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EXHIBIT 10.10
SHAREHOLDER PROTECTION RIGHTS PLAN AGREEMENT
DATED AS OF
FEBRUARY 8, 1994
BETWEEN
REPAP ENTERPRISES INC.
AND
MONTREAL TRUST COMPANY
AS RIGHTS AGENT
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TABLE OF CONTENTS
PAGE
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ARTICLE I -- INTERPRETATION
1.1 Certain Definitions......................................... 1
1.2 Currency.................................................... 12
1.3 Headings.................................................... 12
1.4 Grandfather Provisions...................................... 12
ARTICLE 2 -- THE RIGHTS
2.1 Legend on Common Share Certificates......................... 13
2.2 Initial Exercise Price; Exercise of Rights; Detachment of 14
Rights......................................................
2.3 Adjustments to Exercise Price; Number of Rights............. 17
2.4 Date on Which Exercise is Effective......................... 21
2.5 Execution, Authentication, Delivery and Dating of Rights 22
Certificates................................................
2.6 Registration, Transfer and Exchange......................... 22
2.7 Mutilated, Destroyed, Lost and Stolen Rights Certificates... 23
2.8 Persons Deemed Owners....................................... 24
2.9 Delivery and Cancellation of Certificates................... 24
2.10 Agreement of Rights Holders................................. 24
2.11 Rights Certificate Holder not Deemed a Shareholder.......... 25
ARTICLE 3 -- FLIP-IN EVENT
3.1 Flip-in Event............................................... 25
3.2 Exchange Option............................................. 26
ARTICLE 4 -- THE RIGHTS AGENT
4.1 General..................................................... 28
4.2 Merger or Amalgamation or Change of Name of Rights Agent.... 29
4.3 Duties of Rights Agent...................................... 29
4.4 Change of Rights Agent...................................... 31
ARTICLE 5 -- MISCELLANEOUS
5.1 Redemption and Waiver....................................... 32
5.2 Expiration.................................................. 33
5.3 Issuance of New Rights Certificates......................... 33
5.4 Supplements and Amendments.................................. 34
5.5 Fractional Rights and Fractional Shares..................... 35
5.6 Rights of Action............................................ 35
5.7 Regulatory Approvals........................................ 36
5.8 Declaration as to Non-Canadian and Non-U.S. Holders......... 36
5.9 Notices..................................................... 36
5.10 Costs of Enforcement........................................ 37
5.11 Successors.................................................. 38
5.12 Benefits of this Agreement.................................. 38
5.13 Governing Law............................................... 38
5.14 Severability................................................ 38
5.15 Effective Date.............................................. 38
5.16 Determinations and Actions by the Board of Directors........ 38
5.17 Time of the Essence......................................... 39
5.18 Execution in Counterparts................................... 39
Exhibit A -- Form of Rights Certificate
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SHAREHOLDER PROTECTION RIGHTS PLAN AGREEMENT
MEMORANDUM OF AGREEMENT, dated as of the 8th day of February, 1994,
between Repap Enterprises Inc., a corporation incorporated under the Canada
Business Corporations Act (the "Corporation"), and Montreal Trust Company, a
trust company incorporated under the laws of Canada (the "Rights Agent");
WHEREAS in order to implement the adoption of a shareholder protection
rights plan as established by this Agreement, the Board of Directors of the
Corporation (the "Board of Directors") has:
(a) authorized effective 5:00 p.m. (Montreal time) on February 8, 1994
the issuance of one Right (as hereinafter defined) in respect of each
Common Share (as hereinafter defined) outstanding at the Record Time
(as hereinafter defined); and
(b) authorized the issuance of one Right in respect of each Common Share
issued after the Record Time and prior to the earlier of the
Separation Time and the Expiration Time (as hereinafter defined); and
WHEREAS each Right entities the holder thereof, after the Separation Time,
to purchase securities or other assets of the Corporation pursuant to the terms
and subject to the conditions set forth herein; and
WHEREAS the Corporation desires to appoint the Rights Agent to act on
behalf of the Corporation, and the Rights Agent is willing to so act, in
connection with the issuance, transfer, exchange and replacement of Rights
Certificates (as hereinafter defined), the exercise of Rights and other matters
referred to herein;
NOW THEREFORE, in consideration of the premises and the respective
covenants and agreements set forth herein, subject to such covenants and
agreements, the parties hereby agree as follows:
ARTICLE I
INTERPRETATION
1.1 Certain Definitions
For purposes of this Agreement, the following terms have the meanings
indicated:
"ACQUIRING PERSON" shall mean, subject to Section 1.4 hereof, any Person
who, at any time after the date hereof and prior to the Expiration Time, is the
Beneficial Owner of 20 per cent or more of the outstanding Voting Shares,
specifically excluding the following Persons:
(i) the Corporation or any Subsidiary of the Corporation, any employee
benefit plan or trust for the benefit of employees of the Corporation
or any Subsidiary of the Corporation, or any Person organized,
appointed or established by the Corporation for or pursuant to the
terms of any such plan or trust and acting in such capacity; and
(ii) any Person who becomes the Beneficial Owner of [20] per cent or
more of the outstanding Voting Shares as a result of one or any
combination of (A) an acquisition or redemption by the Corporation of
Voting Shares which, by reducing the number of Voting Shares
outstanding, increases the proportionate number of Voting Shares
Beneficially Owned by such Person to [20] per cent or more of the
Voting Shares then outstanding, (B) Permitted Bid Acquisitions, or
(C) Exempt Acquisitions; provided, however, that if a Person becomes
the Beneficial Owner of 20 per cent or more of the outstanding Voting
Shares by reason of one or any combination of the operation of parts
(A), (B) or (C) above and, after so becoming, becomes the Beneficial
Owner of any additional Voting Shares other than pursuant to
Permitted Bid Acquisitions or through Exempt Acquisitions or employee
stock option or purchase plans, or as a result of a stock dividend, a
stock split or other event pursuant to which such Person receives or
acquires Voting Shares on the same pro rata basis as all other
holders of Voting Shares of the same class ("Pro Rata Acquisitions"),
then as of the date of such additional Beneficial Ownership such
Person shall become an "Acquiring Person";
"AFFILIATE" shall have the meaning ascribed to such term in Section 1(2)
of the Securities Act (Quebec);
"AGREEMENT" shall mean this shareholder protection rights plan agreement
dated as of February 8, 1994 between the Corporation and the Rights Agent, as
amended or supplemented from time to time; "hereof", "herein", "hereto" and
similar expressions mean and refer to this Agreement as a whole and not to any
particular part of this Agreement;
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"ANNUAL CASH DIVIDENDS" shall mean cash dividends paid in any fiscal year
of the Corporation on its Common Shares to the extent that such cash dividends
do not exceed, in the aggregate, the greatest of:
(i) 200 per cent of the aggregate amount of cash dividends declared
payable by the Corporation on its Common Shares in its immediately
preceding fiscal year;
(ii) 300 per cent of the arithmetic mean of the aggregate amounts of the
annual cash dividends declared payable by the Corporation on its
Common Shares in its three immediately preceding fiscal years; and
(iii) 100 per cent of the aggregate consolidated net income of the
Corporation, before extraordinary items, for its immediately
preceding fiscal year;
"ASSOCIATE" shall have the meaning ascribed to such term in the Securities
Act (Quebec), provided that a Fiduciary is not an Associate of a trust or trusts
for which the Fiduciary is acting as trustee or in a similar capacity and where
the Fiduciary has no investment authority (including none of the rights of
control or direction) and no beneficial interest in the securities owned by the
other person and the trust or trusts are not otherwise affiliated with or acting
jointly or in concert with the Fiduciary or each other;
A Person shall be deemed the "BENEFICIAL OWNER" of, and to have
"BENEFICIAL OWNERSHIP" of, and to "BENEFICIALLY OWN":
(i) any securities as to which such Person or any of such Person's
Affiliates or Associates is the direct or indirect beneficial owner
and for this purpose a Person shall be deemed to be a beneficial
owner of all securities (A) owned by a partnership of which the
Person is a partner, (B) owned by a trust of which the Person is a
beneficiary, (C) owned jointly or in common with others and (D) of
which the Person may be deemed to be the beneficial owner (whether or
not of record) pursuant to the provisions of the Canada Business
Corporations Act, the Securities Act (Quebec), including Sections II
1 and 1 12 thereof, or Rule 13d-3 or 13d-5 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (or pursuant to
any comparable or successor laws, regulations or rules or, if such
laws, regulations or rules shall be rescinded and there shall be no
comparable or successor laws, regulations or rules, pursuant to the
provisions of the Canada Business Corporations Act, the Securities
Act (Quebec) or Rule 13d-3 or 13d-5 under the Exchange Act as in
effect on the date of this Agreement);
(ii) any securities as to which such Person or any of such Person's
Affiliates or Associates has either or both (A) the right to acquire
(whether such right is exercisable immediately or after the lapse or
passage of time and whether or not on condition or the happening of
any contingency or otherwise) pursuant to any agreement, arrangement,
pledge or understanding, whether or not in writing (other than
customary agreements with and between underwriters and banking group
or selling group members with respect to a bona fide public offering
of securities and other than pledges of securities in the ordinary
course of business which meet all of the conditions specified in Rule
13d-3(d)(3) under the 1934 Exchange Act), or upon the exercise of any
convertible debentures, conversion right, exchange right, share
purchase right (other than the Rights), warrant or option, or
otherwise or (B) the right to vote such security (whether such right
is exercisable immediately or after the lapse or passage of time and
whether or not on condition or the happening of any contingency or
otherwise), pursuant to any proxy agreement, arrangement or
understanding (whether or not in writing) or otherwise;
(iii) any securities which are Beneficially Owned within the meaning of
clauses (i) or ii) by any other Person with which a Person or any of
its Affiliates or Associates is acting in concert or jointly on has
any proxy agreement, arrangement or understanding (whether or not in
writing) with respect to or for the purpose of acquiring, holding,
voting or disposing of any Voting Shares or acquiring, holding or
disposing of a significant portion of the property or assets of the
Corporation or any Subsidiary of the Corporation, other than (A)
customary agreements with and between underwriters and banking group
or selling group members with respect to a bona fide public offering
of securities or (B) agreements between a Fiduciary, acting as such,
and another Person, where the Fiduciary has no investment authority
(including none of the rights of control or direction) and no
beneficial interest in the securities owned by the other Person;
provided, however, that a Person shall not be deemed the "Beneficial Owner" or
to have "Beneficial Ownership" of,
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or to "Beneficially Own", any security:
(A) solely because such security has been deposited or tendered pursuant
to any Take-over Bid made by such Person or made by any of such
Person's Affiliates or Associates until such deposited or tendered
security has been taken up or paid for, whichever shall first occur;
or
(B) solely because such Person or any of such Person's Affiliates or
Associates has or shares the power to vote or direct the voting of
such security pursuant to a revocable proxy given in response to a
public proxy solicitation made pursuant to and in accordance with the
applicable rules and regulations under the Canada Business
Corporations Act or the Securities Act (Quebec); or
(C) solely because such Person or any of such Person's Affiliates or
Associates has or shares the power to vote or direct the voting of
such security in connection with or in order to participate in a
public proxy solicitation made or to be made pursuant to and in
accordance with the applicable rules and regulations referred to in
(B) above; or
(C) held for or pursuant to the terms of any employee stock ownership or
other employee benefit plan of the Corporation or a wholly owned
Subsidiary of the Corporation.
For purposes of this Agreement, in determining the percentage of the
outstanding Voting Shares with respect to which a Person is or is deemed to be
the Beneficial Owner, all Voting Shares as to which such Person is deemed the
Beneficial Owner shall be deemed outstanding;
"BOARD OF DIRECTORS" shall mean the board of directors of the Corporation
or any duly constituted and empowered committee thereof;
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a day
on which banking institutions in Montreal are authorized or obligated by law or
executive order to close;
"CANADA BUSINESS CORPORATIONS ACT" shall mean the Canada Business
Corporations Act, R.S.C. 1985, c. C-44, as amended, and the regulations made
thereunder and any comparable or successor laws or regulations thereto;
"CANADIAN DOLLAR EQUIVALENT" of any amount which is expressed in United
States dollars shall mean on any day the Canadian dollar equivalent of such
amount determined by reference to the U.S.-Canadian Exchange Rate on such date;
"CLOSE OF BUSINESS" on any given date shall mean the time on such date
(or, if such date is not a Business Day, the time on the next succeeding
Business Day) at which the principal transfer office in Montreal of the transfer
agent for the Common Shares (or, after the Separation Time, the principal
transfer office in Montreal of the Rights Agent) closes to the public;
"CDN" shall mean the trade reporting and quotation system for over-the
counter trading operated by The Canadian Dealing Network Inc.;
"COMMON SHARES" shall mean the subordinate voting shares and multiple
voting shares in the capital of the Corporation and any other shares of the
Corporation into which such shares may be subdivided, consolidated, reclassified
or changed, and so on from time to time, except in the case of clauses 2.2 (a),
(d), (e) and (g) where "COMMON SHARE" shall mean the subordinate voting shares
in the capital of the Corporation and any other shares of the Corporation into
which such shares may be subdivided, consolidated, reclassified or changed, and
so on from time to time;
"CO-RIGHTS AGENTS" shall have the meaning ascribed thereto in clause
4.1(a);
"ELECTION TO EXERCISE" shall have the meaning ascribed thereto in clause
2.2(d);
"EXEMPT ACQUISITIONS" shall mean share acquisitions in respect of which
the Board of Directors has waived the application of Section 3.1 pursuant to the
provisions of clause 5.1(b) or clause 5.1(c) or which were made on or prior to
the date of this Agreement;
"EXERCISE PRICE" shall mean, as of any date, the price at which a holder
may purchase the securities issuable upon exercise of one whole Right which,
until adjustment thereof in accordance with the terms hereof and in particular
in accordance with sections 2.3 and 3.1 hereof, shall be $25;
"EXPANSION FACTOR" shall have the meaning ascribed thereto in clause
2.3(a);
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"EXPIRATION TIME" shall mean the earlier of:
(i) the Termination Time; or
(ii) the close of business on February 8, 1999 being the fifth year
after the date hereof;
"FIDUCIARY" shall mean a trust company registered under the trust company
legislation of Canada or any province thereof, a trust company organized under
the laws of any state of the United States, a portfolio manager registered under
the securities legislation of one or more provinces of Canada or an investment
adviser registered under the United States or any state of the United States;
"FLIP-IN EVENT" shall mean a transaction in or pursuant to which any
Person becomes an Acquiring Person;
"GRANDFATHERED PERSON", and "GRANDFATHERED BIDDER" shall have the
respective meanings ascribed thereto in Section 1.4;
"HOLDER" shall have the meaning ascribed thereto in Section 2.8;
"MARKET PRICE" per share of any securities on any date of determination
shall mean the average of the daily closing prices per share of such securities
(determined as described below) on each of the 20 consecutive Trading Days
through and including the Trading Day immediately preceding such date; provided,
however, that if an event of a type analogous to any of the events described in
Section 2.3 hereof shall have caused the closing prices used to determine the
Market Price on any Trading Days not to be fully comparable with the closing
price on such date of determination or, if the date of determination is not a
Trading Day, on the immediately preceding Trading Day, each such closing price
so used shall be appropriately adjusted in a manner analogous to the applicable
adjustment provided for in Section 2.3 hereof in order to make it fully
comparable with the closing price, on such date of determination or, if the date
of determination is not a Trading Day, on the immediately preceding Trading Day.
The closing price per share of any securities on any date shall be (i) the
closing board lot sale price or, if such price is not available, the average of
the closing-bid and asked prices, for each share as reported by the stock
exchange on which the greater number of shares has been traded on such day or if
the shares are listed only on one stock exchange at that time, that stock
exchange, or (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 any stock exchange,
the closing board lot sale price or, if such price is not available, the average
of the closing bid and asked prices, for each share as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the securities exchange in Canada. or the United States
on which the Common Shares are primarily traded, 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 securities exchange in Canada or the United States or
on any consolidated reporting system, the last quoted price, or if not so
quoted, the average of the high bid and low asked prices for each share of such
securities in the over-the-counter market, as reported by NASDAQ or, if the
securities are not quoted on NASDAQ, as reported by CDN or such other system
then in use, or (iv) if on any such date the securities are not quoted by any
such organizations 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 if on any such date
the securities are not traded in the over-the-counter market, the closing price
per share of such securities on such date shall mean the fair value per share of
securities on such date as determined in good faith by the Board of Directors,
after consultation with a nationally or internationally recognized investment
dealer or investment banker. The Market Price shall be expressed in Canadian
dollars and if initially determined in respect of any day forming part of the 20
consecutive trading day period in United States dollars, such amount shall be
translated into Canadian dollars at the Canadian Dollar Equivalent thereof.
Notwithstanding the foregoing, where the Board of Directors is satisfied that
the Market Price of securities as determined herein was affected by improper
manipulation, the Board of Directors may, acting in good faith, determine the
Market Price of securities, such determination to be based on a finding as to
the price of which a holder of securities of that class could reasonably have
expected to dispose of his securities immediately prior to the relevant date
excluding any change in price reasonably attributable to the improper
manipulation;
"NASDAQ" shall mean the National Association of Dealers, Inc. Automated
Quotation System;
"1933 SECURITIES ACT" shall mean the Securities Act of 1933 of the United
States, as amended, and the rules and regulations thereunder, and any successor
laws or regulations thereto;
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"1934 EXCHANGE ACT" shall mean the Securities Exchange Act of 1934 of the
United States, as amended, and the rules and regulations thereunder, and any
successor laws or regulations thereto;
"NOMINEE" shall have the meaning ascribed thereto in clause 2.2(c);
"OFFER TO ACQUIRE" shall include:
(i) an offer to purchase, or a solicitation of an offer to sell, Voting
Shares; and
(ii) an acceptance of an offer to sell Voting Shares, whether or not
such offer to sell has been solicited;
or any combination thereof, and the Person accepting an offer to sell shall be
deemed to be making an Offer to Acquire to the Person that made the offer to
sell;
"OFFEROR" shall mean a Person who has announced an intention to make or
who has made a Take-over Bid;
"OFFEROR'S SECURITIES" means Voting Shares Beneficially Owned by an
Offeror;
"PERMITTED BID" means a Take-over Bid made in compliance with, and not on
a basis which is exempt from or otherwise not subject to, the provisions of Part
XVII of the Canada Business Corporations Act and the regulations thereunder, the
provisions of Title IV of the Securities Act (Quebec) and the regulations
thereunder (or such comparable or successor laws or regulations or, if such
provisions shall be repealed and there shall be no comparable or successor laws
or regulations, pursuant to such provisions as in effect on the date of this
Agreement) and in compliance with all other applicable securities laws and
regulations, subject to any exemptions ordered or granted for purposes of
uniformity, and which also complies with the following additional provisions:
(i) the Take-over Bid is made for all Voting Shares to all holders of
record of Voting Shares wherever resident as registered on the books
of the Corporation and the time of expiry of the Take-over Bid does
not occur prior to a date which is not less than 90 days following
the Take-over Bid;
(ii) subject to clause 1.4(b) hereof, the Offeror does not at the
commencement of nor at any time during the current, of the Take-over
Bid Beneficially Own more than 5 per cent of the outstanding Voting
Shares; the Take-over Bid contains, and the take up and payment for
securities tendered or deposited is subject to, an irrevocable and
unqualified provision that no Voting Shares will be taken up or paid
for pursuant to the Take-over Bid prior to the close of business on a
date which is not less than 90 days following the date of the
Take-over Bid;
(iv) the Take-over Bid contains irrevocable and unqualified provisions
that all Voting Shares may be deposited pursuant to the Take-over Bid
at any time prior to the close of business on the date referred to in
clause (iii) hereof and that all Voting Shares deposited pursuant to
the Take-over Bid may be withdrawn at any time prior to the close of
business on a date which is not less than 90 days following the date
of the Take-over Bid;
(v) the Take-over Bid contains an irrevocable and unqualified condition,
which for greater certainty may not be waived by the Offeror, and
which may not be extended without the prior written approval of the
Corporation, that not less than 50 per cent of the then outstanding
Voting Shares, other than Offeror's Securities, must be deposited to
the Take-over Bid and not withdrawn at the close of business on the
80th day following the date of the Take-over Bid, and the Offeror
shall publicly announce and advise the Corporation forthwith and in
any event not more than one Business Day thereafter whether or not
such condition has been satisfied;
(vi) the Offeror shall provide the Rights Agent, within two Business
Days of the announcement of the Take-over Bid, with a list of all the
Offeror's Securities together with the particulars of the
registration of all such securities and an undertaking to update such
list on a daily basis during the currency of the Take-over Bid to
reflect any changes occurring or to occur in such Beneficial
Ownership, and shall continually perform such obligation;
(vii) the Offeror, or any of its Affiliates or Associates, or any Person
acting jointly or in concert with the Offeror or any of its
Affiliates or Associates in connection with the Take-over Bid, shall
not have entered into either prior to the commencement of the
Take-over Bid nor at any time during the currency thereof any
agreement, commitment or understanding, whether formal or informal,
with a Person who Beneficially Owns 20 per cent or more of the
outstanding Voting Shares with respect to the Voting Shares
Beneficially Owned by such Person; and
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(viii) the Take-over Bid is made on terms and conditions that comply with,
and which do not and will not, upon its completion, result in the
Corporation or any Subsidiary of the Corporation being in default
under, or in contravention of, any applicable laws; provided that,
for greater certainty, the Offeror shall be entitled to withdraw its
Take-over Bid at any time prior to the termination thereof should it
be otherwise entitled to do so under applicable law;
"PERMITTED BID ACQUISITIONS" shall mean share acquisitions made pursuant
to a Permitted Bid;
"PERSON" shall mean an individual, body corporate, partnership, syndicate
or other form of unincorporated association, government, government agency or
instrumentality, entity or group whether or not having legal personality and any
of the foregoing acting in any derivative, representative or fiduciary capacity;
"PRO RATA ACQUISITIONS" shall have the meaning ascribed thereto in
paragraph (ii) of the definition of "Acquiring Person" in Section 1.1;
"RECORD TIME" shall mean the close of business on February 8, 1994;
"REDEMPTION PRICE" shall have the meaning ascribed thereto in clause
5.1(a);
"RIGHT" shall mean a right to purchase a Common Share, upon the terms and
subject to the conditions set forth in this Agreement;
"RIGHTS CERTIFICATE" shall have the meaning ascribed thereto and be in the
form provided in clause 2.2(c);
"RIGHTS REGISTER" shall have the meaning ascribed thereto in clause
2.6(a);
"RIGHTS REGISTRAR" shall have the meaning ascribed thereto in clause
2.6(a);
"SECURITIES ACT (QUEBEC)" shall mean the Securities Act, R.S.Q., C.V1.1,
as amended, and the regulations thereunder, and comparable or successor laws or
regulations thereto;
"SEPARATION TIME" shall mean the close of business on the eighth Trading
Day after the earliest of (i) the Stock Acquisition Date, (ii) the date of the
commencement of or first public announcement of the intent of any Person (other
than a Person referred to in clause (i) of the definition of "Acquiring Person")
to commence a Take-over Bid (other than a Permitted Bid) and (iii) the date upon
which a Take-over Bid that is a Permitted Bid ceases to be a Permitted Bid, or
such earlier or later time as may be determined by the Board of Directors,
provided that, if any Take-over Bid referred to in clause (ii) or (iii) of this
definition expires, is cancelled, terminated or otherwise withdrawn prior to the
Separation Time, such Take-over Bid shall be deemed, for the purposes of this
definition, never to have been made;
"STOCK ACQUISITION DATE" shall mean the date of public announcement by the
Corporation that an Acquiring Person has become such;
"SUBSIDIARY" of any Person shall mean any corporation or other entity of
which a majority of the voting power or a majority of the equity interest is
Beneficially Owned by such Person;
"TAKE-OVER BID" means an Offer to Acquire Voting Shares where the Voting
Shares subject to the Offer to Acquire, together with the Offeror's Securities,
constitute in the aggregate 20 per cent or more of the outstanding Voting Shares
at the date of the Offer to Acquire;
"TERMINATION TIME" shall mean the time at which the right to exercise
Rights shall terminate pursuant to Section 3.2 or 5.1 hereof;
"TRADING DAY", when used with respect to any securities, shall mean a day
on which the principal securities exchange on which such securities are listed
or admitted to trading is open for the transaction of business or, if the
securities are not listed or admitted to trading on any securities exchange, a
Business Day;
"U.S.-CANADIAN EXCHANGE RATE" shall mean on any date:
(i) if on such date the Bank of Canada sets an average noon spot rate
of exchange for the conversion of one United States dollar into
Canadian dollars, such rate; and
(ii) in any other case, the rate for such date for the conversion of one
United States dollar into Canadian dollars which is calculated in the
manner which shall be determined by the Board of Directors from time
to time acting in good faith;
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"VOTING SHARES" shall mean the Common Shares and any other shares in the
capital of or voting interests of the Corporation entitled to vote generally in
the election of all directors; the percentage of Voting Shares Beneficially
Owned by any Person, shall, for the purposes of this Agreement, be and be deemed
to be the product determined by the formula:
100 X A
B
where
A the number of votes for the election of all directors generally
attaching to the Voting Shares Beneficially Owned by such Person, and
B the number of votes for the election of all directors generally
attaching to all outstanding Voting Shares;
provided that where any Person is deemed to Beneficially Own Unicode Voting
Shares, such Voting Shares shall be deemed to be outstanding for the Purpose of
calculating the percentage of Voting Shares Beneficially Owned by such Person.
1.2 Currency
All sums of money which are referred to in this Agreement are expressed in
lawful money of Canada, unless otherwise specified.
1.3 Headings
The division of this Agreement into Articles, Sections, clauses and
subclauses and the insertion of headings, subheadings and a table of contents
are for convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
1.4 Grandfather Provisions
(a) A Person shall not be and shall not tie deemed to be an Acquiring
Person if such Person (a "Grandfathered Person") is the Beneficial
Owner of 20% or more of the outstanding Voting Shares as at the
Record Time; provided, however, that the exception in this clause
1.4(a) shall cease to be applicable to a Grandfathered Person who
shall after the Record Time become, pursuant to one or more
transactions or events, the Beneficial Owner of additional Voting
Shares constituting in the aggregate more than one per cent of the
outstanding Voting Shares determined as at the Record Time, other
than pursuant to Permitted Bid Acquisitions, Exempt Acquisitions or
Pro Rata Acquisitions.
(b) A Person shall not be and shall not be deemed to be an Acquiring
Person if such Person (a "Grandfathered Person Transferee") becomes
the Beneficial Owner of 20% or more of the outstanding Voting Shares
solely as a result of the acquisition of all but not less than all of
the Voting Shares Beneficially Owned immediately prior thereto by a
Grandfathered Person or a Grandfathered Person Transferee (the
"Transferor") and such Person's Beneficial Ownership of Voting Shares
after giving effect to such acquisition does not exceed the number of
Voting Shares Beneficially Owned by the Transferor and by such Person
immediately prior to such acquisition (the "Transfer Time");
provided, however, that the exception in this clause 1.4(b) shall
cease to be applicable to a Grandfathered Person Transferee who
becomes, pursuant to one or more transactions or events, the
Beneficial Owner of additional Voting Shares constituting in the
aggregate more than 1% of the outstanding Voting Shares determined as
at the Record Time, other than pursuant to Permitted Bid
Acquisitions, Exempt Acquisitions or Pro Rata Acquisitions.
(c) For the purpose of determining whether a Person is entitled to make
a Permitted Bid, the provisions of paragraph (ii) of the definition
of "Permitted Bid' in Section 1.1 shall not apply to a Person (a
"Grandfathered Bidder") who is either:
(i) a Grandfathered Person or a (Grandfathered Person Transferee
who Beneficially Owns at the time of the commencement of and at
all times while such Person's Take-over Bid remains outstanding
more than 5 % of the outstanding Voting Shares; or
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(ii) the Beneficial Owner of more than 5 % but less than 20 % of the
outstanding Voting Shares as at the Record Time;
provided that the exceptions in this clause 1.4(c) shall cease to be
applicable to a Grandfathered Bidder (and a Take-over Bid that would
otherwise constitute a Permitted Bid shall cease to be a Permitted
Bid) if such Grandfathered Bidder shall after the Record Time (or, in
the case of a Grandfather Person Transferee only, the Transfer Time)
become, pursuant to one or more transactions or events, the
Beneficial Owner of additional Voting Shares constituting in the
aggregate more than 1 % of the outstanding Voting Shares determined
as at the Record Time, other than pursuant to Permitted Bid
Acquisitions, Exempt Acquisitions or Pro Rata Acquisitions.
(d) For greater certainty, for the purposes of this Section 1.4, a
Person shall be deemed to have become the Beneficial Owner of
additional Voting Shares if the Person becomes the Beneficial Owner
of such Voting Shares pursuant to a transaction or event and, as a
result, such Person is the Beneficial Owner of a greater number of
Voting Shares than the number of Voting Shares that such Person
Beneficially Owned immediately prior to such transaction or event.
ARTICLE 2
THE RIGHTS
2.1 Legend on Common Share Certificates
Certificates representing Common Shares which certificates are issued
after the Record Time but prior to the earlier of the Separation Time and 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 (defined in the Rights Agreement referred to
below), this certificate also evidences and entitles the holder thereof to
certain rights described in a Shareholder Protection Rights Plan
Agreement, dated as of February 8, 1994, as amended (the "Rights
Agreement"), between the Repap Enterprises Inc. (the "Corporation") and
Montreal Trust Company, a copy of which is on file at the principal
executive offices of the Corporation the terms of which are incorporated
herein by reference. Under certain circumstances set out in the Rights
Agreement, the rights may be redeemed, may expire, may become null and
void (if, in certain cases, they are "Beneficially Owned" by an "Acquiring
Person") or may be evidenced by separate certificates and no longer
evidenced by this certificate. Upon written request, a copy of the Rights
Agreement will be mailed within five days to the holder of this
Certificate."
Certificates representing Common Shares that are issued and outstanding at
the Record Time shall also evidence one Right for each Common Share evidenced
thereby notwithstanding the absence of the foregoing legend until the Separation
Time.
2.2 Initial Exercise Price: Exercise of Rights: Detachment of Rights
(a) Subject to adjustment as herein set forth, each Right will entitle
the holder thereof, after the Separation Time and prior to the
Expiration Time, to purchase, for the Exercise Price, one Common
Share. Notwithstanding any other provision of this Agreement, any
Rights Beneficially Owned 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) for administrative purposes
each Right will be evidenced by the certificates for Common Shares
registered in the names of the holders thereof (which certificates
shall also be deemed to be Rights Certificates) and will be
transferable only together with, and will be transferred by a
transfer of, such Common Shares.
(c) From and after the Separation Time and prior to the Expiration Time
(i) the Rights shall be exercisable and (ii) 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 and the Rights Agent will mail to each
holder of record of Common Shares as of the Separation Time (other
than an Acquiring Person and, 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
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(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), (x) a Rights
Certificate in substantially the form of Exhibit A hereto
appropriately completed, representing the number of Rights' held by
such holder at the Separation Time and having such marks of
identification or designation and such legends, summaries or
endorsements printed thereon as the Corporation may deem appropriate
and as are not inconsistent with the provisions of this Agreement, or
as may be required to comply with any law, rule, regulation or
judicial or administrative order or with any rule or regulation made
pursuant thereto or with any rules or regulation of any
self-regulatory organization, stock exchange or quotation system on
which the Rights may from time to time be listed or traded, or to
conform to usage, and (y) a disclosure statement describing the
rights, provided that a Nominee shall be sent the materials provided
for in (x) and (y) in respect of all Common Shares held of record by
it which are not Beneficially Owned by an Acquiring Person.
(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 stock transfer
office in the City of Montreal, or the principal stock transfer
office of the Rights Agent in the cities designated from time to time
for that purpose by the Corporation, the Rights Certificate
evidencing such Rights with an election to exercise such Rights (an
"Election to Exercise") substantially in the form attached to the
Rights Certificate duly completed, accompanied by 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, which is accompanied by (x) a
completed Election to Exercise that does not indicate that such Right
is null and void as provided by clause 2.2(a) or 3.1(b) and (y)
payment as set forth in clause 2.2(d), the Rights Agent (unless
otherwise instructed by the Corporation as a result of the
Corporation being of the opinion that such Right is null and void as
provided in clause 2.2(a) or 3.l(b) or that it would be inappropriate
to issue such Right where the circumstances of clause 3.2 shall
apply) will thereupon promptly:
(i) requisition from a transfer agent for the Common Shares
certificates representing the number of such Common Shares to be
purchased (the Corporation hereby irrevocably authorizing its
transfer agents to comply with all such requisitions); and
(ii) after receipt of such certificates, deliver the same to or
upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be
designated by such holder.
(f) In case the holder of any Rights shall exercise less than all the
Rights evidenced by such holder's Rights Certificate, a new Rights
Certificate evidencing the Rights remaining unexercised will be
issued by the Rights Agent to such holder or to such holder's duly
authorized assigns.
(g) The Corporation covenants and agrees that it will:
(i) take all such action as may be necessary and within its power
to ensure that all securities delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such
securities (subject to payment of the Exercise Price), be duly
and validly authorized, executed, issued and delivered and fully
paid and nonassessable;
(ii) take all such action as may be necessary and within its power
to comply with the requirements of the Canada Business
Corporations Act, the Securities Act (Quebec), the securities
laws or comparable legislation of each of the provinces of
Canada and the 1933 Securities Act and the 1934 Exchange Act and
any other applicable law, rule or regulation applicable to the
issuance and delivery of the Rights Certificates and the
issuance of any securities upon exercise of Rights;
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(iii) use reasonable efforts to cause all securities issued upon
exercise of Rights to be listed upon issuance on the principal
exchanges on which the Common Shares were traded prior to the
Stock Acquisition Date;
(iv) cause to be reserved and kept available out of its authorized
and unissued Common Shares, the number of Common Shares that, as
provided in this Agreement, will from time to time be sufficient
to permit the exercise in full of all outstanding Rights;
(v) pay when due and payable any and all Canadian and, if applicable,
United States, federal, provincial and state transfer taxes and
charges (not including any income or capital gain taxes of the holder
or exercising holder or any liability of the Corporation to withhold
tax) which may be payable in respect of the original issuance or
delivery of the Rights Certificates, provided that the Corporation
shall not be required to pay any transfer tax or charge which may be
payable in respect of any transfer involved in the transfer or
delivery of Rights Certificates or the issuance or delivery of
certificates for securities 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 hereof, 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
The Exercise Price, the number and kind of securities subject to purchase
upon exercise of each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 2.3.
(a) In the event the Corporation shall, at any time after the date of
this Agreement (i) declare or pay a dividend on its Common Shares
payable in Common Shares (or other capital, stock or securities
exchangeable for or convertible into or giving a right to acquire its
Common Shares or other capital stock) other than pursuant to any
optional stock dividend program and other than a dividend payable in
Common Shares in lieu of annual cash dividends, (ii) subdivide or
change the outstanding Common Shares into a greater number of Common
Shares, (iii) combine or change the outstanding Common Shares into a
smaller number of Common Shares or (iv) issue any Common Shares (or
other securities exchangeable for or convertible into or giving a
right to acquire Common Shares or other securities) in respect of, in
lieu of or in exchange for existing Common Shares except as otherwise
provided in this Section 2.3, the Exercise Price and the number of
Rights outstanding, or, if the payment or effective date therefor
shall occur after the Separation Time, the securities purchasable
upon exercise of Rights shall be adjusted as of the payment or
effective date in the manner set forth below. If the Exercise Price
and number of Rights outstanding are to be adjusted, (x) the Exercise
Price in effect after such adjustment will be equal to the Exercise
Price in effect immediately prior to such adjustment divided by the
number of Common Shares (or other capital stock) (the "Expansion
Factor") that a holder of one Common Share immediately prior to such
dividend, subdivision, change, combination or issuance would hold
thereafter as a result thereof and (y) 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
distributed among the Common Shares with respect to which the
original Rights were associated (if they remain outstanding) and the
shares issued in respect of such dividend, subdivision, change,
combination or issuance, so that each such Common Share (or other
capital stock) will have exactly one Right associated with it. If the
securities purchasable upon exercise of Rights are to be adjusted,
the securities purchasable upon exercise of each Right after such
adjustment will be the securities that a holder of the securities
purchasable upon exercise of one Right immediately prior to such
dividend, subdivision, change, combination or issuance would hold
thereafter as a result thereof. If after the Record Time and prior to
the Expiration Time the Corporation shall issue any shares of capital
stock other than Common Shares in a transaction of a type described
in the first sentence of this clause 2.3(a), shares of such capital
stock shall be treated herein as nearly equivalent to Common Shares
as may be practicable and appropriate under the circumstances and the
Corporation and the Rights Agent agree to amend this Agreement in
order to effect, and the Corporation will not
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consolidate with, amalgamate with or into or enter into an
arrangement with, any other Person unless such Person agrees to be
bound by the terms of an amendment effecting, such treatment:
In the event the Corporation shall at any time after the Record Time
and prior to the Separation Time issue any Common Shares otherwise
than in a transaction referred to in the preceding paragraph, each
such Common Share so issued shall automatically have one new Right
associated with it, which Right shall be evidenced by the certificate
representing such share.
(b) In the event the Corporation shall at any time after the Record Time
and prior to the Expiration Time fix a record date for the issuance
of rights, options or warrants to all or substantially all of the
holders of Common Shares entitling them (for a period expiring within
45 calendar days after such record date) to subscribe for or purchase
Common Shares (or securities convertible into or exchangeable for or
carrying a right to purchase Common Shares) at a price per Common
Share (or, if a security convertible into or exchangeable for or
carrying a right to purchase or subscribe for Common Shares having a
conversion, exchange or exercise price, including the price required
to be paid to purchase such convertible or exchangeable security or
right per share) of less than 90% of the Market Price per Common
Share on such record date, the Exercise Price to be in effect after
such record date shall be determined by multiplying the Exercise
Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the number of Common Shares
outstanding on such record date plus the number of Common Shares that
the aggregate offering price of the total number of Common Shares so
to be offered (and/or the aggregate initial conversion, exchange or
exercise price of the convertible or exchangeable securities or
rights so to be offered, including the price required to be paid to
purchase such convertible or exchangeable securities or rights) would
purchase at such Market Price per Common Share, and the denominator
of which shall be the number of Common Shares outstanding on such
record date plus the number of additional Common Shares to be offered
for subscription or purchase (or into which the convertible or
exchangeable securities or rights so to be offered are initially
convertible, exchangeable or exercisable). In case such subscription
price may be paid by delivery of consideration, part or all of which
may be in a form other than cash, the value of such consideration
shall be, as determined in good faith by the Board of Directors,
whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent and the holders
of the Rights. Such adjustment shall be made successively whenever
such a record date is fixed, and in the event that such rights or
warrants are not so issued, the Exercise Price shall be adjusted to
be the Exercise Price which would then be in effect if such record
date had not been fixed.
For purposes of this Agreement, the granting of the right to purchase
Common Shares (whether from treasury shares or otherwise) pursuant to
any dividend or interest reinvestment plan and/or any Common Share
purchase plan providing for the reinvestment of dividends or interest
payable on securities of the Corporation and/or the investment of
periodic optional payments and/or employee benefit, stock option or
similar plans (so long as such right to purchase is in no case
evidenced by the delivery of rights or warrants) shall not be deemed
to constitute an issue of rights, options or warrants by the
Corporation; provided, however, that, in the case of any dividend or
interest reinvestment plan, the right to purchase Common Shares is at
a price per share of not less than 90 percent of the current market
price per share (determined as provided in such plans) of the Common
Shares.
(c) In the event the Corporation shall at any time after the Record Time
and prior to the Expiration Time fix a record date for a distribution
to all or substantially all of the holders of Common Shares
(including any such distribution made in connection with a merger or
amalgamation in which the Corporation is the continuing corporation)
of evidences of indebtedness, cash (other than annua1 cash
dividends), assets (including securities, but except a dividend
described in subclause 2.3(a)(i) above), or rights, options or
warrants (excluding those referred to in clause 2.3(b) hereof, the
Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately
prior to such record date by a fraction, the numerator of which shall
be the Market Price per Common Share on such record date, less the
fair market value (as determined in good faith by the Board of
Directors, whose determination shall be described in a statement
filed with the Rights Agent) of the portion of the cash, assets or
evidences of indebtedness so to be
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distributed or of such rights or warrants applicable to a Common
Share and the denominator of which shall be such Market Price per
Common Share. Such adjustments shall be made successively whenever
such a record date is fixed, and in the event that such distribution
is not so made, the Exercise Price shall be adjusted to be the
Exercise Price which would have been in effect if such record date
had not been fixed.
(d) Notwithstanding anything herein to the contrary, no adjustment in
the Exercise Price shall be required unless such adjustment would
require an increase or decrease of at least one percent in the
Exercise Price; provided, however, that any adjustments which by
reason of this clause 2.3(d) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 2.3 shall be made to the nearest
cent or to the nearest hundredth of a share. Notwithstanding the
first sentence of this clause 2.3(d), any adjustment required by this
Section 2.3 shall be made no later than the earlier of (i) three
years from the date of the transaction which mandates such adjustment
or (ii) the Termination Date.
(e) In the event the Corporation shall at any time after the Record Time
and prior to the Separation Time issue any shares of capital stock
(other than Common Shares), or rights or warrants to subscribe for or
purchase any such capital stock, or securities convertible into or
exchangeable for any such capital stock, in a transaction referred to
in clause (a)(i) or (a)(iv) above, or if the Corporation shall take
any other action (other than the issue of Common Shares) which might
have a negative effect on the holders of Rights, then, unless the B4)
and of Directors acting in good faith determines that the adjustments
contemplated by clauses (a), (b) and (c) above in connection with
such transaction will appropriately protect the interests of the
holders of Rights, the Corporation will determine what other
adjustments to the Exercise Price, number of Rights and/or securities
purchasable upon exercise of Rights would be appropriate and,
notwithstanding clauses (a), (b) and (c) above, such adjustments,
rather than the adjustments contemplated by clauses (a), (b) and (c)
above, shall be made. The Corporation and the Rights Agent shall
amend this Agreement as appropriate to provide for such adjustments.
(f) Each Right originally issued by the Corporation subsequent to any
adjustment made to the 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 a Right immediately prior to such issue, all subject to further
adjustment as provided herein.
(g) Irrespective of any adjustment or change in the Exercise Price or
the number of Common Shares issuable upon the exercise of the Rights,
the Rights Certificates theretofore and thereafter issued may
continue to express the Exercise Price per Common Share and the
number of Common Shares which were expressed in the initial Rights
Certificates issued hereunder.
(h) In any case in which this Section 2.3 shall require that an
adjustment in the 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 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 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 shares (fractional or otherwise) or securities upon
the occurrence of the event requiring such adjustment.
(i) Notwithstanding anything in this Section 2.3 to the contrary, the
Corporation shall be entitled to make such reductions in the Exercise
Price, in addition to those adjustments expressly required by this
Section 2.3, as and to the extent that in their good faith judgment
the Board of Directors shall determine to be advisable in order that
any (i) consolidation or subdivision of the Common Shares, (ii)
issuance wholly or in part for cash of Common Shares or securities
that by their terms are convertible into or exchangeable for Common
Shares, (iii) stock dividends or (iv) issuance of rights, options or
warrants referred to in this Section 2.3, hereafter made by the
Corporation to holders of its Common Shares, shall not be taxable to
such shareholders.
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In any case in which this Section 2.3 shall require any adjustment, the
Corporation shall deliver to the Rights Agent a certificate duly executed
by an officer of the Corporation describing such adjustment, in addition
to any other statement or document required by this Section 2.3.
2.4 Date on Which Exercise is Effective
Each Person in whose name any certificate for Common Shares or other
securities, if applicable, is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of the Common Shares or
other securities, if applicable, represented thereby on, and such certificate
shall be dated, the date upon which the Rights Certificate evidencing such
Rights was duly surrendered (together with a duly completed Election to
Exercise) and payment of the Exercise Price for such Rights (and any applicable
transfer taxes and other governmental charges payable by the exercising holder
hereunder) was made; provided, however, that if the date of such surrender and
payment is a date upon which the relevant transfer books of the Corporation are
closed, such Person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding Business Day
on which the relevant transfer books of the Corporation are open.
2.5 Execution on, Delivery and Dating of Rights Certificates
(a) The Rights Certificates shall be executed on behalf of the
Corporation by its Chairman, President or any of its Vice Presidents
and by its Secretary or one of its Assistant Secretaries. The
signature and attestation of any of these officers on the Rights
Certificates may be manual or facsimile. Rights Certificates bearing
the manual or facsimile signatures of individuals who were at any
time the proper officers of the Corporation shall bind the
Corporation, notwithstanding that such individuals or any of them
have ceased to hold such offices prior to the countersignature and
delivery of such Rights Certificates.
(b) Promptly after the Corporation learns of the Separation Time, the
Corporation will notify the Rights Agent of such Separation Time and
will deliver Rights Certificates executed by the Corporation to the
Rights Agent for countersignature, and the Rights Agent shall
manually countersign and send such Rights Certificates to the holders
of the Rights pursuant to clause 2.2(c) hereof. 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 of Transfer and Exchange
(a) The Corporation will cause to be kept a register (the "Rights
Register") in which, subject to such reasonable regulations as it may
prescribe, the Corporation will provide for the registration and
transfer of Rights. The Rights Agent is hereby appointed registrar
for the Rights (the "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.
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 clause 2.6(c) below, the Corporation will
execute, and the Rights Agent will manually countersign and deliver, in
the name of the holder or the designated transferee or transferees, as
required pursuant to the holder's instructions, one or more new Rights
certificates evidencing the same aggregate number of Rights as did the
Rights Certificates so surrendered.
(b) All Rights issued upon any registration of transfer or exchange of
Rights Certificates shall be the valid obligations of the
Corporation, and such Rights shall be entitled to the same benefits
under this Agreement as the Rights surrendered upon such registration
of transfer or exchange.
(c) Every Rights Certificate surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Corporation or the
Rights Agent, as the case may be, duly executed by the holder thereof
or such holder's attorney duly authorized in writing. As a condition
to the issuance of any new Rights Certificate under this Section 2.6,
the Corporation may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of
the Rights Agent) connected therewith.
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2.7 Mutilated, Destroyed, Lost and Stolen Rights Certificates
(a) If any mutilated Rights Certificate is surrendered to the Rights
Agent prior to the Expiration Time, the Corporation shall execute and
the Rights Agent shall countersign and deliver in exchange therefor a
new Rights Certificate evidencing the same number of Rights as did
the Rights Certificate so surrendered.
(b) If there shall be delivered to the Corporation and the Rights Agent
prior to the Expiration Time (i) evidence to their 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 the 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 by the Corporation.
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 Share
certificate).
2.9 Delivery and Cancellation of Certificates
All Rights Certificates surrendered, upon exercise or for redemption,
registration of transfer or exchange shall, if surrendered to any Person other
than the Rights Agent, be delivered to the Rights Agent and, in any case, shall
be promptly cancelled by the Rights Agent. The Corporation may at any time
deliver to the Rights Agent for cancellation any Rights Certificates previously
countersigned and delivered hereunder which the Corporation may have acquired in
any manner whatsoever, and all Rights Certificates so delivered shall be
promptly cancelled by the Rights Agent. No Rights Certificate shall be
countersigned in lieu of or in exchange for any Rights Certificates cancelled as
provided in this Section 2.9, except as expressly permitted by this Agreement.
The Rights Agent shall destroy all cancelled Rights Certificates and deliver a
certificate of destruction to the Corporation.
2.10 Agreement of Rights Holders
Every holder of Rights, by accepting the same, 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
Common Share certificate representing such Right;
(c) 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)
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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;
(d) that such holder of Rights has waived his right to receive any
fractional Rights or any fractional shares or other securities upon
exercise of a Right (except as provided herein); and
(e) that without the approval of any holder of Rights and upon the sole
authority of the Board of Directors acting in good faith this
Agreement may be supplemented or amended from time to time pursuant
to and as provided herein.
2.11 Rights Certificate Holder not Deemed a Shareholder
No holder, as such, of any Rights or Rights Certificate shall be entitled
to vote, receive dividends or be deemed for any purpose whatsoever the holder of
any Common Share or any other share or security of the Corporation which may at
any time be issuable on the exercise of the Rights represented thereby, nor
shall anything contained herein or in any Rights Certificate be construed or
deemed or confer upon the holder of any Right or Rights Certificate, as such,
any of the rights, titles, benefits or privileges of a holder of Common Shares
or any other shares or securities of the Corporation or any right to vote at any
meeting of shareholders of the Corporation whether for the election of Directors
or otherwise or upon any matter submitted to holders of shares of the
Corporation at any meeting thereof, or to give or withhold consent to any action
of the Corporation, or to receive notice of any meeting or other action
affecting any holder of Common Shares or any other shares or securities of the
Corporation except as expressly provided herein, or to receive dividends,
distributions or subscription rights, or otherwise, until the Right or Rights
evidenced by Rights Certificates shall have been duly exercised in accordance
with the terms and provisions hereof.
ARTICLE 3
FLIP-IN EVENT
3.1 Flip-in Event
(a) Subject to clause 3.1(b), Section 3.2, clause 5.1(b), clause 5.1(c)
and the second sentence of clause 2.2(a), in the event that prior to
the Expiration Time a Flip-in Event shall occur, each Right shall
constitute, effective on and after the Stock Acquisition Date, the
right to purchase from the Corporation, upon payment of the Exercise
Price and otherwise exercising such Right in accordance with the
terms hereof, that number of Common Shares as shall equal the result
obtained by (i) multiplying the then current Exercise Price by the
number of Common Shares for which each Right is exercisable
immediately prior to the Stock Acquisition Date and dividing that
product by (ii) 50 per cent of the Market Price on the Stock
Acquisition Date of the Common Shares (such Right to be appropriately
adjusted in a manner analogous to the applicable adjustment provided
for in Section 2.3 in the event that after the Stock Acquisition Date
an event of a type analogous to any of the events described in
Section 2.3 shall have occurred).
(b) Notwithstanding anything in this Agreement to the contrary, upon the
occurrence of any Flip-in Event, any Rights that are Beneficially
Owned by (i) an Acquiring Person (or any Affiliate or Associate of an
Acquiring Person or any Person acting jointly or in concert with an
Acquiring Person or any Affiliate or Associate of an Acquiring
Person) or (ii) a transferee of Rights, directly or indirectly, of an
Acquiring Person (or of any Affiliate or Associate of an Acquiring
Person or of any Person acting jointly or in concert with an
Acquiring Person or any Associate or Affiliate of an Acquiring
Person) who becomes a transferee concurrently with or subsequent to
the Acquiring Person becoming such shall become null and void without
any further action, and any holder of such Rights (including
transferees) shall not have any rights whatsoever to exercise such
Rights under any provision of this Agreement and shall not have
thereafter any other rights whatsoever with respect to such Rights,
whether under any provision of this Agreement or otherwise.
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(c) From and after the Separation Time, the Corporation shall do all
such acts and things as shall be necessary and within its power to
ensure compliance with the provisions of this Section 3.1, including
without limitation, all such acts and things as may be required to
satisfy the requirements of the Canada Business Corporations Act, the
Securities Act (Quebec), the securities laws or comparable
legislation in each of the provinces of Canada, the 1933 Securities
Act and the 1934 Exchange Act and the rules of the stock exchangers)
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.
3.2 Exchange Option
(a) In the event that the Board of Directors acting in good faith shall
determine that conditions exist which would eliminate or otherwise
materially diminish in any respect the benefits intended to be
afforded to the holders of Rights pursuant to this Agreement, the
Board of Directors, at its option, at any time after a Flip-in Event
has occurred, may authorize the Corporation to issue or deliver in
respect of each Right which is not void pursuant to the second
sentence of clause 2.2(a) or clause 3.1 (b), either (i) in return for
the Exercise Price and the Right, debt or equity securities or assets
of the Corporation (or a combination thereof) having a value equal to
twice the Exercise Price, or (ii) in return for the Right, subject to
any amounts that may be required to be paid under applicable law,
debt or equity securities or- assets of the Corporation (or a
combination thereof) having a value equal to the value of the Right,
in full and final settlement of all rights attaching to the Rights,
where in either case the value of such debt or equity securities or
assets (or a combination thereto and, in the case of an issue of debt
or equity securities or assets (or a combination thereof) pursuant to
(ii), the value of the Right shall be determined by the Board of
Directors who may rely upon the advice of a nationally or
internationally recognized firm of investment dealers or investment
bankers selected by the Board of Directors.
(b) If the Board of Directors authorizes the exchange of debt or equity
securities or assets of the Corporation (or a combination thereof)
for Rights pursuant to clause 3.2(a), without any further action or
notice the right to exercise the Rights will terminate and the only
right thereafter of a holder of Rights shall be to receive the debt
or equity securities or assets of the Corporation (or a combination
thereof) in accordance with the exchange formula authorized by the
Board of Directors. Within 10 Business Days after the Board of
Directors has authorized an exchange for Rights pursuant to clause
3.2(a), the Corporation shall give notice of such exchange to the
holders of such Rights by mailing such notice to all such holders at
their last addresses as they appear upon the register of Rights
holders maintained by the Rights Agent. Each such notice of exchange
will state the method by which the exchange of debt or equity
securities or assets of the Corporation (or a combination thereof)
for Rights will be effected.
(c) In the event that there shall not be sufficient securities
authorized but unissued to permit the exchange in full of such Rights
pursuant to this Section 3.2, the Corporation shall take all such
action as may be necessary and within its power to authorize
additional securities for issuance upon the exchange of Rights.
(d) The Corporation shall not be required to issue fractions of
securities or to distribute certificates evidencing fractional
securities. In lieu of issuing such fractional securities, there
shall be paid to the registered holders of Rights to whom such
fractional securities would otherwise be issuable an amount in cash
equal to the same friction of the Market Price of a whole security.
Alternatively, fractional shares may, at the election of the
Corporation, be evidenced by scrip certificates.
ARTICLE 4
THE RIGHTS AGENT
4.1 General
(a) The Corporation hereby appoints the Rights Agent to act as agent for
the Corporation 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,
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the respective duties of the Rights Agent and Co-Rights Agents shall
be as the Corporation may determine. The Corporation also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any
loss, liability, or expense, incurred without negligence, bad faith
or willful misconduct on the part of the Rights Agent, for anything
done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and
expenses of defending against any claim of liability, which right to
indemnification will survive the termination of this Agreement.
The Corporation agrees to pay to the Rights Agent reasonable compensation
for all services rendered by it hereunder and, from time to time, on
demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder.
(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 Voting Shares or Common Shares or any Rights
Certificate or 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.
4.2 Merger or Amalgamation or Change of Name of Rights Agent
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or amalgamated or with which it may be
consolidated, or any corporation resulting from any merger,
amalgamation, statutory arrangement or consolidation to which the
Rights Agent or any successor Rights Agent is a party, or any
corporation succeeding to the shareholder or stockholder services
business of the Rights Agent or any successor Rights Agent, will be
the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of
any of the parties hereto, provided that such corporation would be
eligible for appointment as a successor Rights Agent under the
provisions of Section 4.4 hereof. In case at the time such successor
Rights Agent succeeds to the agency created by this Agreement any of
the Rights Certificates have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights
Certificates have not been countersigned, any successor Rights Agent
may countersign such Rights Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Rights Certificates will have the
full force provided in the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent is changed and at
such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates
so countersigned; and in case at that time any of the Right
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 Right Certificates shall
have the full force provided in the Right Certificates and in this
Agreement.
4.3 Duties of Rights Agent
The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the
Corporation and the holders of Rights Certificates, by their acceptance thereof,
shall be bound:
(a) the Rights Agent may consult with legal counsel (who may be legal
counsel for the Corporation) and the opinion of such counsel will be
full and complete authorization and protection to the Rights Agent as
to any action taken or omitted by it in good faith and in accordance
with such opinion;
(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
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specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by a Person believed by the
Rights Agent to be the Chairman of the Board, the President or any
Vice President of the Corporation and delivered to the Rights Agent;
and such certificate will be full authorization to the Rights Agent
for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate;
(c) the Rights Agent will be liable hereunder only for its own
negligence, bad faith or willful misconduct;
(d) the Rights Agent will not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the
certificates for Voting Shares or Common Shares or the Rights
Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and will be
deemed to have been made by the Corporation only;
(e) the Rights Agent will not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof
(except the due authorization, execution and delivery hereof by the
Rights Agent) or in respect of the validity or execution of any
Common Share certificate or Rights Certificate (except its
countersignature thereof); nor will it be responsible for any breach
by the Corporation of any covenant or condition contained in this
Agreement or in any Rights Certificate; nor will it be responsible
for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to clause 3.1(b) hereof) or any
adjustment required under the provisions of Section 2.3 hereof or
responsible for the manner, method or amount of any such adjustment
or the ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights after
receipt of the certificate contemplated by Section 2.3 describing any
such adjustment); nor will it by any act hereunder be deemed to make
any representation or warranty as to the authorization of any Common
Shares to be issued pursuant to this Agreement or any Rights or as to
whether any Common Shares will, when issued, be duly and validly
authorized, executed, issued and delivered and fully paid and
non-assessable;
(f) the Corporation agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances
as may reasonably be required by the Rights Agent for the carrying
out or performing by the Rights Agent of the provisions of this
Agreement;
(g) the Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder
from any Person believed by the Rights Agent to be the Chairman of
the Board, the President, any Vice President, or the Treasurer or the
Controller of the Corporation, and to apply to such Persons for
advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered by it in good faith in
accordance with instructions of any such Person;
(h) the Rights Agent and any shareholder or stockholder, director,
officer or employee of the Rights Agent may buy, sell or deal in
Common Shares, Rights or other securities of the Corporation or
become pecuniarily interested in any transaction in which the
Corporation may be interested, or contract with or lend money to the
Corporation or otherwise act as fully and freely as though it were
not Rights Agent under this Agreement. Nothing herein shall preclude
the Rights Agent from acting in any other capacity for the
Corporation or for any other legal entity; and
(i) the Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys or agents, and the Rights Agent
will not be answerable or accountable for any act, default, neglect
or misconduct of any such attorneys or agents or for any loss to the
Corporation resulting from any such act, default, neglect or
misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
4.4 Change of Rights Agent
The Rights Agent may resign and be discharged from its duties under this
Agreement upon 90 days' notice (or such lesser notice as is acceptable to the
Corporation) in writing mailed to the Corporation and to each transfer agent of
Common Shares by registered or certified mail, and to the holders of the Rights
in accordance with Section 5.9. The Corporation may remove the Rights Agent upon
30 days' notice in writing, mailed to the Rights Agent and to each transfer
agent of the Common Shares by registered or certified mail, and to the holders
of the
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Rights in accordance with Section 5.9. If the Rights Agent should resign or be
removed or otherwise become incapable of acting, the Corporation will appoint a
successor to the Rights Agent. If the Corporation fails to make such appointment
within a period of 30 days after such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the; holder of any Rights (which holder shall, with such
notice, submit such holder's Rights, Certificate for inspection by the
Corporation), then the holder of any Rights may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Corporation or by such a court, shall be a
corporation incorporated under the laws of Canada or a province thereof
authorized to carry on the business of a trust company. After appointment, the
successor Rights Agent will be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Corporation will file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the Common Shares, and mail a notice thereof in
writing to the holders of the Rights. Failure to give any notice provided for in
this Section 4.4, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be.
ARTICLE 5
MISCELLANEOUS
5.1 Redemption and Waiver
(a) The Board of Directors may, at its option, at any time prior to the
Separation Time, elect to redeem all but not less than all of the
then outstanding Rights at a redemption price of $0.0001 per Right
appropriately adjusted in a manner analogous to the applicable
adjustment provided for in Section 2.3 in the event that an event of
the type analogous to any of the events described in Section 2.3
shall have occurred (such redemption price being herein referred to
as the "Redemption Price"). The redemption of the Rights by the Board
of Directors may be made effective at such time, on such basis and
with such conditions as the Board of Directors in its sole discretion
may establish.
(b) The Board of Directors may until the Separation Time determine, upon
prior written notice delivered to the Rights Agent, to waive the
application of Section 3.1 to any particular Flip-in Event.
(c) The Board of Directors may prior to the Separation Time waive the
application of Section 3.1 to any particular Flip-in Event, provided
that both of the following conditions are satisfied:
(i) the Board of Directors has determined that the Acquiring Person
became an Acquiring Person by inadvertence and without any intent
or knowledge that he would become an Acquiring Person; and
(ii) such Acquiring Person has reduced his Beneficial Ownership of
Voting Shares such that at the time of waiver pursuant to this
clause he is no longer an Acquiring Person.
(d) The Board of Directors shall, without further formality, be deemed
to have elected to redeem the Rights at the Redemption Price on the
date of expiry of a Permitted Bid, provided that the Offeror takes up
and pays for the Voting Shares pursuant to the terms and conditions
of the Permitted Bid.
(e) If the Board of Directors elects to redeem the Rights, the right to
exercise the Rights will thereupon, without further action and
without notice, terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price.
(f) Within 10 days after the Board of Directors electing to redeem the
Rights, the Corporation shall give notice of redemption to the
holders of the then outstanding Rights by mailing such notice to all
such holders at their last address as they appear upon the registry
books of the Rights Agent 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. The Corporation shall not be
required to make any payment of
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the Redemption Price to a holder of Rights if any such payment is
less than $10. The Corporation may not redeem, acquire or purchase
for value any Rights at any time in any manner other than that
specifically set forth in this Section 5. 1, or other than in
connection with the purchase of Common Shares prior to the Separation
Time.
5.2 Expiration
No Person shall have any rights whatsoever pursuant to or arising out of
this Agreement or in respect of any Right after the Expiration Time, except the
Rights Agent as specified in clause 4. 1 (a) of this Agreement.
5.3 Issuance of New Rights Certificates
Notwithstanding any of the provisions of this Agreement or of the Rights
to the contrary, the Corporation may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by the Board of
Directors to reflect any adjustment or change in the number or kind or class of
securities purchasable upon exercise of Rights made in accordance with the
provisions of this Agreement.
5.4 Supplements and Amendments
(a) Subject to prior written approval of the Montreal Exchange and The
Toronto Stock Exchange, the Corporation may from time to time
supplement or amend this Agreement without the approval of any
holders of Rights:
(i) to make any changes which the Board of Directors acting in good
faith may deem necessary or desirable, provided that no such
supplement or amendment made on or after the Separation Time
shall materially adversely affect the interests of the holders of
Rights generally and provided further that no supplement or
amendment shall be made to the provisions of Article 4 except
with the written concurrence of the Rights Agent to such
supplement or amendment; or
(ii) in order to cure any ambiguity or to correct or supplement any
provision contained herein which may be inconsistent with any
other provisions herein or otherwise defective.
(b) The Corporation may, with the consent of the holders of Rights
obtained as set forth below, at any time after the Separation Time,
amend, vary or rescind any of the provisions of this Agreement and
the Rights (whether or not such action would materially adversely
affect the interests of the holders of Rights generally). Such
consent shall be deemed to have been given and be binding upon all
holders of Rights if such action 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 and representing 50 per cent
plus one of the votes cast in respect thereof. For the purposes
hereof, each outstanding Right (other than Rights which are void
pursuant to the provisions hereof) shall be entitled to one vote, and
the procedures for the calling, holding and conduct of the meeting
shall be those, as nearly as may be, which are provided in the
Corporation's by-laws with respect to meetings of its shareholders.
(c) Any supplement or amendment to this Agreement made by the Board of
Directors pursuant to subclause (a)(i) in connection with the
definitions of "Acquiring Person", "Exercise Price", "Expiration
Time", "Flip-in Event", "Grandfathered Person" or "Permitted Bid"
shall, if made prior to the Separation Time, be submitted to the
shareholders of the Corporation at the next meeting of shareholders
and the shareholders may, by ordinary resolution, confirm or reject
such supplement or amendment; if made at or after the Separation Time
such supplement or amendment shall be submitted to the holders of the
Rights at a meeting to be called for on a date not later than
immediately following the next meeting of shareholders and the
holders of Rights may, by ordinary resolution (on the same basis as
described in clause (b) hereof), confirm or reject such supplement or
amendment. A supplement or amendment to this Agreement made by the
Board of Directors as contemplated by the previous sentence shall be
effective from the date of the relevant resolution of the Board of
Director; until it is confirmed or rejected or until it ceases to be
effective (as described in the next following sentence) and, where
the supplement or amendment is confirmed, it continues in effect in
the form in which it was so confirmed. If such supplement or
amendment to this Agreement made by the Board of Directors is
rejected by the shareholders or holders of Rights or is not submitted
to the shareholders or holders of Rights as required, then such
supplement or amendment shall cease to be effective from and after
the termination of the meeting at which it was rejected or to
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which it should have been but was not submitted, or from and after
the last date on which a meeting of holders of Rights should have
been but was not held, and no subsequent resolution of the Board of
Directors to supplement or amend the Agreement to substantially the
same effect shall be effective until confirmed by the shareholders or
holders of Rights, as the case may be.
5.5 Fractional Rights and Fractional Shares
(a) Subject to clause 3.2(d) in respect of circumstances referred to in
clause 3.2(a), the Corporation shall not be required to issue
fractions of Rights or to distribute Rights Certificates which
evidence fractional Rights and no amount shall be paid to the
registered holders of the Rights Certificates with regard to which
such fractional Rights would otherwise be issuable.
(b) The Corporation shall not be required to issue fractions of Common
Shares upon exercise of the Right, or to distribute certificates
which evidence fractional Common Shares. Fractions of Common Shares
may, at the election of the Corporation, be evidenced by scrip
certificates. In lieu of issuing fractional Common Shares, the
Corporation may pay to the registered holders 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.
5.6 Rights of Action
Subject to the terms of this Agreement, all rights of action in respect of
this Agreement, other than rights of action vested solely in the Rights Agent,
are vested in the respective registered holders of the Rights; and any
registered holder of any Rights, without the consent of the Rights Agent or of
the registered holder of any other Rights, may, on such holder's own behalf and
for such holder's own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Corporation to enforce such holder's right to
exercise such holder's Rights in the manner provided in such holder's Rights
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of the obligations of any Person subject to, this Agreement.
5.7 Regulatory Approvals
Any obligation of the Corporation or action or event contemplated by this
Agreement shall be subject to the receipt of any requisite approval or consent
from any governmental or regulatory authority.
5.8 Declaration as to Non-Canadian and Non-U.S. Holders
If in the opinion of the Board of Directors (who may rely upon the advice
of counsel) any action or event contemplated by this Agreement would require
compliance with the securities laws or comparable legislation of a jurisdiction
outside Canada and the United States of America, 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 the United States of America in which such issue or delivery would
be unlawful without registration of the relevant Persons or securities for such
purposes.
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5.9 Notices
Notices or demands authorized or required by this Agreement to be given or
made by the Rights Agent or by the holder of any Rights to or on the Corporation
shall be sufficiently given or made if delivered or sent by first class mail,
postage prepaid, by telecopier or by other similar means of telecommunications
addressed (until another address is filed in writing with the Rights Agent) as
follows:
REPAP ENTERPRISES INC.
▇▇▇▇ ▇▇▇▇-▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President and Chief Executive Officer
Any notice or demand authorized or required by this Agreement to be given
or made by the Corporation or by the holder of any Rights to or on the Rights
Agent shall be sufficiently given or made if delivered or sent by first-class
mail, postage prepaid, by telecopier or by other similar means of
telecommunications addressed (until another address is filed in writing with the
Corporation) as follows:
Montreal Trust Company
1800 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Manager, Stock Transfer Services
Notices or demands authorized or required by this Agreement to be given or
made by the Corporation or the Rights Agent to or on the holder of any Rights
shall be sufficiently given or made if delivered or sent by first-class mail,
postage prepaid, by telecopier or by other similar means of telecommunications
addressed to such holder at the address of such holder as it appears upon the
registry books of the Rights Agent or, prior to the Separation Time, on the
registry books of the Corporation for its Common Shares. Any notice which is
mailed or sent in the manner herein provided shall be deemed given, whether or
not the holder receives the notice.
5.10 Costs of Enforcement
The Corporation agrees that if the Corporation fails to fulfill any of its
obligations pursuant to this Agreement, then the Corporation will reimburse the
holder of any Rights for the costs and expenses (including legal fees) incurred
by such holder to enforce his rights pursuant thereto in any action, suit or
proceeding in which a court of competent jurisdiction in a final non-appealable
judgment has rendered judgment in favor of the holder.
5.11 Successors
All the covenants and provisions of this Agreement by or for the benefit
of the Corporation or the Rights Agent shall bind and inure to the benefit of
their respective successors and assigns hereunder.
5.12 Benefits of this Agreement
Nothing in this Agreement shall be construed to give to any Person other
than the Corporation, the Rights Agent and the holders of the Rights any legal
or equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Corporation, the Rights Agent
and the holders of the Rights.
5.13 Governing Law
This Agreement and each Right issued hereunder shall be deemed to be a
contract made under the laws of the Province of Quebec and for all purposes
shall be governed by and construed in accordance with the laws of such Province
applicable to contracts to be made and performed entirely within such Province.
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5.14 Severability
If any Section, clause, term or provision hereof or the application
thereof to any circumstance or any right hereunder shall, in any jurisdiction
and to any extent, be invalid or unenforceable, such Section, clause, term or
provision or such right shall be ineffective only as to such jurisdiction and to
the extent of such invalidity or unenforceability in such jurisdiction without
invalidating or rendering unenforceable or ineffective the remaining Sections,
clauses, terms and provisions hereof or rights hereunder in such jurisdiction or
the application of such Section, clause, term or provision or rights hereunder
in any other jurisdiction or to circumstances other than those as to which it is
specifically held invalid or unenforceable.
5.15 Effective Date
This Agreement is effective and in full force and effect in accordance
with its terms from the date hereof.
5.16 Determinations and Actions by the Board of Directors
The Board of Directors shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board of Directors or the Corporation, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the provisions of this
Agreement, (ii) make the public announcement referred to under "Stock
Acquisition Date" in section 1.1 hereof and (iii) make all determinations deemed
necessary or advisable for the administration of this Agreement (including a
determination to redeem or not to redeem the Rights or to amend the Agreement).
All such actions, calculations, interpretations and determinations (including,
for purposes of clause (y) below, all omissions with respect to the foregoing)
which are done or made by the Board of Directors, in good faith, shall (x) be
final, conclusive and binding on the Corporation, the Right, Agent, the holders
of the Rights Certificates (including Rights which are void pursuant to the
provisions hereof) and all other parties, and (y) not subject the Board of
Directors or any director of the Corporation to any liability to the holders of
the Rights Certificates (including Rights which are void pursuant to the
provisions hereof).
5.17 Time of the Essence
Time shall be of the essence in this Agreement.
5.18 Execution In Counterparts
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
REPAP ENTERPRISES INC.
By:
By:
MONTREAL TRUST COMPANY
By:
By:
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EXHIBIT "A"
Form of Rights Certificate
Certificate No.
THE RIGHTS ARE SUBJECT TO TERMINATION, AT THE OPTION OF THE CORPORATION, ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES (SPECIFIED
IN SECTION 3.1(b) OF THE RIGHTS AGREEMENT), RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR TRANSFEREE OF AN ACQUIRING PERSON OR ITS AFFILIATES OR
ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) MAY BECOME VOID.
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RIGHTS CERTIFICATE
This certifies that, or
registered assigns, is the registered holder of the number of Rights set forth
above, each of which entitles the registered holder thereof, subject to the
terms, provisions and conditions of the Shareholder Protection Rights Plan
Agreement dated as of the 8th day of February, 1994 (the "Rights Agreement")
between Repap Enterprises Inc., a corporation duly incorporated under the Canada
Business Corporations Act (the "Corporation") and Montreal Trust Company, a
trust company incorporated under the laws of Canada (the "Rights Agent") (which
term shall include any successor Rights Agent under the Rights Agreement, as
amended, to purchase from the Corporation at any time after the Separation Time
(as such term is defined in the Rights Agreement) and prior to the Expiration
Time (as such terms is 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 with the Form
of Election to Exercise duly executed and submitted to the Rights Agent at its
principal office in the city of Montreal. The Exercise Price shall initially be
$25 (Cdn.) per Right and shall be subject to adjustment in certain events as
provided in the Rights Agreement.
In certain circumstances described in the Rights Agreement, each Right
evidenced hereby may entitle the registered holder thereof to purchase or
receive assets, debt securities or shares in the capital stock 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.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Rights Agent, the. Corporation and the holders of the Rights Certificates.
Copies of the Rights Agreement are on file at the registered office of the
Corporation.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at any of the offices of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or Rights Certificates of like
tenor and date evidencing an aggregate number of Rights equal to the aggregate
number of Rights evidenced by the Rights Certificate or Rights Certificates
surrendered. If this Rights Certificate shall be exercised in part, the
registered holder shall be entitled to receive, upon surrender hereof, another
Rights Certificate or Rights Certificates for the number of whole, Rights not
exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be terminated by the Corporation under certain
circumstances at its option.
No holder of this Rights Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of Common Shares or
of any other securities which may at any time be issuable upon the exercise
hereof, nor shall anything contained in the Rights Agreement or herein be
construed to confer upon the holder hereof, as such, any of the rights of a
shareholder of the Corporation or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Rights evidenced by this Rights Certificate shall have been exercised
as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Corporation.
REPAP ENTERPRISES INC.
Date:
By:
Title:
By:
Title:
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Countersigned:
MONTREAL TRUST COMPANY
By
Authorized Signature
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer
the Rights Certificates.)
FOR VALUE RECEIVED hereby sells, assigns and transfers unto
(Please print name and address of transferee) this
Rights Certificate, together with all right, tide and interest therein, and does
hereby irrevocably constitute and appoint
, as attorney, to transfer the within Rights Certificate
on the books of the within-named Corporation, with full power of substitution.
Dated:
Signature Guaranteed:
Signature
(Signature must correspond to name as
written upon the face of this Rights
Certificate in every particular,
without alteration or enlargement or
any change whatsoever)
Signature must be guaranteed by a member firm of a recognized stock
exchange in Canada, a registered national securities exchange in the United
States, a member of the National Association of Securities Dealers, Inc., or a
commercial bank or trust company having an office or correspondent in Canada or
the United States.
(To be completed if true)
The undersigned hereby represents, for the benefit of all holders of
Rights and Common Shares, that the Rights evidenced by this Rights Certificate
are not, and, to the knowledge of the undersigned, have never been, Beneficially
Owned by an Acquiring Person or an Affiliate or Associate thereof (as defined in
the Rights Agreement).
Signature
[To be attached to each Rights Certificate]
FORM OF ELECTION TO EXERCISE
TO: REPAP ENTERPRISES INC.
The undersigned hereby irrevocably elects to exercise whole Rights
represented by the attached Rights Certificate to PURCHASE the Common Shares or
other securities, if applicable, issuable upon the exercise of such Rights and
requests that certificates for such securities be issued in the name of:
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Address:
Social Insurance, Social Security
or Other Taxpayer Identification Number
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Address:
Social Insurance, Social Security
or Other Taxpayer Identification Number
Dated:
Signature Guaranteed:
Signature
(Signature must correspond to name as
written upon the face of this Rights
Certificate in every particular,
without alteration or enlargement or
any change whatsoever)
Signature must be guaranteed by a member firm of a recognized stock
exchange in Canada, a registered national securities exchange in the United
States, a member of the National Association of Securities Dealers, Inc., or a
commercial bank or trust company having an office or correspondent in Canada or
the United States.
(To be completed if true)
The undersigned hereby represents, for the benefit of all holders of
Rights and Common Shares, that the Rights evidenced by this Rights Certificate
are not, and, to the knowledge of the undersigned, have never been, Beneficially
Owned by an Acquiring Person or an Affiliate or Associate thereof (as defined in
the Rights Agreement).
Signature
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NOTICE
In the event the certification set forth above in the Forms of Assignment
and Election is not completed, the Corporation will deem the Beneficial Owner of
the Rights evidenced by this Rights Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement). No Rights
Certificates shall be issued in exchange for a Rights Certificate owned or
deemed to have been owned by an Acquiring Person or an Affiliate or Associate
thereof Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
of Directors, in good faith, shall (x) be final, conclusive and binding on the
Corporation, the Rights Agent, the holders of the Rights Certificates (including
Rights which are void pursuant to the provisions hereof) and all other parties,
and (y) not subject the Board of Directors or any director of the Corporation to
any liability to the holders of the Rights Certificates (including Rights which
are void pursuant to the provisions hereof).
5.17 Time of the Essence
Time shall be of the essence in this Agreement.
5.18 Execution In Counterparts
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be original, and all such
counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
REPAP ENTERPRISES INC.
MONTREAL TRUST COMPANY
By:
By:
By:
By:
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AMENDMENT TO THE SHAREHOLDER PROTECTION RIGHTS PLAN AGREEMENT
DATED AS OF FEBRUARY 8, 1994 BETWEEN REPAP ENTERPRISES INC. AND
MONTREAL TRUST COMPANY
1 Paragraph 5.1 (b) of the Shareholder Protection Rights Plan Agreement
dated as of February 8, 1994 between Repap Enterprises Inc. ("Repap") and
Montreal Trust Company as Rights Agent (the "Plan") is hereby amended to
read as follows:
(b) The Board of Directors may until the occurrence of any particular
Flip-in Event determine, upon prior written notice delivered to the
Rights Agent, to waive the application of Section 3.1 to such Flip-in
Event."
2. All other provisions of the Plan continue in full force and effect
unamended.
3. This amendment shall be governed by and construed in accordance with the
laws of the Province of Quebec and the laws of Canada applicable therein.
Dated as of July 31, 1996
REPAP ENTERPRISES INC.
PER:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ -- Chairman
PER:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ -- Secretary
MONTREAL TRUST COMPANY
PER:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ -- Senior Manager
PER:
▇▇▇▇▇ ▇▇▇▇▇▇▇ -- Account Manager
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