EXHIBIT 10.2
SHAREHOLDER RIGHTS PLAN AGREEMENT
(AS AMENDED AS OF OCTOBER 19, 2000)
BETWEEN
CERTICOM CORP.
AND
MONTREAL TRUST COMPANY OF CANADA
AS RIGHTS AGENT
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
SHAREHOLDER RIGHTS PLAN AGREEMENT
MEMORANDUM OF AGREEMENT dated as of August 15, 1997 between Certicom
Corp. (the "Corporation"), a corporation incorporated under the laws of the
Province of Ontario and Montreal Trust Company of Canada, a trust company
incorporated under the laws of Canada (the "Rights Agent"), as amended as of
October 19, 2000;
WHEREAS the Board of Directors has determined that it is advisable and
in the best interests of the Corporation to adopt a shareholder rights plan to
insure, to the extent possible, that all shareholders of the Corporation are
treated fairly in connection with any take-over bid for the Corporation;
AND WHEREAS in order to implement the adoption of a shareholder rights
plan as established by this Agreement, the board of directors of the Corporation
has authorized the issuance of:
(a) one Right in respect of each Common Share outstanding at the Record
Time, effective as of such time; and
(b) one Right in respect of each Common Share of the Corporation issued
after the Record Time and prior to the earlier of the Separation Time and
the Expiration Time;
AND WHEREAS each Right entitles the holder thereof, after the
Separation Time, to purchase securities of the Corporation pursuant to the terms
and subject to the conditions set forth herein;
AND WHEREAS the Corporation desires to appoint the Rights Agent to act
on behalf of the Corporation and the holders of Rights, and the Rights Agent is
willing to so act, in connection with the issuance, transfer, exchange and
replacement of Rights Certificates, the exercise of Rights and other matters
referred to herein;
NOW THEREFORE, in consideration of the premises and the respective
covenants and agreements set forth herein, and subject to such covenants and
agreements, the parties hereby agree as follows:
ARTICLE 1 - INTERPRETATION
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1.1 Certain Definitions
For purposes of this Agreement, the following terms have the meanings
indicated:
(a) "Acquiring Person" means any Person who is the Beneficial Owner of 20%
or more of the outstanding Voting Shares; provided, however, that the
term "Acquiring Person" shall not include:
(i) the Corporation or any Subsidiary of the Corporation;
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(ii) any Person who becomes the Beneficial Owner of 20% or more of
the outstanding Voting Shares as a result of one or any
combination of (A) a Voting Share Reduction, (B) a Permitted
Bid Acquisition, (C) an Exempt Acquisition or (D) a Pro Rata
Acquisition; provided, however, that if a Person becomes the
Beneficial Owner of 20% or more of the outstanding Voting
Shares by reason of one or any combination of the operation of
Paragraphs (A), (B), (C) or (D) above and such Person's
Beneficial Ownership of Voting Shares thereafter increases by
more than 1.0% of the number of Voting Shares outstanding
(other than pursuant to one or any combination of a Voting
Share Reduction, a Permitted Bid Acquisition, an Exempt
Acquisition or a Pro Rata Acquisition), then as of the date
such Person becomes the Beneficial Owner of such additional
Voting Shares, such Person shall become an "Acquiring Person";
(iii) for a period of ten days after the Disqualification Date (as
defined below), any Person who becomes the Beneficial Owner of
20% or more of the outstanding Voting Shares as a result of
such Person becoming disqualified from relying on Clause
1.1(f)(viii) solely because such Person or the Beneficial Owner
of such Voting Shares is making or has announced an intention
to make a Take-over Bid, either alone or by acting jointly or
in concert with any other Person. For the purposes of this
definition, "Disqualification Date" means the first date of
public announcement of facts indicating that any Person is
making or has announced an intention to make a Take-over Bid;
(iv) an underwriter or member of a banking or selling group that
becomes the Beneficial Owner of 20% or more of the Voting
Shares in connection with a bona fide distribution to the
public of securities of the Corporation; or
(v) a Person (a "Grandfathered Person") who is the Beneficial Owner
of 20% or more of the outstanding Voting Shares of the
Corporation determined as at the Record Time, provided,
however, that this exception shall not be, and shall cease to
be, applicable to a Grandfathered Person in the event that such
Grandfathered Person shall, after the Record Time, become the
Beneficial Owner of additional Voting Shares of the Corporation
that increases its Beneficial Ownership of Voting Shares by
more than 1% of the number of Voting Shares outstanding as at
the Record Time, other than through a Permitted Bid Acquisition
or a Pro Rata Acquisition.
(b) "Affiliate", when used to indicate a relationship with a Person, means
a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with, such specified Person.
(c) "Agreement" means this shareholder rights plan agreement, as the same
may be 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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(d) "annual cash dividend" means cash dividends paid in any fiscal year of
the Corporation 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.
(e) "Associate", when used to indicate a relationship with a specified
Person, means a spouse of that Person, any Person of the same or
opposite sex with whom that Person is living in a conjugal
relationship outside marriage, a child of that Person or a relative of
that Person if that relative has the same residence as that Person.
(f) A Person shall be deemed the "Beneficial Owner" of, to have
"Beneficial Ownership" of, and to "Beneficially Own":
(i) any securities as to which such Person or any of such Person's
Affiliates or Associates is the owner at law or in equity;
(ii) any securities as to which such Person or any of such Person's
Affiliates or Associates has:
(A) the right to become the owner at law or in equity (whether
such right is exercisable immediately or within a period
of 75 days thereafter 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 (x) customary
agreements with and between underwriters and/or banking
group members and/or selling group members with respect to
a bona fide public offering of securities and (y) bona
fide pledges of securities in the ordinary course of
business), or upon the exercise of any conversion right,
exchange right, share purchase right (other than the
Rights), warrant or option, or otherwise; or
(B) the right to vote such securities (whether such right is
exercisable immediately or within a period of 75 days
thereafter and whether or not on condition or the
happening of any contingency or otherwise) pursuant to any
agreement, arrangement, pledge (other than bona fide
pledges of securities in the ordinary course of
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business) or understanding (whether or not in writing) or
otherwise; and
(iii) any securities which are Beneficially Owned within the meaning
of Clauses 1.1(f)(i) and (ii) by any other Person with whom
such Person is acting jointly or in concert;
provided, however, that a Person shall not be deemed the "Beneficial Owner" of,
or to have "Beneficial Ownership" of, or to "Beneficially Own", any security
solely because:
(iv) such security has been deposited or tendered pursuant to any
Take-over Bid made by such Person, made by any of such Person's
Affiliates or Associates or made by any other Person acting
jointly or in concert with such Person until such deposited or
tendered security has been taken up or paid for, whichever
shall first occur;
(v) such Person, any of such Person's Affiliates or Associates or
any other Person acting jointly or in concert with such Person
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;
(vi) such Person, any of such Person's Affiliates or Associates or
any other Person acting jointly or in concert with such Person
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;
(vii) such Person has an agreement, arrangement or understanding with
respect to a shareholder proposal or proposals or a matter or
matters to come before a meeting of shareholders, including the
election of directors;
(viii) where such Person, any of such Person's Affiliates or
Associates or any other Person acting jointly or in concert
with such Person holds or exercises voting or dispositive power
over such security provided that:
(A) the ordinary business of any such Person (the "Investment
Manager") includes the management of investment funds for
others (which others, for greater certainty, may include
or be limited to one or more employee benefit plans or
pension plans) and such voting or dispositive power over
such security is held by the Investment Manager in the
ordinary course of such business in the performance of
such Investment Manager's duties for the account of any
other Person (a "Client"),
(B) such Person (the "Trust Company") is licensed to carry on
the business of a trust company under applicable laws and,
as such, acts as trustee or administrator or in a similar
capacity in relation to
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the estates of deceased or incompetent Persons (each an
"Estate Account") or in relation to other accounts (each
an "Other Account") and holds such voting or dispositive
power over such security in the ordinary course of such
duties for the estate of any such deceased or incompetent
Person or for such other accounts,
(C) such Person is established by statute for purposes that
include, and the ordinary business or activity of such
Person (the "Statutory Body") includes, the management of
investment funds for employee benefit plans, pension
plans, insurance plans or various public bodies, or
(D) such Person (the "Administrator") is the administrator or
trustee of one or more pension funds or plans (a "Plan")
registered under the laws of Canada or any Province
thereof or the laws of the United States of America or any
State thereof;
provided, in any of the above cases, that the Investment Manager, the Trust
Company, the Statutory Body or the Administrator, as the case may be, is not
then making a Take-over Bid or has not then announced an intention to make a
Take-over Bid, other than an Offer to Acquire Voting Shares or other securities
by means of a distribution by the Corporation or by means of ordinary market
transactions (including prearranged trades) executed through the facilities of a
stock exchange or organized over-the-counter market, alone or by acting jointly
or in concert with any other Person;
(ix) such Person is (A) a Client of the same Investment Manager as another
Person on whose account the Investment Manager holds or exercises
voting or dispositive power over such security, (B) an Estate Account
or an Other Account of the same Trust Company as another Person on
whose account the Trust Company holds or exercises voting or
dispositive power over such security or (C) a Plan with the same
Administrator as another Plan; or
(x) such Person is (A) a Client of an Investment Manager and such security
is owned at law or in equity by the Investment Manager, (B) an Estate
Account or an Other Account of a Trust Company and such security is
owned at law or in equity by the Trust Company or (C) a Plan and such
security is owned at law or in equity by the Administrator of the
Plan; or
(xi) the holder of such security has agreed to deposit or tender such
security pursuant to a Permitted Lock-Up Agreement to a Take-Over Bid
made by such Person, made by any of such Person's Affiliates and/or
Associates or made by any other Person referred to in Subsection
1.1(f)(iii) until such deposited or tendered security has been taken
up or paid for, whichever shall first occur.
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(g) "Board of Directors" means the board of directors of the Corporation or any
duly constituted and empowered committee thereof.
(h) "Business Corporations Act" means the Ontario Business Corporations Act,
R.S.O. 1990, c. B.16, as amended, and the regulations made thereunder, and
any comparable or successor laws or regulations thereto.
(i) "Business Day" means any day other than a Saturday, Sunday or a day on
which banking institutions in Toronto are authorized or obligated by law to
close.
(j) "Canadian Dollar Equivalent" of any amount which is expressed in United
States dollars means, on any date, the Canadian dollar equivalent of such
amount determined by multiplying such amount by the U.S. - Canadian
Exchange Rate in effect on such date.
(k) "Canadian - U.S. Exchange Rate" means, on any date, the inverse of the U.S.
- Canadian Exchange Rate in effect on such date.
(l) "close of business" on any given date means the time on such date (or, if
such date is not a Business Day, the time on the next succeeding Business
Day) at which the principal transfer office in Toronto of the transfer
agent for the Common Shares of the Corporation (or, after the Separation
Time, the principal transfer office in Toronto of the Rights Agent) is
closed to the public.
(m) "Common Shares" means the Common Shares in the capital of the Corporation.
(n) "Competing Permitted Bid" means a Take-over Bid made while another
Permitted Bid is in existence and that satisfies all of the provisions of a
Permitted Bid except that the condition set forth in Clause 1.1(hh)(ii) may
provide that the Voting Shares that are the subject of the Take-over Bid
may be taken up or paid for on a date which is not earlier than the later
of 21 days after the date of the Take-over Bid or the earliest date on
which Voting Shares may be taken up or paid for under any other Permitted
Bid that is then in existence for the Voting Shares.
(o) A corporation shall be deemed to be "controlled" by another Person or two
or more Persons if:
(i) securities entitled to vote in the election of directors carrying more
than 50 per cent of the votes for the election of directors are held,
directly or indirectly, by or for the benefit of the other Person or
Persons; and
(ii) the votes carried by such securities are entitled, if exercised, to
elect a majority of the board of directors of such corporation;
and "controls", "controlling" and "under common control with" shall be
interpreted accordingly.
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(p) "Co-Rights Agents" has the meaning ascribed thereto in Subsection 4.1(a).
(q) "Disposition Date" has the meaning ascribed thereto in Subsection 5.1(h).
(r) "Dividend Reinvestment Acquisition" means an acquisition of Voting Shares
pursuant to a Dividend Reinvestment Plan.
(s) "Dividend Reinvestment Plan" means any regular dividend reinvestment or
other plan of the Corporation made available by the Corporation to holders
of its securities where such plan permits the holder to direct that some or
all of:
(i) dividends paid in respect of shares of any class of the Corporation;
(ii) proceeds of redemption of shares of the Corporation;
(iii) interest paid on evidences of indebtedness of the Corporation; or
(iv) optional cash payments;
be applied to the purchase from the Corporation of Voting Shares.
(t) "Election to Exercise" has the meaning ascribed thereto in Clause
2.2(d)(ii).
(u) "Exempt Acquisition" means a share acquisition in respect of which the
Board of Directors has waived the application of Section 3.1 pursuant to
the provisions of Subsection 5.1(a) or (h).
(v) "Exercise Price" means, as of any date from and after the Separation Time,
the price at which a holder may purchase the securities issuable upon
exercise of one whole Right which, subject to adjustment in accordance with
the terms hereof, shall be an amount equal to five times the Market Price
per Common Share determined as at the Separation Time;
(w) "Expansion Factor" has the meaning ascribed thereto in Clause 2.3(a)(x).
(x) "Expiration Time" means the close of business on that date which is the
earliest of the date of termination of this Agreement pursuant to Section
5.15 or, if this Agreement is confirmed pursuant to Section 5.15, the date
of termination of this Agreement pursuant to Section 5.16 or, if this
Agreement is reconfirmed pursuant to Section 5.16, the close of business on
the tenth anniversary of the date hereof.
(y) "Flip-in Event" means a transaction in or pursuant to which any Person
becomes an Acquiring Person.
(z) "holder" has the meaning ascribed thereto in Section 2.8.
(aa) "Independent Shareholders" shall mean holders of Voting Shares, other than:
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(i) any Acquiring Person;
(ii) any offeror;
(iii) any Affiliate or Associate of any Acquiring Person or offeror;
(iv) any Person acting jointly or in concert with any Acquiring Person or
offeror, or with any Affiliate or Associate of any Acquiring Person
or Offeror; and
(v) any employee benefit plan, deferred profit sharing plan, stock
participation plan and any other similar plan or trust for the
benefit of employees of the Corporation unless the beneficiaries of
the plan or trust direct the manner in which the Voting Shares are
to be voted or direct whether the Voting Shares are to be tendered
to a Take-over Bid.
(bb) "Market Price" per security 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 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 or if any other issuance or distribution by the Corporation to
the holders of Common Shares of securities (other than pursuant to a
dividend reinvestment plan) or assets (other than an annual cash dividend)
shall have had a similar effect, each such closing price so used shall be
appropriately adjusted in a manner analogous to the adjustment provided for
in Section 2.3 or as the Board of Directors shall otherwise determine 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 security of any
securities on any date shall be:
(i) the closing board lot sale price or, in case no such sale takes
place on such date, the average of the closing bid and asked prices
for each of such securities as reported by the principal Canadian
stock exchange (as determined by the Board of Directors) on which
such securities are listed or admitted to trading;
(ii) if for any reason none of such prices is available on such day or
the securities are not listed or posted for trading on a Canadian
stock exchange, the last sale price or, in case no such sale takes
place on such date, the average of the closing bid and asked prices
for each of such securities as reported by the principal national
United States securities
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exchange (as determined by the Board of Directors) on which such
securities are listed or admitted to trading;
(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 Canadian
stock exchange or a national United States securities exchange, the
last sale price or, in case no sale takes place on such date, the
average of the high bid and low asked prices for each of such
securities in the over-the-counter market, as quoted by any
reporting system then in use (as determined by the Board of
Directors); or
(iv) 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 Canadian
stock exchange or a national United States securities exchange or
quoted by any such reporting system, the average of the closing bid
and asked prices as furnished by a professional market maker making
a market in the securities selected by the Board of Directors;
(v) provided, however, that if for any reason none of such prices is
available on such day, the closing price per share of such
securities on such date means the fair value per share of such
securities on such date as determined by the Board of Directors,
after consultation with a nationally recognized investment dealer or
investment banker with respect to the fair value per share of such
securities. The Market Price shall be expressed in Canadian dollars
and, if initially determined in respect of any day forming part of
the 20 consecutive Trading Day period in question in United States
dollars, such amount shall be translated into Canadian dollars on
such date at the Canadian Dollar Equivalent thereof.
(cc) "1934 Exchange Act" means the Securities Exchange Act of 1934 of the United
States, as amended, and the rules and regulations thereunder as now in
effect or as the same may from time to time be amended, re-enacted or
replaced.
(dd) "Nominee" has the meaning ascribed thereto in Subsection 2.2(c).
(ee) "Offer to Acquire" includes:
(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.
(ff) "Offeror" means a Person who has announced an intention to make or who is
making a Take-over Bid;
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(gg) "Offeror's Securities" means Voting Shares Beneficially Owned by an
Offeror on the date of the Offer to Acquire;
(hh) "Permitted Bid" means a Take-over Bid made by an Offeror by way of take-
over bid circular which also complies with the following provisions:
(i) the Take-over Bid is made to all holders of Voting Shares as
registered on the books of the Corporation, other than the
Offeror;
(ii) 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 the date which is not less than 60 days following the
date of the Take-over Bid and only if at such date more than 50%
of the Voting Shares held by Independent Shareholders shall have
been deposited or tendered pursuant to the Take-over Bid and not
withdrawn;
(iii) unless the Take-over Bid is withdrawn, the Take-over Bid contains
an irrevocable and unqualified provision that Voting Shares may be
deposited pursuant to such Take-over Bid at any time during the
period of time described in Clause 1.1(hh)(ii) and that any Voting
Shares deposited pursuant to the Take-over Bid may be withdrawn
until taken up and paid for; and
(iv) the Take-over Bid contains an irrevocable and unqualified
provision that in the event that the deposit condition set forth
in Clause 1.1(hh)(ii) is satisfied the Offeror will make a public
announcement of that fact and the Take-over Bid will remain open
for deposits and tenders of Voting Shares for not less than ten
Business Days from the date of such public announcement.
(ii) "Permitted Bid Acquisition" means an acquisition of Voting Shares made
pursuant to a Permitted Bid or a Competing Permitted Bid;
(ii.1) "Permitted Lock-up Agreement" shall mean an agreement (the "Lock-up
Agreement") between a Person and one or more holders of Voting Shares
(each such holder herein referred to as a "Locked-Up Person") (the terms
of which are publicly disclosed and a copy of which is made available to
the public, including the Corporation, not later than the date the Lock-
up Bid (as defined below) is publicly announced or, if the Lock-up Bid
has been publicly announced prior to the date of the Lock-up Agreement,
not later than the date of the Lock-up Agreement) pursuant to which each
such Locked-up Person agrees to deposit or tender Voting Shares to a
Take-over Bid (the "Lock-up Bid") made or to be made by the Person, any
of such Person's Affiliates or Associates or any other Person referred to
in clause 1.1(f)(iii), provided that:
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(i) the Lock-up Agreement permits the Locked-up Person to withdraw its
Voting Shares from the Lock-up Agreement in order to deposit or tender
the Voting Shares to another Take-over Bid or to support another
transaction prior to the Voting Shares being taken up and paid for
under the Lock-up Bid, so long as the other Take-over Bid or
transaction:
(A) offers a price or value per Voting Share that exceeds the price
or value per Common Share offered under the Lock-up Bid; or
(B) offers a price or value for each Voting Share which is greater
than the price or value for each Voting Share offered under the
Lock-up Bid by as much as or more than a specified amount
provided that such specified amount is not greater than 5% of the
price or value offered under such Lock-up Bid; and,
for greater clarity, the Lock-up Agreement may (1) contain a right of first
refusal, (2) require a period of delay to give the Person who made the
Lock-up Bid an opportunity to match or better the consideration or value
offered in the other Take-over Bid or transaction or to offer to purchase
or otherwise acquire the same number of Common Shares subject to the other
Take-over Bid or transaction, or (3) contain other similar limitations on a
Locked-up Person's right to withdraw Voting Shares from the Lock-up
Agreement, so long as any such limitation does not preclude the exercise by
the Locked-up Person of the right to withdraw Voting Shares during the
period of the other Take-over Bid or transaction; and
(ii) no "break-up" fees, "top-up" fees, penalties, expenses or other
amounts that exceed in the aggregate the greater of:
(A) the cash equivalent of 2 5% of the price or value of the
consideration payable under the Lock-up Bid to the Locked-up
Person; and
(B) 50% of the amount by which the price or value of the
consideration payable under another Take-over Bid or transaction
to a Locked-up Person exceeds the price or value of the
consideration that such Locked-up Person would have received
under the Lock-up Bid;
shall be payable by such Locked-up Person pursuant to the Lock-up Agreement
in the event such Locked-up Person fails to deposit or tender Voting Shares
to the Lock-up Bid or withdraws Voting Shares previously tendered thereto
in order to deposit or tender such Voting Shares to another Take-over Bid
or support another transaction.
(jj) "Person" includes any individual, firm, partnership, association, trust,
body corporate, corporation, unincorporated organization, syndicate,
governmental entity or other entity;
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(kk) "Pro Rata Acquisition" means an acquisition by a Person of Voting Shares
pursuant to:
(i) a Dividend Reinvestment Acquisition;
(ii) a stock dividend, stock split or other event in respect of
securities of the Corporation of one or more particular classes or
series pursuant to which such Person becomes the Beneficial Owner of
Voting Shares on the same pro rata basis as all other holders of
securities of the particular class, classes or series;
(iii) the acquisition or the exercise by the Person of only those rights
to purchase Voting Shares distributed to that Person in the course
of a distribution to all holders of securities of the Corporation of
one or more particular classes or series pursuant to a bona fide
rights offering or pursuant to a prospectus; or
(iv) a distribution of Voting Shares, or securities convertible into or
exchangeable for Voting Shares (and the conversion or exchange of
such convertible or exchangeable securities), made pursuant to a
prospectus or by way of a private placement, provided that the
Person does not thereby acquire a greater percentage of such Voting
Shares, or securities convertible into or exchangeable for Voting
Shares, so offered than the Person's percentage of Voting Shares
Beneficially Owned immediately prior to such acquisition.
(ll) "Record Time" means the close of business on the date upon which the
issuance of the Rights shall have received all necessary regulatory
approvals.
(mm) "Right" means a right to purchase a Common Share of the Corporation upon
the terms and subject to the conditions set forth in this Agreement.
(nn) "Rights Certificate" means the certificates representing the Rights after
the Separation Time, which shall be substantially in the form attached
hereto as Attachment 1.
(oo) "Rights Register" has the meaning ascribed thereto in Subsection 2.6(a).
(pp) "Securities Act" means the Securities Act, R.S.O. 1990, c.S.5, as amended,
and the regulations thereunder, and any comparable or successor laws or
regulations thereto.
(qq) "Separation Time" shall mean the close of business on the eighth Trading
Day after the earlier of:
(i) the Stock Acquisition Date; and
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(ii) the date of the commencement of or first public announcement of the
intent of any Person (other than the Corporation or any Subsidiary of
the Corporation) to commence a Take-over Bid (other than a Permitted
Bid or a Competing Permitted Bid), or such later date as may be
determined by the Board of Directors, provided that, if any Take-over
Bid referred to in this Clause (ii) expires, is cancelled, terminated
or otherwise withdrawn prior to the Separation Time, such Take-over
Bid shall be deemed, for the purposes of this definition, never to
have been made.
(rr) "Stock Acquisition Date" shall mean the first date of public announcement
(which, for purposes of this definition, shall include, without limitation,
a report filed pursuant to section 101 of the Securities Act or Section
13(d) of the 1934 Exchange Act) by the Corporation or an Acquiring Person
that an Acquiring Person has become such.
(ss) A corporation shall be deemed to be a "Subsidiary" of another corporation
if:
(i) it is controlled by:
(A) that other; or
(B) that other and one or more corporations each of which is
controlled by that other; or
(C) two or more corporations each of which is controlled by that
other; or
(ii) it is a Subsidiary of a corporation that is that other's Subsidiary.
(tt) "Take-over Bid" means an Offer to Acquire Voting Shares, or securities
convertible into Voting Shares, where the Voting Shares subject to the
Offer to Acquire, together with (i) the Voting Shares into which securities
subject to the Offer to Acquire are convertible and (ii) the Offeror's
Securities, constitute in the aggregate 20% or more of the outstanding
Voting Shares at the date of the Offer to Acquire.
(uu) "Trading Day", when used with respect to any securities, means a day on
which the principal Canadian stock exchange on which such securities are
listed or admitted to trading is open for the transaction of business or,
if the securities are not listed or admitted to trading on any Canadian
stock exchange, a Business Day.
(vv) "U.S.-Canadian Exchange Rate" means, 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
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(ii) in any other case, the rate for such date for the conversion of
one United States dollar into Canadian dollars calculated in such
manner as may be determined by the Board of Directors from time
to time acting in good faith;
(ww) "U.S. Dollar Equivalent" of any amount which is expressed in Canadian
dollars means, on any date, the United States dollar equivalent of
such amount determined by multiplying such amount by the Canadian-U.S.
Exchange Rate in effect on such date; and
(xx) "Voting Share Reduction" means 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 any person to 20% or more of the Voting
Shares then outstanding;
(yy) "Voting Shares" shall mean the Common Shares of the Corporation and
any other shares in the capital of the Corporation entitled to vote
generally in the election of all directors.
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, Subsections,
Clauses, Paragraphs, Subparagraphs or other portions hereof 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 Calculation of Number and Percentage of Beneficial Ownership of
Outstanding Voting Shares
For purposes of this Agreement, the percentage of Voting Shares
Beneficially Owned by any Person, shall be and be deemed to be the product
(expressed as a percentage) 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.
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Where any Person is deemed to Beneficially Own unissued 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.
1.5 Acting Jointly or in Concert
For the purposes hereof, a Person is acting jointly or in concert with
every Person who, as a result of any agreement, commitment or understanding,
whether formal or informal, with the first Person or any Associate or Affiliate
thereof, acquires or offers to acquire Voting Shares (other than (x) customary
agreements with and between underwriters and/or banking group members and/or
selling group members with respect to a bona fide public offering of securities
and (y) bona fide pledges of securities in the ordinary course of business).
ARTICLE 2 - THE RIGHTS
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2.1 Legend on Common Share Certificates
Certificates representing Common Shares which are issued after the
Record Time (notice of the Record Time will be provided to the Rights Agent by
the Corporation) 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 (as defined in the Shareholder Rights Agreement
referred to below), this certificate also evidences rights of the holder
described in a Shareholder Rights Plan Agreement dated as of August 15,
1997 (the "Shareholder Rights Agreement") between Certicom Corp. (the
"Corporation") and Montreal Trust Company of Canada, the terms of which are
incorporated herein by reference and a copy of which is on file at the
principal executive offices of the Corporation. Under certain
circumstances set out in the Shareholder Rights Agreement, the rights may
expire, may be redeemed, may become null and void or may be evidenced by
separate certificates and no longer evidenced by this certificate. The
Corporation will mail or arrange for the mailing of a copy of the
Shareholder Rights Agreement to the holder of this certificate without
charge as soon as practicable after the receipt of a written request
therefor.
Certificates representing Common Shares that are issued and outstanding at
the Record Time shall also evidence one Right for each Common Share represented
thereby, notwithstanding the absence of the foregoing legend, until the close of
business on the earlier of the Separation Time and the Expiration Time.
2.2 Exercise of Rights; Detachment of Rights
(a) Subject to adjustment as herein set forth, each Right will entitle the
holder thereof, from and after the Separation Time and prior to the
Expiration Time, to purchase one Common Share for the Exercise Price
(which Exercise Price and number of Common Shares are subject to
adjustment as set forth below).
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Notwithstanding any other provision of this Agreement, any Rights held
by the Corporation or any of its Subsidiaries shall be void.
(b) Until the Separation Time:
(i) the Rights shall not be exercisable and no Right may be
exercised; and
(ii) each Right will be evidenced by the certificate for the
associated Common Share registered in the name of the holder
thereof (which certificate shall also be deemed to represent a
Rights Certificate) and will be transferable only together with,
and will be transferred by a transfer of, such associated Common
Share.
(c) From and after the Separation Time and prior to the Expiration Time:
(i) the Rights shall be exercisable; and
(ii) the registration and transfer of Rights shall be separate from
and independent of the 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 (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 appropriately completed, representing the number
of Rights held by such holder at the Separation Time and having such marks
of identification or designation and such legends, summaries or
endorsements printed thereon as the Corporation may deem appropriate and as
are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any law, rule or regulation or with any rule 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 of the Corporation 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:
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(i) the Rights Certificate evidencing such Rights;
(ii) an election to exercise such Rights (an "Election to Exercise")
substantially in the form attached to the Rights Certificate
appropriately completed and executed by the holder or his executors
or administrators or other personal representatives or his or their
legal attorney duly appointed by an instrument in writing in form
and executed in a manner satisfactory to the Rights Agent; and
(iii) 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, together with a completed Election to
Exercise executed in accordance with Clause 2.2(d)(ii), which does not
indicate that such Right is null and void as provided by Subsection 3.1(d),
and payment as set forth in Clause 2.2(d)(iii), the Rights Agent (unless
otherwise instructed by the Corporation in the event that the Corporation
is of the opinion that the Rights cannot be exercised in accordance with
this Agreement) will thereupon promptly:
(i) requisition from the transfer agent for the Common Shares
certificates representing the number of such Common Shares to be
purchased (the Corporation hereby irrevocably agreeing to authorize
its transfer agent to comply with all such requisitions);
(ii) when appropriate, requisition from the Corporation the amount of
cash to be paid in lieu of issuing fractional Common Shares;
(iii) after receipt of the certificates referred to in Clause 2.2(e)(i),
deliver the same to or upon the order of the registered holder of
such Rights Certificates, registered in such name or names as may be
designated by such holder;
(iv) after receipt, deliver any cash referred to in Clause 2.2(e)(ii) to
or to the order of the registered holder of such Rights Certificate;
and
(v) tender to the Corporation all payments received on exercise of the
Rights.
(f) In case the holder of any Rights exercises less than all the Rights
evidenced by such holder's Rights Certificate, a new Rights Certificate
evidencing the Rights remaining unexercised (subject to the provisions of
Subsection 5.5(a)) will be issued by the Rights Agent to such holder or to
such holder's duly authorized assigns.
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(g) The Corporation covenants and agrees that it will:
(i) take all such action as may be necessary and within its power
to ensure that all Common Shares delivered upon exercise of
Rights shall, at the time of delivery of the certificates for
such Common Shares (subject to payment of the Exercise Price),
be duly and validly authorized, executed, issued and delivered
as fully paid and non-assessable;
(ii) take all such action as may be necessary and within its power
to comply with the requirements of the Business Corporations
Act, the Securities Act and the securities laws or comparable
legislation of each of the provinces of Canada and any other
applicable law, rule or regulation, in connection with the
issuance and delivery of the Rights Certificates and the
issuance of any Common Shares upon exercise of Rights;
(iii) use reasonable efforts to cause all Common Shares issued upon
exercise of Rights to be listed on the stock exchanges on which
such Common Shares were traded immediately prior to the Stock
Acquisition Date;
(iv) cause to be reserved and kept available out of the authorized
and unissued Common Shares, the number of Common Shares that,
as provided in this Agreement, will from time to time be
sufficient to permit the exercise in full of all outstanding
Rights;
(v) pay when due and payable, if applicable, any and all federal,
provincial and municipal transfer taxes and charges (not
including any income or capital 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, or
certificates for Common Shares to be issued upon exercise of
any Rights, provided that the Corporation shall not be required
to pay any transfer tax or charge which may be payable in
respect of any transfer 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 transferred or exercised; and
(vi) after the Separation Time, except as permitted by Section 5.1,
not take (or permit any Subsidiary to take) any action if at
the time such action is taken it is reasonably foreseeable that
such action will diminish substantially or otherwise eliminate
the benefits intended to be afforded by the Rights.
2.3 Adjustments to Exercise Price; Number of Rights
(a) In the event the Corporation at any time after the Separation Time and
prior to the Expiration Time:
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(i) declares or pays a dividend on Common Shares payable in Common
Shares (or other securities exchangeable for or convertible
into or giving a right to acquire Common Shares) other than
pursuant to any optional stock dividend program;
(ii) subdivides or changes the then outstanding Common Shares into a
greater number of Common Shares;
(iii) consolidates or changes the then outstanding Common Shares into
a smaller number of Common Shares; or
(iv) otherwise issues any Common Shares (or other securities
exchangeable for or convertible into or giving a right to
acquire Common Shares) in respect of, in lieu of or in exchange
for existing Common Shares,
the Exercise Price, the number of Rights outstanding and the securities
purchasable upon exercise of the Rights shall be adjusted as of the record
or effective date as follows:
(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 (the "Expansion Factor") that a holder of one Common
Share immediately prior to such dividend, subdivision, change, consolidation or
issuance would hold thereafter as a result thereof (assuming the exercise of any
such exchange, conversion or acquisition rights); 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, consolidation or
issuance, so that each such Common Share will have exactly one Right associated
with it.
To the extent that any such exchange, conversion or acquisition rights are
not exercised prior to the expiration thereof, the Exercise Price shall be
readjusted to the Exercise Price which would be in effect, based on the
number of Common Shares actually issued on the exercise of such rights.
In the event the Corporation at any time after the Record Time and prior to
the Separation Time issues any Common Shares (or other securities
exchangeable for or convertible into or giving a right to acquire Common
Shares), each such Common Share shall automatically have one new Right
associated with it, which Right shall be evidenced by the certificate
representing such associated Common Share.
(b) If, after the Separation Time and prior to the Expiration Time, the
Corporation shall issue any shares of capital stock other than Common
Shares (or other securities exchangeable for or convertible into or
giving a right to acquire shares of any such capital stock) in a
transaction of a type described in Clause 2.3(a)(i) or (iv), the
shares of such capital stock shall be treated herein as nearly
equivalent
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to Common Shares to the extent practicable and appropriate under the
circumstances, as determined by the Board of Directors, and the shares
purchasable upon exercise of Rights shall be adjusted as necessary such
that the shares purchasable upon exercise of each Right after such
adjustment will be the shares that a holder of the shares purchasable upon
exercise of one Right immediately prior to such issuance would hold
thereafter as a result of such issuance. Notwithstanding Section 5.4, the
Corporation and the Rights Agent are authorized and agree to amend this
Agreement in order to give effect to the foregoing.
(c) In the event that at any time after the Record Time and prior to the
Expiration Time there shall occur:
(i) a reclassification or redesignation of the Common Shares or any
change of the Common Shares into other shares (other than as the
result of an event described in Subsection 2.3(a));
(ii) a consolidation, merger or amalgamation of the Company with or into
another body corporate (other than a consolidation, merger or
amalgamation which does not result in a reclassification of the
Common Shares or a change of the Common Shares into other shares); or
(iii) the transfer of all or substantially all of the assets of the Company
to another body corporate;
a holder of a Right shall thereafter be entitled to receive and shall
accept upon exercise of such Right, in lieu of the number of Common Shares
to which such Holder was theretofor entitled to acquire upon such exercise,
the kind and amount of shares and/or other securities or property which
such holder would have been entitled to receive as a result of such
occurrence if, on the effective date thereof, such holder had been the
holder of the number of Common Shares to which such holder was then
entitled upon exercise of such Right. The Corporation shall take all
necessary steps so that holders of Rights shall thereafter be entitled to
acquire such shares and/or other securities or property, subject to
adjustment thereafter in accordance with provisions the same, as nearly as
may be possible, as those contained in this Section 2.3.
(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 per cent in the Exercise Price;
provided, however, that any adjustments which by reason of this Subsection
2.3(d) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under Section 2.3
shall be made to the nearest cent or to the nearest ten-thousandth of a
share. Notwithstanding the first sentence of this Subsection 2.3(d), any
adjustment required by Section 2.3 shall be made no later than the earlier
of:
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(i) three years from the date of the transaction which gives rise to such
adjustment; or
(ii) the Expiration Time.
(e) 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.
(f) 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 other securities upon
the occurrence of the event requiring such adjustment.
(g) Notwithstanding anything contained 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 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, hereafter made by the
Corporation to holders of its Common Shares, shall not be taxable to
such shareholders.
(h) Whenever an adjustment to the Exercise Price or a change in the securities
purchaseable upon exercise of the Rights is made pursuant to this Section
2.3, the Corporation shall promptly and in any event, where such change or
adjustment occurs prior to the Separation Time, not later than the
Separation Time:
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(i) file with the Rights Agent and with each transfer agent for the
Common Shares a certificate specifying the particulars of such
adjustment or change; and
(ii) cause notice of the particulars of such adjustment or change to
be given to the holders of the Rights.
Failure to file such certificate or to cause such notice to be given as
aforesaid, or any defect therein, shall not affect the validity of such
adjustment or change.
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 thereon, and such certificate shall
be dated the date upon which the Rights Certificate evidencing such Rights was
duly surrendered in accordance with Subsection 2.2(d) (together with a duly
completed Election to Exercise) and payment of the Exercise Price for such
Rights (and any applicable transfer taxes and other governmental charges payable
by the exercising holder hereunder) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Common Share
transfer books of the Corporation are closed, such Person shall be deemed to
have become the record holder of such shares on, and such certificate shall be
dated, the next succeeding Business Day on which the Common Share transfer books
of the Corporation are open.
2.5 Execution, Authentication, Delivery and Dating of Rights Certificates
(a) The Rights Certificates shall be executed on behalf of the Corporation
by its Chairman of the Board, President or any Vice-President and by
its Corporate Secretary or any Assistant Secretary under the corporate
seal of the Corporation reproduced thereon. The signature of any of
these officers on the Rights Certificates may be manual or facsimile.
Rights Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the
Corporation shall bind the Corporation, notwithstanding that such
individuals or any of them have ceased to hold such offices either
before or after 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 (in a manner satisfactory to the Corporation) and send
such Rights Certificates to the holders of the Rights pursuant to
Subsection 2.2(c) hereof. No Rights Certificate shall be valid for any
purpose until countersigned by the Rights Agent as aforesaid.
(c) Each Rights Certificate shall be dated the date of countersignature
thereof.
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2.6 Registration, 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 Subsection 2.6(c), 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 or the Rights Agent 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
reasonable fees and expenses of the Rights Agent) connected therewith.
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
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(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 or the Rights Agent 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 reasonable 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 hereunder.
2.8 Persons Deemed Owners of Rights
The Corporation, the Rights Agent and any agent of the Corporation or the
Rights Agent may deem and treat the Person in whose name a Rights Certificate
(or, prior to the Separation Time, the associated Common Share certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby for
all purposes whatsoever. In this Agreement, unless the context otherwise
requires, the term "holder" of any Right means the registered holder of such
Right (or, prior to the Separation Time, the associated Common Share).
2.9 Delivery and Cancellation of Certificates
All Rights Certificates surrendered upon exercise or for redemption,
registration of transfer or exchange shall, if surrendered to any Person other
than the Rights Agent, be delivered to the Rights Agent and, in any case, shall
be promptly cancelled by the Rights Agent. The Corporation may at any time
deliver to the Rights Agent for cancellation any Rights Certificates previously
countersigned and delivered hereunder which the Corporation may have acquired in
any manner whatsoever, and all Rights Certificates so delivered shall be
promptly cancelled by the Rights Agent. No Rights Certificate shall be
countersigned in lieu of or in exchange for any Rights Certificates cancelled as
provided in this Section 2.9, except as expressly permitted by this Agreement.
The Rights Agent shall, subject to applicable laws, destroy all cancelled Rights
Certificates and deliver a certificate of destruction to the Corporation.
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2.10 Agreement of Rights Holders
Every holder of Rights, by accepting the same, consents and agrees
with the Corporation and the Rights Agent and with every other holder of Rights
that:
(a) such Holder shall be bound by and subject to the provisions of this
Agreement, as amended from time to time in accordance with the terms
hereof, in respect of all Rights held;
(b) prior to the Separation Time, each Right will be transferable only
together with, and will be transferred by a transfer of, the
associated Common Share certificate representing such Right;
(c) after the Separation Time, the Rights Certificates will be
transferable only on the Rights Register as provided herein;
(d) prior to due presentment of a Rights Certificate (or, prior to the
Separation Time, the associated Common Share certificate) for
registration of transfer, the Corporation, the Rights Agent and any
agent of the Corporation or the Rights Agent may deem and treat the
Person in whose name the Rights Certificate (or, prior to the
Separation Time, the associated Common Share certificate) is
registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on such
Rights Certificate or the associated Common Share certificate made by
anyone other than the Corporation or the Rights Agent) for all
purposes whatsoever, and neither the Corporation nor the Rights Agent
shall be affected by any notice to the contrary;
(e) such holder of Rights has waived his right to receive any fractional
Rights or any fractional shares or other securities upon exercise of a
Right (except as provided herein);
(f) subject to the provisions of Section 5.4, without the approval of any
holder of Rights or Voting Shares and upon the sole authority of the
Board of Directors, acting in good faith, this Agreement may be
supplemented or amended from time to time including, without
limitation, to cure any ambiguity or to correct or supplement any
provision contained herein which may be inconsistent with the intent
of this Agreement or is otherwise defective, as provided herein; and
(g) notwithstanding anything in this Agreement to the contrary, neither
the Corporation nor the Rights Agent shall have any liability to any
holder of a Right or any other Person as a result of its inability to
perform any of its obligations under this Agreement by reason of any
preliminary or permanent injunction or other order, decree or ruling
issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute,
rule, regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining
performance of such obligation.
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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 right, title, benefit or privilege 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 Common Shares or any other
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 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 - ADJUSTMENTS TO THE RIGHTS
---------------------------------------
3.1 Flip-in Event
(a) Subject to Subsection 3.1(b) and Section 5.1, in the event that prior
to the Expiration Time a Flip-in Event shall occur, each Right shall
constitute, effective at the close of business on the eighth Trading
Day after the Stock Acquisition Date, the right to purchase from the
Corporation, upon exercise thereof in accordance with the terms
hereof, that number of Common Shares having an aggregate Market Price
on the date such Flip-in Event occurs equal to twice the Exercise
Price for an amount in cash equal to the Exercise Price (such right to
be appropriately adjusted in a manner analogous to the applicable
adjustment provided for in Section 2.3 in the event that after such
occurrence, 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 or were
Beneficially Owned on or after the earlier of the Separation Time or
the Stock Acquisition Date by:
(i) an Acquiring Person (or any Affiliate or Associate of an
Acquiring Person or any Person acting jointly or in concert with
an Acquiring Person or any Affiliate or Associate of an Acquiring
Person); or
(ii) a transferee of Rights, directly or indirectly, from 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), where such
transferee becomes a transferee concurrently with or subsequent
to the Acquiring Person becoming such in a transfer that the
Board of Directors has determined is
-27-
part of a plan, arrangement or scheme of an Acquiring Person (or
any Affiliate or Associate of an Acquiring Person or any Person
acting jointly or in concert with an Acquiring Person or any
Affiliate or Associate of an Acquiring Person), that has the
purpose or effect of avoiding Clause 3.1(b)(i),
shall become null and void without any further action, and any holder
of such Rights (including transferees) shall thereafter have no right
to exercise such Rights under any provision of this Agreement and
further shall thereafter not have any other rights whatsoever with
respect to such Rights, whether under any provision of this Agreement
or otherwise.
(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 Business Corporations Act, the Securities Act, the
securities laws or comparable legislation of each of the provinces of
Canada and any other applicable law, rule or regulation in respect of
the issue of Common Shares upon the exercise of Rights in accordance
with this Agreement.
(d) Any Rights Certificate that represents Rights Beneficially Owned by a
Person described in either Clause 3.1(b)(i) or (ii) or transferred to
any nominee of any such Person, and any Rights Certificate issued upon
the transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain the following
legend:
The Rights represented by this Rights Certificate were issued to
a Person who was an Acquiring Person or an Affiliate or an
Associate of an Acquiring Person or a Person who was acting
jointly or in concert with an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such terms are defined in
the Shareholder Rights Plan Agreement). This Rights Certificate
and the Rights represented hereby are void or shall become void
in the circumstances specified in Subsection 3.1(b) of the
Shareholder Rights Plan Agreement.
provided, however, that the Rights Agent shall not be under any
responsibility to ascertain the existence of facts that would require
the imposition of such legend but shall impose such legend only if
instructed to do so by the Corporation in writing or if a holder fails
to certify upon transfer or exchange in the space provided on the
Rights Certificate that such holder is not a Person described in such
legend.
-28-
ARTICLE 4 - THE RIGHTS AGENT
------------------------------
4.1 General
(a) The Corporation hereby appoints the Rights Agent to act as agent for
the Corporation and the holders of the Rights in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Corporation may from time to time appoint such co-
Rights Agents ("Co-Rights Agents") as it may deem necessary or
desirable. In the event the Corporation appoints one or more Co-Rights
Agents, the respective duties of the Rights Agent and Co-Rights Agents
shall be as the Corporation may determine. The Corporation agrees to
pay all reasonable fees and expenses of the Rights Agent in respect of
the performance of its duties under this Agreement. 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 wilful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs
and expenses of defending against any claim of liability, which right
to indemnification will survive the termination of this Agreement.
(b) The Rights Agent shall be protected and shall incur no liability for
or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon
any certificate for Common Shares, Rights Certificate, certificate for
other securities of the Corporation, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice,
direction, consent, certificate, statement, or other paper or document
believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons.
4.2 Merger, Amalgamation or Consolidation or Change of Name of Rights
Agent
(a) Any corporation into which the 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 is a party, or any corporation
succeeding to the shareholder or stockholder services business of the
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 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 have not been countersigned, any successor Rights Agent may
countersign such Rights Certificates in the name of the predecessor
Rights Agent or in the name of the
-29-
successor Rights Agent; and in all such cases such Rights Certificates will
have the full force provided in the Rights Certificates and in this
Agreement.
(b) In case at any time the name of the Rights Agent is changed and at such
time any of the Rights Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior
name or in its changed name; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certificates and in this
Agreement.
4.3 Duties of Rights Agent
The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, all of which the Corporation
and the holders of certificates for Common Shares and the holders of Rights
Certificates, by their acceptance thereof, shall be bound:
(a) the Rights Agent may, at the expense of the Corporation, 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 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, President, any Vice-President,
Treasurer, Corporate Secretary, or any Assistant Secretary of the
Corporation and delivered to the Rights Agent; and such certificate will be
full authorization to the Rights Agent for any action taken or suffered in
good faith by it under the provisions of this Agreement in reliance upon
such certificate;
(c) the Rights Agent will be liable hereunder for its own negligence, bad faith
or wilful misconduct;
(d) the Rights Agent will not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the
certificates for Common Shares or the Rights Certificates (except its
countersignature thereof) or be required to verify the same, but all such
statements and recitals are and will be deemed to have been made by the
Corporation only;
-30-
(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 certificate for a Common Share
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 exerciseability of the Rights (including
the Rights becoming void pursuant to Subsection 3.1(b) hereof) or any
adjustment required under the provisions of Section 2.3 hereof or
responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights after receipt of
the certificate contemplated by Section 2.3 describing any such
adjustment); nor will it by any act hereunder be deemed to make any
representation or warranty as to the authorization of any Common Shares to
be issued pursuant to this Agreement or any Rights or as to whether any
Common Shares will, when issued, be duly and validly authorized, executed,
issued and delivered and fully paid and non-assessable;
(f) the Corporation agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably
be required by the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement;
(g) the Rights Agent is hereby authorized and directed to accept instructions
in writing with respect to the performance of its duties hereunder from any
individual believed by the Rights Agent to be the Chairman of the Board,
President, any Vice-President, Treasurer, Corporate Secretary or any
Assistant Secretary of the Corporation, and to apply to such individuals
for advice or instructions in connection with its duties, and it shall not
be liable for any action taken or suffered by it in good faith in
accordance with instructions of any such individual;
(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;
(i) nothing herein shall preclude the Rights Agent from acting in any other
capacity for the Corporation or for any other legal entity; and
(j) 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
-31-
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 60 days' notice (or such lesser notice as is acceptable to
the Corporation) in writing mailed to the Corporation and to each transfer agent
of Common Shares by registered or certified mail. The Corporation may remove the
Rights Agent upon 60 days' notice in writing, mailed to the Rights Agent and to
each transfer agent of the Common Shares by registered or certified mail. If the
Rights Agent should resign or be removed or otherwise become incapable of
acting, the Corporation will appoint a successor to the Rights Agent. If the
Corporation fails to make such appointment within a period of 60 days after such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent, then by prior written
notice to the Corporation the resigning Rights Agent or the holder of any Rights
(which holder shall, with such notice, submit such holder's Rights Certificate,
if any, for inspection by the Corporation), may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Corporation or by such a court, shall be a
corporation incorporated under the laws of Canada or a province thereof
authorized to carry on the business of a trust company in the Province of
Ontario. After appointment, the successor Rights Agent will be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights
Agent shall, after payment to it by the Corporation of all outstanding fees and
expenses, deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Corporation will file notice thereof in
writing with the predecessor Rights Agent and each transfer agent of the Common
Shares and mail a notice thereof in writing to the holders of the Rights in
accordance with Section 5.9. Failure to give any notice provided for in this
Section 4.4, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
any successor Rights Agent, as the case may be.
ARTICLE 5 - MISCELLANEOUS
---------------------------
5.1 Redemption and Waiver
(a) The Board of Directors acting in good faith may, until the occurrence
of a Flip-In Event upon prior written notice delivered to the Rights
Agent, determine to waive the application of Section 3.1 to any Flip-
In Event, provided that if the Board of Directors waives the
application of Section 3.1 to a particular Flip-In Event occurring by
reason of any Take-Over Bid which is made by means of a Take-Over Bid
circular to all holders of record of Voting Shares, the Board of
Directors will be deemed to have waived the application of Section 3.1
to any other Flip-In
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Event occurring by reason of any other Take-Over Bid which is made by means
of a Take-Over Bid circular to all holders of shares prior to the expiry of
any Take-Over Bid, as the same may be extended from time to time, in
respect of which a waiver is, or is deemed to have been, granted under this
Subsection 5.1(a).
(b) Subject to the prior consent of the holders of the Voting Shares or the
rights obtained as set forth in Subsection 5.4(b) or (c), as applicable,
the Board of Directors of the Corporation may, at its option, at any time
prior to the provisions of Section 3.1 becoming applicable as a result of
the occurrence of a Flip-in Event, elect to redeem all but not less than
all of the outstanding Rights at a redemption price of $0.001 per Right
appropriately adjusted in a manner analogous to the applicable adjustment
provided for in Section 2.3 if an event of the type analogous to any of the
events described in Section 2.3 shall have occurred (such redemption price
being herein referred to as the "Redemption Price").
(c) Where a Person acquires pursuant to a Permitted Bid or a Competing
Permitted Bid outstanding Voting Shares, other than Voting Shares
Beneficially Owned at the date of the Permitted Bid or the Competing
Permitted Bid by such Person, then the Board of Directors of the
Corporation shall immediately upon the consummation of such acquisition
without further formality be deemed to have elected to redeem the Rights at
the Redemption Price.
(d) Where a Take-over Bid that is not a Permitted Bid Acquisition is withdrawn
or otherwise terminated after the Separation Time has occurred and prior to
the occurrence of a Flip-in Event, the Board of Directors may elect to
redeem all the outstanding Rights at the Redemption Price.
(e) If the Board of Directors is deemed under Subsection 5.1(c) to have
elected, or elects under either of Subsection 5.1(b) or (d), 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 12 days after the Board of Directors is deemed under Subsection
5.1(c) to have elected, or elects under Subsection 5.1(b) or (d), to redeem
the Rights, the Corporation shall give notice of redemption to the holders
of the then outstanding Rights by mailing such notice to each such holder
at his last address as it appears upon the registry books of the Rights
Agent or, prior to the Separation Time, on the registry books of the
transfer agent for the Voting 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.
(g) Upon the Rights being redeemed pursuant to Subsection 5.1(d), all the
provisions of this Agreement shall continue to apply as if the Separation
Time had not
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occurred and Rights Certificates representing the number of Rights
held by each holder of record of Common Shares as of the Separation
Time had not been mailed to each such holder and for all purposes of
this Agreement the Separation Time shall be deemed not to have
occurred.
(h) The Board of Directors may waive the application of Section 3.1 in
respect of the occurrence of any Flip-in Event if the Board of
Directors has determined within eight Trading Days following a Stock
Acquisition Date that a Person became an Acquiring Person by
inadvertence and without any intention to become, or knowledge that it
would become, an Acquiring Person under this Agreement and, in the
event that such a waiver is granted by the Board of Directors, such
Stock Acquisition Date shall be deemed not to have occurred. Any such
waiver pursuant to this Subsection 5.1(h) must be on the condition
that such Person, within 14 days after the foregoing determination by
the Board of Directors or such earlier or later date as the Board of
Directors may determine (the "Disposition Date"), has reduced its
Beneficial Ownership of Voting Shares such that the Person is no
longer an Acquiring Person. If the Person remains an Acquiring Person
at the close of business on the Disposition Date, the Disposition Date
shall be deemed to be the date of occurrence of a further Stock
Acquisition Date and Section 3.1 shall apply thereto.
5.2 Expiration
No Person shall have any rights whatsoever pursuant to this Agreement
or in respect of any Right after the Expiration Time, except the Rights Agent as
specified in Subsection 4.1(a) of this Agreement.
5.3 Issuance of New Rights Certificates
Notwithstanding any of the provisions of this Agreement or 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) The Corporation may make amendments to this Agreement to correct any
clerical or typographical error or which are required to maintain the
validity of this Agreement as a result of any change in any applicable
legislation or regulations or rules thereunder. The Corporation may,
prior to the date of the shareholders' meeting referred to in Section
5.15, supplement or amend this Agreement without the approval of any
holders of Rights or Voting Shares in order to make any changes which
the Board of Directors acting in good faith may deem necessary or
desirable. Notwithstanding anything in this Section 5.4 to the
contrary, no such supplement or amendment shall be made to the
provisions of Article 4 except
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with the written concurrence of the Rights Agent to such supplement or
amendment.
(b) Subject to the Section 5.4(a), the Corporation may, with the prior consent
of the holders of Voting Shares obtained as set forth below, at any time
prior to 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 if the action
requiring such approval is authorized by the affirmative vote of a majority
of the votes cast by Independent Shareholders present or represented at and
entitled to be voted at a meeting of the holders of Voting Shares duly
called and held in compliance with applicable laws and the articles and by-
laws of the Corporation.
(c) The Corporation may, with the prior consent of the holders of Rights, at
any time on or after the Separation Date, amend, vary or delete any of the
provisions of this Agreement and the Rights (whether or not such action
would materially adversely affect the interests of the holders of Rights
generally), provided that no such amendment, variation or deletion shall be
made to the provisions of Article 4 except with the written concurrence of
the Rights Agent thereto. Such consent shall be deemed to have been given
if such amendment, variation or deletion is authorized by the affirmative
votes of the holders of Rights present or represented at and entitled to be
voted at a meeting of the holders and representing 50% plus one of the
votes cast in respect thereof.
(d) Any approval of the holders of Rights shall be deemed to have been given if
the action requiring such approval is authorized by the affirmative votes
of the holders of Rights present or represented at and entitled to be voted
at a meeting of the holders of Rights and representing a majority of the
votes cast in respect thereof. For the purposes hereof, each outstanding
Right (other than Rights which are void pursuant to the provisions hereof)
shall be entitled to one vote, and the procedures for the calling, holding
and conduct of the meeting shall be those, as nearly as may be, which are
provided in the Corporation's by-laws and the Business Corporations Act
with respect to meetings of shareholders of the Corporation.
(e) Any amendments made by the Corporation to this Agreement pursuant to
Subsection 5.4(a) which are required to maintain the validity of this
Agreement as a result of any change in any applicable legislation or
regulation thereunder shall:
(i) if made before the Separation Time, be submitted to the shareholders
of the Corporation at the next meeting of shareholders and the
shareholders may, by the majority referred to in Subsection 5.4(b),
confirm or reject such amendment; or
(ii) if made after the Separation Time, be submitted to the holders of
Rights at a meeting to be called for on a date not later than
immediately following
-35-
the next meeting of shareholders of the Corporation and the
holders of Rights may, by resolution passed by the majority
referred to in Subsection 5.4(d ), confirm or reject such
amendment.
Any such amendment shall be effective from the date of the resolution
of the Board of Directors adopting such amendment, until it is
confirmed or rejected or until it ceases to be effective (as described
in the next sentence) and, where such amendment is confirmed, it
continues in effect in the form so confirmed. If such amendment is
rejected by the shareholders or the holders of Rights or is not
submitted to the shareholders or holders of Rights as required, then
such amendment shall cease to be effective from and after the
termination of the meeting at which it was rejected or to which it
should have been but was not submitted or from and after the date of
the meeting of holders of Rights that should have been but was not
held, and no subsequent resolution of the Board of Directors to amend
this Agreement to substantially the same effect shall be effective
until confirmed by the shareholders or holders of Rights as the case
may be.
5.5 Fractional Rights and Fractional Shares
(a) The Corporation shall not be required to issue fractions of Rights or
to distribute Rights Certificates which evidence fractional Rights.
After the Separation Time, in lieu of issuing fractional Rights, the
Corporation shall pay to the holders of record of the Rights
Certificates (provided the Rights represented by such Rights
Certificates are not void pursuant to the provisions of Subsection
3.1(b), at the time such fractional Rights would otherwise be
issuable), an amount in cash equal to the fraction of the Market Price
of one whole Right that the fraction of a Right that would otherwise
be issuable is of one whole Right.
(b) The Corporation shall not be required to issue fractions of Common
Shares upon exercise of Rights or to distribute certificates which
evidence fractional Common Shares. In lieu of issuing fractional
Common Shares, the Corporation shall 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 fraction of the Market Price
of one Common Share that the fraction of a Common Share that would
otherwise be issuable upon the exercise of such Right is of one whole
Common Share at the date of such exercise.
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 holders of the Rights. Any holder of
Rights, without the consent of the Rights Agent or of the holder of any other
Rights, may, on such holder's own behalf and for such holder's own benefit and
the benefit of other holders of Rights, enforce, and may institute and maintain
any suit, action or proceeding against the Corporation to enforce such holder's
right to exercise such holder's Rights, or Rights to which such holder is
entitled, in the manner provided in such
-36-
holder's Rights 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, and without limiting the
generality of the foregoing, necessary approvals of The Toronto Stock Exchange
and other exchanges shall be obtained, such as to the issuance of or delivery of
debt or equity securities (other than non-convertible debt) of the Corporation
upon the exercise of Rights and any amendment to this Agreement shall be subject
to the prior written consent of The Toronto Stock Exchange.
5.8 Declaration as to Non-Canadian 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 by the Corporation with the securities laws or comparable
legislation of a jurisdiction outside Canada, the Board of Directors acting in
good faith shall take such actions as it may deem appropriate to ensure such
compliance. 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, in which such
issue or delivery would be unlawful without registration of the relevant Persons
or securities for such purposes.
5.9 Notices
(a) Notices or demands authorized or required by this Agreement to be
given or made by the Rights Agent or by the holder of any Rights to or
on the Corporation shall be sufficiently given or made if delivered,
sent by first class mail, postage prepaid, or sent by facsimile or
other form of recorded electronic communication, charges prepaid and
confirmed in writing, as follows:
Certicom Corp.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: Chief Financial Officer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) Notices or demands authorized or required by this Agreement to be
given or made by the Corporation or by the holder of any Rights to or
on the Rights Agent shall be sufficiently given or made if delivered,
sent by first class mail, postage
-37-
prepaid, or sent by facsimile or other form of recorded electronic
communication, charges prepaid and confirmed in writing, as follows:
Montreal Trust Company of Canada
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: Senior Manager
Client Services
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(c) Notices or demands authorized or required by this Agreement to be
given or made by the Corporation or the Rights Agent to or on the
holder of any Rights shall be sufficiently given or made if delivered
or sent by first class mail, postage prepaid, addressed to such holder
at the address of such holder as it appears upon the register of the
Rights Agent or, prior to the Separation Time, on the register of the
Corporation for the 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.
(d) Any notice given or made in accordance with this Section 5.9 shall be
deemed to have been given and to have been received on the day of
delivery, if so delivered, on the third Business Day (excluding each
day during which there exists any general interruption of postal
service due to strike, lockout or other cause) following the mailing
thereof, if so mailed, and on the day of telegraphing, telecopying or
sending of the same by other means of recorded electronic
communication (provided such sending is during the normal business
hours of the addressee on a Business Day and if not, on the first
Business Day thereafter).
(e) Each of the Corporation and the Rights Agent may from time to time
change its address for notice under Subsection 5.9(a) or (b) by notice
to the other given in the manner aforesaid.
5.10 Costs of Enforcement
The Corporation agrees that if the Corporation fails to fulfil any of
its obligations pursuant to this Agreement, then the Corporation will reimburse
the holder of any Rights for the costs and expenses (including legal fees)
incurred by such holder to enforce his rights pursuant to any Rights or this
Agreement.
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5.11 Successors
All the covenants and provisions of this Agreement by or for the
benefit of the Corporation or the Rights Agent shall bind and enure to the
benefit of their respective successors and assigns hereunder.
5.12 Benefits of this Agreement
Nothing in this Agreement shall be construed to give to any Person
other than the Corporation, the Rights Agent and the holders of the Rights any
legal or equitable right, remedy or claim under this Agreement; further, 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 Ontario and for all purposes
shall be governed by and construed in accordance with the laws of such Province
applicable to contracts to be made and performed entirely within such Province.
5.14 Severability
If any term or provision hereof or the application thereof to any
circumstance shall, in any jurisdiction and to any extent, be invalid or
unenforceable, such term or provision 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 terms and provisions hereof in such jurisdiction or the application of
such term or provision 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 and after the date hereof. At the first annual meeting of
holders of Voting Shares of the Corporation following the date hereof, the
Corporation shall request confirmation of this Agreement by the holders of its
Voting Shares. If this Agreement is not confirmed by a majority of the votes
cast by holders of Voting Shares who vote in respect of confirmation of this
Agreement at such meeting, then this Agreement and all outstanding Rights shall
terminate and be void and of no further force and effect on and from the close
of business on the date of termination of such meeting.
5.16 Reconfirmation
Notwithstanding the confirmation of this Agreement pursuant to Section
5.15, this Agreement must be reconfirmed by a resolution passed by a majority of
greater than 50% of the votes cast by all holders of Voting Shares who vote in
respect of such reconfirmation at every third annual meeting following the 1997
annual meeting. If the Agreement is not so reconfirmed
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or is not presented for reconfirmation at such annual meeting, the Agreement and
all outstanding Rights shall terminate and be void and of no further force and
effect on and from the date of termination of the annual meeting; provided that
termination shall not occur if a Flip-in Event has occurred (other than a Flip-
in Event which has been waived pursuant to Subsection 5.1(a) or (h) hereof),
prior to the date upon which this Agreement would otherwise terminate pursuant
to this Section 5.16.
5.17 Determinations and Actions by the Board of Directors
The Board of Directors, upon the advice of outside counsel, 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 as may be necessary or advisable in the administration of this
Agreement. All such actions, calculations and determinations (including all
omissions with respect to the foregoing) which are done or made by the Board of
Directors, in good faith, shall not subject the Board of Directors or any
director of the Corporation to any liability to the holders of the Rights.
5.18 Time of the Essence
Time shall be of the essence in this Agreement.
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5.19 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.
CERTICOM CORP.
By: _______________________________
Name:
Title:
By: _______________________________
Name:
Title:
MONTREAL TRUST COMPANY OF CANADA
By: _______________________________
Name:
Title:
By: _______________________________
Name:
Title:
ATTACHMENT 1
CERTICOM CORP.
SHAREHOLDER RIGHTS PLAN AGREEMENT
[Form of Rights Certificate]
Certificate No.________ Rights_________
THE RIGHTS ARE SUBJECT TO TERMINATION ON THE TERMS SET FORTH IN THE SHAREHOLDER
RIGHTS PLAN AGREEMENT. UNDER CERTAIN CIRCUMSTANCES (SPECIFIED IN SUBSECTION
3.1(b) OF THE SHAREHOLDER RIGHTS PLAN AGREEMENT), RIGHTS BENEFICIALLY OWNED BY
AN ACQUIRING PERSON OR CERTAIN RELATED PARTIES, OR TRANSFEREES OF AN ACQUIRING
PERSON OR CERTAIN RELATED PARTIES, MAY BECOME VOID.
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 Rights Plan Agreement, dated as of August 15,
1997, as the same may be amended or supplemented from time to time (the
"Shareholder Rights Agreement"), between Certicom Corp., a corporation
incorporated under the laws of the Province of Ontario (the "Corporation") and
Montreal Trust Company of Canada, a trust company incorporated under the laws of
Canada (the "Rights Agent") (which term shall include any successor Rights Agent
under the Shareholder Rights Agreement), to purchase from the Corporation at any
time after the Separation Time (as such term is defined in the Shareholder
Rights Agreement) and prior to the Expiration Time (as such term is defined in
the Shareholder 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 (in the form provided hereinafter) duly executed and submitted to
the Rights Agent at its principal office in the City of Toronto. The Exercise
Price shall be an amount expressed in Canadian dollars equal to five times the
Market Price (as such term is defined in the Shareholder Rights Agreement) per
Common Share at the Separation Time, subject to adjustment in certain events as
provided in the Shareholder Rights Agreement.
This Rights Certificate is subject to all of the terms and provisions
of the Shareholder Rights Agreement, which terms and provisions are incorporated
herein by reference and made a part hereof and to which Shareholder 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 Shareholder Rights Agreement are on file at the registered office
of the Corporation.
-2-
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.
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 Shareholder 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 Shareholder 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 Shareholder 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.
Date:_________________
CERTICOM CORP.
By:___________________ By:____________________
President Secretary
Countersigned:
MONTREAL TRUST COMPANY OF CANADA
By:____________________________
Authorized Signature
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
Rights Certificate.) FOR VALUE RECEIVED ________________________________ hereby
sells, assigns and transfers unto
________________________________________________________________________________
____________________
(Please print name and address of transferee.)
the Rights represented by this Rights Certificate, together with all right,
title and interest therein, and does hereby irrevocably constitute and appoint
_________________________, as attorney, to transfer the within Rights on the
books of the Corporation, with full power of substitution.
Dated: ____________________________________________________
Signature
Signature Guaranteed: (Signature must correspond to name as written upon
the face of this Rights Certificate in every
particular, without alteration or enlargement or any
change whatsoever.)
Signature must be guaranteed by a member firm of a recognized stock
exchange in Canada, a Canadian chartered bank, a trust company in Canada or a
member of the Securities Transfer Association Medallion (Stamp) Program.
...............................................................................
CERTIFICATE
(To be completed if true.)
The undersigned party transferring Rights hereunder, hereby
represents, for the benefit of all holders of Rights and Common Shares, that the
Rights evidenced by this Rights Certificate are not, and, to the knowledge of
the undersigned, have never been, Beneficially Owned by an Acquiring Person or
an Affiliate or Associate thereof or a Person acting jointly or in concert with
an Acquiring Person or an Affiliate or Associate thereof. Capitalized terms
shall have the meaning ascribed thereto in the Shareholder Rights Agreement.
______________________________
Signature
................................................................................
(To be attached to each Rights Certificate.)
FORM OF ELECTION TO EXERCISE
(To be exercised by the registered holder if such holder desires to exercise the
Rights Certificate.)
TO: ______________________
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:
________________________________________________________________
(Name)
________________________________________________________________
(Address)
________________________________________________________________
(City and Province)
________________________________________________________________
Social Insurance Number or other taxpayer identification number.
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights shall be
registered in the name of and delivered to:
________________________________________________________________
(Name)
________________________________________________________________
(Address)
________________________________________________________________
(City and Province)
________________________________________________________________
Social Insurance Number or other taxpayer identification number.
Dated:___________________________________________________________
Signature
Signature Guaranteed: (Signature must correspond to name as written
upon the face of this Rights Certificate in every
particular, without alteration or enlargement or
any change whatsoever.)
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Signature must be guaranteed by a member firm of a recognized stock
exchange in Canada, a Canadian chartered bank, a trust company in Canada or a
member of the Securities Transfer Association Medallion (Stamp) Program.
.............................................................................
CERTIFICATE
(To be completed if true.)
The undersigned party exercising Rights hereunder, hereby represents,
for the benefit of all holders of Rights and Common Shares, that the Rights
evidenced by this Rights Certificate are not, and, to the knowledge of the
undersigned, have never been, Beneficially Owned by an Acquiring Person or an
Affiliate or Associate thereof or a Person acting jointly or in concert with an
Acquiring Person or an Affiliate or Associate thereof. Capitalized terms shall
have the meaning ascribed thereto in the Shareholder Rights Agreement.
____________________________
Signature
.............................................................................
(To be attached to each Rights Certificate.)
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. 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, or by a
Person acting jointly or in concert with an Acquiring Person or an Affiliate or
Associate thereof.