SHAREHOLDER RIGHTS PLAN AGREEMENT BETWEEN SOUTHWESTERN RESOURCES CORP. AND COMPUTERSHARE INVESTOR SERVICES INC. Made as of July 23, 2007 Sangra Moller LLP Vancouver, BC V6C 3L2
BETWEEN
AND
COMPUTERSHARE
INVESTOR SERVICES INC.
Made
as of July 23, 2007
Sangra
Moller LLP
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TABLE
OF CONTENTS
| ARTICLE 1. | INTERPRETATION | -2- |
| 1.1 | Certain Definitions | -2- |
| 1.2 | Currency | -15- |
| 1.3 | Number and Gender | -15- |
| 1.4 | Sections and Headings | -15- |
| 1.5 | Statutory References | -16- |
| 1.6 | Determination of Percentage Ownership | -16- |
| 1.7 | Acting Jointly or in Concert | -16- |
| 1.8 | Generally Accepted Accounting Principles | -16- |
| ARTICLE 2. | THE RIGHTS | -17- |
| 2.1 | Legend on Common Share Certificates | -17- |
| 2.2 | Initial Exercise Price; Exercise of Rights; Detachment of Rights | -18- |
| 2.3 | Adjustments to Exercise Price; Number of Rights | -21- |
| 2.4 | Date on Which Exercise is Effective | -27- |
| 2.5 | Execution, Authentication, Delivery and Dating of Rights Certificates | -27- |
| 2.6 | Registration, Transfer and Exchange | -28- |
| 2.7 | Mutilated, Lost, Stolen and Destroyed Rights Certificates | -28- |
| 2.8 | Persons Deemed Owners | -29- |
| 2.9 | Delivery and Cancellation of Certificates | -29- |
| 2.10 | Agreement of Rights Holders | -29- |
| 2.11 | Exclusion of Warranty by Rights Agent | -30- |
| ARTICLE 3. | ADJUSTMENTS TO THE RIGHTS | -31- |
| 3.1 | Flip-in Event | -31- |
| 3.2 | Fiduciary Duties of the Board of Directors | -32- |
| ARTICLE 4. | THE RIGHTS AGENT | -33- |
| 4.1 | General | -33- |
| 4.2 | Merger, Amalgamation, Consolidation or Change of Name of Rights Agent | -33- |
| 4.3 | Duties of Rights Agent | -34- |
| 4.4 | Change of Rights Agent | -36- |
| ARTICLE 5. | MISCELLANEOUS | -37- |
| 5.1 | Redemption, Waiver, Extension and Termination | -37- |
| 5.2 | Expiration | -39- |
| 5.3 | Issuance of New Rights Certificates | -39- |
| 5.4 | Supplements and Amendment | -39- |
| 5.5 | Fractional Rights and Fractional Shares | -41- |
| 5.6 | Rights of Action | -41- |
| 5.7 | Holder of Rights Not Deemed a Shareholder | -42- |
| 5.8 | Notice of Proposed Actions | -42- |
| 5.9 | Notices | -42- |
| 5.10 | Costs of Enforcement | -43- |
| 5.11 | Regulatory Approvals | -43- |
| 5.12 | Declaration as to Non-Canadian and Non-United States Holders | -43- |
| 5.13 | Successors | -44- |
| 5.14 | Benefits of this Agreement | -44- |
| 5.15 | Shareholder Review | -44- |
| 5.16 | Determinations and Actions by the Board of Directors | -44- |
| 5.17 | Governing Law | -44- |
| 5.18 | Language | -44- |
| 5.19 | Counterparts | -45- |
| 5.20 | Severability | -45- |
| 5.21 | Effective Date | -45- |
| 5.22 | Time of the Essence | -45- |
THIS
AGREEMENT is made as of the 23rd day of
July, 2007
between:
SOUTHWESTERN
RESOURCES CORP., a corporation incorporated pursuant to the
Business Corporations Act (British Columbia) (the
"Corporation")
-
and
-
COMPUTERSHARE
INVESTOR SERVICES INC., a corporation incorporated under the laws of
Canada (the "Rights Agent").
WHEREAS:
|
A.
|
The
Board of Directors has determined that it is advisable to adopt a
shareholder rights plan (the "Rights Plan") to ensure, to
the extent possible, that (a) all shareholders of the Corporation
are
treated fairly in connection with any take-over offer for the Corporation
or other acquisition of control of the Corporation and that (b) the
Board
of Directors are provided with sufficient time to evaluate take-over
bids
and to explore and develop alternatives to maximize shareholder
value.
|
|
B.
|
In
order to implement the Rights Plan, the Board of Directors
has:
|
|
(a)
|
authorized
and declared a distribution of one right (a "Right")
effective at the Close of Business at the Record Time in respect
of each
Common Share outstanding at the Close of Business at the Record
Time;
|
|
(b)
|
authorized
the issuance of one Right in respect of each Common Share issued
after the
Record Time and prior to the earlier of the Separation Time and the
Expiration Time; and
|
|
(c)
|
authorized
the issuance of Rights Certificates to holders of Rights pursuant
to the
terms and subject to the conditions set forth
herein.
|
|
C.
|
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.
|
|
D.
|
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,
the exercise of Rights and other matters referred to
herein.
|
NOW
THEREFORE, in consideration of the premises and respective agreements set forth
herein, the parties hereby agree as set forth below.
ARTICLE
1.
INTERPRETATION
|
1.1
|
Certain
Definitions
|
For
the
purposes of this agreement, including the recitals hereto, the terms set forth
below have the meanings indicated.
|
(a)
|
"Acquiring
Person" means any Person who is the Beneficial Owner of 20% or
more of the outstanding Common Shares, but does 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 as a result of one or any combination
of
|
|
(A)
|
a
Common Share Reduction,
|
|
(B)
|
a
Permitted Bid Acquisition,
|
|
(C)
|
an
Exempt Acquisition, and
|
|
(D)
|
a
Pro Rata Acquisition,
|
provided,
however, that if a Person shall become the Beneficial Owner of 20% or more
of
the outstanding Common Shares by reason of one or any combination of a Common
Share Reduction, a Permitted Bid Acquisition, an Exempt Acquisition and a Pro
Rata Acquisition, and thereafter becomes the Beneficial Owner of more than
an
additional 1.0% of the number of Common Shares outstanding pursuant to one
or
any combination of a Common Share Reduction, a Permitted Bid Acquisition, an
Exempt Acquisition or a Pro Rata Acquisition or any combination thereof, then,
as of the date that such Person becomes a Beneficial Owner of such additional
Common Shares, such Person shall become an "Acquiring
Person";
|
(iii)
|
for
the period of 10 days after the Disqualification Date (as hereinafter
defined), any Person who becomes the Beneficial Owner of 20% or more
of
the outstanding Common Shares as a result of such Person becoming
disqualified from relying on Clause 1.1(d)(ii)(B) where such
disqualification results solely because such Person is making or
has
announced a current intention to make a Take-over Bid, either alone
or by
acting jointly or in concert with any other Person, unless such
disqualified Person during such 10 day period acquires more than
1.0% of
the number of Common Shares then outstanding in addition to those
Common
Shares such disqualified Person already holds. For the purposes of
this
definition, "Disqualification Date" means the first date
of public announcement that such Person is making or intends to make
a
Take-over Bid, either alone or by acting jointly or in concert with
another Person; or
|
|
(iv)
|
an
underwriter or a 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 pursuant to an underwriting agreement
with the
Corporation.
|
|
(b)
|
"Affiliate",
when used to indicate a relationship with a specified company or
corporation, means a Person that directly, or indirectly, controls,
or is
controlled by, or is under common control with, such specified company
or
corporation.
|
|
(c)
|
"Associate",
when used to indicate a relationship with a specified Person, means
any
relative of such specified Person who has the same home as such specified
Person, or any person to whom such specified Person is married, or
any
person with whom such specified Person is living in a conjugal
relationship outside marriage, or any relative of such spouse or
other
Person who has the same home as such specified Person, or a child
of such
specified Person.
|
|
(d)
|
(i) A
Person shall be deemed the "Beneficial Owner" of, and to
have"Beneficial Ownership" of, and to
"Beneficially
Own":
|
|
(A)
|
any
securities of which such Person or any of such Person's Affiliates
or
Associates is the owner at law or in
equity;
|
|
(B)
|
any
securities of which such Person or any of such Person's Affiliates
or
Associates has the right to acquire within 60 days (whether such
right is
exercisable immediately or within a period of 60 days thereafter
and
whether or not on the condition or occurrence of a contingency or
the
making of one or more payments) upon the conversion, exchange or
exercise
of any Convertible Security or pursuant to any agreement, arrangement,
pledge or understanding, whether or not in writing, other
than:
|
|
(1)
|
customary
agreements with and between underwriters and banking group or selling
group members with respect to a distribution of securities,
and
|
|
(2)
|
pledges
of securities in the ordinary course of the pledgee's business;
and
|
|
(C)
|
any
securities that are Beneficially Owned within the meaning of Clauses
1.1(d)(i)(A) or 1.1(d)(i)(B) by any other Person with which such
Person is
acting jointly or in concert.
|
|
(ii)
|
Notwithstanding
the provisions of Clause 1.1(d)(i), a Person shall not be deemed
the
"Beneficial Owner" of, or to have "Beneficial
Ownership" of, or to "Beneficially Own", any
security because:
|
|
(A)
|
(1) the
holder of such security has agreed to deposit or tendersuch security
to a
Take-over Bid made by such Person orany of such Person's Affiliates
or
Associates or any otherPerson referred to in Clause 1.1(d)(i)(C)
pursuant
to a Permitted Lock-up Agreement,
or
|
(2) such
security has been deposited or tendered pursuant to aTake-over Bid made by
such
Person or any of suchPerson's Affiliates or Associates or made by any
otherPerson acting jointly or in concert with such Person until such deposited
or tendered security has been taken up;
|
(B)
|
such
Person, any Affiliate or Associate of such Person or any other Person
acting jointly or in concert with such Person holds such security;
provided that:
|
|
(1)
|
the
ordinary business of such Person (the "Portfolio
Manager") includes the management or administration of investment
funds for other Persons and such security is held by the Portfolio
Manager
in the ordinary course of such business in the performance of the
Portfolio Manager's duties for the account of any other Person (a
"Client"), including non-discretionary accounts held on
behalf of a Client by a broker or dealer appropriately registered
under
applicable law,
|
|
(2)
|
the
ordinary business of such Person (the "Fund Manager") is
manager or trustee of one or more mutual funds registered or qualified
to
issue its securities under the laws of Canada or the United States
of
America or any province or state thereof (each, a "Mutual
Fund"), or is a Mutual Fund, and holds such security for the
purposes of its activity as such Fund Manager or Mutual
Fund,
|
|
(3)
|
such
Person (the "Trust Company") is licensed to carry on the
business of a trust company under applicable laws and, as such, acts
as
trustee or administrator or in a similar capacity in relation to
the
estates of deceased or incompetent Persons (each, an "Estate
Account") or in relation to other accounts (each, an
"Other Account") and holds such security in the ordinary
course of such duties for such Estate Accounts or for such Other
Accounts,
|
|
(4)
|
such
Person (the "Crown Agent") is established by statute for
purposes that include, and the ordinary business or activity of such
Person includes, the management of investment funds for employee
benefit
plans, pension plans, insurance plans, or various public bodies,
or
|
|
(5)
|
such
Person (the "Plan Administrator") is the administrator or
the trustee of one or more pension funds or plans registered under
the
laws of Canada or the United States of America or any province or
state
thereof (each, a "Plan"), or is a Plan, and holds such
security for the purposes of its activity as such Plan Administrator
or
Plan,
|
provided;
however, that in any of the foregoing cases, the Portfolio Manager, the Fund
Manager, the Mutual Fund, the Trust Company, the Crown Agent, the Plan
Administrator or the Plan, as the case may be, is not then making or has not
then announced an 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, a Permitted Bid 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 or organized
over-the-counter market in respect of securities of the Corporation, alone
or by
acting jointly or in concert with any other Person;
|
(C)
|
such
Person is a Client of the same Portfolio Manager as another Person
on
whose account the Portfolio Manager holds such security, or because
such
Person is an Estate Account or an Other Account of the same Trust
Company
as another Person on whose account the Trust Company holds such security
or because such Person is a Plan with the same Plan Administrator
as
another Plan on whose account the Plan Administrator holds such
security;
|
|
(D)
|
such
Person is a Client of a Portfolio Manager and such security is owned
at
law or in equity by the Portfolio Manager or because such Person
is an
Estate Account or an Other Account of a Trust Company and such security
is
owned at law or in equity by the Trust Company or such Person is
a Plan
and such security is owned at law or in equity by the Plan Administrator
of such Plan; or
|
|
(E)
|
such
Person is the registered holder of securities as a result of carrying
on
the business, or acting as a nominee of, a securities
depositary.
|
For
the
purposes of this Agreement, in determining the percentage of the outstanding
Common Shares with respect to which a Person is or is deemed to be the
Beneficial Owner, any unissued Common Shares as to which such Person is deemed
the Beneficial Owner pursuant to this Subsection 1.1(d) shall be deemed
outstanding.
|
(e)
|
"Board
of Directors" means the board of directors of the Corporation or
any duly constituted and empowered committee
thereof.
|
|
(f)
|
"Business
Day" means any day, other than a Saturday or Sunday or a day
on
which banking institutions in Vancouver, British Columbia are authorized
or obligated by law to close.
|
|
(g)
|
"Canadian
Dollar Equivalent" of any amount which is expressed in United
States dollars means on any day, the Canadian dollar equivalent of
such
amount determined by reference to the U.S. - Canadian Exchange Rate
in
effect on such date.
|
|
(h)
|
"Close
of Business" on any given date means the time on such date (or,
if such date is not a Business Day, the time on the next succeeding
Business Day) at which the principal office of the transfer agent
for the
Common Shares in Vancouver, British Columbia (or after the Separation
Time, the principal office of the Rights Agent in Vancouver, British
Columbia) is closed to the public.
|
|
(i)
|
"Closing
Price" per security of any securities on any date of
determination means:
|
|
(i)
|
the
closing board lot sale price or, if such price is not available,
the
average of the closing bid and asked prices, for each of such securities
as reported by the principal stock exchange or national securities
quotation system on which such securities are listed or admitted
to
trading (provided that, if at the date of determination such securities
are listed or admitted to trading on more than one stock exchange
or
national securities quotation system, then such price or prices shall
be
determined based upon the stock exchange or quotation system on which
such
securities are then listed or admitted to 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 day or the
securities are not listed or admitted to trading on a stock exchange
or a
national securities quotation system, then 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 each of such securities in the over-the-counter
market,
as quoted by any reporting system then in use;
or
|
|
(iii)
|
if
for any reason none of such prices is available on such day or the
securities are not listed or admitted to trading on a stock exchange
or a
national securities quotation system or quoted by any such reporting
system, then the average of the closing bid and asked prices as furnished
by a professional market maker making a market in the securities
selected
in good faith by the Board of
Directors,
|
provided,
however, that (A) if for any reason none of such prices are available on such
date, then the "Closing Price" per security of such securities
on such date shall mean the fair value per security of the securities on such
date as determined by a nationally or internationally recognized investment
dealer or investment banker with respect to the fair value per security of
such
securities, and (B) if the Closing Price so determined is expressed in United
States dollars, then such amount shall be converted to the Canadian Dollar
Equivalent.
|
(j)
|
"Co-Rights
Agents" has the meaning ascribed thereto in Subsection
4.1(a).
|
|
(k)
|
"Common
Share Reduction" means an acquisition or redemption by the
Corporation of Common Shares which, by reducing the number of Common
Shares outstanding, increases the percentage of Common Shares Beneficially
Owned by any Person to 20% or more of the Common Shares then
outstanding.
|
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(l)
|
"Common
Shares" means the common class shares in the share capital of
the
Corporation as presently constituted, as such shares may be subdivided,
consolidated, reclassified or otherwise changed from time to
time.
|
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(m)
|
"Competing
Permitted Bid" means a Take-over Bid
that:
|
|
(i)
|
is
made after another Permitted Bid has been made and prior to the expiry
of
such Permitted Bid;
|
|
(ii)
|
satisfies
all components of the definition of a Permitted Bid other than the
requirement set forth in Subclause 1. 1 (ii)(ii)(A)(1);
and
|
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(iii)
|
contains,
and the take-up and payment for securities tendered or deposited
thereunder is subject to, irrevocable and unqualified conditions
that no
Common Shares shall be taken up or paid for pursuant to such Take-over
Bid
prior to the Close of Business on a date that is no earlier than
the later
of:
|
|
(A)
|
35
days after the date of such Take-over Bid,
and
|
|
(B)
|
the
earliest date on which Common Shares may be taken up or paid for
under any
other Permitted Bid that preceded the Competing Permitted Bid that
is then
in existence for the Common Shares.
|
|
(n)
|
"Controlled"
means as follows:
|
|
(i)
|
a
body corporate is "controlled" by another Person
if:
|
|
(A)
|
securities
entitled to vote in the election of directors 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,
and
|
|
(B)
|
the
votes carried by such securities are entitled, if exercised, to elect
a
majority of the board of directors of such body corporate;
and
|
|
(ii)
|
a
Person which is not a body corporate is "controlled" by another Person
if
more than 50% of the voting or equity interests of such Person are
held,
directly or indirectly, by or for the benefit of the other
Person,
|
and
"controls", "controlling" and "under
common control with" shall be interpreted accordingly.
|
(o)
|
"Convertible
Security" means a security convertible or exchangeable into a
Common Share.
|
|
(p)
|
"Disposition
Date" has the meaning ascribed thereto in Subsection
5.1(b).
|
|
(q)
|
"Effective
Date" means July 23, 2007.
|
|
(r)
|
"Election
to Exercise" has the meaning ascribed thereto in Clause
2.2(d)(ii).
|
|
(s)
|
"Exchange"
means the Toronto Stock Exchange and any other exchange on which
the
Common Shares may, from time to time, be listed for
trading.
|
|
(t)
|
"Exempt
Acquisition" means a share acquisition in respect of which the
Board of Directors has waived the application of Section 3.1 pursuant
to
Subsections 5.1(b), 5.1(d), or 5.1(f) or which was made on or prior
to the
Record Time.
|
|
(u)
|
"Exercise
Price" means, as of any date, the price at which a holder of
a
Right may purchase the securities issuable upon exercise of one whole
Right and, until adjustment thereof in accordance with the terms
hereof,
the Exercise Price shall be
$100.00.
|
|
(v)
|
"Expansion Factor"
has the meaning ascribed thereto in Subclause
2.3(b)(iv)(A)(1).
|
|
(w)
|
"Expiration
Time" means the earlier
of:
|
|
(i)
|
the
Termination Time; and
|
|
(ii)
|
the
Close of Business on the date on which the first annual meeting of
shareholders of the Corporation following the third year anniversary
of
the Effective Date is held,
|
provided,
however, that if the resolution referred to in Section 5.15 is approved by
the
Independent Shareholders in accordance with Section 5.15 at or prior to such
annual meeting, "Expiration Time" means the earlier
of:
|
(iii)
|
the
Termination Time; and
|
|
(iv)
|
the
Close of Business on July 24, 2013.
|
|
(x)
|
"Fiduciary"
means 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, as amended, or any other securities legislation of the
United
States or any state of the United
States.
|
|
(y)
|
"Flip-in
Event" means a transaction or event in or pursuant to which any
Person becomes an Acquiring Person.
|
|
(z)
|
"Governing
Corporate Law" means the Business Corporations Act
(British Columbia), and the regulations thereunder, and any comparable
or
successor laws or regulations thereto, or the relevant corporate
law that
otherwise governs the Corporation by virtue of continuance or
amalgamation
|
|
(aa)
|
INTENTIONALLY
DELETED
|
|
(bb)
|
"holder"
has the meaning ascribed thereto in Section
2.8.
|
|
(cc)
|
"Independent
Shareholders" means holders of outstanding Common Shares, other
than any:
|
|
(i)
|
Acquiring
Person;
|
|
(ii)
|
Offeror,
other than a Person who at the relevant time is deemed not to Beneficially
Own such Common Shares by reason of Clause 1.1
(d)(ii)(B);
|
|
(iii)
|
Affiliate
or Associate of such Acquiring Person or
Offeror;
|
|
(iv)
|
Person
acting jointly or in concert with such Acquiring Person or
Offeror;
|
|
(v)
|
employee
benefit plan, stock purchase plan, deferred profit sharing plan and
any
similar plan or trust for the benefit of employees of the Corporation
or a
Subsidiary of the Corporation, unless the beneficiaries of such plan
or
trust direct the manner in which the Common Shares are to be voted
or
withheld from voting or direct whether or not the Common Shares are
to be
tendered to a Take-over Bid.
|
|
(dd)
|
"Market
Price" per security of any securities on any date of
determination means the average of the daily Closing Prices per security
of such securities on each of the 20 consecutive Trading Days through
and
including the Trading Day immediately preceding such date of
determination; provided, however, that if an event of a type analogous
to
any of the events described in Section 2.3 shall have caused any
Closing
Price used to determine the Market Price on any Trading Day not to
be
fully comparable with the Closing Price on the Trading Day immediately
preceding such date of determination, each such Closing Price so
used
shall be appropriately adjusted in a mariner analogous to the applicable
adjustment provided for in Section 2.3 in order to make it fully
comparable with the Closing Price on the Trading Day immediately
preceding
such date of determination.
|
|
(ee)
|
"Nominee"
has the meaning ascribed thereto in Subsection
2.2(c).
|
|
(ff)
|
"Offer
to Acquire" shall include:
|
|
(i)
|
an
offer to purchase or a solicitation of an offer to sell Common Shares,
or
a public announcement of an intention to make such an offer or
solicitation; 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.
|
(gg)
|
"Offeror"
means a Person who has announced a current intention to make, or
who is
making, a Take-over Bid.
|
|
(hh)
|
"Offeror's
Securities" means the aggregate of the Common Shares Beneficially
Owned on the date of a Take-over Bid by an
Offeror.
|
|
(ii)
|
"Permitted
Bid" means a Take-over Bid made by way 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, for all Common Shares held by them;
and
|
|
(ii)
|
the
Take-over Bid contains, and the take-up and payment for securities
tendered or deposited thereunder is subject to, irrevocable and
unqualified conditions that:
|
|
(A)
|
no
Common Shares shall be taken up or paid for pursuant to the Take-over
Bid:
|
|
(1)
|
prior
to the Close of Business on a date which is not less than 60 days
following the date of the Take-over Bid,
and
|
|
(2)
|
unless,
at the Close of Business on such date, more than 50% of the then
outstanding Common Shares held by Independent Shareholders have been
deposited or tendered pursuant to the Take-over Bid and have not
been
withdrawn,
|
|
(B)
|
unless
the Take-over Bid is withdrawn, Common Shares may be deposited pursuant
to
such Take-over Bid at any time prior to the Close of Business on
the date
of the first take-up of or payment for Common
Shares,
|
|
(C)
|
any
Common Shares deposited pursuant to the Take-over Bid may be withdrawn
until taken up and paid for, and
|
|
(D)
|
in
the event that the requirement set forth in Subclause 1.1(ii)(ii)(A)(2)
is
satisfied, the Offeror will make a public announcement of that fact
and
the Take-over Bid will remain open for deposits and tenders of Common
Shares for not less than 10 Business Days from the date of such public
announcement,
|
provided
that, should a Permitted Bid cease to be a Permitted Bid because it ceases
to
meet any or all of the requirements mentioned above prior to the time it expires
(after giving effect to any extension) or is withdrawn, then any acquisition
of
Common Shares made pursuant to such Permitted Bid shall not be a Permitted
Bid
Acquisition. The term Permitted Bid shall include a Competing Permitted
Bid.
|
(jj)
|
"Permitted
Bid Acquisition" means an acquisition of Common Shares made
pursuant to a Permitted Bid or a Competing Permitted
Bid.
|
|
(kk)
|
"Permitted
Lock-up Agreement" means an agreement between a Person and one or
more holders of Common Shares (each, 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 on which such agreement
is
entered into, not later than the first Business Day following the
date of
such agreement) pursuant to which each such Locked-up Person agrees
to
deposit or tender Common Shares to a Take-over Bid (the "Lock-up
Bid") made or to be made by the Person, any of such Person's
Affiliates or Associates or any other Person acting jointly or in
concert
with such Person, provided that:
|
|
(i)
|
the
agreement permits any Locked-up Person to terminate its obligation
to
deposit or tender to or not to withdraw Common Shares from the Lock-up
Bid
in order to tender or deposit the Common Shares to another Take-over
Bid
or support another transaction:
|
|
(A)
|
where
the price or value per Common Share offered under such other Take-over
Bid
or transaction is higher than the price or value per Common Share
offered
under the Lock-up Bid, or
|
|
(B)
|
if:
|
|
(1)
|
the
price or value per Common Share offered under the other Take-over
Bid or
transaction exceeds by as much as or more than a specified amount
(the
"Specified Amount") the price or value per Common Share
offered under the Lock-up Bid, provided that such Specified Amount
is not
greater than 7% of the price or value per Common Share offered under
the
Lock-up Bid, or
|
|
(2)
|
the
number of Common Shares to be purchased under the other Take-over
Bid or
transaction exceeds by as much as or more than a specified number
(the
"Specified Number") the number of Common Shares that the
Offeror has offered to purchase under the Lock-up Bid at a price
or value
per Common Share that is not less than the price or value per Common
Share
offered under the Lock-up Bid, provided that the Specified Number
is not
greater than 7% of the number of Common Shares offered under 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 such Person 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
|
(ii)
|
no
"break-up" fees, "top-up" fees,
penalties, expenses or other amounts that exceed in the aggregate
the
greater of:
|
|
(A)
|
the
cash equivalent of 2.5% of the price or value 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 payable
under another Take-over Bid or transaction to a Locked-up Person
exceeds
the price or value of the consideration that such Locked-up Person
would
have received under the Lock-up
Bid,
|
shall
be
payable by a Locked-up Person pursuant to the agreement in the event a 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 accept the other Take-over
Bid or support another transaction.
|
(ll)
|
"Person"
includes any individual, firm, partnership, association, trust, trustee,
executor, administrator, legal personal representative, government,
governmental body or authority, corporation, or other incorporated
or
unincorporated organization, syndicate or other
entity.
|
|
(mm)
|
"Pro
Rata Acquisition" means an acquisition by a Person of Common
Shares pursuant to:
|
|
(i)
|
any
dividend reinvestment plan or share purchase plan of the Corporation
made
available to all holders of Common Shares (other than holders resident
in
any jurisdiction where participation in any such plan is restricted
or
impractical as a result of applicable
law);
|
|
(ii)
|
a
stock dividend, a stock split or other event pursuant to which such
Person
becomes the Beneficial Owner of Common Shares on the same pro rata
basis
as all other holders of Common Shares of the same class or
series;
|
|
(iii)
|
the
acquisition or exercise of rights to purchase Common Shares distributed
to
all holders of Common Shares (other than holders resident in any
jurisdiction where such distribution is restricted or impractical
as a
result of applicable law) by the Corporation pursuant to a rights
offering
(but only if such rights are acquired directly from the Corporation);
or
|
|
(iv)
|
a
distribution of Common Shares or Convertible Securities made pursuant
to a
prospectus or by way of a private placement or a conversion or exchange
of
any Convertible Security,
|
provided,
however, that such Person does not thereby acquire a greater percentage of
Common Shares or of Convertible Securities so offered than such Person's
percentage of Common Shares Beneficially Owned immediately prior to such
acquisition.
|
(nn)
|
"Record
Time" means the Close of Business on the Effective
Date.
|
|
(oo)
|
"Redemption
Price" has the meaning attributed thereto in Subsection
5.1(a).
|
|
(pp)
|
"Regular
Periodic Cash Dividend" means cash dividends paid on the Common
Shares at regular intervals in any fiscal year of the Corporation
to the
extent that such cash dividends do not exceed in the aggregate in
any
fiscal year, on a per share basis, the greatest
of:
|
|
(i)
|
200%
of the aggregate amount of cash dividends declared payable by the
Corporation on its Common Shares in its immediately preceding fiscal
year
divided by the number of Common Shares outstanding as at the end
of such
fiscal year;
|
|
(ii)
|
300%
of the arithmetic mean of the aggregate amounts of cash dividends
declared
payable by the Corporation on its Common Shares in its three immediately
preceding fiscal years divided by the arithmetic mean of the number
of
Common Shares outstanding as at the end of each of such fiscal years;
and
|
|
(iii)
|
100%
of the aggregate consolidated net income of the Corporation, before
extraordinary items, for its immediately preceding fiscal year divided
by
the number of Common Shares outstanding as at the end of such fiscal
year.
|
|
(qq)
|
"Rights"
means the herein described rights to purchase securities pursuant
to the
terms and subject to the conditions set forth
herein.
|
|
(rr)
|
"Rights
Certificate" means the certificates representing the Rights after
the Separation Time which shall be substantially in the form attached
hereto as Schedule A.
|
|
(ss)
|
"Rights
Register" and "Rights Registrar" have the
respective meanings ascribed thereto in Subsection
2.6(a).
|
|
(tt)
|
"Securities
Act" means the Securities Act (British Columbia), as
amended, and the rules and regulations made thereunder, as now in
effect
or as the same may from time to time be amended, re-enacted or
replaced.
|
|
(uu)
|
"Separation
Time" means the Close of Business on the tenth Business Day
(or
such later Business Day as may be determined at any time or from
time to
time by the Board of Directors) after the earlier
of:
|
|
(i)
|
the
Stock Acquisition Date;
|
|
(ii)
|
the
date of the commencement of, or first public announcement or disclosure
of
the intent of any Person (other than the Corporation or any Subsidiary
of
the Corporation) to commence, a Take-over Bid (other than a Permitted
Bid,
so long as such Take-over Bid continues to satisfy the requirements
of a
Permitted Bid); and
|
|
(iii)
|
the
date on which a Permitted Bid ceases to qualify as a Permitted Bid,
provided; however, that if any such Take-over Bid expires, is cancelled,
is terminated or is otherwise withdrawn prior to the Separation Time,
then
such Take-over Bid shall be deemed, for purposes of this Subsection
1.1(uu) never to have been made, and, provided further, that if the
Board
of Directors determines, pursuant to Section 5.1, to waive the application
of Section 3.1 to a Flip-In Event, then the Separation Time in respect
of
such Flip-In Event shall be deemed never to have
occurred.
|
|
(vv)
|
"Stock
Acquisition Date" means the first date of public announcement or
disclosure by the Corporation or an Acquiring Person of facts indicating
that a Person has become an Acquiring Person, which, for the purposes
of
this definition, shall include, without limitation, a report filed
pursuant to Section 111 of the Securities Act or Section 13(d) of
the U.S. Exchange Act announcing or disclosing such
information.
|
|
(ww)
|
"Subsidiary"
means a body corporate that is controlled by another
Person.
|
|
(xx)
|
"Take-over
Bid" means an Offer to Acquire Common Shares or Convertible
Securities where the Common Shares subject to the Offer to Acquire,
together with the Common Shares into or for which the securities
subject
to the Offer to Acquire are convertible or exchangeable 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.
|
|
(yy)
|
"Termination
Time" means the time at which the right to exercise Rights shall
terminate pursuant to Section 5.1.
|
|
(zz)
|
"Trading
Day", when used with respect to any securities, means the day
on
which the principal Canadian or United States securities exchange
(as
determined by the Board of Directors) on which such securities are
listed
or admitted to trading is open for the transaction of business or,
if the
securities are not listed or admitted to trading on any Canadian
or United
States securities exchange, a Business
Day.
|
|
(aaa)
|
"U.S.
- Canadian Exchange Rate" on any date
means:
|
|
(i)
|
if
on such date the Bank of Canada sets an average noon spot rate of
exchange
for the conversion of one United States dollar into Canadian dollars,
such
rate; and
|
|
(ii)
|
in
any other case, the rate for such date for the conversion of one
United
States dollar into Canadian dollars which is calculated in the manner
which shall be determined by the Board of Directors from time to
time
acting in good faith.
|
|
(bbb)
|
"U.S.
Exchange Act" means the United States Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder as from
time to
time in effect, and any comparable or successor laws, rules or regulations
thereto.
|
|
(ccc)
|
"1933
Act" means the United States Securities Act of 1933, as amended,
and the rules and regulations thereunder, and any comparable or successor
laws, rules or regulations thereto.
|
|
1.2
|
Currency
|
All sums of money which are referred to in this Agreement are expressed in
lawful money of Canada, unless otherwise specified.
|
1.3
|
Number
and Gender
|
Wherever the context will require, terms (including defined terms) used herein
importing the singular number only shall include the plural and vice versa
and
words importing any one gender shall include all others.
|
1.4
|
Sections
and Headings
|
The division of this Agreement into Articles, Sections, Subsections, clauses,
subclauses and Schedules and the insertion of headings are for convenience
of
reference only and shall not affect the construction or interpretation of this
Agreement. The terms this "Agreement",
"hereunder", "hereof" and similar expressions
refer to this Agreement as amended or supplemented from time to time and not
to
any particular Article, Section, Subsection, clause, subclause or Schedule
or
other portion hereof and include any agreement or instrument supplemental or
ancillary hereto. Unless something in the subject matter or context is
inconsistent therewith, references herein to Articles, Sections, Subsections,
clauses, subclauses and Schedules are to Articles, Sections, Subsections,
clauses, subclauses and Schedules of or to this Agreement.
|
1.5
|
Statutory
References
|
Unless the context otherwise requires, any reference to a specific section,
subsection, clause or rule of any act or regulation shall be deemed to refer
to
the same as it may be amended, re-enacted or replaced or, if repealed and there
shall be no replacement therefor, to the same as it is in effect on the date
of
this Agreement.
|
1.6
|
Determination
of Percentage Ownership
|
The percentage of Common Shares Beneficially Owned by any Person, shall, for
the
purposes of this Agreement, be and be deemed to be the product determined by
the
formula:
100 x
A
B
where:
A
=
the
aggregate number of votes for the election of all directors
generallyattaching
to the Common Shares Beneficially Owned by such Person; and
B =
the aggregate
number of votes for the election of all directors generallyattaching to all
outstanding Common Shares.
Where
any Person is deemed to
Beneficially Own unissued Common Shares pursuant to
Subsection
1.1(d), such Common Shares shall be deemed to be outstanding for the purpose
of
both
A
and B in the formula above
|
1.7
|
Acting
Jointly or in Concert
|
For the purposes of this Agreement, a Person is acting jointly or in concert
with every Person who is a party to an agreement, commitment or understanding,
whether formal or informal or written or unwritten, with the first Person to
acquire, or make an Offer to Acquire, Common Shares or Convertible Securities
(other than customary agreements with and between underwriters and banking
or
selling group members with respect to a distribution of securities and pledges
of securities in the ordinary course of business to secure
indebtedness).
|
1.8
|
Generally
Accepted Accounting
Principles
|
Wherever in this Agreement reference is made to generally accepted accounting
principles, such reference shall be deemed to be the recommendations at the
relevant time of the Canadian Institute of Chartered Accountants, or any
successor institute, applicable on a consolidated basis (unless otherwise
specifically provided herein to be applicable on an unconsolidated basis) as
at
the date on which a calculation is made or required to be made in accordance
with generally accepted accounting principles. Where the character or amount
of
any asset or liability or item of revenue or expense is required to be
determined, or any consolidation or other accounting computation is required
to
be made for the purpose of this Agreement or any document, such determination
or
calculation shall, to the extent applicable and except as otherwise specified
herein or as otherwise agreed in writing by the parties, be made in accordance
with generally accepted accounting principles applied on a consistent
basis.
ARTICLE
2.
THE
RIGHTS
|
2.1
|
Legend
on Common Share
Certificates
|
|
(a)
|
One
Right for each Common Share shall be issued and Certificates representing
the Common Shares (including without limitation Common Shares issued
upon
the conversion of Convertible Securities) issued after the later
of (i)
the Record Time and (ii) the date on which all required regulatory
approvals required in respect of this Agreement have been received,
but
prior to the Close of Business on the earlier of (iii) the Separation
Time
and (iv) the Expiration Time, shall also evidence one Right for each
Common Share represented thereby and shall have impressed on, printed
on,
written on or otherwise affixed to them the following
legend:
|
"Until
the Separation Time (as defined in the Rights Agreement referred to below),
this
certificate also evidences and entitles the holder hereof to certain Rights
as
set forth in a Shareholder Rights Plan Agreement, made as of July 23, 2007,
as
such agreement may from time to time be amended, restated, varied or replaced
(the "Rights Agreement"), between Southwestern Resources Corp.
and Computershare Investor Services Inc., as Rights Agent, the terms of which
are hereby incorporated herein by reference and a copy of which is on file
at
the registered office of the Corporation and is available for viewing at
xxx.xxxxx.xxx. Under certain circumstances, as set forth in the Rights
Agreement, such Rights may be amended or 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."
|
(b)
|
Certificates
representing Common Shares that are issued and outstanding at the
later of
(i) the Record Time and (ii) the date on which all required regulatory
approvals required in respect of this Agreement have been received,
shall
evidence one Right for each Common Share evidenced thereby,
notwithstanding the absence of the foregoing legend, until the earlier
of
(iii) the Separation Time and (iv) the Expiration
Time.
|
|
2.2
|
Initial
Exercise Price; Exercise of Rights; Detachment of
Rights
|
|
(a)
|
Subject
to adjustment as herein set forth, including without limitation as
set
forth in Article 3, each Right will entitle the holder thereof, from
and
after the Separation Time and prior to the Expiration Time, to purchase
one Common Share for the Exercise Price as at the Business Day immediately
preceding the Separation Time (which Exercise Price and number of
Common
Shares are subject to adjustment as set forth below). Notwithstanding
any
other provision of this Agreement, any Rights held by the Corporation
or
any of its Subsidiaries shall be
void.
|
|
(b)
|
Until
the Separation Time:
|
|
(i)
|
the
Rights shall not be exercisable and no Right may be exercised;
and
|
|
(ii)
|
each
Right will be evidenced by the certificate for the associated Common
Share
registered in the name of the holder thereof (which certificate shall
be
deemed to represent a Rights Certificate) and will be transferable
only
together with, and will be transferred by a transfer of, such associated
Common Share.
|
|
(c)
|
From
and after the Separation Time and prior to the Expiration Time, the
Rights
may be exercised, and the registration and transfer of the Rights
shall be
separate from and independent of Common Shares. Promptly following
the
Separation Time, the Corporation will prepare or cause to be prepared
and
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, the Corporation will prepare
or
cause to be prepared and the Rights Agent will mail to the holder
so
converting (other than a Person indicated by the Corporation in writing
to
be 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 as indicated by the
Corporation in writing (a "Nominee")) at such holder's
address as shown by the records of the Corporation (the Corporation
hereby
agreeing to furnish copies of such records to the Rights Agent for
this
purpose):
|
|
(i)
|
a
Rights Certificate, substantially the form of Schedule A 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, rule
or
regulation or judicial or administrative order, or with any article
or
regulation of any stock exchange or quotation system on which the
Rights
may from time to time be listed or traded, or to conform to usage;
and
|
|
(ii)
|
a
disclosure statement prepared by the Corporation describing the
Rights,
|
provided
that a Nominee shall be sent the materials provided for in Clauses 2.2(c)(i)
and
2.2(c)(ii) only in respect of all Common Shares held of record by it which
are
not Beneficially Owned by an Acquiring Person as indicated to the Rights Agent
by the Corporation in writing, and the Corporation may require any Nominee
or
suspected Nominee to provide such information and documentation as the
Corporation may reasonably require for such purpose.
|
(d)
|
Rights
may be exercised in whole or in part on any Business Day after the
Separation Time and prior to the Expiration Time by submitting to
the
Rights Agent, at its principal office in Vancouver, British
Columbia:
|
|
(i)
|
the
Rights Certificate evidencing such
Rights;
|
|
(ii)
|
an
election to exercise (an "Election to Exercise"),
substantially in the form attached to the Rights Certificate, duly
completed, and duly completed and executed in a manner acceptable
to the
Rights Agent; and
|
|
(iii)
|
payment
by certified cheque, banker's draft or money order payable to the
order of
the Corporation, of a sum equal to the Exercise Price multiplied
by the
number of Rights being exercised and a sum sufficient to cover any
transfer tax or charge which may be payable in respect of any transfer
involved in the transfer or delivery of Rights Certificates or the
issuance or delivery of certificates for Common Shares in a name
other
than that of the holder of the Rights being
exercised.
|
|
(e)
|
Upon
receipt of a Rights Certificate, accompanied by a duly completed
and
executed Election to Exercise, which does not indicate that such
Right is
' null and void as provided by Subsection 3.1(b) and payment as set
forth
in Subsection 2.2(d), the Rights Agent (unless otherwise instructed
by the
Corporation) will thereupon
promptly:
|
|
(i)
|
requisition
from the transfer agent of the Common Shares certificates representing
the
number of Common Shares to be purchased (the Corporation hereby
irrevocably authorizing its transfer agent to comply with all such
requisitions);
|
|
(ii)
|
after
receipt of such Common Share certificates, deliver such certificates
to,
or to the order of, the registered holder of such Rights Certificate,
registered in such name or names as may be designated by such holder
in
the Election to Exercise;
|
|
(iii)
|
when
appropriate and pursuant to Section 5.5, requisition from the Corporation
the amount of cash, if any, to be paid in lieu of issuing fractional
Common Shares;
|
|
(iv)
|
when
appropriate and pursuant to Section 5.5, after receipt of such cash,
deliver such cash to, or to the order of, the registered holder of
the
Rights Certificate; and
|
|
(v)
|
tender
to the Corporation all payments received on exercise of the
Rights.
|
|
(f)
|
If
the holder of any Rights exercises less than all the Rights evidenced
by
such holder's Rights Certificate, a new Rights Certificate evidencing
the
Rights remaining unexercised will be issued by the Rights Agent to
such
holder or to such holder's duly authorized
assigns.
|
|
(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 Common Shares delivered upon the exercise of Rights shall, at
the time
of delivery of the certificates for such Common Shares (subject to
payment
of the Exercise Price), be duly and validly authorized, executed,
issued
and delivered as fully paid and
non-assessable;
|
|
(ii)
|
take
all such action as may reasonably be considered to be necessary and
within
its power to comply with any applicable requirements of the Governing
Corporate Law, the Securities Act, the U.S. Exchange Act, the 1933
Act and
comparable legislation of each of the other provinces and territories
of
Canada and states of the United States of America, or the rules and
regulations thereunder or any other applicable law, rule or regulation,
in
connection with the issuance and delivery of the Rights, the Rights
Certificates and the issuance of any Common Shares upon exercise
of the
Rights;
|
|
(iii)
|
use
reasonable efforts to cause all Common Shares issued upon exercise
of the
Rights to be listed on the principal exchanges on which the Common
Shares
are listed at that time;
|
|
(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;
|
|
(v)
|
pay
when due and payable, if applicable, any and all federal, provincial
and
municipal taxes (not in the nature of income, capital gains or withholding
taxes) and charges which may be payable in respect of the original
issuance or delivery of the Rights Certificates or certificates for
Common
Shares issued upon the exercise of Rights, provided that the Corporation
shall not be required to pay any transfer tax or charge which may
be
payable in respect of any transfer of Rights or the issuance or delivery
of certificates for Common Shares issued upon the exercise of Rights,
in a
name other than that of the holder of the Rights being transferred
or
exercised; and
|
|
(vi)
|
after
the Separation Time, except as permitted by Section 5.1 or Section
5.4,
not take (or permit any Subsidiary to take) any action if at the
time such
action is taken it is reasonably foreseeable that such action will
diminish substantially or otherwise eliminate the benefits intended
to be
afforded by the Rights.
|
|
2.3
|
Adjustments
to Exercise Price; Number of
Rights
|
|
(a)
|
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 and
in
Article 3.
|
|
(b)
|
In
the event that the Corporation shall at any time after the Record
Time and
prior to the Expiration Time:
|
|
(i)
|
declare
or pay a dividend on the Common Shares payable in Common Shares or
Convertible Securities in respect thereof other than pursuant to
any
optional stock dividend plan;
|
|
(ii)
|
subdivide
or change the then outstanding Common Shares into a greater number
of
Common Shares;
|
|
(iii)
|
consolidate
or change the then outstanding Common Shares into a smaller number
of
Common Shares; or
|
|
(iv)
|
issue
any Common Shares (or Convertible Securities in respect thereof)
in
respect of, in lieu of or in exchange for existing Common Shares,
whether
in a reclassification, amalgamation, statutory arrangement, consolidation
or otherwise,
|
then
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 the exercise of Rights) shall be adjusted as
follows:
|
(A)
|
if
the Exercise Price and number of Rights outstanding are to be
adjusted:
|
|
(1)
|
the
Exercise Price in effect after such adjustment will be equal to the
Exercise Price in effect immediately prior to such adjustment divided
by
the number of Common Shares (or other securities of the Corporation)
(the
"Expansion Factor") that a holder of one Common Share
immediately prior to such dividend, subdivision, change, combination
or
issuance would hold thereafter as a result thereof,
and
|
|
(2)
|
each
Right held prior to such adjustment will become that number of Rights
equal to the Expansion Factor, and the adjusted number of Rights
will be
deemed to be allocated among the Common Shares with respect to which
the
original Rights were associated (if they remain outstanding) and
the
securities of the Corporation issued in respect of such dividend,
subdivision, change, consolidation or issuance, so that each such
Common
Share (or other security of the Corporation) will have exactly one
Right
associated with it, and
|
|
(B)
|
if
the securities purchasable upon exercise of Rights are to be adjusted,
the
securities purchasable upon exercise of each Right after such adjustment
will be the securities that a holder of the securities purchasable
upon
exercise of one Right immediately prior to such dividend, subdivision,
change, consolidation or issuance would hold thereafter as a result
thereof.
|
Adjustments
made pursuant to this Subsection 2.3(b) shall be made successively, whenever
an
event referred to in this Subsection 2.3(b) occurs.
|
(c)
|
If,
after the Record Time and prior to the Expiration Time, the Corporation
shall issue any of its securities other than Common Shares in a
transaction of a type described in Clauses 2.3(b)(i) or 2.3(b)(iv),
or
such securities shall be treated herein as nearly equivalent to Common
Shares as may be practicable and appropriate under the circumstances
and
the Corporation and the Rights Agent agree to amend this Agreement
in
order to effect such treatment.
|
|
(d)
|
If
an event occurs which would require an adjustment under both this
Section
2.3 and Section 3.1, the adjustment provided for in this Section
2.3 shall
be in addition to, and shall be made prior to, any adjustment required
pursuant to Section 3.1.
|
|
(e)
|
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 Subsection 2.3(b), 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.
|
|
(f)
|
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 Convertible
Securities in respect of Common Shares) at a price per Common Share
(or,
in the case of such a Convertible Security, having a conversion,
exchange
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, the Exercise Price in effect after
such
record date will equal the Exercise Price in effect immediately prior
to
such record date multiplied by a
fraction:
|
|
(A)
|
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 Securities so to be offered (including the price
required
to be paid to purchase such Convertible Securities)) would purchase
at
such Market Price per Common Share;
and
|
|
(B)
|
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 Securities
so
to be offered are initially convertible, exchangeable or
exercisable).
|
|
(ii)
|
In
case such subscription price is satisfied, in whole or in part, by
consideration other than cash, the value of such consideration shall
be as
determined in good faith by the Board of Directors. Such adjustment
shall
be made successively whenever such a record date is fixed. To the
extent
that such rights or warrants are not exercised prior to the expiration
thereof, the Exercise Price shall be readjusted in the manner contemplated
above based on the number of Common Shares (or securities convertible
into
or exchangeable for Common Shares) actually issued upon the exercise
of
such rights or warrants.
|
|
(iii)
|
For
purposes of this Agreement, the granting of the right to purchase
Common
Shares (whether from treasury or otherwise) pursuant to any dividend
or
interest reinvestment plan or any share purchase plan providing for
the
reinvestment of dividends or interest payable on securities of the
Corporation or the investment of periodic optional payments 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 by the Corporation)
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 or share purchase 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.
|
|
(g)
|
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:
|
|
(i)
|
evidences
of indebtedness or assets (other than a Regular Periodic Cash Dividend
or
a dividend paid in Common Shares, but including any dividend payable
in
securities other than Common Shares);
or
|
|
(ii)
|
rights
or warrants entitling them to subscribe for or purchase Common Shares
(or
Convertible Securities in respect of Common
Shares),
|
in
an
amount or at a price per Common Share (or, in the case of a Convertible Security
in respect of Common Shares, having a conversion, exchange 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 rights or warrants referred to in Subsection 2.3(f)), the
Exercise Price in effect after such record date shall be equal to the Exercise
Price in effect immediately prior to such record date less the fair market
value
(as determined in good faith by the Board of Directors) of the portion of the
assets, evidences of indebtedness, rights, warrants or other securities so
to be
distributed applicable to each of the securities purchasable upon exercise
of
one Right. Such adjustment shall be made successively whenever such a record
date is fixed.
|
(h)
|
Each
adjustment made pursuant to this Section 2.3 shall be made as
of:
|
|
(i)
|
the
payment or effective date for the applicable dividend, subdivision,
change, combination or issuance, in the case of an adjustment made
pursuant to Subsection 2.3(b); and
|
|
(ii)
|
the
record date for the applicable dividend or distribution, in the case
of an
adjustment made pursuant to Subsections 2.3(f) or 2.3(g), subject
to
readjustment to reverse the same if such distribution shall not be
made.
|
|
(i)
|
In
the event the Corporation shall at any time after the Record Time
and
prior to the Expiration Time issue any shares (other than Common
Shares),
or rights or warrants to subscribe for or purchase any such shares,
or
Convertible Securities in respect of any such shares, in a transaction
referred to in any of Clauses 2.3(b)(i) to 2.3(b)(iv), inclusive,
if the
Board of Directors acting in good faith determines that the adjustments
contemplated by Subsections 2.3(b), 2.3(f) and 2.3(g) in connection
with
such transaction will not appropriately protect the interests of
the
holders of Rights, then the Board of Directors may from time to time,
but
subject to obtaining the prior approval of the holders of the Rights
obtained as set forth in Subsection 5.4(b), determine what other
adjustments to the Exercise Price, number of Rights or securities
purchasable upon exercise of Rights would be appropriate and,
notwithstanding Subsections 2.3(b), 2.3(f) and 2.3(g), such adjustments,
rather than the adjustments contemplated by Subsections 2.3(b), 2.3(f)
and
2.3(g), shall be made upon the Board of Directors providing written
certification thereof to the Rights Agent as set forth in Subsection
2.3(q). The Corporation and the Rights Agent shall amend this Agreement
as
appropriate to provide for such
adjustments.
|
|
(j)
|
Notwithstanding
anything herein to the contrary, no adjustment of the Exercise Price
shall
be required unless such adjustment would require an increase or decrease
of at least 1% in such Exercise Price; provided, however, that any
adjustments which by reason of this Subsection 2.3(j) are not required
to
be made shall be carried forward and taken into account in any subsequent
adjustment. All adjustments to the Exercise Price made pursuant to
this
Section 2.3 shall be calculated to the nearest
cent.
|
|
(k)
|
All
Rights originally issued by the Corporation subsequent to any adjustment
made to an Exercise Price hereunder shall evidence the right to purchase,
at the adjusted Exercise Price, the number of Common Shares purchasable
from time to time hereunder upon exercise of the Rights, all subject
to
further adjustment as provided
herein.
|
|
(l)
|
Unless
the Corporation shall have exercised its election, as provided in
Subsection 2.3(m), upon each adjustment of an Exercise Price as a
result
of the calculations made in Subsections 2.3(f) and 2.3(g), each Right
outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Exercise
Price,
that number of Common Shares obtained
by:
|
|
(i)
|
multiplying
(A) the number of Common Shares covered by a Right immediately prior
to
such adjustment, by (B) the Exercise Price in effect immediately
prior to
such adjustment; and
|
|
(ii)
|
dividing
the product so obtained by the Exercise Price in effect immediately
after
such adjustment.
|
|
(m)
|
The
Corporation may elect on or after the date of any adjustment of an
Exercise Price to adjust the number of Rights, in lieu of any adjustment
in the number of Common Shares purchasable upon the exercise of a
Right.
Each of the Rights outstanding after the adjustment in the number
of
Rights shall be exercisable for the number of Common Shares for which
a
Right was exercisable immediately prior to such adjustment. Each
Right
held of record prior to such adjustment of the number of Rights shall
become the number of Rights that is equal to the result of dividing
the
relevant Exercise Price in effect immediately prior to adjustment
of the
relevant Exercise Price by the relevant Exercise Price in effect
immediately after adjustment of the relevant Exercise Price. The
Corporation shall make a public announcement of its election to adjust
the
number of Rights, indicating the record date for the adjustment,
and, if
known at the time, the amount of the adjustment to be made. This
record
date may be the date on which the relevant Exercise Price is adjusted
or
any day thereafter, but, if the Rights Certificates have been issued,
shall be at least 10 calendar days later than the date of the public
announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Subsection 2.3(m),
the
Corporation shall, as promptly as practicable, cause to be distributed
to
holders of record of Rights Certificates on such record date, Rights
Certificates evidencing, subject to Section 5.5, the additional Rights
to
which such holders shall be entitled as a result of such adjustment,
or,
at the option of the Corporation, shall cause to be distributed to
such
holders of record in substitution and replacement for the Rights
Certificates held by such holders prior to the date of adjustment,
and
upon surrender thereof, if required by the Corporation, new Rights
Certificates evidencing all the Rights to which such holders shall
be
entitled after such adjustment. Rights Certificates so to be distributed
shall be issued, executed and countersigned in the manner provided
for
herein and may bear, at the option of the Corporation, the relevant
adjusted Exercise Price and shall be registered in the names of holders
of
record of Rights Certificates on the record date specified in the
public
announcement.
|
|
(n)
|
In
any case in which this Section 2.3 shall require that an adjustment
in an
Exercise Price be made effective as of a record date for a specified
event, the Corporation may elect to defer until the occurrence of
such
event the issuance to the holder of any Right exercised after such
record
date of the number of Common Shares and other securities of the
Corporation, if any, issuable upon such exercise over and above the
number
of Common Shares and other securities of the Corporation, if any,
issuable
upon such exercise on the basis of the relevant Exercise Price in
effect
prior to such adjustment; provided, however, that the Corporation
shall
deliver to such holder an appropriate instrument evidencing such
holder's
right to receive such additional Common Shares (fractional or otherwise)
or other securities upon the occurrence of the event requiring such
adjustment.
|
|
(o)
|
Notwithstanding
anything in this Section 2.3 to the contrary, the Corporation shall
be
entitled to make such adjustments in the Exercise Price, in addition
to
those adjustments expressly required by this Section 2.3, as and
to the
extent that in its good faith judgment the Board of Directors shall
determine to be advisable in order that
any:
|
|
(i)
|
subdivision
or consolidation of the Common
Shares;
|
|
(ii)
|
issuance
wholly for cash of any Common Shares at less than the applicable
Market
Price;
|
|
(iii)
|
issuance
wholly for cash of any Common Shares or securities that by their
terms are
exchangeable for or convertible into or give a right to acquire Common
Shares;
|
|
(iv)
|
stock
dividends; or
|
|
(v)
|
issuance
of rights, options or warrants referred to in this Section 2.3, hereafter
made by the Corporation to holders of its Common
Shares,
|
shall
not
be taxable to such shareholders.
|
(p)
|
Irrespective
of any adjustment or change in the securities purchasable upon exercise
of
the Rights, the Rights Certificates thereto for and thereafter issued
may
continue to represent the securities so purchasable which were represented
in the initial Rights Certificates issued
hereunder.
|
|
(q)
|
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;
|
|
(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;
and
|
|
(iii)
|
cause
notice of the particulars of such adjustment to be given to the holders
of
the Rights by way of press release or by such other means as the
Corporation may determine.
|
Failure
to file such certificate or to cause such notice to be given 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 on, and such certificate shall be dated, the date upon
which
the Rights Certificate evidencing such Rights was duly surrendered (together
with a duly completed Election to Exercise) and payment of the Exercise Price
for such Rights (and any applicable transfer taxes and other governmental
charges payable by the exercising Person 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 shares on, and such certificate shall
be dated, the next Business Day on which the Common Share transfer books of
the
Corporation are open.
|
2.5
|
Execution,
Authentication, Delivery and Dating of Rights
Certificates
|
|
(a)
|
The
Rights Certificates shall be executed on behalf of the Corporation
by any
two officers or directors of the Corporation. The signature of any
of
these officers or directors 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 or directors
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.
|
|
(b)
|
Promptly
following the Separation Time, the Corporation will notify the Rights
Agent of such Separation Time and will deliver Rights Certificates
executed by the Corporation to the Rights Agent for countersignature,
and
the Rights Agent shall countersign (manually or by facsimile signature
in
a manner satisfactory to the Corporation) and deliver such Rights
Certificates to the holders of the Rights pursuant to Section 2.2.
No
Rights Certificate shall be valid for any purpose until countersigned
by
the Rights Agent as aforesaid.
|
|
(c)
|
Each
Rights Certificate shall be dated the date of countersignature
thereof.
|
|
2.6
|
Registration,
Transfer and Exchange
|
|
(a)
|
After
the Separation Time, the Corporation will cause to be kept a register
(the
"Rights Register") in which, subject to such reasonable
regulations as it may prescribe, the Corporation will provide for
the
registration and transfer of Rights. The Rights Agent is hereby appointed
"Rights Registrar" for the purpose of maintaining the
Rights Register for the Corporation and registering Rights and transfers
of Rights as herein provided and the Rights Agent hereby accepts
such
appointment. 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 Subsections 2.6(d) and 3.1(b), the
Corporation will execute, and the Rights Agent will countersign,
deliver
and register, 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 valid obligations of the Corporation, and such
Rights shall be entitled to the same benefits under this Agreement
as the
Rights surrendered upon such registration of transfer or
exchange.
|
|
(d)
|
Every
Rights Certificate surrendered for registration of transfer or exchange
shall be duly endorsed, or be accompanied by a written instrument
of
transfer in form satisfactory to the Corporation or the Rights Agent,
as
the case may be, duly executed by the holder thereof or such holder's
attorney duly authorized, in writing. As a condition to the issuance
of
any new Rights Certificate under this Section 2.6, the Corporation
may
require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any
other
expenses (including the fees and expenses of the Rights Agent) in
connection therewith.
|
|
2.7
|
Mutilated,
Lost, Stolen and Destroyed Rights
Certificates
|
|
(a)
|
If
any mutilated Rights Certificate is surrendered to the Rights Agent
prior
to the Expiration Time, the Corporation shall execute and the Rights
Agent
shall countersign and deliver in exchange therefor a new Rights
Certificate evidencing the same number of Rights as did the Rights
Certificate so surrendered.
|
|
(b)
|
If
there shall be delivered to the Corporation and the Rights Agent
prior to
the Expiration Time:
|
|
(i)
|
evidence
to their reasonable satisfaction of the destruction, loss or theft
of any
Rights Certificate; and
|
|
(ii)
|
such
security or indemnity as may be reasonably required by them to save
each
of them and any of their agents
harmless,
|
then,
in
the absence of notice to the Corporation or the Rights Agent that such Rights
Certificate has been acquired by a bona fide purchaser, the Corporation shall
execute and, upon the Corporation's request the Rights Agent shall countersign
and deliver, in lieu of any such destroyed, lost or stolen Rights Certificate,
a
new Rights Certificate evidencing the same number of Rights as did the Rights
Certificate so destroyed, lost or stolen.
|
(c)
|
As
a condition to the issuance of any new Rights Certificate under this
Section 2.7, the Corporation may require the payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed
in
relation thereto and any other expenses (including the fees and expenses
of the Rights Agent) connected
therewith.
|
|
(d)
|
Every
new Rights Certificate issued pursuant to this Section 2.7 in lieu
of any
destroyed, lost or stolen Rights Certificate shall evidence a 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. As
used
in this Agreement, unless the context otherwise requires, the term
"holder" of any Rights shall mean the registered holder of such
Rights (or, prior to the Separation Time, the associated Common
Shares).
|
2.9
|
Delivery
and Cancellation of
Certificates
|
All
Rights Certificates
surrendered upon exercise or for redemption, for 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
Each
holder of Rights, by
accepting such Rights, consents and agrees with the Corporation and the Rights
Agent and with every other holder of Rights:
|
(a)
|
to
be bound by and subject to the provisions of this Agreement, as amended
from time to time in accordance with the terms hereof, in respect
of all
Rights held;
|
|
(b)
|
that,
prior to the Separation Time, each Right will be transferable only
together with, and will be transferred by a transfer of, the associated
Common Share;
|
|
(c)
|
that,
after the Separation Time, the Rights will be transferable only on
the
Rights Register as provided herein;
|
|
(d)
|
that,
prior to due presentment of a Rights Certificate (or, prior to the
Separation Time, the associated Common Share certificate) for registration
of transfer, the Corporation, the Rights Agent and any agent of the
Corporation or the Rights Agent may deem and treat the Person in
whose
name the Rights Certificate (or, prior to the Separation Time, the
associated Common Share certificate) is registered as the absolute
owner
thereof and of the Rights evidenced thereby (notwithstanding any
notations
of ownership or writing on such Rights Certificate or the associated
Common Share certificate made by anyone other than the Corporation
or the
Rights Agent) for all purposes whatsoever, and neither the Corporation
nor
the Rights Agent shall be affected by any notice to the
contrary;
|
|
(e)
|
that
such holder of Rights has waived its right to receive any fractional
Rights or any fractional Common Shares or other securities upon exercise
of a Right (except as provided
herein);
|
|
(f)
|
that,
without the approval of any holder of Rights or Common Shares 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 to cure
any
ambiguity or to correct or supplement any provision contained herein
which
may be inconsistent with the intent of this Agreement or is otherwise
defective; 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.
|
|
2.11
|
Exclusion
of Warranty by Rights
Agent
|
|
(a)
|
The
Rights Agent shall have no obligation under this Agreement to ensure
or
verify compliance with any applicable laws or regulatory requirements
on
the issue, exercise or transfer of any Rights or Common Shares issuable
upon the exercise thereof. The Rights Agent shall be entitled to
process
all proffered transfers and exercises of Rights upon the presumption
that
such transfers or exercises are permissible pursuant to all applicable
laws and regulatory requirements.
|
|
(b)
|
The
Rights Agent may assume for the purposes of this Agreement that any
address on the Register is the holder's actual address and is
determinative as to residency and that the address of any transferee
to
whom any Rights are to be registered, as shown on the transfer document,
is the transferee's residency.
|
|
(c)
|
The
Rights Agent shall have no obligation to ensure that the legends
appearing
on the Rights Certificates or Common Shares comply with the regulatory
requirements or securities laws of any applicable
jurisdiction.
|
ARTICLE
3.
ADJUSTMENTS
TO THE RIGHTS
|
3.1
|
Flip-in
Event
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(a)
|
Subject
to Subsection 3.1(b) and Section 5.1, in the event that prior to
the
Expiration Time a Flip-in Event occurs, 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
as have an aggregate Market Price on the date of the 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 if, 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).
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(b)
|
Notwithstanding
anything in this Agreement to the contrary, upon the occurrence of
any
Flip-in Event, any Rights that are or were Beneficially Owned on
or after
the earlier of the Separation Time and the Stock Acquisition Date,
or
which may thereafter be Beneficially Owned,
by:
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(i)
|
an
Acquiring Person, any Affiliate or Associate of an Acquiring Person,
any
other Person acting jointly or in concert with an Acquiring Person
or any
Associate or Affiliate of an Acquiring Person (or any Affiliate or
Associate of any such Person so acting jointly and in concert);
or
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(ii)
|
a
transferee, direct or indirect, of an Acquiring Person, any Affiliate
or
Associate of an Acquiring Person, any other Person acting jointly
or in
concert with an Acquiring Person or any Associate or Affiliate of
an
Acquiring Person (or any Affiliate or Associate of any such Person
so
acting jointly and in concert), in a transfer of Rights occurring
subsequent to the Acquiring Person becoming
such,
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shall
become null and void without any further action and any holder of such Rights
(including any transferee of, or other successor entitled to, such Rights,
whether directly or indirectly) shall thereafter have no right to exercise
such
Rights under any provisions of this Agreement and, further, shall thereafter
not
have any rights whatsoever with respect to such Rights, whether under any
provision of this Agreement or otherwise. The holder of any Rights represented
by a Rights Certificate which is submitted to the Rights Agent upon exercise
or
for registration of transfer or exchange which does not contain the necessary
certifications set forth in the Rights Certificate establishing that such Rights
are not void under this Subsection 3.1(b) shall be deemed to be an Acquiring
Person for the purposes of this Subsection 3.1(b) and such Rights shall become
null and void.
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(c)
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Any
Rights Certificate that represents Rights Beneficially Owned by a
Person
described in either of Clauses 3.1(b)(i) or 3.1(b)(ii) or transferred
to
any Nominee of any such Person, and any Rights Certificate issued
upon
transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain or will be
deemed
to contain the following legend:
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"The
Rights represented by this Rights Certificate were issued to a Person who was
an
Acquiring Person or an Affiliate or an Associate of an Acquiring Person (as
such
terms are defined in the Rights Agreement) or acting jointly or in concert
with
any of them. This Rights Certificate and the Rights represented hereby shall
be
void in the circumstances specified in Subsection 3.1(b) of the Rights
Agreement."
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 to do
so.
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(d)
|
After
the Separation Time, the Corporation shall do all such acts and things
necessary and within its power to ensure compliance with the provisions
of
this Section 3.1 including, without limitation, all such acts and
things
as may be required to satisfy the requirements of the Governing Corporate
Law, the Securities Act and the securities laws or comparable legislation
in each of the provinces of Canada and in any other jurisdiction
where the
Corporation is subject to such laws and the rules of the stock exchanges
where the Common Shares are listed at such time in respect of the
issue of
Common Shares upon the exercise of Rights in accordance with this
Agreement.
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3.2
|
Fiduciary
Duties of the Board of
Directors
|
For
clarification it is
understood that nothing contained in this Article 3 shall be considered to
affect the obligations of the Board of Directors to exercise its fiduciary
duties. Without limiting the generality of the foregoing, nothing contained
herein shall be construed to suggest or imply that the Board of Directors shall
not be entitled to recommend that holders of the Common Shares reject or accept
any Take-over Bid or take any other action including, without limitation, the
commencement, prosecution, defence or settlement of any litigation and the
submission of additional or alternative Take-over Bids or other proposals to
the
shareholders of the Corporation with respect to any Take-over Bid or otherwise
that the Board of Directors believes is necessary or appropriate in the exercise
of its fiduciary duties.
ARTICLE
4.
THE
RIGHTS AGENT
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4.1
|
General
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(a)
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The
Corporation hereby appoints the Rights Agent to act as agent for
the
Corporation and the holders of the 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
("Co-Rights Agents") as it may deem necessary or
desirable. In the event the Corporation appoints one or more Co-Rights
Agents, the respective duties of the Rights Agent and Co-Rights Agents
shall be as the Corporation may determine. The Corporation agrees
to pay
to the Rights Agent reasonable compensation for all services rendered
by
it hereunder and, from time to time, on demand of the Rights Agent,
its
reasonably incurred expenses and other disbursements in the administration
and execution of this Agreement and the exercise and performance
of its
duties hereunder, including fees and disbursements of counsel and
other
experts consulted by the Rights Agent pursuant to Subsection 4.3(a).
The
Corporation also agrees to indemnify the Rights Agent and each of
its
directors, officers, employees, agents and shareholders for, and
to hold
each of them harmless against, any loss, liability, cost, claim,
action,
damage, suit or expense, incurred without negligence, bad faith or
wilful
misconduct on the part of the Rights Agent, for anything done or
omitted
by the Rights Agent in connection with the acceptance and administration
of this Agreement, including without limitation the costs and expenses
of
defending against any claim of liability, which right to indemnification
will survive the termination of this Agreement. In the event of any
disagreement arising regarding the terms of this Agreement the Rights
Agent shall be entitled, at its option, to refuse to comply with
any and
all demands whatsoever until the dispute is settled either by written
agreement amongst the parties to this Agreement or by a court of
competent
jurisdiction.
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(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 be genuine
and to
be signed, executed and, where necessary, verified or acknowledged,
by the
proper Person or Persons.
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(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 and, at any time upon request, shall provide to
the
Rights Agent an incumbency certificate certifying the then current
officers of the Corporation.
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4.2
|
Merger,
Amalgamation, Consolidation or Change of Name of Rights
Agent
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(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 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
document
or any further act on the part of any of the parties hereto, provided
that
such corporation would be eligible for appointment as a successor
Rights
Agent under the provisions of Section 4.4. In case at the time 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.
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(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.
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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:
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(a)
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The
Rights Agent, at the Corporation's expense, 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),
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.
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(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 Chief Executive Officer, President, Chief Financial
Officer or the Secretary or Assistant Secretary of the Corporation
and
delivered to the Rights Agent; and such certificate will be full
authorization to the Rights Agent for any action taken or suffered
in good
faith by it under the provisions of this Agreement in reliance upon
such
certificate.
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(c)
|
The
Rights Agent will not be liable hereunder except for losses caused
principally and directly by its negligence, bad faith or wilful
misconduct.
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(d)
|
The
Rights Agent will not be liable for or by reason of any of the statements
of fact or recitals contained in this Agreement or in the certificates
for
Common Shares, or the Rights Certificates (except its countersignature
thereof which countersignature shall not be construed as a representation
or warranty by the Rights Agent as to the validity of this Agreement
or
the Rights Certificate(s), except the due certification thereof)
or be
required to verify the same, and all such statements and recitals
are and
will be deemed to have been made by the Corporation
only.
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|
(e)
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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) or any adjustment required under the provisions
of
Section 2.3 or responsible for the manner, method or amount of any
such
adjustment, nor will it be responsible for 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 or any
written
notice from the Corporation or any holder that a Person has become
an
Acquiring Person); 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 any Common
Shares, when issued, being duly and validly authorized, issued and
delivered as fully paid and
non-assessable.
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(f)
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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.
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(g)
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The
Rights Agent is hereby authorized and directed to accept instructions
with
respect to the performance of its duties hereunder from any individual
believed by the Rights Agent to be the Chief Executive Officer, President,
Chief Financial Officer, or the Secretary or Assistant Secretary
of the
Corporation, and to apply to such individuals for advice or instructions
in connection with its duties, and it shall not be liable for any
action
taken or suffered by it in good faith in accordance with instructions
of
any such individual. It is understood that instructions to the Rights
Agent shall, except where circumstances make it impractical 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
practicable after the giving of such
instructions.
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(h)
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The
Rights Agent and any shareholder or director, officer or employee
of the
Rights Agent may buy, sell or deal in Common Shares, Rights or other
securities of the Corporation or become pecuniarily interested in
any
transaction in which the Corporation may be interested, or contract
with
or lend money to the Corporation or otherwise act as fully and freely
as
though it were not the Rights Agent under this Agreement. Nothing
herein
shall preclude the Rights Agent from acting in any other capacity
for the
Corporation or for any other legal
entity.
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(i)
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The
Rights Agent may execute and exercise any of the rights or powers
hereby
vested in it or perform any duty hereunder either itself or by or
through
its attorneys or agents, and the Rights Agent will not be answerable
or
accountable for any act, default, omission, neglect or misconduct
of any
such attorneys or agents or for any loss to the Corporation resulting
from
any such act, default, omission, neglect or misconduct, provided
reasonable care was exercised in the selection and continued employment
thereof.
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4.4
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Change
of Rights Agent
|
The Rights Agent may resign and be discharged from its duties under this
Agreement by giving 60 days prior written notice (or such lesser notice as
is
acceptable to the Corporation) to the Corporation, to each transfer agent
of
Common Shares and to the holders of the Rights, all in accordance with Section
5.9 and at the expense of the Corporation. The Corporation may remove the
Rights
Agent by giving 30 days prior written notice to the Rights Agent, to each
transfer agent of the Common Shares and to the holders of the Rights in
accordance with Section 5.9. If the Rights Agent should resign or be removed
or
otherwise become incapable of acting, the Corporation will appoint a successor
to the Rights Agent. If the Corporation fails to make such appointment within
a
period of 30 days after such removal or after it has been notified in writing
of
such resignation or incapacity by the resigning or incapacitated Rights Agent
or
by the holder of any Rights (which holder shall, with such notice, submit
such
holder's Rights Certificate for inspection of the Corporation), then the
holder
of any Rights may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Corporation or by such a court, must be a corporation incorporated
under
the laws of Canada or a province thereof and authorized to carry on the business
of a trust company in the Province of British Columbia. After appointment,
the
successor Rights Agent will be vested with the same powers, rights, duties
and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent, upon receiving all
amounts owing to it hereunder (unless otherwise agreed by the Rights Agent),
shall deliver and transfer to the successor Rights Agent any property at
the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Corporation will file notice thereof in
writing with the predecessor Rights Agent and each transfer agent of the
Common
Shares and mail a notice thereof in writing to the holders of the Rights
in
accordance with Section 5.9. Failure to give any notice provided for in this
Section 4.4, however, or any defect therein, shall not affect the legality
or
validity of the resignation or removal of the Rights Agent or the appointment
of
the successor Rights Agent, as the case may
be.
ARTICLE
5.
MISCELLANEOUS
|
5.1
|
Redemption,
Waiver, Extension and
Termination
|
|
(a)
|
Subject
to the prior consent of the holders of Common Shares or Rights obtained
as
set forth in Subsections 5.4(a) or 5.4(b), as applicable, the Board
of
Directors acting in good faith may, at any time prior to the later
of the
Stock Acquisition Date and the Separation Time, elect to redeem all
but
not less than all of the then outstanding Rights at a redemption
price of
$0.00001 per Right, appropriately adjusted in a manner analogous
to the
applicable adjustment provided for in Section 2.3 if an event of
the type
analogous to any of the events described in Section 2.3 shall have
occurred, (such redemption price being herein referred to as the
"Redemption
Price").
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|
(b)
|
The
Board of Directors shall waive the application of Section 3.1 in
respect
of the occurrence of any Flip-in Event if the Board of Directors
has
determined in good faith, following the Stock Acquisition Date and
prior
to the Separation Time, that a Person became an Acquiring Person
by
inadvertence and without any intention to become, or knowledge that
it
would become, an Acquiring Person under this Agreement and, in the
event
that such a waiver is granted by the Board of Directors, such Stock
Acquisition Date shall be deemed not to have occurred. Any such waiver
pursuant to this Subsection 5.1(b) may only be given on the condition
that
such Person, within 14 days after the foregoing determination by
the Board
of Directors or such later date as the Board of Directors may determine
(the "Disposition Date"), has reduced its Beneficial
Ownership of Common Shares such that the Person is no longer an Acquiring
Person. If the Person remains an Acquiring Person at the Close of
Business
on the Disposition Date, then the Disposition Date shall be deemed
to be
the date of occurrence of a further Stock Acquisition Date and Section
3.1
shall apply thereto.
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(c)
|
In
the event that a Person acquires Common Shares pursuant to a Permitted
Bid
or an Exempt Acquisition referred to in Subsection 5.1(d), then the
Board
of Directors shall, immediately upon the consummation of such acquisition
and without further formality, be deemed to have
elected to redeem the Rights at the Redemption
Price.
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(d)
|
The
Board of Directors acting in good faith may, prior to the occurrence
of
the relevant Flip-in Event, upon prior written notice delivered to
the
Rights Agent, determine to waive the application of Section 3.1 to
a
Flip-in Event that may occur by reason of a Take-over Bid made by
means of
a Take-over Bid circular to all holders of record of Common Shares;
provided that, if the Board of Directors waives the application of
Section
3.1 to a particular Take-over Bid pursuant to this Subsection 5.1(d),
then
the Board of Directors shall be deemed to have waived the application
of
Section 3.1 to any other Take-over Bid made by means of a Take-over
Bid
circular to all holders of record of Common Shares 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(d).
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|
(e)
|
Subject
to the prior consent of the holders of Common Shares obtained as
set forth
in Subsection 5.4(b)(i), the Board of Directors may, 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 registered holders of Common Shares and otherwise than in
the
circumstances set forth in Subsection 5.1(b) or (c), waive the application
of Section 3.1 to such Flip-in Event. In such event, the Board of
Directors shall extend the Separation Time to a date at least 10
Business
Days subsequent to the meeting of shareholders called to approve
such
waiver.
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|
(f)
|
The
Board of Directors may, prior to the Close of Business on the tenth
Business Day following a Stock Acquisition Date or such later Business
Day
as it may from time to time determine, upon prior written notice
delivered
to the Rights Agent, waive the application of Section 3.1 to the
related
Flip-in Event; provided that the Acquiring Person has reduced its
Beneficial Ownership of Common Shares (or has entered into a contractual
arrangement with the Corporation, acceptable to the Board of Directors,
to
do so within 10 days of the date on which such contractual arrangement
is
entered into or such later date as the Board of Directors may determine)
such that, at the time the waiver becomes effective pursuant to this
Subsection 5.1(f), such Person is no longer an Acquiring Person.
In the
event of such a waiver becoming effective prior to the Separation
Time,
for the purposes of this Agreement, such Flip-in Event shall be deemed
not
to have occurred.
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(g)
|
Where
a Take-over Bid that is not a Permitted Bid Acquisition is withdrawn
or
otherwise terminated after the Separation Time has occurred and prior
to
the occurrence of a Flip-in Event, or if the Board of Directors grants
a
waiver under Subsection 5.1(f) after the Separation Time, then the
Board
of Directors may elect to redeem all the outstanding Rights at the
Redemption Price. Upon the Rights being redeemed pursuant to this
Subsection 5.1(g), all of the provisions of
this Agreement shall continue to apply as if the
Separation Time had not occurred and Rights Certificates representing
the
number of Rights held by each holder of record of Common Shares at
the
Separation Time had not been mailed to each such holder and for all
purposes of this Agreement the Separation Time shall be deemed not
to have
occurred and the Corporation shall be deemed to have issued replacement
Rights to the holders of its then outstanding Common
Shares.
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|
(h)
|
If
the Board of Directors is deemed under Subsection 5.1(c) to have
elected
or elects under Subsections 5.1 (a) or 5.1(g) to redeem the Rights,
then
the right to exercise the Rights will thereupon, without further
action
and without notice, terminate and the only right thereafter of the
holders
of Rights shall be to receive the Redemption
Price.
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|
(i)
|
Within
10 days after the Board of Directors is deemed under Subsection 5.1
(c) to
have elected or elects under Subsection 5.1 (a) or 5.1(g) to redeem
the
Rights, the Corporation shall give notice of redemption to the holders
of
the then outstanding Rights by mailing such notice to each such holder
at
his last address as it appears upon the Rights Register or, prior
to the
Separation Time, on the registry books of the transfer agent for
the
Common Shares. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice.
Each
such notice of redemption will state the method by which the payment
of
the Redemption Price will be made.
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|
5.2
|
Expiration
|
No
Person will have any rights
pursuant to this Agreement or in respect of any Right after the Expiration
Time,
except in respect of any right to receive cash, securities or other property
which has accrued at the Expiration Time and except as specified in Subsections
4.1 (a) and 4.1(b).
|
5.3
|
Issuance
of New Rights Certificates
|
Notwithstanding
any of the
provisions of this Agreement or of the Rights to the contrary, the Corporation
may, at its option, issue new Rights Certificates evidencing Rights in such
form
as may be approved by its Board of Directors to reflect any adjustment or change
in the number or kind or class of shares purchasable upon exercise of Rights
made in accordance with the provisions of this Agreement.
|
5.4
|
Supplements
and Amendment
|
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(a)
|
The
Corporation may from time to time amend, vary or delete any of the
provisions of this Agreement and the Rights prior to the date of
the
initial meeting of shareholders to confirm the Rights Plan as set
forth in
Section 5.21 without the approval of the shareholders of the Corporation
and on or after the date of such confirmation, no amendment, variation
or
deletion shall be made without the prior consent of the shareholders
of
the Corporation or holders of the Rights, subject to Subsections
5.4(b)
and 5.4(c), except that amendments, variations or deletions made
for any
of the following purposes shall not require such prior
approval:
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|
(i)
|
subject
to subsequent ratification in accordance with Subsection 5.4(b),
in order
to make such changes as are necessary in order to maintain the validity
of
this Agreement and the Rights as a result of any change in any applicable
legislation, regulations or rules;
or
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|
(ii)
|
in
order to make such changes as are necessary in order to cure any
clerical
or typographical error.
|
Notwithstanding
anything in this Section 5.4 to the contrary, no amendment, variation or
deletion shall be made to the provisions of Article 4.4 or any other provision
specifically relating to the rights or duties of the Rights Agent except with
the written concurrence of the Rights Agent thereto.
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(b)
|
Any
amendment, variation or deletion made by the Board of Directors pursuant
to Subsection 5.4(a) which is made on or after the date of shareholder
confirmation as set forth in Section 5.21 and which requires shareholder
approval shall, if made:
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|
(i)
|
prior
to the Separation Time, be submitted to the shareholders of the
Corporation at the next meeting of shareholders and the shareholders
may,
by resolution passed by a majority of the votes cast by Independent
Shareholders who vote in respect of such amendment, variation or
deletion,
confirm or reject such amendment or supplement;
or
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|
(ii)
|
after
the Separation Time, be submitted to the holders of Rights at a meeting
to
be held on a date not later than the date of the next meeting of
shareholders of the Corporation and the holders of Rights may, by
resolution passed by a majority of the votes cast by the holders
of Rights
which have not become void pursuant to Subsection 3.1(b) who vote
in
respect of such amendment, variation or deletion, confirm or reject
such
amendment or supplement.
|
Any
amendment, variation or deletion subject to shareholder approval shall be
effective from the later of the date of the consent of the holders of Common
Shares or Rights, as applicable, adopting such amendment, variation or deletion
and the date of approval thereof by the Exchange (except in the case of another
amendment, variation or deletion referred to in Clauses 5.4(a)(i), which shall
be effective from the later of the date of the resolution of the Board of
Directors adopting such amendment, variation or deletion and the date or
approval thereof by the Exchange and shall continue in effect until it ceases
to
be effective (as in this Subsection 5.4(b) described) and, where such amendment,
variation or deletion is confirmed, it shall continue in effect in the form
so
confirmed). If an amendment, variation or deletion pursuant to Clauses
5.4(a)(i), 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, variation or deletion shall cease to be effective from and after
the
termination of the meeting at which it was rejected or to which it should have
been but was not submitted or from and after the date of the meeting of holders
of Rights that should have been but was not held, and no subsequent resolution
of the Board of Directors to amend, vary or delete any provision of this
Agreement to substantially the same effect shall be effective until confirmed
by
the shareholders or holders of Rights, as the case may be.
|
(c)
|
For
greater certainty, neither the exercise by the Board of Directors
of any
power or discretion conferred on it hereunder nor the making by the
Board
of Directors of any determination or the granting of any waiver it
is
permitted to make or give hereunder shall constitute an amendment,
variation or deletion of the provisions of this Agreement or the
Rights,
for purposes of this Section 5.4 or
otherwise.
|
|
(d)
|
The
approval, confirmation or consent of the holders of Rights with respect
to
any matter arising hereunder shall be deemed to have been given if
the
action requiring such approval, confirmation or consent is authorized
by
the affirmative votes of the holders of Rights present or represented
at
and entitled to be voted at a meeting of the holders of Rights and
representing a majority of the votes cast in respect thereof. For
the
purposes hereof, each outstanding Right (other than Rights which
are void
pursuant to the provisions hereof or which, prior to the Separation
Time,
are held otherwise than by 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 bylaws and the Governing Corporate Law with respect
to
meetings of shareholders of the
Corporation.
|
|
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, in lieu of such fractional Rights,
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.
|
|
(b)
|
The
Corporation shall not be required to issue fractional Common Shares
upon
exercise of the Rights or to distribute certificates that 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.
|
|
(c)
|
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).
|
|
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 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) or to receive dividends or subscription rights or
otherwise, until such Rights shall have been exercised in accordance with the
provisions hereof.
|
5.8
|
Notice
of Proposed Actions
|
In
case the Corporation proposes
after the Separation Time and prior to the Expiration Time to effect the
liquidation, dissolution or winding up of the Corporation or the sale of all
or
substantially all of the Corporation's assets, then, in each such case, the
Corporation shall give to each holder of a Right, in accordance with Section
5.9, a notice of such proposed action, which shall specify the date on which
such liquidation, dissolution, or winding up is to take place, and such notice
shall be so given at least 20 Business Days prior to the date of the taking
of
such proposed action by the Corporation.
|
5.9
|
Notices
|
Notices
or demands authorized or
required by this Agreement to be given or made to or by the Rights Agent, the
holder of any Rights or the Corporation will be sufficiently given or made
and
shall be deemed to be received if delivered or sent by first-class mail, postage
prepaid, or by facsimile machine or other means of printed telecommunication,
charges prepaid and confirmed in writing by mail or delivery, addressed (until
another address is filed in writing with the Rights Agent or the Corporation,
as
applicable), as follows:
|
(a)
|
if
to the Corporation:
|
X.X.
Xxx 00000
#0000-000
Xxxx Xxxxxxx
Xxxxxx
Xxxxxxxxx,
XX X0X 0X0
Attention: President
Facsimile
No.: 000-000-0000
|
(b)
|
if
to the Rights Agent:
|
Computershare
Investor Services
Inc.
000
Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxx,
XX X0X 0X0
Attention: General
Manager, Client Services
Facsimile
No.: (000)-000-0000
|
(c)
|
if
to the holder of any Rights, to the address of such holder as it
appears
on the Rights Register or, prior to the Separation Time, on the registry
books of the Corporation for the Common
Shares.
|
Any
notice which is mailed or
sent or delivered in the manner herein provided for shall be deemed given and
received whether or not the holder receives the notice.
|
5.10
|
Costs
of Enforcement
|
The Corporation agrees that if the Corporation, or any other Person the
securities of which are purchasable upon exercise of Rights, fails to fulfill
any of its obligations pursuant to this Agreement, then the Corporation or
such
Person will reimburse the holder of any Rights for the costs and expenses
(including legal fees) incurred by such holder in actions to enforce his rights
pursuant to any Rights or this Agreement.
|
5.11
|
Regulatory
Approvals
|
Any
obligation of the
Corporation or action or event contemplated by this Agreement, shall be subject
to applicable law and to the receipt of any requisite approval or consent from
any governmental or regulatory authority including, without limitation, the
Exchange. Without limiting the generality of the foregoing, any issuance or
delivery of debt or equity securities (other than non-convertible debt security)
of the Corporation upon the exercise of Rights and any amendment to this
Agreement shall be subject to the applicable prior consent of the stock
exchanges on which the Corporation is from time to time listed.
Unless provided with written notice to the contrary, the Rights Agent is
entitled to assume that all such necessary consents and approvals have been
obtained.
|
5.12
|
Declaration
as to Non-Canadian and Non-United States
Holders
|
If, upon the advice of outside 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,
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 any province or territory thereof and of 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.
|
5.13
|
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.
|
5.14
|
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; this Agreement shall
be
for the sole and exclusive benefit of the Corporation, the Rights Agent and
the
holders of the Rights.
|
5.15
|
Shareholder
Review
|
At or prior to the first annual meeting of shareholders of the Corporation
following the third anniversary of the date of this Agreement, 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. If a majority of the votes cast by Independent Shareholders who vote
in respect of such resolution are voted against the continued existence of
this
Agreement, then the Board of Directors shall, immediately upon the confirmation
by the chairman of such shareholders' meeting of the result of the vote on
such
resolution and without further formality, be deemed to have elected to redeem
the Rights at the Redemption Price.
|
5.16
|
Determinations
and Actions by the Board of
Directors
|
All actions, calculations, interpretations and determinations (including all
omissions with respect to the foregoing) which are done or made by the Board
of
Directors, in good faith:
|
(a)
|
may
be relied upon by the Rights Agent (and in the case of reliance by
the
Rights Agent, the good faith of the Board of Directors shall be presumed);
and
|
|
(b)
|
shall
not subject the Board of Directors to any liability to the holders
of the
Rights or to any other parties.
|
|
5.17
|
Governing
Law
|
This Agreement and the Rights issued hereunder shall be deemed to be a contract
made under the laws of the Province of British Columbia and for all purposes
will be governed by and construed in accordance with the laws of such
province applicable to contracts to be made and performed entirely within such
province.
|
5.18
|
Language
|
Les parties aux présentes ont exigé que la présente convention ainsi que tous
les documents et avis qui s'y rattachent ou qui en coulent soient rédiges en
langue anglaise. The parties hereto have required that this Agreement and all
documents and notices related thereto or resulting therefrom be drawn up in
English.
|
5.19
|
Counterparts
|
This Agreement may be executed in any number of counterparts and each of such
counterparts will for all purposes be deemed to be an original, and all such
counterparts shall together constitute one and the same instrument.
|
5.20
|
Severability
|
If any term or provision hereof or the application thereof to any circumstance
is, in any jurisdiction and to any extent, invalid or unenforceable, such term
or provision will be ineffective only 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.
|
5.21
|
Effective
Date
|
This
Agreement is effective as
of and from July 23, 2007, subject to receipt of all required regulatory
approvals. If the Rights Plan is not confirmed by resolution passed by a
majority of the votes cast by Independent Shareholders who vote in respect
of
such Rights Plan at a meeting to be held not later than six months from the
date
of this Agreement, then this Agreement and any outstanding Rights shall be
of no
further force and effect.
|
5.22
|
Time
of the Essence
|
Time
shall be of the essence
hereof.
IN
WITNESS WHEREOF, the parties
hereto have caused this Agreement to be duly executed effective the 23rd day of
July,
2007.
|
|
|
|
By:
/s/ W. Xxxxx Xxxxx
|
|
|
By:
/s/ Xxxxxxx
XxXxxxxxx
|
|
|
COMPUTERSHARE
INVESTOR SERVICES INC.
|
|
|
By:
/s/ Xxxx Xxxxxx
|
|
|
By:
/s/ Xxxxxx Xxxxxxxxxx
|
SCHEDULE
A
to
a
Shareholder Rights Plan Agreement made as of July 23, 2007, between Southwestern
Resources Corp. and Computershare Investor Services Inc.
[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 SHAREHOLDER RIGHTS PLAN AGREEMENT. UNDER CERTAIN CIRCUMSTANCES
(SPECIFIED IN SUBSECTION 3.1(b) OF SUCH AGREEMENT), RIGHTS BENEFICIALLY OWNED
BY
AN ACQUIRING PERSON, CERTAIN RELATED PARTIES OF AN ACQUIRING PERSON OR A
TRANSFEREE OF AN ACQUIRING PERSON OR ANY SUCH RELATED PARTIES WILL BECOME VOID
WITHOUT FURTHER ACTION.
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 made as of July 23, 2007,
as
such agreement may from time to time be amended, restated, varied or replaced
(the "Rights Agreement") between Southwestern Resources Corp.,
a British Columbia corporation, (the "Corporation") and
Computershare Investor Services Inc., a trust company incorporated under the
laws of the 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 and prior
to the Expiration Time (as such terms are defined in the Rights Agreement),
one
fully paid common share of the Corporation (a "Common Share")
at the Exercise Price referred to below, upon presentation and surrender of
this
Rights Certificate, together with the Form of Election to Exercise appropriately
completed and duly executed, to the Rights Agent at its principal office in
Vancouver, Canada. Until adjustment thereof in certain events as provided in
the
Rights Agreement, the Exercise Price shall be $100.00 per Right (payable in
cash, certified cheque or money order payable to the order of the
Corporation).
The
number of Common Shares which may be purchased for the Exercise Price is subject
to adjustment as set forth 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 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 holder of the Rights Certificates. By acceptance hereof,
the
holder is deemed to accept, and agrees to be bound by the terms of the Rights
Agreement. 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 the principal office of
the
Rights Agent in Vancouver, British Columbia may be exchanged for another Rights
Certificate or Rights Certificates of like tenor 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.
In
certain circumstances described in the Rights Agreement, each Right evidenced
hereby may be adjusted so as to entitle the registered holder thereof to
purchase or receive securities or shares in the capital of the Corporation
other
than Common Shares or more or less than one Common Share (or a combination
thereof), all as provided in the Rights Agreement. The number of Common Shares
which may be purchased for the Exercise Price is subject to adjustment as set
forth in the Rights Agreement.
Subject
to the provisions of the Rights Agreement, the Rights evidenced by this
Certificate may be redeemed by the Corporation at a redemption price of $0.00001
per Right subject to adjustment in certain events.
No
fractional Common Shares will be issued upon the exercise of any Right or 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 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 any meeting 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 for any purpose until it shall have been
countersigned by the Rights Agent.
WITNESS
the facsimile signature of the
proper officers of the Corporation.
Date:
|
By:
By:
Countersigned:
|
|
|
COMPUTERSHARE
INVESTOR SERVICES INC.
By:
|
FORM
OF ELECTION TO EXERCISE
The
undersigned hereby irrevocably
elects to exercise whole Rights represented by this Rights
Certificate to purchase the Common Shares issuable upon the exercise of such
Rights and requests that certificates for such Common Shares be issued in the
name of and delivered to:
Rights
Certificate
No.
Name
Address
City and Province
Social Insurance No. or other taxpayer
identification
numbers
If
such number of Rights shall not be
all the Rights evidenced by this Rights Certificate, a new Rights Certificate
for the balance of such Rights shall be registered in the name of and delivered
to:
Name
Address
City and Province
Social Insurance No. or other taxpayer
identification
numbers
Date:
Signature
Written
Signature
Guaranteed (Signature
must correspond to name as written
upon
the
face of this Rights Certificate
in every particular,
without
alteration
or enlargement or any change
whatsoever)
Signature
must be guaranteed by a
Canadian chartered bank or trust company, a member of a recognized stock
exchange in Canada or a member of the Securities Transfer Association Medallion
(STAMP) Program.
(To
be
completed by the holder if true)
The
undersigned hereby represents, for
the benefit of the Corporation and all holders of Rights and Common Shares,
that
the Rights evidenced by this Rights Certificate are not and, to the knowledge
of
the undersigned, have never been, Beneficially Owned by an Acquiring Person
or
by an Affiliate or Associate of an Acquiring Person, any other Person acting
jointly or in concert
with an Acquiring Person or any Affiliate or Associate of any such other Person
(as such terms are defined in the Rights Agreement).
Signature
NOTICE
In
the event that the certifications set forth above in the Form of Election to
Exercise and Assignment are not completed, the Corporation shall deem the
Beneficial Owner of the Rights represented by this Rights Certificate to be
an
Acquiring Person (as defined in the Rights Agreement) and, accordingly, such
Rights shall be null and void.
FORM
OF ASSIGNMENT
FOR
VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto
(Please print name and address of transferee)
the
Rights represented by this Rights Certificate, together with all right, title
and interest therein.
|
Date:
|
Signature:
|
|
Written
Signature Guaranteed
|
(Signature
must correspond to name as written upon
the
face of this Rights Certificate in every particular,
without
alteration or enlargement or any change
whatsoever)
|
Signature
must be guaranteed by a
Canadian chartered bank or trust company, a member of a recognized stock
exchange in Canada or a member of the Securities Transfer Association Medallion
(STAMP) Program.
(To
be
completed by the assignor if true)
The
undersigned hereby represents, for
the benefit of the Corporation and all holders of Rights and Common Shares,
that
the Rights evidenced by this Rights Certificate are not and, to the knowledge
of
the undersigned have never been, Beneficially Owned by an Acquiring Person
or by
an Affiliate or Associate of an Acquiring Person, any other Person acting
jointly or in concert with an Acquiring Person or any Affiliate or Associate
of
any such other Person (as such terms are defined in the Rights
Agreement).
Signature
(Please
print name below
signature)
NOTICE
In
the event that the certifications set forth above in the Form of Election to
Exercise and Assignment are not completed, the Corporation shall deem the
Beneficial Owner of the Rights represented by this Rights Certificate to be
an
Acquiring Person (as defined in the Rights Agreement) and, accordingly, such
Rights shall be null and void.
