................................28
5.7 Holder of Rights Not Deemed a Shareholder...........................28
5.8 Notice of Proposed Actions..........................................28
5.9 Notices.............................................................28
5.10 Costs of Enforcement................................................29
5.11 Successors..........................................................29
5.12 Benefits of this Agreement..........................................29
5.13 Descriptive Headings................................................30
-i-
TABLE OF CONTENTS
(CONTINUED)
5.14 Governing Law.......................................................30
5.15 Language............................................................30
5.16 Counterparts........................................................30
5.17 Severability........................................................30
5.18 Effective Date......................................................30
5.19 Shareholder Review..................................................30
5.20 Regulatory Approvals................................................31
5.21 Declaration as to Non-Canadian and Non-U.S. Holders.................31
5.22 Determinations and Actions by the Board of Directors................31
-ii-
SHAREHOLDER RIGHTS PLAN AGREEMENT
THIS SHAREHOLDER RIGHTS PLAN AGREEMENT made as of the 29th day of
November, 2004.
BETWEEN:
THE DESCARTES SYSTEMS GROUP INC., a body corporate organized
under the laws of Ontario (hereinafter referred to as the
"CORPORATION")
OF THE FIRST PART
- and -
COMPUTERSHARE TRUST COMPANY OF CANADA, a trust company
incorporated under the laws of Canada (hereinafter referred to as
the "RIGHTS AGENT")
OF THE SECOND PART
WHEREAS the board of directors of the Corporation (the "BOARD OF
DIRECTORS") has determined that it is advisable to adopt a shareholder rights
plan to take effect immediately upon receipt of approval of the Independent
Shareholders (the "RIGHTS PLAN") to ensure, to the extent possible, that all
shareholders of the Corporation are treated fairly in connection with any
take-over offer or bid for the common shares of the Corporation, and to ensure
that the Board of Directors is provided with a sufficient time to evaluate
unsolicited take-over bids and to explore and develop alternatives to maximize
shareholder value;
AND WHEREAS, in order to implement the adoption of the Rights Plan as
established by this agreement, the Board of Directors has:
(a) authorized the issuance of one right (a "RIGHT") in respect of
each Common Share (as hereinafter defined) outstanding at the
close of business on November 29, 2004 (the "RECORD TIME"),
such distribution to be made to shareholders of record at the
Record Time; and
(b) authorized the issuance of one Right in respect of each Common
Share issued after the Record Time and prior to the earlier of
the Separation Time (as hereinafter defined) and the
Expiration Time (as hereinafter defined);
AND WHEREAS each Right entitles the holder thereof, after the
Separation Time, to purchase securities of the Corporation pursuant to the terms
and subject to the conditions set forth herein;
AND WHEREAS the Corporation desires to appoint the Rights Agent to act
on behalf of the Corporation, and the Rights Agent is willing to so act, in
connection with the issuance, transfer, exchange and replacement of Rights
Certificates (as hereinafter defined), the exercise of Rights and other matters
referred to herein;
NOW THEREFORE in consideration of the premises and the respective
agreements set forth herein, the parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
indicated:
(a) "ACQUIRING PERSON" shall mean any Person who is the Beneficial Owner of 20%
or more of the outstanding Common Shares of the Corporation; provided,
however, that the term "Acquiring Person" shall not include:
(i) the Corporation or any Subsidiary of the Corporation;
(ii) any Person who becomes the Beneficial Owner of 20% or more of the
outstanding Common Shares of the Corporation as a result of any one or
a combination of:
(A) an acquisition or redemption by the Corporation of Common Shares
of the Corporation which, by reducing the number of Common Shares
outstanding, increases the proportionate number of Common Shares
Beneficially Owned by such Person to 20% or more of the Common
Shares of the Corporation then outstanding;
(B) share acquisitions made pursuant to a Permitted Bid ("PERMITTED
BID ACQUISITIONS");
(C) share acquisitions (1) in respect of which the Board of Directors
has waived the application of Section 3.1 pursuant to subsections
5.1(b), 5.1(c) or 5.1(d); or (2) which were made pursuant to a
dividend reinvestment plan of the Corporation; or (3) pursuant to
the receipt or exercise of rights issued by the Corporation to
all the holders of the Common Shares (other than holders resident
in a jurisdiction where such distribution is restricted or
impracticable as a result of applicable law) to subscribe for or
purchase Common Shares or Convertible Securities, provided that
such rights are acquired directly from the Corporation and not
from any other person and provided that the Person does not
thereby acquire a greater percentage of Common Shares or
Convertible Securities so offered than the Person's percentage of
Common Shares or Convertible Securities beneficially owned
immediately prior to such acquisition; or (4) pursuant to a
distribution by the Corporation of Common Shares or Convertible
Securities made pursuant to a prospectus, provided that the
Person does not thereby acquire a greater percentage of Common
Shares or Convertible Securities so offered than the Person's
percentage of Common Shares or Convertible Securities
beneficially owned immediately prior to such acquisition; or (5)
pursuant to a distribution by the Corporation of Common Shares or
Convertible Securities by way of a private placement or a
securities exchange take-over bid circular or upon the exercise
by an individual employee of stock options granted under a stock
option plan of the Corporation or rights to purchase securities
granted under a share purchase plan of the Corporation, provided
that (i) all necessary stock exchange approvals for such private
placement, stock option plan or share purchase plan have been
obtained and such private placement, stock option plan or share
purchase plan complies with the terms and conditions of such
approvals and (ii) such Person does not become the Beneficial
Owner of more than 25% of the Common Shares outstanding
immediately prior to the distribution, and in making this
determination, the
-2-
Common Shares to be issued to such Person in the distribution
shall be deemed to be held by such Person but shall not be
included in the aggregate number of outstanding Common Shares
immediately prior to the distribution; or (6) pursuant to an
amalgamation, merger or other statutory procedure requiring
shareholder approval ("EXEMPT ACQUISITIONS");
(D) the acquisition of Common Shares upon the exercise of Convertible
Securities received by such Person pursuant to a Permitted Bid
Acquisition, Exempt Acquisition or a Pro Rata Acquisition (as
defined below) ("CONVERTIBLE SECURITY ACQUISITIONS"); or
(E) acquisitions as a result of a stock dividend, a stock split or
other event pursuant to which such Person receives or acquires
Common Shares or Convertible Securities on the same PRO RATA
basis as all other holders of Common Shares of the same class
("PRO RATA ACQUISITIONS");
provided, however, that if a Person shall become the Beneficial Owner
of 20% or more of the Common Shares of the Corporation then
outstanding by reason of any one or a combination of (i) share
acquisitions or redemptions by the Corporation or (ii) Permitted Bid
Acquisitions or (iii) Exempt Acquisitions or (iv) Convertible Security
Acquisitions or (v) Pro Rata Acquisitions and, after such share
acquisitions or redemptions by the Corporation or Permitted Bid
Acquisitions or Exempt Acquisitions or Convertible Security
Acquisitions or Pro Rata Acquisitions, such Person subsequently
becomes the Beneficial Owner of more than an additional 1% of the
number of Common Shares of the Corporation outstanding other than
pursuant to any one or a combination of share acquisitions or
redemptions of shares by the Corporation, Permitted Bid Acquisitions,
Exempt Acquisitions, Convertible Security Acquisitions or Pro Rata
Acquisitions, then as of the date of any such acquisition such Person
shall become an "Acquiring Person";
(iii) for a period of 10 days after the Disqualification Date, any Person
who becomes the Beneficial Owner of 20% or more of the outstanding
Common Shares as a result of such Person becoming disqualified from
relying on clause 1.1(d)(B) solely because such Person makes or
announces an intention to make a Take-over Bid, either alone, through
such Person's Affiliates or Associates or by acting jointly or in
concert with any other Person. For the purposes of this definition,
"DISQUALIFICATION DATE" means the first date of public announcement
that any Person is making or intends to make a Take-over Bid, either
alone, through such Person's Affiliates or Associates or by acting
jointly or in concert with any other Person;
(iv) an underwriter or member of a banking or selling group that becomes
the Beneficial Owner of 20% or more of the Common Shares in connection
with a distribution of securities by way of prospectus or private
placement; or
(v) a Person (a "GRANDFATHERED PERSON") who is the Beneficial Owner of 20%
or more of the outstanding Common Shares of the Corporation as at the
Record Time, PROVIDED, HOWEVER, that this exception shall not be, and
shall cease to be, applicable to a Grandfathered Person in the event
that such Grandfathered Person shall, after the Record Time: (1) cease
to own 20% or more of the outstanding Common Shares or (2) become the
Beneficial Owner (other than pursuant to any one or a combination of
(A) share acquisitions or redemptions by the Corporation or (B)
Permitted Bid Acquisitions (C) Exempt Acquisitions or (D) Convertible
Security Acquisition or (E) Pro Rata Acquisitions) of additional
Common Shares constituting more than 1% of the number of Common Shares
outstanding as at the Record Time.
-3-
(b) "AFFILIATE", used to indicate a relationship with a specified Person, shall
mean a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control
with, such specified Person.
(c) "ASSOCIATE" of a specified individual shall mean any individual to whom
such specified individual is married or with whom such specified individual
is living in a conjugal relationship, outside marriage, or any relative of
such specified individual or said spouse who has the same home as such
specified individual.
(d) A Person shall be deemed the "BENEFICIAL OWNER", and to have "BENEFICIAL
OWNERSHIP", of, and to "BENEFICIALLY OWN":
(i) any securities as to which such Person or any 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 (A) upon the
exercise of any Convertible Securities, or (B) pursuant to any
agreement, arrangement or understanding, in either case where such
right is exercisable within a period of 60 days and whether or not on
condition or the happening of any contingency (other than (1)
customary agreements with and between underwriters and banking group
or selling group members with respect to a distribution to the public
or pursuant to a private placement of securities, or (2) pursuant to a
pledge of securities in the ordinary course of business); and
(iii) any securities which are Beneficially Owned within the meaning of
clauses 1.1(d)(i) or (ii) above by any other Person with which such
Person is acting jointly or in concert;
provided, however, that a Person shall not be deemed the "Beneficial
Owner", or to have "Beneficial Ownership" of, or to "Beneficially
Own", any security:
(A) where (1) the holder of such security has agreed to deposit or
tender such security pursuant to a Permitted Lock-up Agreement to
a Take-over Bid made by such Person or any of such Person's
Affiliates or Associates or any other Person referred to in
clause 1.1(d)(iii), or (2) such security has been deposited or
tendered pursuant to a Take-over Bid made by such Person or any
of such Person's Affiliates or Associates or any other Person
referred to in clause 1.1(d)(iii), in each case until the
earliest time at which any such tendered security is accepted
unconditionally for payment or exchange or is taken up and paid
for;
(B) where such Person, any of such Person's Affiliates or Associates
or any other Person referred to in clause 1.1(d)(iii), holds such
security provided that (1) the ordinary business of any such
Person (the "INVESTMENT MANAGER") includes the management of
investment funds for others and such security is held by the
Investment Manager in the ordinary course of such business in the
performance of such Investment Manager's duties for the account
of any other Person, including the acquisition or holding of
securities for non-discretionary accounts held on behalf of a
client by a broker or dealer registered under applicable
securities laws, or (2) 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 or in relation to other accounts and holds
such security in the ordinary course of such duties for the
estates of deceased or incompetent Persons or for such other
accounts, or (3) such Person (the "PLAN TRUSTEE") is the
administrator or trustee of one or more pension funds or plans
(each a "PLAN") registered under applicable laws and holds such
security for the
-4-
purposes of its activity as such, or (4) such Person is a Plan or
is a Person established by statute (the "STATUTORY BODY") for
purposes that include, and the ordinary business or activity of
such Person includes the management of investment funds for
employee benefit plans, pension plans, insurance plans (other
than plans administered by insurance companies) or various public
bodies, or (5) such Person is a Crown agent or agency or (6) such
Person (the "MANAGER") is the manager or trustee of a mutual fund
("MUTUAL FUND") that is registered or qualified to issue its
securities to investors under the securities laws of any province
of Canada or the laws of the United States of America or is a
Mutual Fund; provided in any of the above cases, that the
Investment Manager, the Trust Company, the Plan Trustee, the
Plan, the Statutory Body, the Crown agent or agency, the Manager
or the Mutual Fund, as the case may be, is not then making a
Take-over Bid or has not announced a current intention to make a
Take-over Bid, other than an Offer to Acquire Common Shares or
other securities pursuant to a distribution by the Corporation or
by means of ordinary market transactions (including pre-arranged
trades entered into in the ordinary course of business of such
Person) executed through the facilities of a stock exchange,
securities quotation system or organized over-the-counter market,
alone, through its Affiliates or Associates or by acting jointly
or in concert with any other Person; or
(C) because such Person is a client of or has an account with the
same Investment Manager as another Person on whose account the
Investment Manager holds such security, or where such Person is a
client of or has an account with the same Trust Company as
another Person on whose account the Trust Company holds such
security, or where such Person is a Plan and has a Plan Trustee
who is also a Plan Trustee for another Plan on whose account the
Plan Trustee holds such security; or
(D) where such Person is (i) a client of an Investment Manager and
such security is owned at law or in equity by the Investment
Manager, or (ii) an account of a Trust Company and such security
is owned at law or in equity by the Trust Company, or (iii) a
Plan and such security is owned at law or in equity by the Plan
Trustee; or
(E) where 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.
For purposes of this Agreement, the percentage of Common Shares Beneficially
Owned by any Person, shall be and be deemed to be the product determined by the
formula:
100 x A/B
Where:
A = the number of votes for the election of all directors generally attaching
to the Common Shares Beneficially Owned by such Person; and
B = the number of votes for the election of all directors generally attaching
to all outstanding Common Shares.
For the purposes of the foregoing formula, where any Person is deemed to
Beneficially Own unissued Common Shares which may be acquired pursuant to
Convertible Securities, such Common Shares shall be deemed to be outstanding for
the purpose of calculating the percentage of Common Shares Beneficially Owned by
such Person in both the numerator and the
-5-
denominator, but no other unissued Common Shares which may be acquired pursuant
to any other outstanding Convertible Securities shall, for the purposes of that
calculation, be deemed to be outstanding.
(e) "BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a day
that is treated as a holiday at the Corporation's principal executive
offices in Waterloo, Canada.
(f) "BUSINESS CORPORATIONS ACT" shall mean the BUSINESS CORPORATIONS ACT
(Ontario), R.S.O. 1990, c. B.16, as amended, and the regulations
thereunder, and any comparable or successor laws or regulations thereto.
(g) "CANADIAN-U.S. EXCHANGE RATE" shall mean on any date the inverse of the
U.S. Canadian Exchange Rate.
(h) "CANADIAN DOLLAR EQUIVALENT" of any amount which is expressed in United
States dollars shall mean on any day the Canadian dollar equivalent of such
amount determined by reference to the Canadian-U.S. Exchange Rate on such
date.
(i) "CLOSE OF BUSINESS" on any given date shall mean the time on such date (or,
if such date is not a Business Day, the time on the next succeeding
Business Day) at which the office of the transfer agent for the Common
Shares in the City of Toronto (or, after the Separation Time, the offices
of the Rights Agent in the City of Toronto) becomes closed to the public.
(j) "COMMON SHARES OF THE CORPORATION" and "COMMON SHARES" shall mean the
common shares in the capital stock of the Corporation and any other share
of the Corporation into which such common shares may be subdivided,
consolidated, reclassified or changed from time to time.
(k) "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 the Permitted Bid or Competing
Permitted Bid;
(ii) satisfies all components of the definition of a Permitted Bid other
than the requirements set out in clause (ii) of that definition; and
(iii) contains, and the take-up and payment for securities tendered or
deposited is subject to, an irrevocable and unqualified provision that
no Common Shares will be taken up or paid for pursuant to the
Take-over Bid prior to the close of business on the date that is no
earlier than the later of (1) the earliest date on which Common Shares
may be taken up or paid for under any Permitted Bid or Competing
Permitted Bid that is then in existence and (2) 35 days (or such other
minimum period of days as may be prescribed by applicable law in
Ontario) after the date of the Take-over Bid constituting the
Competing Permitted Bid.
(l) "CONVERTIBLE SECURITIES" means, at any time, any securities issued by the
Corporation from time to time (other than the Rights) carrying any
exercise, conversion or exchange right pursuant to which the holder thereof
may acquire Common Shares or other securities which are convertible into or
exercisable or exchangeable for Common Shares.
(m) "CONVERTIBLE SECURITY ACQUISITIONS" has the meaning set forth in the
definition of "Acquiring Person" herein.
(n) "CO-RIGHTS AGENTS" shall have the meaning set forth in subsection 4.1(a).
(o) "EFFECTIVE DATE" shall mean the close of business on November 29, 2004.
-6-
(p) "EXEMPT ACQUISITION" has the meaning set forth in the definition of
"Acquiring Person" herein.
(q) "EXERCISE PRICE" shall mean, as of any date, the price at which a holder
may purchase the securities issuable upon exercise of one whole Right in
accordance with the terms hereof and, subject to adjustment thereof in
accordance with the terms hereof, the Exercise Price shall be:
(i) until the Separation Time, an amount equal to three times the Market
Price, from time to time, per Common Share; and
(ii) from and after the Separation Time, an amount equal to three times the
Market Price, as at the Separation Time, per Common Share.
(r) "EXPANSION FACTOR" shall have the meaning set forth in subsection
2.3(a)(x).
(s) "EXPIRATION TIME" shall mean the earlier of:
(i) the Termination Time; and
(ii) the termination of the annual meeting of the shareholders of the
Corporation in the year 2008;
provided, however, that if the resolution referred to in Section 5.19
is approved by Independent Shareholders in accordance with Section
5.19 at or prior to such annual meeting, "EXPIRATION TIME" means the
earlier of (i) the Termination Time and (ii) the termination of the
annual meeting of the shareholders of the Corporation in the year
2011.
(t) "FIDUCIARY" shall mean a trust company registered under the trust company
legislation of Canada or any province thereof, a trust company organized
under the laws of any state of the United States, a portfolio manager
registered under the securities legislation of one or more provinces of
Canada or an investment adviser registered under the United States
Investment Advisers Act of 1940 or any other securities legislation of the
United States or any state of the United States.
(u) A "FLIP-IN EVENT" shall mean a transaction occurring subsequent to the date
of this Agreement as a result of which any Person shall become an Acquiring
Person provided, however, that a Flip-in Event, shall be deemed to occur at
the close of business on the tenth day (or such later day as the Board of
Directors of the Corporation may determine) after the Stock Acquisition
Date.
(v) "INDEPENDENT SHAREHOLDERS" shall mean holders of outstanding Common Shares
of the Corporation excluding (i) any Acquiring Person; or (ii) any Person
(other than a Person referred to in clause 1.1(d)(B)) that is making or has
announced a current intention to make a Take-over Bid for Common Shares of
the Corporation (including a Permitted Bid or a Competing Permitted Bid)
but excluding any such Person if the Take-over Bid so announced or made by
such Person has been withdrawn, terminated or expired; or (iii) any
Affiliate or Associate of such Acquiring Person or a Person referred to in
clause (ii); or (iv) any Person acting jointly or in concert with such
Acquiring Person or a Person referred to in clause (ii); or (v) a Person
who is a trustee of any employee benefit plan, share purchase plan,
deferred profit sharing plan or any similar plan or trust for the benefit
of employees of the Corporation or a Subsidiary of the Corporation, unless
the beneficiaries of the plan or trust direct the manner in which the
Common Shares are to be voted or direct whether the Common Shares are to be
tendered to a Take-over Bid.
(w) "MARKET PRICE" per security of any securities on any date of determination
shall mean the average of the daily Closing Price Per Security of such
securities (determined as described below) on each of the 20 consecutive
Trading Days through and including the Trading Day immediately preceding
such date; provided, however, that if an event of a type analogous to any
of the events described in Section 2.3 hereof shall have caused the price
used to determine the Closing Price Per Security on any Trading Day not to
be fully comparable with the price used to determine the Closing Price Per
Security on
-7-
such date of determination or, if the date of determination is not a
Trading Day, on the immediately preceding Trading Day, each such price so
used shall be appropriately adjusted in a manner analogous to the
applicable adjustment provided for in Section 2.3 hereof in order to make
it fully comparable with the price per security used to determine the
Closing Price Per Security on such date of determination or, if the date of
determination is not a Trading Day, on the immediately preceding Trading
Day. The "Closing Price Per Security" of any securities on any date shall
be:
(i) the closing board lot sale price or, if such price is not available,
the average of the closing bid and asked prices, for such securities
as reported by the securities exchange or national securities
quotation system on which such securities are listed or admitted for
trading on which the largest number of such securities were traded
during the most recently completed calendar year;
(ii) if, for any reason, none of such prices is available on such date or
the securities are not listed or admitted to trading on a securities
exchange or on a national securities quotation system, the last sale
price, or in case no sale takes place on such date, the average of the
high bid and low asked prices for such securities in the
over-the-counter market, as quoted by any reporting system then in use
(as selected by the Board of Directors); or
(iii) if the securities are not listed or admitted to trading as
contemplated in clause 1.1(w)(i) or (ii), 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 Closing Price Per Security cannot be determined in
accordance with the foregoing, the Closing Price Per Security of such
securities on such date shall mean the fair value per share of such
securities on such date as determined in good faith by an
internationally recognized investment dealer or investment banker with
respect to the fair value per share of such securities.
The Market Price, shall be expressed in Canadian dollars and, if initially
determined in respect of any day forming part of the 20 consecutive Trading
Day period in question in United States dollars, such amount shall be
translated into Canadian dollars at the Canadian Dollar Equivalent thereof.
(x) "1933 SECURITIES ACT" shall mean the SECURITIES ACT of 1933 of the United
States, as amended, and the rules and regulations thereunder, and any
comparable or successor laws or regulations thereto.
(y) "1934 EXCHANGE ACT" shall mean the SECURITIES EXCHANGE ACT of 1934 of the
United States, as amended, and the rules and regulations thereunder, and
any comparable or successor laws or regulations thereto.
(z) "OFFER TO ACQUIRE" shall include:
(i) an offer to purchase, or a solicitation of an offer to sell, Common
Shares; and
(ii) an acceptance of an offer to sell Common Shares, whether or not such
offer to sell has been solicited;
or any combination thereof, and the Person accepting an offer to sell
shall be deemed to be making an offer to acquire to the Person that
made the offer to sell.
(aa) "OFFEROR'S SECURITIES" means Common Shares Beneficially Owned on the date
of an Offer to Acquire by any Person who is making a Take-over Bid and
"OFFEROR" means a Person who has announced a current intention to make or
is making a Take-over Bid.
-8-
(bb) "PERMITTED BID" means a Take-over Bid made by a Person by means of a
Take-over Bid circular and which also complies with the following
additional provisions:
(i) the Take-over Bid is made to all holders of record of Common Shares,
other than the Offeror;
(ii) the Take-over Bid shall contain, and the provisions for the take-up
and payment for Common Shares tendered or deposited thereunder shall
be subject to, an irrevocable and unqualified condition that no Common
Shares shall be taken up or paid for pursuant to the Take-over Bid
prior to the close of business on a date which is not less than 60
days following the date of the Take-over Bid;
(iii) the Take-over Bid shall contain irrevocable and unqualified
provisions that, unless the Take-over Bid is withdrawn, Common Shares
may be deposited pursuant to the Take-over Bid at any time prior to
the close of business on the date of first take-up or payment for
Common Shares and that all Common Shares deposited pursuant to the
Take-over Bid may be withdrawn at any time prior to the close of
business on such date;
(iv) the Take-over Bid shall contain an irrevocable and unqualified
condition that more than 50% of the outstanding Common Shares held by
Independent Shareholders, determined as at the close on business on
the date of first take-up or payment for Common Shares under the
Take-over Bid, must be deposited to the Take-over Bid and not
withdrawn at the close of business on the date of first take-up or
payment for Common Shares; and
(v) the Take-over Bid shall contain an irrevocable and unqualified
provision that in the event that more than 50% of the then outstanding
Common Shares held by Independent Shareholders shall have been
deposited to the Take-over Bid and not withdrawn as at the close on
business on the date of first take-up or payment for Common Shares
under the Take-over Bid, the Offeror will make a public announcement
of that fact and the Take-over Bid will remain open for deposits and
tenders of Common Shares for not less than 10 Business Days from the
date of such public announcement;
provided that if a Take-over Bid constitutes a Competing Permitted Bid, the
term "Permitted Bid" shall also mean the Competing Permitted Bid.
(cc) "PERMITTED BID ACQUISITIONS" has the meaning set forth in the definition of
"Acquiring Person" herein.
(dd) "PERMITTED LOCK-UP AGREEMENT" means an agreement (the "LOCK-UP AGREEMENT")
between a Person and one or more holders of Common Shares (each such holder
herein referred to as a "LOCKED-UP PERSON") (the terms of which are
publicly disclosed and a copy of which is made available to the public
(including the Corporation) not later than the date of the Lock-up Bid (as
defined below), or if the Lock-up Bid has been made prior to the date of
the Lock-up Agreement not later than the first Business Day following the
date of the Lock-up Agreement) pursuant to which each Locked-up Person
agrees to deposit or tender the Common Shares held by such holder to a
Take-over Bid (the "LOCK-UP BID") made by the Person or any of such
Person's Affiliates or Associates or any other Person referred to in clause
1.1(d)(iii), provided that:
(i) the Lock-up Agreement permits the Locked-up Person to withdraw its
Common Shares from the Lock-up Agreement in order to deposit or tender
the Common Shares to another Take-over Bid or to support another
transaction prior to the Common Shares being taken up and paid for
under the Lock-up Bid at a price or value per Common Share that
exceeds the price or value per Common Share offered under the Lock-up
Bid; or
-9-
(ii) the Lock-up Agreement permits the Locked-up Person to withdraw its
Common Shares from the Lock-up Agreement in order to deposit or tender
the Common Shares to another Take-over Bid or to support another
transaction prior to the Common Shares being taken up and paid for
under the Lock-up Bid at an offering price for each Common Share that
exceeds by as much as or more than a specified amount (the "SPECIFIED
AMOUNT") the offering price for each Common Share contained in or
proposed to be contained in the Lock-up Bid and that does not by
itself provide for a Specified Amount that is greater than 7% of the
offering price contained in or proposed to be contained in the Lock-up
Bid;
and, for greater clarity, the agreement may contain a right of first
refusal or require a period of delay to give the Person who made the
Lock-up Bid an opportunity to match a higher price in another
Take-over Bid or transaction or other similar limitation on a
Locked-up Person's right to withdraw Common Shares from the agreement,
so long as the limitation does not preclude the exercise by the
Locked-up Person of the right to withdraw Common Shares during the
period of the other Take-over Bid or transaction; and
(iii) no "break-up" fees, "top-up" fees, penalties, expenses or other
amounts that exceed in aggregate the greater of:
(A) 2.5% of the price or value of the consideration payable under the
Lock-up Bid to a Locked-up Person; and
(B) 50% of the amount by which the price or value of the
consideration received by a Locked-up Person under another
Take-over Bid or transaction exceeds the price or value of the
consideration that the Locked-up Person would have received under
the Lock-up Bid;
shall be payable by such Locked-up Person if the Locked-up Person
fails to deposit or tender Common Shares to the Lock-up Bid, or
withdraws Common Shares previously tendered thereto in order to
deposit or tender such Common Shares to another Take-over Bid or
support another transaction.
(ee) "PERSON" shall mean any individual, firm, partnership, association, trust,
trustee, personal representative, body corporate, corporation,
unincorporated organization, syndicate or other entity.
(ff) "PRO RATA ACQUISITION" has the meaning set forth in the definition of
"Acquiring Person" herein.
(gg) "RECORD TIME" shall mean the close of business on
November 29, 2004.
(hh) "REDEMPTION PRICE" has the meaning set forth in subsection 5.1(a) herein.
(ii) "RIGHTS CERTIFICATE" shall mean, after the Separation Time, the certificate
representing the Rights substantially in the form of Exhibit A hereto;
(jj) "SECURITIES ACT" shall mean the SECURITIES ACT (Ontario), R.S.O. 1990, c.
S-5, and the rules and regulations thereunder, each as may be amended from
time to time, and any comparable or successor laws, rules or regulations
thereto.
(kk) "SEPARATION TIME" shall mean the close of business on the tenth Business
Day after the earlier of:
(i) the Stock Acquisition Date;
-10-
(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 Take-over
Bid which is a Permitted Bid so long as such Take-over Bid continues
to satisfy the requirements of a Permitted Bid), provided that, if any
Take-over Bid referred to in this clause (ii) expires, is cancelled,
terminated or otherwise withdrawn prior to the Separation Time, such
Take-over Bid shall be deemed, for purposes of this subsection
1.1(kk), never to have been made; and
(iii) the date upon which a Permitted Bid ceases to be a Permitted Bid;
or such later date as may be determined by the Board of Directors acting in
good faith provided that, if the foregoing results in the Separation Time
being prior to the Record Time, the Separation Time shall be the Record
Time and if the Board of Directors determines pursuant to Section 5.1 to
waive the application of Section 3.1 to a Flip-in Event, the Separation
Time in respect of such Flip-in Event shall be deemed never to have
occurred.
(ll) "STOCK ACQUISITION DATE" shall mean the first date of public announcement
(which, for purposes of this definition, shall include, without limitation,
a report filed pursuant to Section 101 of the SECURITIES ACT or Section
13(d) under the 1934 EXCHANGE ACT) by the Corporation or an Acquiring
Person that a Person has become an Acquiring Person.
(mm) "SUBSIDIARY" of any specified Person shall mean any corporation or other
entity controlled by such specified Person.
(nn) "TAKE-OVER BID" means an Offer to Acquire Common Shares or securities
convertible into Common Shares, where the Common Shares subject to the
Offer to Acquire, together with the Common Shares into which the securities
subject to the Offer to Acquire are convertible, and the Offeror's
Securities, constitute in the aggregate 20% or more of the outstanding
Common Shares at the date of the Offer to Acquire.
(oo) "TERMINATION TIME" shall mean the time at which the right to exercise
Rights shall terminate pursuant to Section 5.1, 5.18 or 5.19 hereof.
(pp) "TRADING DAY", when used with respect to any securities, shall mean a day
on which the securities exchange or national securities quotation system on
which such securities are listed or admitted for trading on which the
largest number of such securities were traded during the most recently
completed calendar year is open for the transaction of business or, if the
securities are not listed or admitted to trading on any securities
exchange, a Business Day.
(qq) "U.S. CANADIAN EXCHANGE RATE" shall mean on any date:
(i) if on such date the Bank of Canada sets an average noon spot rate of
exchange with a conversion of one United States dollar into Canadian
dollars, such rate;
(ii) in any other case, the rate for such date for the conversion of one
United States dollar into Canadian dollars which is calculated in the
manner which shall be determined by the Board of Directors from time
to time acting in good faith.
(rr) "U.S. DOLLAR EQUIVALENT" of any amount which is expressed in Canadian
dollars shall mean on any day the United States dollar equivalent of such
amount determined by reference to the U.S.-Canadian Exchange Rate on such
date.
1.2 CURRENCY
All sums of money which are referred to in this Agreement are expressed in
lawful money of Canada.
-11-
1.3 ACTING JOINTLY OR IN CONCERT
For purposes of this Agreement, a Person is acting jointly or in concert
with another Person if such Person has any agreement, arrangement or
understanding (whether formal or informal and whether or not in writing) with
such other Person to acquire, or Offer to Acquire, any Common Shares of the
Corporation (other than (A) customary agreements with and between underwriters
and banking group or selling group members with respect to a distribution of
securities by way of prospectus or private placement, or (B) pursuant to a
pledge of securities in the ordinary course of business).
1.4 CONTROL
A Person is "CONTROLLED" by another Person or two or more other Persons
acting jointly or in concert if:
(a) in the case of a body corporate, securities entitled to vote in the
election of directors of such body corporate carrying more than 50% of the
votes for the election of directors are held, directly or indirectly, by or
for the benefit of the other Person or Persons acting jointly or in concert
and the votes carried by such securities are entitled, if exercised, to
elect a majority of the board of directors of such body corporate; or
(b) in the case of a Person which is not a body corporate, more than 50% of the
voting or equity interests of such entity are held, directly or indirectly,
by or for the benefit of the other Person or Persons
and "CONTROLS", "CONTROLLING" and "UNDER COMMON CONTROL WITH" shall be
interpreted accordingly.
1.5 HOLDER OF RIGHTS AND TRUST UNITS
As used in this Agreement, unless the context otherwise requires, the term
"HOLDER" of any Rights shall mean the registered holder of such Rights (or,
prior to the Separation Time, the associated Common Shares).
1.6 REFERENCES TO THIS AGREEMENT
In this Agreement, unless otherwise provided herein and unless the context
otherwise requires, references to "THIS Agreement", "HEREIN", "HEREBY" and
"HEREUNDER" mean this Shareholder Rights Plan Agreement dated as of November 29,
2004 between the Corporation and the Rights Agent as amended and supplemented
from time to time.
ARTICLE 2
THE RIGHTS
2.1 LEGEND ON COMMON SHARE CERTIFICATES
Certificates for the Common Shares, including without limitation Common
Shares issued upon the conversion of Convertible Securities, issued after the
Record Time but prior to the earlier of the Separation Time and the Expiration
Time shall evidence one Right for each Common Share represented thereby and,
commencing as soon as reasonably practicable after the Record Time, shall have
impressed on, printed on, written on or otherwise affixed to them a legend,
substantially in the following form:
Until the Separation Time (as defined in the Rights Agreement referred
to below), this certificate also evidences and entitles the holder
hereof to certain Rights as set forth in a Shareholder Rights Plan
Agreement dated as of November 29, 2004, as such may from time to time
be amended, restated, varied or replaced (the "Rights Agreement"),
between The Descartes Systems Group Inc. (the "Corporation") and
Computershare Trust Company of Canada as Rights Agent, the terms of
which are hereby incorporated herein by reference and, a
-12-
copy of which is on file at the registered office of the Corporation.
In certain circumstances, as set forth in the Rights Agreement, such
Rights may be amended, redeemed, may expire, may become void (if, in
certain cases, they are "Beneficially Owned" by an "Acquiring Person",
as such terms are defined in the Rights Agreement, or a transferee
thereof) 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 practicable,
after the receipt of a written request therefor.
Certificates representing Common Shares that are issued and outstanding at the
Record Time shall evidence one Right for each Common Share evidenced thereby
notwithstanding the absence of the foregoing legend, until the earlier of the
Separation Time and the Expiration Time.
2.2 INITIAL EXERCISE PRICE; EXERCISE OF RIGHTS; DETACHMENT OF RIGHTS
(a) Subject to adjustment as herein set forth, each Right will entitle the
holder thereof, after the Separation Time, to purchase, for the Exercise
Price, or its U.S. Dollar Equivalent as at the Business Day immediately
preceding the day of exercise of the Right, one Common Share.
Notwithstanding any other provision of this Agreement, any Rights held by
the Corporation or any of its Subsidiaries shall be void.
(b) Until the Separation Time,
(i) no Right may be exercised; and
(ii) each Right will be evidenced by the certificate for the associated
Common Share and will be transferable only together with, and will be
transferred by a transfer of, such associated share.
(c) After the Separation Time and prior to the Expiration Time, the Rights (i)
may be exercised; and (ii) will be transferable independent of Common
Shares. Promptly following the Separation Time the Rights Agent will mail
to each holder of record of Common Shares as of the Separation Time and, in
respect of each Convertible Security converted into Common Shares after the
Separation Time and prior to the Expiration Time promptly after such
conversion to the holder so converting (other than an Acquiring Person and,
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) at such holder's address as shown by the records of the
Corporation (the Corporation hereby agreeing to furnish copies of such
records to the Rights Agent for this purpose), (x) a Rights Certificate
with registration particulars appropriately completed, representing the
number of Rights held by such holder at the Separation Time and having such
marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Corporation may deem appropriate and as
are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange or
securities quotation system on which the Rights may from time to time be
listed or traded, or to conform to usage, and (y) a disclosure statement
describing the Rights.
(d) Rights may be exercised in whole or in part on any Business Day (or on any
other day which, in the city at which an Election to Exercise (as
hereinafter defined) is duly submitted to the Rights Agent in accordance
with this Agreement, is not a Saturday, Sunday or a day that is treated as
a holiday in such city) after the Separation Time and prior to the
Expiration Time by submitting to the Rights Agent (at its office in the
City of Toronto, Canada or at any other office of the Rights Agent in the
cities designated from time to time for that purpose by the Corporation),
the Rights Certificate evidencing such Rights together with an Election to
Exercise (an "ELECTION TO EXERCISE") substantially in the form attached to
the Rights Certificate duly completed,
-13-
accompanied by payment by certified cheque, banker's draft or money order
payable to the order of the Rights Agent, of a sum equal to the Exercise
Price multiplied by the number of Rights being exercised and a sum
sufficient to cover any transfer tax or charge which may be payable in
respect of any transfer involved in the transfer or delivery of Rights
Certificates or the issuance or delivery of certificates for Common Shares
in a name other than that of the holder of the Rights being exercised.
(e) Upon receipt of a Rights Certificate, with a duly completed Election to
Exercise (which does not indicate that the holder so exercising is an
Acquiring Person) accompanied by payment as set forth in subsection 2.2(d)
above, the Rights Agent will thereupon promptly:
(i) requisition from the transfer agent or any co-transfer agent of the
Common Shares certificates for the number of Common Shares to be
purchased (the Corporation hereby irrevocably authorizing its 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 and, after
receipt, deliver such cash to or to the order of the registered holder
of the Rights Certificate;
(iii) after receipt of the Common Share certificates, deliver the same to
or upon the order of the registered holder of such Rights Certificate,
registered in such name or names as may be designated by such holder;
and
(iv) tender to the Corporation all payments received on exercise of the
Rights.
(f) In case the holder of any Rights shall exercise less than all the Rights
evidenced by such holder's Rights Certificate, a new Rights Certificate
evidencing the Rights remaining unexercised will be issued by the Rights
Agent to such holder or to such holder's duly authorized assigns.
(g) The Corporation covenants and agrees that it will:
(i) take all such action as may be necessary and within its power to
ensure that all shares delivered upon exercise of Rights shall, at the
time of delivery of the certificates for such shares (subject to
payment of the Exercise Price), be duly and validly authorized,
executed, issued and delivered and 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 BUSINESS CORPORATIONS
ACT, the SECURITIES ACT, the securities acts or comparable legislation
of each of the other provinces of Canada, the 1933 SECURITIES ACT and
the 1934 EXCHANGE ACT, and the rules and regulations thereunder or any
other applicable law, rule or regulation, in connection with the
issuance and delivery of the Rights Certificates and the issuance of
any shares upon exercise of Rights;
(iii) use reasonable efforts to cause all shares issued upon exercise of
Rights to be listed on the principal exchanges or traded in the
over-the-counter markets on which the shares were traded immediately
prior to the Stock Acquisition Date;
(iv) cause to be reserved and kept available out of its authorized and
unissued Common Shares the number of Common Shares that, as provided
in this Agreement, will from time to time be sufficient to permit the
exercise in full of all outstanding Rights; and
(v) pay when due and payable any and all Canadian and United States
federal, provincial, and state transfer taxes (for greater certainty
not including any income taxes or capital gains of the holder or
exercising holder or any liability of the Corporation to withhold tax)
and charges which may be payable in respect of the original issuance
or delivery of
-14-
the Rights Certificates or certificates for shares, provided that the
Corporation shall not be required to pay any transfer tax or charge
which may be payable in respect of any transfer involved in the
transfer or delivery of Rights Certificates or the issuance or
delivery of certificates for shares in a name other than that of the
holder of the Rights being transferred or exercised.
2.3 ADJUSTMENTS TO EXERCISE PRICE; NUMBER OF RIGHTS
The Exercise Price, the number and kind of securities subject to purchase
upon exercise of each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 2.3.
(a) In the event the Corporation shall at any time after the Record Date and
prior to the Expiration Time:
(i) declare or pay a dividend on the Common Shares payable in Common
Shares (or other capital stock or securities exchangeable for or
convertible into or giving a right to acquire Common Shares or other
capital stock) other than pursuant to any optional stock dividend
program, dividend reinvestment plan or a dividend payable on Common
Shares in lieu of a regular periodic cash dividend;
(ii) subdivide or change the then outstanding Common Shares into a greater
number of Common Shares;
(iii) combine or change the then outstanding Common Shares into a smaller
number of Common Shares; or
(iv) issue any Common Shares (or other capital stock or securities
exchangeable for or convertible into or giving a right to acquire
Common Shares or other capital stock) in respect of, in lieu of or in
exchange for existing Common Shares in a reclassification,
amalgamation, merger, statutory arrangement or consolidation,
the Exercise Price and the number of Rights outstanding, or, if the payment
or effective date therefor shall occur after the Separation Time, the
securities purchasable upon exercise of Rights shall be adjusted in the
manner set forth below. If the Exercise Price and number of Rights
outstanding are to be adjusted (x) the Exercise Price in effect after such
adjustment shall be equal to the Exercise Price in effect immediately prior
to such adjustment divided by the number of Common Shares (or other capital
stock) (the "EXPANSION FACTOR") that a holder of one Common Share
immediately prior to such dividend, subdivision, change, combination or
issuance would hold thereafter as a result thereof and (y) each Right held
prior to such adjustment shall become that number of Rights equal to the
Expansion 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 shares issued in
respect of such dividend, subdivision, change, combination or issuance, so
that each such Common Share (or other capital stock) will have exactly one
Right associated with it. If the securities purchasable upon exercise of
Rights are to be adjusted, the securities purchasable upon exercise of each
Right after such adjustment will be the number of securities that a holder
of the securities purchasable upon exercise of one Right immediately prior
to such dividend, subdivision, change, combination or issuance would hold
thereafter as a result thereof. If after the Record Time and prior to the
Expiration Time the Corporation shall issue any shares of capital stock
other than Common Shares in a transaction of a type described in clause
2.3(a)(i) or (iv), shares of such capital stock shall be treated herein as
nearly equivalent to Common Shares as may be practicable and appropriate
under the circumstances and the Corporation and the Rights Agent agree to
amend this Agreement in order to effect such treatment. If an event occurs
which would require an adjustment under both this Section 2.3 and Section
3.1 hereof, the adjustment provided for in this Section 2.3 shall be in
addition to and shall be made prior to any adjustment required pursuant to
Section 3.1 hereof.
-15-
Adjustments pursuant to subsection 2.3(a) shall be made successively,
whenever an event referred to in subsection 2.3(a) occurs.
In the event the Corporation shall at any time after the Record Time and
prior to the Separation Time issue any Common Shares otherwise than in a
transaction referred to in the preceding paragraph, each such Common Share
so issued shall automatically have one new Right associated with it, which
Right shall be evidenced by the certificate representing such Common Share.
(b) In the event the Corporation shall at any time after the Record Time and
prior to the Expiration Time fix a record date for the making of a
distribution to all holders of Common Shares of rights or warrants
entitling them (for a period expiring within 45 calendar days after such
record date) to subscribe for or purchase Common Shares (or securities
convertible into or exchangeable for or carrying a right to purchase or
subscribe for Common Shares) at a price per Common Share (or, if a security
convertible into or exchangeable for or carrying a right to purchase or
subscribe for Common Shares, having a conversion, exchange or exercise
price (including the price required to be paid to purchase such convertible
or exchangeable security or right per share)) less than 90% of the Market
Price per Common Share on such record date, the Exercise Price shall be
adjusted in the manner set forth below. The Exercise Price in effect after
such record date shall equal the Exercise Price in effect immediately prior
to such record date multiplied by a fraction, of which the numerator shall
be the number of Common Shares outstanding on such record date plus the
number of Common Shares which the aggregate offering price of the total
number of Common Shares so to be offered (and/or the aggregate initial
conversion, exchange or exercise price of the convertible or exchangeable
securities or rights so to be offered (including the price required to be
paid to purchase such convertible or exchangeable securities or rights))
would purchase at such Market Price and of which the denominator shall be
the number of Common Shares outstanding on such record date plus the number
of additional Common Shares to be offered for subscription or purchase (or
into which the convertible or exchangeable securities or rights so to be
offered are initially convertible, exchangeable or exercisable). In case
such subscription price is satisfied in whole or in part by consideration
in a form other than cash the value of such consideration shall be as
determined in good faith by the Board of Directors whose determination
shall be described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent and the holders of Rights.
Such adjustment shall be made successively whenever such a record date is
fixed. For purposes of this paragraph (b), the granting of the right to
purchase Common Shares pursuant to any dividend or interest reinvestment
plan and/or any Common Share purchase plan providing for the reinvestment
of dividends or interest payable on securities of the Corporation and/or
the investment of periodic optional payments and/or employee benefit or
similar plans (so long as such right to purchase is in no case evidenced by
the delivery of rights or warrants) shall not be deemed to constitute an
issue of rights or warrants by the Corporation; provided, however, that in
the case of any dividend or interest reinvestment plan, the right to
purchase Common Shares is at a price per share of not less than 90% of the
current market price per share (determined as provided in such plans) of
the Common Shares.
(c) In the event the Corporation shall at any time after the Record Time and
prior to the Expiration Time fix a record date for the making of a
distribution to all holders of Common Shares of evidences of indebtedness
or assets (other than a regular periodic cash dividend or a dividend paid
in Common Shares) or rights or warrants entitling them to subscribe for or
purchase Common Shares (or Convertible Securities in respect of Common
Shares) at a price per Common Share (or, in the case of a Convertible
Security in respect of Common Shares having a conversion or exercise price
per share (including the price required to be paid to purchase such
Convertible Security) less than 90% of the Market Price per Common Share on
such record date (excluding those referred to in subsection 2.3(b)), the
Exercise Price shall be adjusted in the manner set forth below. The
Exercise Price in effect after such record date shall 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
Corporation) of the portion of the assets, evidences of indebtedness,
rights or
-16-
warrants so to be distributed applicable to each of the securities
purchasable upon exercise of one Right (such determination to be described
in a statement filed with the Rights Agent and shall be binding on the
Rights Agent and the holders of the Rights). Such adjustment shall be made
successively whenever such a record date is fixed.
(d) Each adjustment made pursuant to this Section 2.3 shall be made as of:
(i) the payment or effective date for the applicable dividend,
subdivision, change, combination or issuance, in the case of an
adjustment made pursuant to paragraph (a) above; and
(ii) the record date for the applicable dividend or distribution, in the
case of an adjustment made pursuant to paragraph (b) or (c) above,
subject to readjustment to reverse the same if such distribution shall not
be made.
(e) In the event the Corporation shall at any time after the Record Time and
prior to the Expiration Time issue any shares of capital stock (other than
Common Shares), or rights or warrants to subscribe for or purchase any such
capital stock, or securities convertible into or exchangeable for any such
capital stock, in a transaction referred to in clause (a)(i) or (a)(iv)
above, or if the Corporation shall take any other action (other than the
issue of Common Shares) which might have a negative effect on the holders
of Rights, if the Board of Directors acting in good faith determines that
the adjustments contemplated by paragraphs (a), (b) and (c) above are not
applicable or will not appropriately protect the interests of the holders
of Rights, the Corporation may determine what other adjustments to the
Exercise Price, number of Rights and/or securities purchasable upon
exercise of Rights would be appropriate and, if the adjustments
contemplated by paragraphs (a), (b) and (c) above are applicable,
notwithstanding such paragraphs, the adjustments so determined by the
Corporation, rather than adjustments contemplated by paragraphs (a), (b)
and (c) above, shall be made. The Corporation and the Rights Agent shall
amend this Agreement in accordance with subsections 5.4(b) and 5.4(c), as
the case may be, to provide for such adjustments.
(f) Each adjustment to the Exercise Price made pursuant to this Section 2.3
shall be calculated to the nearest cent. Whenever an adjustment to the
Exercise Price is made pursuant to this Section 2.3, the Corporation shall:
(i) promptly prepare a certificate setting forth such adjustment and a
brief statement of the facts accounting for such adjustment; and
(ii) promptly file with the Rights Agent and with each transfer agent for
the Common Shares a copy of such certificate and mail a brief summary
thereof to each holder of Rights who requests a copy.
Failure to file such certificate or cause such summary to be mailed as
aforesaid, or any defect therein, shall not affect the validity of any such
adjustment or change.
2.4 DATE ON WHICH EXERCISE IS EFFECTIVE
Each person in whose name any certificate for Common Shares is issued upon
the exercise of Rights shall for all purposes be deemed to have become the
holder of record of the Common Shares represented thereby, and such certificate
shall be dated, the date upon which the Rights Certificate evidencing such
Rights was duly surrendered (together with a duly completed Election to
Exercise) and payment of the Exercise Price for such Rights (and any applicable
transfer taxes and other governmental charges payable by the exercising holder
hereunder) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Common Share transfer books of the Corporation
are closed, such person shall be deemed to have become the record holder of such
-17-
shares on, and such certificate shall be dated, the next succeeding Business Day
on which the Common Share transfer books of the Corporation are open.
2.5 EXECUTION, AUTHENTICATION, DELIVERY AND DATING OF RIGHTS CERTIFICATES
(a) The Rights Certificates shall be executed on behalf of the Corporation by
any one of its Chairman of the Board, the President, the Chief Executive
Officer, the Chief Financial Officer, any Vice President, the Treasurer,
any Assistant Treasurer, the Secretary or any Assistant Secretary of the
Corporation. The signature of any of these officers on the Rights
Certificates may be manual or facsimile. Rights Certificates bearing the
manual or facsimile signatures of individuals who were at any time the
proper officers of the Corporation shall bind the Corporation,
notwithstanding that such individuals or any of them have ceased to hold
such offices prior to the countersignature and delivery of such Rights
Certificates. Promptly after the Corporation learns of the Separation Time,
the Corporation will notify the Rights Agent of such Separation Time and
will deliver Rights Certificates executed by the Corporation to the Rights
Agent for countersignature, and the Rights Agent shall countersign
(manually or by facsimile signature in a manner satisfactory to the
Corporation) and mail such Rights Certificates to the holders of the Rights
pursuant to subsection 2.2(c) hereof. No Rights Certificate shall be valid
for any purpose until countersigned by the Rights Agent as aforesaid.
(b) Each Rights Certificate shall be dated the date of countersignature
thereof.
2.6 REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE
(a) The Corporation will cause to be kept a register (the "RIGHTS REGISTER") in
which, subject to such reasonable regulations as it may prescribe, the
Corporation will provide for the registration and transfer of Rights. The
Rights Agent is hereby appointed "Rights Registrar" for the purpose of
maintaining the Rights Register for the Corporation and registering Rights
and transfers of Rights as herein provided. In the event that the Rights
Agent shall cease to be the Rights Registrar, the Rights Agent will have
the right to examine the Rights Register at all reasonable times.
(b) After the Separation Time and prior to the Expiration Time, upon surrender
for registration of transfer or exchange of any Rights Certificate, and
subject to the provisions of subsection 2.6(d) below, the Corporation shall
execute, and the Rights Agent shall countersign and deliver, in the name of
the holder or the designated transferee or transferees, as required
pursuant to the holder's instructions, one or more new Rights Certificates
evidencing the same aggregate number of Rights as did the Rights
Certificates so surrendered.
(c) All Rights issued upon any registration of transfer or exchange of Rights
Certificates shall be the valid obligations of the Corporation, and such
Rights shall be entitled to the same benefits under this Agreement as the
Rights surrendered upon such registration of transfer or exchange.
(d) Every Rights Certificate surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument
of transfer in form satisfactory to the Corporation or the Rights Agent, as
the case may be, duly executed by the holder thereof or such holder's
attorney duly authorized in writing. As a condition to the issuance of any
new Rights Certificate under this Section 2.6, the Corporation may require
the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto.
2.7 MUTILATED, DESTROYED, LOST AND STOLEN RIGHTS CERTIFICATES
(a) If any mutilated Rights Certificate is surrendered to the Rights Agent
prior to the Expiration Time, the Corporation shall execute and the Rights
Agent shall countersign and deliver in exchange therefor a new Rights
Certificate evidencing the same number of Rights as did the Rights
Certificate so surrendered.
-18-
(b) If there shall be delivered to the Corporation and the Rights Agent prior
to the Expiration Time (i) evidence of ownership of any Rights Certificate,
(ii) evidence to their satisfaction of the destruction, loss or theft of
any Rights Certificate and (iii) such security or indemnity as may be
required by them in their sole discretion to save each of them and any of
their agents harmless, then, in the absence of notice to the Corporation or
the Rights Agent that such Rights Certificate has been acquired by a bona
fide purchaser, the Corporation shall execute and upon its request the
Rights Agent shall countersign and deliver, in lieu of any such destroyed,
lost or stolen Rights Certificate, a new Rights Certificate evidencing the
same number of Rights as did the Rights Certificate so destroyed, lost or
stolen.
(c) As a condition to the issuance of any new Rights Certificate under this
Section 2.7, the Corporation may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the
Rights Agent) connected therewith.
(d) Every new Rights Certificate issued pursuant to this Section 2.7 in lieu of
any destroyed, lost or stolen Rights Certificate shall evidence an original
additional contractual obligation of the Corporation, whether or not the
destroyed, lost or stolen Rights Certificate shall be at any time
enforceable by anyone, and shall be entitled to all the benefits of this
Agreement equally and proportionately with any and all other Rights, duly
issued hereunder.
2.8 PERSONS DEEMED OWNERS
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 whatsoever.
2.9 DELIVERY AND CANCELLATION OF CERTIFICATES
All Rights Certificates surrendered upon exercise or for redemption,
registration of transfer or exchange shall, if surrendered to any Person other
than the Rights Agent, be delivered to the Rights Agent and, in any case, shall
be promptly cancelled by the Rights Agent. The Corporation may at any time
deliver to the Rights Agent for cancellation any Rights Certificates previously
countersigned and delivered hereunder which the Corporation may have acquired in
any manner whatsoever, and all Rights Certificates so delivered shall be
promptly cancelled by the Rights Agent. No Rights Certificate shall be
countersigned in lieu of or in exchange for any Rights Certificates cancelled as
provided in this Section 2.9, except as expressly permitted by this Agreement.
The Rights Agent shall, subject to applicable law, destroy all cancelled Rights
Certificates and deliver a certificate of destruction to the Corporation.
2.10 AGREEMENT OF RIGHTS HOLDERS
Every holder of Rights by accepting the same consents and agrees with the
Corporation and the Rights Agent and with every other holder of Rights that:
(a) he will be bound by and subject to the provisions of this Agreement, as
amended from time to time in accordance with the terms hereof, in respect
of all Rights held;
(b) prior to the Separation Time, each Right will be transferable only together
with, and will be transferred by a transfer of, the associated Common
Share;
(c) after the Separation Time, the Rights Certificates will be transferable
only on the Rights Register as provided herein.
-19-
(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 (notwithstanding any notations of ownership
or writing on such Rights Certificate or the associated Common Share
certificate made by anyone other than the Corporation or the Rights Agent)
for all purposes whatsoever, and neither the Corporation nor the Rights
Agent shall be affected by any notice to the contrary;
(e) such holder of Rights has waived his right to receive any fractional Rights
or any fractional shares upon exercise of a Right (except as provided
herein);
(f) without the approval of any holder of Rights and upon the sole authority of
the Board of Directors acting in good faith this Agreement may be
supplemented or amended from time to time as provided herein; and
(g) notwithstanding anything in this Agreement to the contrary, neither the
Corporation nor the Rights Agent shall have any liability to any holder of
a Right or 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
promulgated or enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation.
ARTICLE 3
ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS
3.1 FLIP-IN EVENT
(a) Subject to subsections 3.1(b), 5.1(b), 5.1(c) and 5.1(d) hereof, in the
event that prior to the Expiration Time a Flip-in Event shall occur, the
Corporation shall take such action as shall be necessary to ensure and
provide, within 10 Business Days thereafter or such longer period as may be
required to satisfy the requirements of the applicable securities acts or
comparable legislation so that, except as provided below, each Right shall
thereafter constitute the right to purchase from the Corporation, upon
exercise thereof in accordance with the terms hereof, that number of Common
Shares of the Corporation having an aggregate Market Price on the date of
consummation or occurrence of such Flip-in Event equal to twice the
Exercise Price for an amount in cash equal to the Exercise Price (such
right to be appropriately adjusted in a manner analogous to the applicable
adjustment provided for in Section 2.3 in the event that after such date of
consummation or occurrence an event of a type analogous to any of the
events described in Section 2.3 shall have occurred with respect to such
Common Shares).
(b) Notwithstanding the foregoing or any other provisions of this Agreement,
upon the occurrence of any Flip-in Event, any Rights that are or were
Beneficially Owned on or after the earlier of the Separation Time or the
Stock Acquisition Date by:
(i) an Acquiring Person (or any Affiliate or Associate of an Acquiring
Person or any Person acting jointly or in concert with an Acquiring
Person or any Affiliate or Associate of an Acquiring Person); or
(ii) a transferee, direct or indirect, 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) in a transfer made after the date
hereof, whether or not for consideration, that the Board of Directors
acting in good faith
-20-
has determined is part of a plan, arrangement or scheme of an
Acquiring Person (or any Affiliate or Associate of an Acquiring
Person) that has the purpose or effect of avoiding clause (i) of this
subsection 3.1(b),
shall become void and any holder of such Rights (including transferees)
shall thereafter have no right, to exercise such Rights under any provision
of this Agreement and shall not have any other rights whatsoever in respect
of such Rights, whether under any provision of this Agreement or otherwise.
(c) Any Rights Certificate that represents Rights Beneficially Owned by a
Person described in either clauses (i) or (ii) of subsection 3.1(b) or
transferred to any nominee of any such Person, and any Rights Certificate
issued upon transfer, exchange, replacement or adjustment of any other
Rights Certificate referred to in this sentence, shall contain the
following legend:
"The Rights represented by this Rights Certificate were Beneficially
Owned by a Person who was an Acquiring Person or who was an Affiliate
or an Associate of an Acquiring Person (as such terms are defined in
the Rights Agreement) or was acting jointly or in concert with any of
them. This Rights Certificate and the Rights represented hereby shall
become void in the circumstances specified in subsection 3.1(b) of the
Rights Agreement.",
provided that the Rights Agent shall not be under any responsibility to
ascertain the existence of facts that would require the imposition of such
legend but shall be required to impose such legend only if instructed to do
so by the Corporation or if a holder fails to certify upon transfer or
exchange in the space provided on the Rights Certificate that such holder
is not an Acquiring Person, an Affiliate or Associate thereof or a Person
acting jointly or in concert with any of them.
ARTICLE 4
THE RIGHTS AGENT
4.1 GENERAL
(a) The Corporation hereby appoints the Rights Agent to act as agent for the
Corporation and the holders of Rights in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment.
The Corporation may from time to time appoint such co-Rights Agents (the
"CO-RIGHTS AGENTS") as it may deem necessary or desirable. In the event the
Corporation appoints one or more Co-Rights Agents, the respective duties of
the Rights Agent and Co-Rights Agents shall be as the Corporation may
determine with the approval of the Rights Agent and Co-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 execution and administration of this
Agreement and the exercise and performance of its duties hereunder. The
Corporation also agrees to indemnify the Rights Agent, its directors,
officers, employees and agents for, and to hold 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
or its directors, officers, employees and agents for anything done,
suffered or omitted by the Rights Agent in connection with the acceptance,
execution and administration of this Agreement and the exercise and
performance of its duties hereunder, including the costs and expenses of
defending against any claim of liability, which right to indemnification
will survive the termination of this Agreement or the resignation or
removal of the Rights Agent.
(b) The Rights Agent shall be protected and shall incur no liability for or in
respect of any action taken, suffered or omitted 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
-21-
be genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper person or persons.
(c) The Corporation shall inform the Rights Agent, in a reasonably timely
manner, of events which may materially affect the administration of this
Agreement by the Rights Agent. At any time, upon request, the Corporation
shall provide to the Rights Agent an incumbency certificate with respect to
the current directors and officers of the Corporation.
4.2 MERGER, AMALGAMATION OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT
(a) Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or amalgamated or with which it may be consolidated, or any
corporation resulting from any merger, amalgamation or consolidation to
which the Rights Agent or any successor Rights Agent is a party or any
corporation succeeding to the shareholder or stockholder services business
of the Rights Agent or any successor Rights Agent, will be the successor to
the Rights Agent under this Agreement without the execution or filing of
any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 4.4 hereof. In case,
at the time such successor Rights Agent succeeds to the agency created by
this Agreement, any of the Rights Certificates have been countersigned but
not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates have not been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such
cases such Rights Certificates will have the full force provided in the
Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent is changed and at such
time any of the Rights Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior
name or in its changed name; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certificates and in this
Agreement.
4.3 DUTIES OF RIGHTS AGENT
The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the
Corporation and the holders of Rights Certificates, by their acceptance thereof,
shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal counsel
for the Corporation), and the opinion of such counsel will be full and
complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion;
the Rights Agent may also, with the approval of the Corporation (such
approval not to be unreasonably withheld) and at the expense of the
Corporation, consult with such other experts as the Rights Agent shall
consider necessary or appropriate to properly carry out the duties and
obligations imposed under this Agreement and the Rights Agent shall be
entitled to rely in good faith on the advice of any such expert.
(b) Whenever in the performance of its duties under this Agreement the Rights
Agent deems it necessary or desirable that any fact or matter be proved or
established by the Corporation prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by a person believed by the Rights
Agent to be the Chairman of the Board, the President, the Chief Executive
Officer, the Chief Financial Officer, any Vice
-22-
President, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Corporation and delivered to the Rights Agent;
and such certificate will be full authorization to the Rights Agent for any
action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent will be liable hereunder only for its own negligence, bad
faith or wilful misconduct.
(d) The Rights Agent will not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the
certificates for Common Shares or the Rights Certificates (except its
countersignature thereof) or be required to verify the same, but all such
statements and recitals are and will be deemed to have been made by the
Corporation only.
(e) The Rights Agent will not be under any responsibility in respect of the
validity of this Agreement or the execution and delivery hereof (except the
due authorization, execution and delivery hereof by the Rights Agent) or in
respect of the validity or execution of any Common Share certificate or
Rights Certificate (except its countersignature thereof); nor will it be
responsible for any breach by the Corporation of any covenant or condition
contained in this Agreement or in any Rights Certificate; nor will it be
responsible for any change in the exercisability of the Rights (including
the Rights becoming void pursuant to subsection 3.1(b) hereof) or any
adjustment required under the provisions of Section 2.3 hereof or
responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights after receipt of
the certificate contemplated by Section 2.3 describing any such
adjustment); nor will it by any act hereunder be deemed to make any
representation or warranty as to the authorization of any Common Shares to
be issued pursuant to this Agreement or any Rights or as to whether any
Common Shares will, when issued, be duly and validly authorized, executed,
issued and delivered and fully paid and non-assessable.
(f) The Corporation agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably
be required by the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept instructions
with respect to the performance of its duties hereunder from any person
believed by the Rights Agent to be the Chairman of the Board, the
President, the Chief Executive Officer, the Chief Financial Officer, any
Vice President, the Secretary or any Assistant Secretary or the Treasurer
or any Assistant Treasurer of the Corporation, and to apply to such persons
for advice or instructions in connection with its duties, and it shall not
be liable for any action taken or suffered by it in good faith in reliance
upon instructions of any such person; it is understood that instructions to
the Rights Agent shall, except where circumstances make it impracticable or
the Rights Agent otherwise agrees, be given in writing and, where not in
writing, such instructions shall be confirmed in writing as soon as
reasonably possible after the giving of such instructions.
(h) The Rights Agent and any shareholder or stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in Common Shares, Rights
or other securities of the Corporation or become pecuniarily interested in
any transaction in which the Corporation may be interested, or contract
with or lend money to the Corporation or otherwise act as fully and freely
as though it were not Rights Agent under this Agreement. Nothing herein
shall preclude the Rights Agent from acting in any other capacity for the
Corporation or for any other legal entity.
(i) The 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, omission, default, neglect or
misconduct of any such attorneys or agents or for any loss to the
Corporation resulting from any such act,
-23-
omission, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
4.4 CHANGE OF RIGHTS AGENT
The Rights Agent may resign and be discharged from its duties under this
Agreement upon 60 days' notice (or such lesser notice as is acceptable to the
Corporation) in writing mailed to the Corporation and to each transfer agent of
Common Shares by registered or certified mail, and to the holders of the Rights
in accordance with Section 5.9. The Corporation may remove the Rights Agent upon
30 days' notice in writing given to the Rights Agent and to each transfer agent
of the Common Shares (by personal delivery, or registered or certified mail). If
the Rights Agent should resign or be removed or otherwise become incapable of
acting, the Corporation will appoint a successor to the Rights Agent. If the
Corporation fails to make such appointment within a period of 30 days after such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent, then the resigning
Rights Agent, at the expense of the Corporation, or any holder of any Rights may
apply to any court of competent jurisdiction for the appointment of a new Rights
Agent. Any successor Rights Agent, whether appointed by the Corporation or by
such a court, shall be a corporation incorporated under the laws of Canada or a
province thereof authorized to carry on the business of a trust company in the
Province of Ontario. After appointment, the successor Rights Agent will be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall, upon the receipt of all outstanding fees and
expenses, 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 4.4, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
ARTICLE 5
MISCELLANEOUS
5.1 REDEMPTION AND TERMINATION
(a) The Board of Directors acting in good faith may, with the prior consent of
holders of Common Shares or of the holders of Rights given in accordance
with subsection 5.1(f) or 5.1(g), as the case may be, at any time prior to
the occurrence of a Flip-in Event as to which the application of Section
3.1 has not been waived pursuant to the provisions of this Section 5.1,
elect to redeem all but not less than all of the then outstanding Rights at
a redemption price of $0.000001 per Right appropriately adjusted in a
manner analogous to the applicable adjustment provided for in Section 2.3
in the event that an event of the type analogous to any of the events
described in Section 2.3 shall have occurred (such redemption price being
herein referred to as the "REDEMPTION PRICE").
(b) The Board of Directors acting in good faith may, with the prior consent of
the holders of Common Shares given in accordance with subsection 5.1(f),
determine, at any time prior to the occurrence of a Flip-in Event as to
which the application of Section 3.1 has not been waived pursuant to this
Section 5.1, if such Flip-in Event would occur by reason of an acquisition
of Common Shares otherwise than pursuant to a Take-over Bid made by means
of a Take-over Bid circular to all holders of record of Common Shares and
otherwise than in the circumstances set forth in subsection 5.1(d), to
waive the application of Section 3.1 to such Flip-in Event. In the event
that the Board of Directors proposes such a waiver, the Board of Directors
shall extend the Separation Time to a date subsequent to and not more than
ten Business Days following the meeting of shareholders called to approve
such waiver.
(c) The Board of Directors acting in good faith may, prior to the occurrence of
a Flip-in Event as to which the application of Section 3.1 has not been
waived under this clause, determine, upon prior written notice to the
Rights Agent, to waive the application of Section 3.1 to that Flip-in Event
provided that the Flip-in Event would occur by reason of a
-24-
Take-over Bid made by means of a Take-over Bid circular sent to all holders
of record of Common Shares; further provided that if the Board waives the
application of Section 3.1 to such a Flip-in Event, the Board of Directors
shall be deemed to have waived the application of Section 3.1 to any other
Flip-in Event occurring by reason of any Take-over Bid made by means of a
Take-over Bid circular to all holders of record of Common Shares which is
made prior to the expiry of any Take-over Bid in respect of which a waiver
is, or is deemed to have been, granted under this subsection 5.1(c).
(d) The Board of Directors acting in good faith may, in respect of any Flip-in
Event waive the application of Section 3.1 to that Flip-in Event, provided
that both of the following conditions are satisfied:
(i) the Board of Directors has determined that the Acquiring Person became
an Acquiring Person by inadvertence and without any intent or
knowledge that it would become an Acquiring Person; and
(ii) such Acquiring Person has reduced its Beneficial Ownership of Common
Shares such that at the time of waiver pursuant to this subsection
5.1(d) it is no longer an Acquiring Person.
(e) The Board of Directors shall, without further formality, be deemed to have
elected to redeem the Rights at the Redemption Price on the date that a
Person who has made a Permitted Bid or a Take-over Bid in respect of which
the Board of Directors has waived, or is deemed to have waived, pursuant to
subsection 5.1(c), the application of Section 3.1, takes up and pays for
the Common Shares pursuant to the terms and conditions of the Permitted Bid
or Take-over Bid, as the case may be.
(f) If a redemption of Rights pursuant to subsection 5.1(a) or a waiver of a
Flip-in Event pursuant to subsection 5.1(b) is proposed at any time prior
to the Separation Time, such redemption or waiver shall be submitted for
approval to the holders of Common Shares. Such approval shall be deemed to
have been given if the redemption or waiver is approved by the affirmative
vote of a majority of the votes cast by Independent Shareholders
represented in person or by proxy at a meeting of such holders duly held in
accordance with applicable laws and the Corporation's by-laws.
(g) If a redemption of Rights pursuant to subsection 5.1(a) is proposed at any
time after the Separation Time, such redemption shall be submitted for
approval to the holders of Rights. Such approval shall be deemed to have
been given if the redemption is approved by holders of Rights by a majority
of the votes cast by the holders of Rights represented in person or by
proxy at and entitled to vote at a meeting of such holders. For the
purposes hereof, each outstanding Right (other than Rights which are
Beneficially Owned by any Person referred to in clauses (i) to (v)
inclusive of the definition of Independent Shareholders) shall be entitled
to one vote, and the procedures for the calling, holding and conduct of the
meeting shall be those, as nearly as may be, which are provided in the
Corporation's by-laws and the BUSINESS CORPORATIONS ACT with respect to
meetings of shareholders of the Corporation.
(h) 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 may elect to redeem all the
outstanding Rights at the Redemption Price. Notwithstanding such
redemption, all of the provisions of this Agreement shall continue to apply
as if the Separation Time had not occurred and it shall be deemed not to
have occurred and Rights shall remain attached to the outstanding Common
Shares, subject to and in accordance with the provisions of this Agreement.
(i) If the Board of Directors elects or is deemed to have elected to redeem the
Rights, and, in circumstances where subsection 5.1(a) is applicable, such
redemption is approved by the holders of Common Shares or the holders of
Rights in accordance with subsection 5.1(f) or (g), as the case may be, the
right to exercise the Rights will thereupon, without further action and
without notice,
-25-
terminate and the only right thereafter of the holders of Rights will be to
receive the Redemption Price.
(j) Within 10 Business Days of the Board of Directors electing or having been
deemed to have elected to redeem the Rights or, if subsection 5.1(a) is
applicable within 10 Business Days after the holders of Common Shares or
the holders of Rights have approved a redemption of Rights in accordance
with subsection 5.1(f) or 5.1(g), as the case may be, the Corporation shall
give notice of redemption to the holders of the then outstanding Rights by
mailing such notice to each such holder at its last address as it appears
upon the register of the Rights Agent or, prior to the Separation Time, on
the register of the transfer agent 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. Each such notice of redemption will
state the method by which the payment of the Redemption Price will be made.
The Corporation may not redeem, acquire or purchase for value any Rights at
any time in any manner other than that specifically set forth in this
Section 5.1 or in connection with the purchase of Common Shares prior to
the Separation Time.
(k) The Corporation shall give prompt written notice to the Rights Agent of any
waiver of the application of Section 3.1 made by the Board of Directors
under this Section 5.1.
5.2 EXPIRATION
No Person shall have any rights pursuant to this Agreement or in respect of
any Right after the Expiration Time, except the Rights Agent as specified in
subsection 4.1(a) of this Agreement.
5.3 ISSUANCE OF NEW RIGHTS CERTIFICATES
Notwithstanding any of the provisions of this Agreement or of the Rights to
the contrary, the Corporation may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by the Board of Directors to
reflect any adjustment or change in the number of or kind or class of shares
purchasable upon exercise of Rights made in accordance with the provisions of
this Agreement.
5.4 SUPPLEMENTS AND AMENDMENTS
(a) The Corporation may make amendments to this Agreement 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 thereunder. The Corporation may, prior to
the date of the shareholders' meeting referred to in Section 5.18,
supplement, amend, vary, rescind or delete any of the provisions of this
Agreement without the approval of any holders of Rights or Common Shares
(whether or not such action would materially adversely affect the interests
of the holders of Rights generally) where the Board of Directors acting in
good xxxxx xxxxx such action necessary or desirable. Notwithstanding
anything in this Section 5.4 to the contrary, no such supplement or
amendment shall be made to the provisions of Article 4 except with the
written concurrence of the Rights Agents to such supplement or amendment.
(b) Subject to subsection 5.4(a), the Corporation may, with the prior consent
of the holders of Common Shares, obtained as set forth below, at any time
prior to the Separation Time, supplement, amend, vary, rescind or delete
any of the provisions of this Agreement and the Rights (whether or not such
action would materially adversely affect the interests of the holders of
Rights generally). Such consent shall be deemed to have been given if 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 be voted at a meeting of the holders of
Common Shares duly called and held in compliance with applicable laws and
the articles and by-laws of the Corporation.
-26-
(c) The Corporation may, with the prior consent of the holders of Rights, at
any time on or after the Separation Time, supplement, amend, vary, rescind
or delete any of the provisions of this Agreement and the Rights (whether
or not such action would materially adversely affect the interests of the
holders of Rights generally), provided that no such amendment, variation or
deletion shall be made to the provisions of Article 4 except with the
written concurrence of the Rights Agent thereto. Such consent shall be
deemed to have been given if such amendment, variation or deletion is
authorized by the affirmative votes of the holders of Rights present or
represented at and entitled to be voted at a meeting of the holders held in
accordance with subsection 5.4(d) and representing 50% plus one of the
votes cast in respect thereof.
(d) Any approval of the holders of Rights shall be deemed to have been given if
the action requiring such approval is authorized by the affirmative votes
of the holders of Rights present or represented at and entitled to be voted
at a meeting of the holders of Rights and representing 50% plus one of the
votes cast in respect thereof. For the purposes hereof, each outstanding
Right (other than Rights which are void pursuant to the provisions hereof)
shall be entitled to one vote, and the procedures for the calling, holding
and conduct of the meeting shall be those, as nearly as may be, which are
provided in the Corporation's by-laws and the BUSINESS CORPORATIONS ACT
with respect to meetings of shareholders of the Corporation.
(e) Any amendments made by the Corporation to this Agreement pursuant to
subsection 5.4(a) which are required to maintain the validity of this
Agreement as a result of any change in any applicable legislation, rules or
regulation thereunder shall:
(i) if made before the Separation Time, be submitted to the shareholders
of the Corporation at the next meeting of shareholders and the
shareholders may, by the majority referred to in subsection 5.4(b),
confirm or reject such amendment;
(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 may, by resolution passed by the majority referred
to in subsection 5.4(d), confirm or reject such amendment.
Any such amendment shall be effective from the date of the resolution of
the Board of Directors adopting such amendment, until it is confirmed or
rejected or until it ceases to be effective (as described in the next
sentence) and, where such amendment is confirmed, it continues in effect in
the form so confirmed. If such amendment is rejected by the shareholders or
the holders of Rights or is not submitted to the shareholders or holders of
Rights as required, then such amendment shall cease to be effective from
and after the termination of the meeting at which it was rejected or to
which it should have been but was not submitted or from and after the date
of the meeting of holders of Rights that should have been but was not held,
and no subsequent resolution of the Board of Directors to amend this
Agreement to substantially the same effect shall be effective until
confirmed by the shareholders or holders of Rights as the case may be.
(f) The Corporation shall be required to provide the Rights Agent with notice
in writing of any such amendment, recission or variation to this Agreement
as referred to in this Section 5.4 within five days of effecting such
amendment, recission or variation.
(g) Any supplement or amendment to this Agreement pursuant to subsection 5.4(b)
through 5.4(e) shall be subject to the receipt of any requisite approval or
consent from any governmental or regulatory authority having jurisdiction
over the Corporation, including without limitation any requisite approval
of stock exchanges on which the Common Shares are listed.
-27-
5.5 FRACTIONAL RIGHTS AND FRACTIONAL SHARES
(a) The Corporation shall not be required to issue fractions of Rights or to
distribute Rights Certificates which evidence fractional Rights. After the
Separation Time there shall be paid to the registered holders of the Rights
Certificates with regard to which fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the Market Price
of a whole Right in lieu of such fractional Rights as of the date such
fractional Rights would otherwise be issuable. The Rights Agent shall have
no obligation to make any payments in lieu of fractional Rights unless the
Corporation shall have provided the Rights Agent with the necessary funds
to pay in full all amounts payable in accordance with subsection 2.2(e).
(b) The Corporation shall not be required to issue fractional Common Shares
upon exercise of the Rights or to distribute certificates which evidence
fractional Common Shares. In lieu of issuing fractional Common Shares, the
Corporation shall pay to the registered holder of Rights Certificates at
the time such Rights are exercised as herein provided, an amount in cash
equal to the same fraction of the Market Price of one Common Share at the
date of such exercise. The Rights Agent shall have no obligation to make
any payments in lieu of fractional Common Shares unless the Corporation
shall have provided the Rights Agent with the necessary funds to pay in
full all amounts payable in accordance with subsection 2.2(e).
5.6 RIGHTS OF ACTION
Subject to the terms of this Agreement, 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,
may, on such holder's own behalf and for such holder's own benefit and the
benefit of other holders of Rights, enforce, and may institute and maintain any
suit, action or proceeding against the Corporation to enforce, or otherwise act
in respect of, such holder's right to exercise such holder's Rights, or Rights
to which he is entitled, in the manner provided in this Agreement and in such
holder's Rights Certificate. Without limiting the foregoing or any remedies
available to the holders of Rights, it is specifically acknowledged that the
holders of Rights would not have an adequate remedy at law for any breach of
this Agreement and will be entitled to specific performance of the obligations
under, and injunctive relief against actual or threatened violations of, the
obligations of any Person subject to this Agreement.
5.7 HOLDER OF RIGHTS NOT DEEMED A SHAREHOLDER
No holder, as such, of any Rights shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of Common Shares or any other
securities which may at any time be issuable on the exercise of Rights, nor
shall anything contained herein or in any Rights Certificate be construed to
confer upon the holder of any Rights, as such, any of the rights of a
shareholder of the Corporation or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders (except as provided in Section
5.8 hereof), or to receive dividends or subscription rights or otherwise, until
such Rights, or Rights to which such holder is entitled, shall have been
exercised in accordance with the provisions hereof.
5.8 NOTICE OF PROPOSED ACTIONS
In case the Corporation shall propose after the Separation Time and prior
to the Expiration Time:
(a) to effect or permit (in cases where the Corporation's permission is
required) any Flip-in Event; or
(b) to effect the liquidation, dissolution or winding up of the
Corporation or the sale of all or substantially all of the
Corporation's assets,
then, in each such case, the Corporation shall give to each holder of a Right,
in accordance with Section 5.9 hereof, a notice of such proposed action, which
shall specify the date on which such Flip-in Event, liquidation, dissolution, or
-28-
winding up is to take place, and such notice shall be so given at least 10
Business Days prior to the date of taking of such proposed action by the
Corporation.
5.9 NOTICES
Notices or demands to be given or made in connection with this Agreement by
the Rights Agent or by the holder of any Rights to or on the Corporation shall
be sufficiently given or made if delivered or sent by mail, postage prepaid or
by fax (with, in the case of fax, an original copy of the notice or demand sent
by first class mail, postage prepaid, to the Corporation following the giving of
the notice or demand by fax), addressed (until another address is filed in
writing with the Rights Agent) as follows:
The Descartes Systems Group Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Chief Executive Officer
Fax: 000-000-0000
Notices or demands to be given or made in connection with this Agreement by the
Corporation or by the holder of any Rights to or on the Rights Agent shall be
sufficiently given or made if delivered or sent by mail, postage prepaid, or by
fax (with, in the case of fax, an original copy of the notice or demand sent by
first class mail, postage prepaid, to the Rights Agent following the giving of
the notice or demand by fax), addressed (until another address is filed in
writing with the Corporation) as follows:
Computershare Trust Company of Canada
000 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: General Manager, Client Services
Fax: 000-000-0000
Notices or demands to be given or made in connection with this Agreement by the
Corporation or the Rights Agent to or on the holder of any Rights shall be
sufficiently given or made if delivered or sent by first class mail, postage
prepaid, or by fax (with, in the case of fax, an original copy of the notice or
demand sent by first class mail, postage prepaid, to such holder following the
giving of the notice or demand by fax), addressed to such holder at the address
of such holder as it appears upon the register of the Rights Agent or, prior to
the Separation Time, on the register of the Corporation for the Common Shares.
Any notice given or made in accordance with this Section 5.9 shall be deemed to
have been given and to have been received on the day of delivery, if so
delivered, on the third Business Day (excluding each day during which there
exists any general interruption of postal service due to strike, lockout or
other cause) following the mailing thereof, if so mailed, and on the day of
faxing (provided such sending is during the normal business hours of the
addressee on a Business Day and if not, on the first Business Day thereafter).
Each of the Corporation and the Rights Agent may from time to time change its
address for notice by notice to the other given in the manner aforesaid.
If mail service is or is threatened to be interrupted at a time when the
Corporation or the Rights Agent wishes to give a notice or demand hereunder to
or on the holders of the Rights, the Corporation or the Rights Agent may,
notwithstanding the foregoing provisions of this Section 5.9, give such notice
by means, of publication once in each of two successive weeks in the business
section of The Globe and Mail and, so long as the Corporation has a transfer
agent in the United States, in a daily publication in the United States
designated by the Corporation, or in such other publication or publications as
may be designated by the Corporation and notice so published shall be deemed to
have been given on the date on which the first publication of such notice in any
such publication has taken place.
-29-
5.10 COSTS OF ENFORCEMENT
The Corporation agrees that if the Corporation fails to fulfil any of its
obligations pursuant to this Agreement, then the Corporation will reimburse the
holder of any Rights for the costs and expenses (including legal fees) incurred
by such holder in actions to enforce his rights pursuant to any Rights or this
Agreement.
5.11 SUCCESSORS
All the covenants and provisions of this Agreement by or for the benefit of
the Corporation or the Rights Agent shall bind and enure to the benefit of their
respective successors and assigns hereunder.
5.12 BENEFITS OF THIS AGREEMENT
Nothing in this Agreement shall be construed to give to any Person other
than the Corporation, the Rights Agent and the holders of the Rights any legal
or equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Corporation, the Rights Agent
and the holders of the Rights.
5.13 DESCRIPTIVE HEADINGS
Descriptive headings appear herein for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
5.14 GOVERNING LAW
This Agreement and each Right issued hereunder shall be deemed to be a
contract made under the laws of the Province of Ontario and for all purposes
shall be governed by and construed in accordance with the laws of such Province
applicable to contracts to be made and performed entirely within such Province.
5.15 LANGUAGE
Les parties aux presentes ont exige que la presente convention ainsi que
tous les documents et avis qui s'y rattachent et/ou qui en decouleront 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.
5.16 COUNTERPARTS
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
5.17 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 shall be ineffective as to such
jurisdiction to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable the remaining terms and provisions
hereof or the application of such term or provision to circumstances other than
those as to which it is held invalid or unenforceable.
5.18 EFFECTIVE DATE
This Agreement (subject to receipt of the approval of the Independent
Shareholders as set forth below) is effective from the Effective Date. If this
Agreement is not approved by resolution passed by a majority of the votes cast
by Independent Shareholders who vote at a meeting of shareholders to be held not
later than the date on which
-30-
the 2005 annual meeting of shareholders of the Corporation terminates, then this
Agreement shall terminate and be void and of no further force and effect.
5.19 SHAREHOLDER REVIEW
At or prior to the annual meeting of the shareholders of the Corporation in
2008, provided that a Flip-in Event has not occurred prior to such time, the
Board of Directors shall submit a resolution ratifying the continued existence
of this Agreement to the Independent Shareholders for their consideration and,
if thought advisable, approval. Unless the majority of the votes cast by
Independent Shareholders who vote in respect of such resolution are voted in
favour of the continued existence of this Agreement, the Board of Directors
shall, immediately upon the confirmation by the Chairman of such shareholders'
meeting of the results of the votes on such resolution and without further
formality, be deemed to elect to redeem the Rights at the Redemption Price.
5.20 REGULATORY APPROVALS
Any obligation of the Corporation or action or event contemplated by this
Agreement shall be subject to the receipt of any requisite approval or consent
from any governmental or regulatory authority. Without limiting the generality
of the foregoing, any issuance or delivery of debt or equity securities (other
than non-convertible debt securities) of the Corporation upon the exercise of
Rights and any amendment or supplement to this Agreement shall be subject to the
prior consent of the Toronto Stock Exchange.
5.21 DECLARATION AS TO NON-CANADIAN AND NON-U.S. HOLDERS
If in the opinion of the Board of Directors (who may rely upon the advice
of counsel), any action or event contemplated by this Agreement would require
compliance with the securities laws or comparable legislation of a jurisdiction
outside Canada and the United States of America, its territories and
possessions, 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 without limitation 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 (but
reserving to the Fiduciary or to the Fiduciary and the Corporation, as the
Corporation may determine, absolute discretion with respect thereto) and the
sale thereof and remittance of the proceeds of such sale, if any, to the Persons
entitled thereto. In no event shall the Corporation or the Rights Agent be
required to issue or deliver Rights or securities issuable on exercise of Rights
to Persons who are citizens, residents or nationals of any jurisdiction other
than Canada and a province or territory thereof and the United States of America
and any state thereof in which such issue or delivery would be unlawful without
registration of the relevant Persons or securities for such purposes.
5.22 DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS
All actions and determinations (including all omissions with respect to the
foregoing) which are done or made by the Board of Directors pursuant to this
Agreement, in good faith, shall not subject any member of the Board of Directors
to any liability whatsoever to the holders of the Rights.
-31-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
THE DESCARTES SYSTEMS GROUP INC.
PER:
--------------------------------
Name:
Title: Chief Executive Officer
PER:
--------------------------------
Name:
Title:
COMPUTERSHARE TRUST COMPANY OF CANADA
PER:
--------------------------------
Name:
Title:
PER:
--------------------------------
Name:
Title:
EXHIBIT A
FORM OF RIGHTS CERTIFICATE
Certificate No. _________ __________ Rights
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE CORPORATION, ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT. IN CERTAIN CIRCUMSTANCES (SPECIFIED IN
SUBSECTION 3.1(b) OF THE RIGHTS AGREEMENT), RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR TRANSFEREE OF AN ACQUIRING PERSON OR ITS AFFILIATES OR
ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY PERSON
ACTING JOINTLY OR IN CONCERT WITH ANY OF THEM MAY BECOME VOID .
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 November 29,
2004, as such may from time to time be amended, restated, varied or replaced,
(the "RIGHTS AGREEMENT") between The Descartes Systems Group Inc., a corporation
organized under the laws of Ontario (the "CORPORATION"), and Computershare Trust
Company of Canada, a trust company incorporated under the laws of Canada, as
Rights Agent (the "RIGHTS Agent"), which term shall include any successor Rights
Agent under the Rights Agreement, to purchase from the Corporation at any time
after the Separation Time (as such term is defined in the Rights Agreement) and
prior to the earlier of (i) the Termination Time (as such term is defined in the
Rights Agreement) and (ii) the termination of the first annual meeting of the
shareholders of the Corporation after the third anniversary of the Rights
Agreement (unless extended in accordance with the Rights Agreement), one fully
paid common share of the Corporation (a "COMMON SHARE") at the Exercise Price
referred to below, upon presentation and surrender of this Rights Certificate
together with the Form of Election to Exercise duly executed to the Rights Agent
at its principal office in the City of Toronto or in such other cities as may be
designated by the Corporation from time to time. Until adjustment thereof in
certain events as provided in the Rights Agreement, the Exercise Price shall be:
(i) until the Separation Time, an amount equal to three times the Market Price
(as such term is defined in the Rights Agreement), from time to time, per Common
Share; and (ii) from and after the Separation Time, an amount equal to three
times the Market Price, as at the Separation Time, per Common Share.
In certain circumstances described in the Rights Agreement, the number of
Common Shares which each Right entitles the registered holder thereof to
purchase shall be adjusted as provided in the Rights Agreement.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Rights Agent, the Corporation and the holders of the Rights 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 shall be exercised in part, the
registered holder shall be entitled to receive, upon surrender hereof, another
Rights Certificate or Rights Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Corporation at a redemption price of
$0.000001 per Right, subject to adjustment in certain events, under certain
circumstances at its option.
No fractional Common Shares will be issued upon the exercise of any Rights
evidenced hereby, but in lieu thereof a cash payment will be made, as provided
in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Common Shares or of
any other securities which may at any time be issuable upon the exercise hereof,
nor shall anything contained in the Rights Agreement or herein be construed to
confer upon the holder hereof, as such, any of the Rights of a shareholder of
the Corporation or any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting shareholders (except as provided in the Rights Agreement), or
to receive dividends or subscription rights, or otherwise, until the Rights
evidenced by this Rights Certificate shall have been exercised as provided in
the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Corporation
and its corporate seal.
Date:
----------------------------------------
THE DESCARTES SYSTEMS GROUP INC.
By:
------------------------------------------
Authorized Officer
Countersigned:
COMPUTERSHARE TRUST COMPANY OF CANADA
By:
------------------------------------------
Authorized Signature
-2-
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
Rights represented by this Rights Certificate.)
FOR VALUE RECEIVED
-------------------------------------------
hereby sells, assigns and transfers to
---------------------------------
(Please print name and address of
transferee)
the Rights represented by this Rights Certificate, together with all right,
title and interest therein, and hereby irrevocably constitutes and appoints
____________________________________as attorney, to transfer the within Rights
on the books of the Corporation, with full power of substitution.
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 a Canadian Schedule 1 chartered bank, a major
Canadian trust company, a member of a recognized stock exchange or a member of a
recognized Medallion Program (STAMP, MSP or SEMP).
--------------------------------------------------------------------------------
(To be completed if true)
The undersigned hereby represents, for the benefit of all holders of Rights and
Common Shares, that the Rights evidenced by this Rights Certificate are not,
and, to the knowledge of the undersigned, have never been, Beneficially Owned by
an Acquiring Person or an Affiliate or Associate thereof or by any Person acting
jointly or in concert with any of the foregoing (all capitalized terms are used
as defined in the Rights Agreement).
Dated: 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.)
NOTICE
In the event the certification set forth above in the Form of Election
to Exercise is not completed upon exercise of the Right(s) evidenced hereby or
in the event that the certification set forth above in the Form of Assignment is
not completed upon the assignment of the Right(s) evidenced hereby, the
Corporation will deem the Beneficial Owner of the Right(s) evidenced by this
Rights Certificate to be an Acquiring Person or an Affiliate or Associate
thereof or a Person acting jointly or in concert with any of them (each as
defined in the Rights Agreement) and, in the case of an assignment, will affix a
legend to that effect on any Rights Certificates issued in exchange for this
Rights Certificate.
(To be attached to each Rights Certificate)
FORM OF ELECTION TO EXERCISE
TO: THE DESCARTES SYSTEMS GROUP INC.
The undersigned hereby irrevocably elects to exercise ______________________
whole Rights represented by the attached Rights Certificate to purchase the
Common Shares (or other securities or property) issuable upon the exercise of
such Rights and requests that certificates for such shares (or other, securities
or title to such property) be issued in the name of:
-------------------------------------------
(Name)
-------------------------------------------
(Street)
-------------------------------------------
(City and State or Province)
-------------------------------------------
(Country, Postal Code or Zip Code)
-------------------------------------------
SOCIAL INSURANCE, SOCIAL SECURITY OR
OTHER TAXPAYER IDENTIFICATION NUMBER
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights shall be
registered in the name of and delivered to:
--------------------------------------
(Name)
--------------------------------------
(Street)
--------------------------------------
(City and State or Province)
--------------------------------------
(Country, Postal Code or Zip Code)
--------------------------------------
SOCIAL INSURANCE, SOCIAL SECURITY OR
OTHER TAXPAYER IDENTIFICATION NUMBER
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 a Canadian Schedule 1 chartered bank, a major
Canadian trust company, a member of a recognized stock exchange or a member of a
recognized Medallion Program (STAMP, MSP or SEMP).
--------------------------------------------------------------------------------
(To be completed if true)
The undersigned hereby represents, for the benefit of all holders of Rights and
Common Shares, that the Rights evidenced by this Rights Certificate are not,
and, to the knowledge of the undersigned, have never been, Beneficially Owned by
an Acquiring Person or an Affiliate or Associate thereof or by any Person acting
jointly or in concert with any of the foregoing (all capitalized terms are used
as defined in the Rights Agreement).
Dated: Signature:
---------------------- -------------------------------
NOTICE
In the event the certification set forth above in the Form of Election to
Exercise is not completed upon exercise of the Right(s) evidenced hereby or in
the event that the certification set forth above in the Form of Assignment is
not completed upon the assignment of the Right(s) evidenced hereby, the
Corporation will deem the Beneficial Owner of the Right(s) evidenced by this
Rights Certificate to be an Acquiring Person, an Affiliate or Associate thereof
or a Person acting jointly or in concert with any of them (each as defined in
the Rights Agreement) and, in the case of an assignment, will affix a legend to
that effect on any Rights Certificates issued in exchange for this Rights
Certificate.
-2-
