Exhibit 4.1
SHAREHOLDER RIGHTS PLAN AGREEMENT
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724 SOLUTIONS INC.
AND
COMPUTERSHARE TRUST COMPANY OF CANADA
AS RIGHTS AGENT
DATED AS OF FEBRUARY 10, 2003
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TABLE OF CONTENTS
ARTICLE 1.
INTERPRETATION
1.1. Certain Definitions................................................. 1
1.2. Currency............................................................11
1.3. Descriptive Headings................................................11
1.4. References to Agreement.............................................11
1.5. Calculation of Number and Percentage of Beneficial Ownership of
Outstanding Voting Shares...........................................12
1.6. Acting Jointly or in Concert........................................12
ARTICLE 2.
THE RIGHTS
2.1. Legend on Certificates..............................................12
2.2. Execution, Authentication, Delivery and Dating of Rights
Certificates........................................................13
2.3. Registration, Transfer and Exchange.................................13
2.4. Mutilated, Destroyed, Lost and Stolen Rights Certificates...........14
2.5. Persons Deemed Owners of Rights.....................................14
2.6. Delivery and Cancellation of Certificates...........................15
2.7. Agreement of Rights Holders.........................................15
2.8. Rights Certificate Holder Not Deemed a Shareholder..................16
ARTICLE 3.
EXERCISE OF THE RIGHTS
3.1. Initial Exercise Price; Exercise of Rights; Detachment of Rights....16
3.2. Adjustments to Exercise Price: Number of Rights.....................18
3.3. Date on Which Exercise Is Effective.................................23
ARTICLE 4.
ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS
4.1. Flip-in Event.......................................................23
ARTICLE 5.
THE RIGHTS AGENT
5.1. General.............................................................25
5.2. Merger or Amalgamation or Change of Name of Rights Agent............26
5.3. Duties of Rights Agent..............................................26
5.4. Change of Rights Agent..............................................28
ARTICLE 6.
MISCELLANEOUS
6.1. Redemption and Waiver...............................................29
6.2. Expiration..........................................................30
6.3. Issuance of New Rights Certificates.................................30
6.4. Fractional Rights and Fractional Shares.............................30
6.5. Supplements and Amendments..........................................30
6.6. Rights of Action....................................................32
6.7. Notice of Proposed Actions..........................................32
6.8. Notices.............................................................33
6.9. Costs of Enforcement................................................34
6.10. Successors..........................................................34
6.11. Benefits of this Agreement..........................................34
6.12. Governing Law.......................................................34
6.13. Counterparts........................................................34
6.14. Severability........................................................34
6.15. Effective Date......................................................34
6.16. Shareholder Approval................................................35
6.17. Determinations and Actions by the Board of Directors................35
6.18. Time of the Essence.................................................35
6.19. Regulatory Approvals................................................35
6.20. Declaration as to Non-Canadian and Non-United States Holders........35
6.21. Fiduciary Duties of the Board of Directors..........................36
6.22. Language............................................................36
SHAREHOLDER RIGHTS PLAN AGREEMENT
This agreement, dated as of February 10, 2003, is between 724
Solutions Inc., a corporation incorporated under the laws of Ontario (the
"CORPORATION"), and Computershare Trust Company of Canada, a trust company
incorporated under the laws of Canada, as rights agent (the "RIGHTS AGENT",
which includes any successor Rights Agent).
RECITALS:
A. The Board of Directors of the Corporation has determined that it is
advisable for and in the best interests of the Corporation to adopt a
shareholder rights plan (the "RIGHTS PLAN").
B. In order to implement the Rights Plan, the Board of Directors of the
Corporation has authorized:
(i) the issuance, effective at 4:00 p.m. (Eastern time) on February
10, 2003, of one right (a "RIGHT") in respect of each Common
Share of the Corporation outstanding at 4:00 p.m. (Eastern time)
on February 10, 2003 (the "RECORD TIME"); and
(ii) the issuance of one Right in respect of each Common Share issued
after the Record Time and prior to the earlier of the Separation
Time and the Expiration Time.
C. Each Right entitles the holder thereof, after the Separation Time, to
purchase securities of the Corporation pursuant to the terms and
subject to the conditions set forth in this agreement.
D. The Corporation wishes to appoint the Rights Agent to act on behalf of
the Corporation and 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 in this agreement.
NOW THEREFORE, in consideration of the premises and the
respective covenants and agreements set forth in this agreement, the parties
agree as follows.
ARTICLE 1.
INTERPRETATION
1.1. CERTAIN DEFINITIONS
For the purpose of this agreement:
(a) "ACQUIRING PERSON" means any Person who is or becomes the
Beneficial Owner of 20% or more of the outstanding Voting
Shares; provided, however, that the term "Acquiring Person"
will not include:
(i) the Corporation or any Subsidiary of the Corporation;
(ii) any Person who becomes the Beneficial Owner of 20% or
more of the outstanding Voting Shares of the Corporation
as a result of any one or any combination of:
(A) a Voting Share Reduction;
(B) a Permitted Bid Acquisition;
(C) an Exempt Acquisition;
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(D) a Pro Rata Acquisition; or
(E) a Convertible Security Acquisition;
provided, however, that if a Person becomes the
Beneficial Owner of 20% or more of the Voting Shares
then outstanding by reason of one or any combination of
a Voting Share Reduction, a Permitted Bid Acquisition,
an Exempt Acquisition, a Pro Rata Acquisition or a
Convertible Security Acquisition and thereafter such
Person, while such Person is the Beneficial Owner of 20%
or more of the Voting Shares then outstanding, increases
the number of Voting Shares beneficially owned by such
Person 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, a Pro Rata
Acquisition or a Convertible Security Acquisition) then,
as of the date such Person becomes the Beneficial Owner
of such additional outstanding Voting Shares, such
Person will be an "Acquiring Person";
(iii) an underwriter or member of a banking or selling group
acting in such capacity that becomes the Beneficial
Owner of 20% or more of the Voting Shares in connection
with a distribution of securities of the Corporation; or
(b) "AFFILIATE", when used to indicate a relationship with a
specified corporation, means a Person who directly, or
indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such specified
corporation;
(c) "ASSOCIATE", where used to indicate a relationship with any
Person, means a spouse of that Person, any Person who resides
in the same home as that Person and to whom that Person is
married or with whom that Person is living in a conjugal
relationship outside marriage, a child of that Person or a
relative of that Person if the relative has the same home as
that Person;
(d) a Person will be deemed the "BENEFICIAL OWNER" of, and to have
"BENEFICIAL OWNERSHIP" of, and to "BENEFICIALLY OWN":
(i) any securities as to which such Person or any of such
Person's Affiliates or Associates is the owner at law or
in equity;
(ii) any securities as to which such Person or any of such
Person's Affiliates or Associates has the right to
acquire (whether such right is exercisable immediately
or within a period of 60 days thereafter and whether or
not upon the occurrence of a contingency) pursuant to
any agreement, arrangement, pledge or understanding,
whether or not in writing, (other than customary
agreements with and between underwriters or banking
group or selling group members with respect to a
distribution of securities and other than pledges of
securities in the ordinary course of the pledgee's
business) or upon the exercise of any conversion right,
exchange right, share purchase right (other than a
Right), warrant or option; and
(iii) any securities which are Beneficially Owned within the
meaning of clauses (i) or (ii) by any other Person with
whom such Person is acting jointly or in concert;
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provided, however, that a Person will not be deemed
the "BENEFICIAL OWNER" of, or to have "BENEFICIAL
OWNERSHIP" of, or to "BENEFICIALLY OWN", any security
because:
(iv) such security has been or agreed to be deposited or
tendered pursuant to a Lock-up Agreement or is otherwise
deposited or tendered pursuant to any Take-over Bid made
by such Person, any Affiliate or Associate of such
Person or any Person acting jointly or in concert with
such Person until such deposited security has been taken
up or paid for, whichever occurs first;
(v) such Person or any Affiliate or Associate of such Person
or any other Person acting jointly or in concert with
such Person holds such security and:
(A) the ordinary business of any such Person (the
"FUND MANAGER") includes the management of
investment funds for others and such security is
held by the Fund Manager in the ordinary course of
such business in the performance of the Fund
Manager's duties for the account of any other
Person (a "CLIENT"), including a non-discretionary
account held on behalf of a Client by a broker or
dealer registered under applicable laws;
(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 the estates of deceased or incompetent Persons
(each, an "ESTATE ACCOUNT") or in relation to
other accounts (each, an "OTHER ACCOUNT") and
holds such security in the ordinary course of such
duties for Estate Accounts or Other Accounts;
(C) such Person (the "PLAN ADMINISTRATOR") is the
administrator or the 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 and such security is held by the Plan
Administrator or the Plan in the ordinary course
of the Plan Administrator's or Plan's activities;
(D) such Person (the "STATUTORY BODY") is established
by statute for purposes that include, and the
ordinary business or activity of such Person
includes, the management of investment funds for
employee benefit plans, pension plans and
insurance plans of various public bodies and such
security is held by the Statutory Body in the
ordinary course of the management of such
investment funds;
(E) such Person is a Crown Agent or agency (a "CROWN
AGENT"); or
(F) such Person is a Plan;
provided, however, that in any of the foregoing cases, the
Fund Manager, the Trust Company, the Plan Administrator, the
Statutory Body, the Crown Agent or the Plan, as the case may
be, is not then making a Take-over Bid, has not then
announced an intention to make a Take-over Bid and is not then
acting jointly or in concert with any other Person who is
making a Take-over Bid or who has
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announced a current intention to make a Take-over Bid, other
than an Offer to Acquire Voting Shares or other securities (1)
pursuant to a distribution by the Corporation, (2) by
means of a Permitted Bid or a Competing Permitted Bid or (3)
by means of market transactions made in the ordinary course of
business of such Person (including pre-arranged trades entered
into in the ordinary course of business of such Person)
executed through the facilities of a stock exchange or
organized over-the-counter market;
(vi) such Person is (A) a Client of the same Fund Manager as
another Person on whose account the Fund Manager holds
such security, (B) an Estate Account or Other Account of
the same Trust Company as another Person on whose
account the Trust Company holds such security or (C) a
Plan with the same Plan Administrator as another Plan on
whose account the Plan Administrator holds such
security;
(vii) such Person is (A) a Client of a Fund Manager and such
security is owned at law or in equity by the Fund
Manager, (B) an Estate Account or 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 Plan
Administrator; or
(viii) because such Person is the registered holder of
securities as a result of carrying on the business of or
acting as a nominee of a securities depositary.
(e) "BOARD OF DIRECTORS" means the board of directors of the
Corporation or, if duly constituted and whenever duly
empowered, any committee of the board of directors of the
Corporation;
(f) "BUSINESS DAY" means any day other than a Saturday, a Sunday
or a day on which banking institutions in Toronto, Ontario are
authorized or obligated by law to close;
(g) "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 Business Day) at which the principal office in Toronto,
Ontario of the transfer agent for the Common Shares (or, after
the Separation Time, the office of the Rights Agent) is closed
to the public;
(h) "COMMON SHARE" means the common shares of the Corporation and
any other shares of the Corporation into which such shares may
be subdivided, consolidated, reclassified or changed;
(i) "COMMON SHARES", when used with reference to any Person other
than the Corporation, means the class or classes of shares (or
similar equity interest) with the greatest per share (or
similar interest) voting power entitled to vote generally in
the election of all directors of such other Person;
(j) "COMPETING PERMITTED BID" means a Take-over Bid that:
(i) is made after a Permitted Bid or another Competing
Permitted Bid has been made and prior to the expiry of
that Permitted Bid or Competing Permitted Bid (in this
definition, the "PRIOR BID");
(ii) satisfies all components of the definition of Permitted
Bid other than the requirement set out in clause (ii) of
that definition; and
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(iii) contains, and the take up and payment for securities
tendered or deposited under the Take-over Bid is subject
to, irrevocable and unqualified conditions that:
(A) no Voting Shares will be taken up or paid for
pursuant to the Take-over Bid (1) prior to the
close of business on a date that is no earlier
than the later of the date which is 35 days (or
such other minimum deposit period for a take-over
bid as is provided in the Securities Act) after
the date the Take-over Bid is made and the 60th
day after the date of the Prior Bid that is then
outstanding and (2) then only if, at the close of
business on the date Voting Shares are first taken
up or paid for, more than 50% of the then
outstanding Voting Shares held by Independent
Shareholders have been deposited or tendered
pursuant to such Take-over Bid and not withdrawn;
and
(B) if the requirement in clause (iii)(A)(2) is
satisfied, the Offeror will make a public
announcement of that fact and the Take-over Bid
will remain open for deposits and tenders of
Voting Shares for a period of at least 10 Business
Days after the date of the announcement;
(k) "CONTROLLED": a corporation is controlled by another Person or
two or more Persons acting jointly or in concert if:
(i) securities entitled to vote in the election of directors
carrying more than 50% of the votes for the election of
the directors are held, directly or indirectly, by or
for the benefit of the other Person or two or more
Persons acting jointly or in concert; 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" will
be interpreted accordingly;
(l) "CONVERTIBLE SECURITIES" means any securities issued by the
Corporation (including rights, warrants and options, but
excluding the Rights) carrying any purchase, exercise,
conversion or exchange rights, pursuant to which the holder of
Convertible Securities may acquire Voting Shares or other
securities convertible into or exercisable or exchangeable for
Voting Shares (in each case, whether such right is exercisable
immediately or after a specified period and whether or not on
condition or the happening of any contingency);
(m) "CONVERTIBLE SECURITY ACQUISITION" means the acquisition of
Voting Shares on the exercise, conversion or exchange of
Convertible Securities acquired by any Person pursuant to a
Permitted Bid Acquisition, Exempt Acquisition or Pro Rata
Acquisition;
(n) "CO-RIGHTS AGENT" has the meaning ascribed to it in subsection
5.1.(a);
(o) "CORPORATIONS ACT" means the BUSINESS CORPORATIONS ACT
(Ontario) or the CANADA BUSINESS CORPORATIONS ACT, in the
event the Corporation is continued under the laws of Canada,
as either may be amended, and the regulations made thereunder,
and any successor laws or regulations thereto;
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(p) "DIVIDEND PAID IN THE ORDINARY COURSE" means cash dividends
paid in any financial year of the Corporation to the extent
that such cash dividends do not exceed, in the aggregate, the
greatest of:
(i) 200% of the aggregate amount of cash dividends declared
payable by the Corporation on the Common Shares in its
immediately preceding financial year;
(ii) 300% of the arithmetic average of the aggregate amounts
of cash dividends declared payable by the Corporation on
the Common Shares in its three immediately preceding
financial years; and
(iii) 100% of the aggregate consolidated net income of the
Corporation, before extraordinary items, for its
immediately preceding financial year;
(q) "ELECTION TO EXERCISE" has the meaning ascribed to it in
clause 3.1(e)(ii);
(r) "EXEMPT ACQUISITION" means an acquisition of Voting Shares:
(i) in respect of which the Board of Directors has waived
the application of section 4.1 pursuant to section 6.1;
(ii) pursuant to a distribution by the Corporation of Voting
Shares or Convertible Securities (and the conversion or
exchange of such securities) pursuant to a prospectus,
registration statement or similar document (provided
that the purchaser does not thereby Beneficially Own a
greater percentage of the Voting Shares or Convertible
Securities so offered than the percentage of Voting
Shares or Convertible Securities beneficially owned by
the purchaser immediately prior to that distribution) or
by way of private placement provided that, in the case
of a private placement, all necessary stock exchange
approvals for the private placement have been obtained
and the private placement complies with the terms and
conditions of those approvals and the purchaser does not
become the Beneficial Owner of more than 25% of the
Voting Shares outstanding immediately prior to the
private placement (and in making this determination, the
securities to be issued to that purchaser pursuant to
the private placement will be deemed to be held by that
purchaser but will not be included in the aggregate
number of outstanding Voting Shares immediately prior to
the private placement); and
(iii) pursuant to an amalgamation, merger or other statutory
procedure requiring shareholder approval;
(s) "EXERCISE PRICE" means, as of any date, the price at which a
holder of a Right may purchase the securities issuable upon
exercise of such Right and, until adjustment thereof in
accordance with the terms hereof, the Exercise Price will be
$100;
(t) "EXPANSION FACTOR" has the meaning ascribed to it in
subsection 3.2(a);
(u) "EXPIRATION TIME" means earlier of:
(i) the Termination Time; and
(ii) subject to section 6.15, the close of the annual meeting
of shareholders of the Corporation in 2004 and every one
year anniversary thereafter and so on unless the
continuation of this agreement for each such one year
period (or other period approved by the Independent
Shareholders) is approved in accordance with section
6.16;
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(v) "FLIP-IN EVENT" means a transaction in or pursuant to which
any Person becomes an Acquiring Person;
(w) "HOLDER" has the meaning ascribed to it in section 2.5;
(x) "INDEPENDENT SHAREHOLDERS" means holders of Voting Shares
other than Voting Shares Beneficially Owned by:
(i) an Acquiring Person;
(ii) an Offeror, other than a Person described in any one or
more of paragraphs (A) through (E) of clause 1.1(d)(v);
(iii) any Associate or Affiliate of such Acquiring Person or
Offeror;
(iv) any Person acting jointly or in concert with such
Acquiring Person or Offeror; and
(v) any employee benefit plan, stock purchase plan, deferred
profit sharing plan and any other similar plan or trust
for the benefit of employees of the Corporation or a
Subsidiary of the Corporation, unless the beneficiaries
of the plan or trust direct the manner in which the
Voting Shares are to be voted or direct whether the
Voting Shares are to be tendered to a Take-over Bid;
(y) "LOCK UP AGREEMENT" means an agreement between an Offeror, any
Affiliate or Associate of the Offeror or any other Person
acting jointly or in concert with the Offeror and a Person
(the "LOCKED-UP PERSON") who is not an Affiliate or Associate
of the Offeror or a Person acting jointly or in concert with
the Offeror whereby the Locked-up Person agrees to deposit or
tender Voting Shares held by the Locked-up Person to the
Offeror's Take-over Bid or to any Take-over Bid made by an
Affiliate or Associate of the Offeror or made by any other
Person acting jointly or in concert with the Offeror (the
"LOCK-UP BID"), where the agreement:
(i) (A) permits the Locked-up Person to withdraw the Voting
Shares in order to tender or deposit the Voting Shares
to another Take-over Bid or to support another
transaction that contains an offering price for each
Voting Share that exceeds, or provides a value for each
Voting Share that is greater than, the offering price
contained or proposed to be contained in the Lock-up
Bid; or
(B) permits the Locked-up Person to withdraw the
Voting Shares in order to tender or deposit the
Voting Shares to another Take-over Bid or to
support another transaction that contains an
offering price for each Voting Share that exceeds,
or provides a value for each Voting Share that is
greater than, the offering price contained in or
proposed to be contained in the Lock-up Bid by as
much or more than a specified amount (the
"SPECIFIED AMOUNT") where the Specified Amount is
not greater than 7% of the offering price that is
contained or proposed to be contained in the
Lock-up Bid; and
(ii) does not provide for any "break-up fees", "top-up fees",
"termination 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 payable to the
Locked-up Person under the Take-over Bid and (B)
one-half of the increased price or value that is paid
pursuant to another Take-over Bid or
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transaction, if the Locked-up Person fails to tender
Voting Shares pursuant thereto or withdraws Voting
Shares previously tendered in order to accept the
other Take-over Bid or support the other transaction;
and for greater clarity, the agreement may contain a
right of first refusal or require a period of delay to give
the Person who made the Lock-up Bid an opportunity to match a
higher price in another Take-over Bid or other similar
limitation on a Locked-up Person's right to withdraw Voting
Shares from the agreement, so long as the limitation does not
preclude the exercise by the Locked-up Person of the right to
withdraw Voting Shares during the period for acceptance of the
other Take-over Bid or transaction;
(z) "MARKET PRICE" per share of any securities on any date of
determination means the average of the weighted average sale
price per share of such securities (determined as described
below) for 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 3.2 have caused the sale
prices in respect of any Trading Day used to determine the
Market Price not to be fully comparable with the sale prices
on such date of determination or, if the date of determination
is not a Trading Day, on the immediately preceding Trading
Day, each such sale price so used will be appropriately
adjusted in a manner analogous to the applicable adjustment
provided for in section 3.2 in order to make it fully
comparable with the sale price on such date of determination
or, if the date of determination is not a Trading Day, on the
immediately preceding Trading Day. The weighted average sale
price per share of any securities on any date will be
determined by dividing the aggregate sale price of all
securities sold on the principal stock exchange in Canada on
which such securities are listed and posted for trading
divided by the total number of securities so sold except that:
(i) if for any reason such prices are not available on such
day or the securities are not listed and posted for
trading on any stock exchange in Canada, the Market
Price will be calculated using the sale prices for such
securities as reported in the principal consolidated
transaction reporting system with respect to securities
listed or admitted to trading on the principal national
securities exchange in the United States on which such
securities are listed or admitted to trading;
(ii) if for any reason such prices are not available on such
day or the securities are not listed and posted for
trading on a stock exchange in Canada or a national
securities exchange in the United States, the Market
Price will be calculated using the sale prices for such
securities in the over-the-counter market, as reported
by The Canadian Dealing Network Inc., or such other
comparable system then in use; or
(iii) if on any such date the securities are not quoted by any
such organization, the Market Price will be calculated
using the average of the closing bid and asked prices as
furnished by a professional market maker making a market
in the securities;
provided, however, that if on any such date the securities are
not traded on any exchange or in the over-the-counter market
and the price referred to in clause (iii) is not
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available, the weighted average trading price per share of
such securities on such date will mean the fair value per
share of such securities on such date as determined by a
nationally or internationally recognized investment dealer or
investment banker chosen by the Board of Directors;
(aa) "NOMINEE" has the meaning attributed to it in subsection
3.1(d);
(bb) "OFFER TO ACQUIRE" includes:
(i) an offer to purchase, or a solicitation of an offer to
sell; and
(ii) an acceptance of an offer to sell, whether or not such
offer to sell has been solicited,
or any combination thereof, and the Person accepting an offer
to sell will be deemed to be making an offer to acquire to the
Person who made the offer to sell;
(cc) "OFFEROR" means a Person who has announced a current intention
to make or who is making a Take-over Bid;
(dd) "OFFEROR'S SECURITIES" means Voting Shares Beneficially Owned
by an Offeror on the date of a Take-over Bid;
(ee) "PERMITTED BID" means a Take-over Bid which is made by means
of a take-over bid circular and which also complies with the
following additional provisions:
(i) the Take-over Bid is made to all holders of Voting
Shares other than the Offeror;
(ii) the Take-over Bid contains, and the take-up and payment
for securities tendered or deposited thereunder is
subject to, an irrevocable and unqualified condition
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
after the date of the Take-over Bid and only if at such
date more than 50% of the Voting Shares held by
Independent Shareholders have been deposited or tendered
pursuant to the Take-over Bid and not withdrawn;
(iii) the Take-over Bid contains an irrevocable and
unqualified provision that, unless the Take-over Bid is
withdrawn, Voting Shares may be deposited pursuant to
such Take-over Bid at any time during the period of time
between the date of the Take-over Bid and the date on
which the Voting Shares subject to the Take-over Bid may
be taken-up and paid for 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, if on the date on which
Voting Shares may be taken up and paid for more than 50%
of the Voting Shares held by Independent Shareholders
have been deposited or tendered pursuant to the
Take-over Bid and not withdrawn, 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 10 Business Days from the date
of such public announcement;
(ff) "PERMITTED BID ACQUISITION" means an acquisition of Voting
Shares made pursuant to a Permitted Bid or a Competing
Permitted Bid;
(gg) "PERSON" includes any individual, body corporate, firm,
partnership, association, trust, trustee, executor,
administrator, legal personal representative, group,
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unincorporated organization, syndicate, government or
governmental agency or instrumentality or other entity;
(hh) "PRO RATA ACQUISITION" means:
(i) the acquisition of Voting Shares as a result of a stock
dividend, a stock split or other event pursuant to which
a Person receives or acquires Voting Shares on the same
proportionate basis as all other holders of the same
class of Voting Shares; (ii) the acquisition of Voting
Shares pursuant to any dividend reinvestment plan or
other plan made available by the Corporation to holders
of all its Voting Shares (other than holders resident in
any jurisdiction where participation in such plan is
restricted or impractical to the Corporation as a result
of applicable law); or (iii) the receipt and/or exercise
of rights (other than the Rights) issued by the
Corporation to all the holders of a class of Voting
Shares to subscribe for or purchase Voting Shares (other
than holders resident in any jurisdiction where the
distribution or exercise of such rights is restricted or
impractical as a result of applicable law), provided
that such rights are acquired directly from the
Corporation and not from any other Person.
(ii) "RECORD TIME" has the meaning ascribed to it in the recitals;
(jj) "REDEMPTION PRICE" has the meaning ascribed to it in
subsection 6.1(a);
(kk) "RIGHT" has the meaning ascribed to it in the recitals;
(ll) "RIGHTS CERTIFICATES" means the certificates representing the
Rights after the Separation Time, which are to be
substantially in the form attached as Exhibit A;
(mm) "RIGHTS PLAN" has the meaning ascribed to it in the recitals;
(nn) "RIGHTS REGISTER" and "RIGHTS REGISTRAR" have the respective
meanings ascribed to them in subsection 2.3(a);
(oo) "SECURITIES ACT" means the SECURITIES ACT (Ontario), as
amended, and the regulations and rules thereunder, and any
comparable or successor laws or regulations thereto;
(pp) "SEPARATION TIME" means, subject to subsection 6.1(c), the
close of business on the tenth Trading Day after the earlier
of:
(i) the Stock Acquisition Date; and
(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 time as may be determined by the Board of Directors;
provided that (x) if the foregoing results in the Separation Time
being prior to the Record Time, the Separation Time will be the
Record Time, (y) if any Take-over Bid referred to in clause (ii)
expires or is cancelled, terminated or otherwise withdrawn prior to
the Separation Time, such Take-over Bid will be deemed, for the
purposes of this definition, never to have been made, (z) if the
Board of Directors determines pursuant to section 6.1 to waive the
application of section 4.1 to have a Flip-in Event, the Separation
Time in respect of that Flip-in Event will be deemed never to have
occurred ;
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(qq) "STOCK ACQUISITION DATE" means the date of the first public
announcement (which, for purposes of this definition, includes
the filing of a report pursuant to section 101 of the
Securities Act or section 13(d) of the U.S. EXCHANGE ACT) by
the Corporation or an Acquiring Person of facts indicating
that a Person has become an Acquiring Person;
(rr) "SUBSIDIARY" of a Person has the meaning ascribed to it in the
Securities Act;
(ss) "TAKE-OVER BID" means an Offer to Acquire Voting Shares or
securities convertible into or exchangeable for Voting Shares,
where the Voting Shares subject to the Offer to Acquire,
together with the Voting Shares into which the securities
subject to the Offer to Acquire are convertible or
exchangeable, together with the Offeror's Securities,
constitute, in the aggregate, 20% or more of the Voting Shares
outstanding on the date of the Offer to Acquire;
(tt) "TERMINATION TIME" means the time at which the right to
exercise Rights will terminate pursuant to subsection 6.1(f);
(uu) "TRADING DAY", when used with respect to any securities, means
a day on which the principal Canadian securities exchange on
which such securities are listed or admitted to trading is
open for the transaction of business or, if the securities are
not listed or admitted to trading on any Canadian securities
exchange, a Business Day;
(vv) "U.S. EXCHANGE ACT" means the UNITED STATES SECURITIES
EXCHANGE ACT OF 1934, as amended, and the rules and
regulations thereunder as from time to time in effect;
(ww) "VOTING SHARES" means the Common Shares and any other shares
in the capital of the Corporation to which are attached a
right to vote for the election of directors generally; and
(xx) "VOTING SHARE REDUCTION" means an acquisition or redemption by
the Corporation or a Subsidiary of the Corporation of Voting
Shares which, by reducing the number of Voting Shares
outstanding, increases the percentage of outstanding Voting
Shares Beneficially Owned by any Person to 20% or more of the
Voting Shares outstanding.
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. DESCRIPTIVE HEADINGS
Descriptive headings are for convenience only and are not to
affect the meaning or construction of any of the provisions of this agreement.
1.4. REFERENCES TO AGREEMENT
References to "THIS AGREEMENT", "HERETO", "HEREIN", "HEREBY",
"HEREUNDER", "HEREOF" and similar expressions refer to this agreement, as
amended or supplemented from time to time, and not to any particular Article,
section, subsection, clause or other portion hereof and include any and every
instrument supplemental or ancillary hereto.
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1.5. CALCULATION OF NUMBER AND PERCENTAGE OF BENEFICIAL OWNERSHIP
OF OUTSTANDING VOTING SHARES
(a) For the purposes of this agreement, in determining the
percentage of the outstanding Voting Shares of the Corporation
with respect to which a Person is or is deemed to be the
Beneficial Owner, all unissued Voting Shares of the
Corporation of which such Person is deemed to be the
Beneficial Owner will be deemed to be outstanding.
(b) The percentage of outstanding Voting Shares of the Corporation
Beneficially Owned by any Person, for the purposes of this
agreement, will be deemed to be the product determined by the
formula:
100 x A
---
B
where:
A = the aggregate number of votes for the
election of all directors generally attaching
to the outstanding Voting Shares Beneficially
Owned by such Person; and
B = the aggregate number of votes for the
election of all directors generally attaching
to all outstanding Voting Shares.
1.6. ACTING JOINTLY OR IN CONCERT
For purposes of this agreement, a Person is acting jointly or
in concert with every other Person who has any agreement, arrangement,
commitment or understanding (whether formal or informal and whether or not in
writing) with the first Person, or with any other Person acting jointly or in
concert with the first Person, to acquire or Offer to Acquire any Voting Shares
or securities convertible into or exchangeable for Voting Shares (other than
customary agreements with and between underwriters or banking group members or
selling group members with respect to a distribution of securities and other
than pledges of securities in the ordinary course of the pledgee's business).
ARTICLE 2.
THE RIGHTS
2.1. LEGEND ON CERTIFICATES
Certificates for Common Shares issued after the Record Time
but prior to the earlier of the Separation Time and the Expiration Time will
evidence, in addition to the Common Shares, but subject to section 3.2, one
Right for each Common Share evidenced thereby and will have impressed, printed
or written on or otherwise affixed to them substantially the following legend:
UNTIL THE SEPARATION TIME (AS DEFINED IN THE RIGHTS AGREEMENT REFERRED
TO BELOW), THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER OF
THIS CERTIFICATE TO CERTAIN RIGHTS AS SET FORTH IN A SHAREHOLDER RIGHTS
PLAN AGREEMENT DATED AS OF FEBRUARY 10, 2003 (AS THE SAME MAY BE
AMENDED OR SUPPLEMENTED FROM TIME TO TIME IN ACCORDANCE WITH THE TERMS
THEREOF, THE "RIGHTS AGREEMENT") BETWEEN 724 SOLUTIONS INC. (THE
"CORPORATION") AND COMPUTERSHARE TRUST
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COMPANY OF CANADA, AS RIGHTS AGENT, THE TERMS OF WHICH ARE
INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH MAY BE
INSPECTED DURING NORMAL BUSINESS HOURS AT THE PRINCIPAL EXECUTIVE
OFFICES OF THE CORPORATION. UNDER CERTAIN CIRCUMSTANCES, AS SET
FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS MAY BE AMENDED, REDEEMED
OR TERMINATED, MAY EXPIRE, MAY BECOME VOID (IF, IN CERTAIN CASES,
THEY ARE "BENEFICIALLY OWNED" BY AN "ACQUIRING PERSON", WHETHER
CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR ANY SUBSEQUENT
HOLDER) OR MAY BE EVIDENCED BY SEPARATE CERTIFICATES AND MAY NO
LONGER BE EVIDENCED BY THIS CERTIFICATE. THE CORPORATION WILL MAIL
OR ARRANGE FOR THE MAILING OF A COPY OF THE RIGHTS AGREEMENT TO THE
HOLDER OF THIS CERTIFICATE WITHOUT CHARGE AS SOON AS IS PRACTICABLE
AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR.
Certificates representing Common Shares that are issued and
outstanding at the Record Time will evidence one Right for each Common Share
evidenced thereby, despite the absence of the foregoing legend until the earlier
of the Separation Time and the Expiration Time.
2.2. EXECUTION, AUTHENTICATION, DELIVERY AND DATING OF RIGHTS
CERTIFICATES
(a) The Rights Certificates will be executed on behalf of the
Corporation by the Chairman of the Board, the Chief Executive
Officer, Chief Financial Officer or the Secretary. The
signatures of such officers may be mechanically reproduced in
facsimile on the Rights Certificates, and when so reproduced
will be valid and binding on the Corporation even though the
Persons whose signatures are so reproduced may not hold office
at the time the Rights Certificates are issued.
(b) Promptly after the Separation Time, the Corporation will
notify the Rights Agent of the Separation Time and will
deliver Rights Certificates executed by the Corporation to the
Rights Agent for countersignature and a disclosure statement
describing the Rights, and the Rights Agent will manually
countersign such Rights Certificates and deliver such Rights
Certificates and disclosure statement to the holders of the
Rights pursuant to subsection 3.1(d). No Rights Certificate
will be valid for any purpose until countersigned by the
Rights Agent.
(c) Each Rights Certificate will be dated the date it is
countersigned.
2.3. REGISTRATION, TRANSFER AND EXCHANGE
(a) After the Separation Time, the Corporation will cause a
register to be kept (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 the "RIGHTS
REGISTRAR" for the purpose of maintaining the Rights Register
for the Corporation and registering Rights and transfers of
Rights as provided in this agreement. If the Rights Agent
ceases 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, but subject to subsection (c) and
subsection 4.1(b), 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
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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 will be valid obligations of
the Corporation, and such Rights will 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 will 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 2.3, the Corporation
may require the payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and
expenses of the Rights Agent) in connection therewith.
2.4. MUTILATED, DESTROYED, LOST AND STOLEN RIGHTS CERTIFICATES
(a) If a mutilated Rights Certificate is surrendered to the Rights
Agent prior to the Expiration Time, the Corporation will
execute and the Rights Agent will manually countersign and
deliver in exchange therefor a new Rights Certificate
evidencing the same number of Rights as the Rights Certificate
so surrendered.
(b) If there will be delivered to the Corporation and the Rights
Agent prior to the Expiration Time (i) evidence to their
satisfaction of the destruction, loss or theft of any Rights
Certificate and (ii) such security or indemnity as may be
required by them to indemnify them and any of their agents,
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 will execute, and upon
its request the Rights Agent will 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 2.4, the Corporation may require the
payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto
and any other expenses (including the fees and expenses of the
Rights Agent) in connection therewith.
(d) Every new Rights Certificate issued pursuant to this section
2.4 in lieu of any destroyed, lost or stolen Rights
Certificate will evidence a contractual obligation of the
Corporation, whether or not the destroyed, lost or stolen
Rights Certificate is at any time enforceable by anyone, and
will be entitled to all the benefits of this agreement equally
and proportionately with any and all other Rights duly issued
by the Corporation under this agreement.
2.5. 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. As used in this agreement, unless
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the context otherwise requires, the term "HOLDER" of any Rights will mean the
registered holder of such Rights (or, prior to the Separation Time, of the
associated Common Shares).
2.6. DELIVERY AND CANCELLATION OF CERTIFICATES
All Rights Certificates surrendered upon exercise or for
redemption, registration of transfer or exchange, if surrendered to any Person
other than the Rights Agent, will be delivered to the Rights Agent and, in any
case, will be promptly cancelled by the Rights Agent. The Corporation may
deliver at any time 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 will
be promptly cancelled by the Rights Agent. No Rights Certificate will be
countersigned in lieu of or in exchange for any Rights Certificates cancelled as
provided for in this section 2.6, except as expressly permitted by this
agreement. The Rights Agent will destroy all cancelled Rights Certificates and
deliver a certificate of destruction to the Corporation.
2.7. AGREEMENT OF RIGHTS HOLDERS
Every holder of Rights, by accepting a Right, consents and
agrees with the Corporation and the Rights Agent and with every other holder of
Rights that:
(a) it will be bound by and subject to the provisions of this
agreement, as amended from time to time in accordance with the
terms hereof, in respect of the 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 upon registration of the transfer on the
Rights Register as provided in this agreement;
(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 (despite 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, and
neither the Corporation nor the Rights Agent will be affected
by any notice to the contrary;
(e) it has waived any right and is not entitled to receive any
fractional Rights or any fractional Common Shares upon
exercise of a Right;
(f) subject to section 6.5, without the approval of the holders of
Voting Shares or Rights and on the sole authority of the Board
of Directors, this agreement may be amended or supplemented
from time to time as provided in this agreement; and
(g) notwithstanding anything in this agreement to the contrary,
neither the Corporation nor the Rights Agent will 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
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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 a
governmental authority, prohibiting or otherwise restraining
performance of such obligations.
2.8. RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER
No holder, as such, of any Right or Rights Certificate will be
entitled to vote or receive dividends as, or be deemed for any purpose to be, a
holder of any Common Share which may at any time be issuable on the exercise of
such Right, nor will anything contained herein or in any Rights Certificate be
construed or deemed to confer on the holder of any Right or Rights Certificate,
as such, any of the rights, titles, benefits or privileges of a shareholder 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 on any matter
submitted to shareholders 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 shareholder 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 any
Rights Certificate will have been duly exercised in accordance with the terms
and provisions hereof.
ARTICLE 3.
EXERCISE OF THE RIGHTS
3.1. INITIAL EXERCISE PRICE; EXERCISE OF RIGHTS; DETACHMENT OF
RIGHTS
(a) Subject to adjustment as set forth in this agreement, from and
after the Separation Time and prior to the Expiration Time,
each Right will entitle the holder thereof 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).
(b) Until the Separation Time:
(i) the Rights are not exercisable and may not 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 will also be deemed to
be 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 will be exercisable; and
(ii) the registration and transfer of the Rights will be
separate from and independent of the Common Shares.
(d) Promptly following the Separation Time, the Rights Agent will
mail to each holder of record of Common Shares as of the
Separation Time (other than an Acquiring Person and other
than, 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 (and the Corporation will furnish copies of
such records to the Rights Agent for this purpose):
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(i) a Rights Certificate representing the number of Rights
held by such holder at the Separation Time in
substantially the form of Exhibit A, appropriately
completed, and having such marks of identification or
designation and such legends, summaries or endorsements
printed thereon as the Corporation may deem appropriate
and as are not inconsistent with the provisions of this
agreement, or as may be required to comply with any law,
rule, regulation or judicial or administrative order or
with any rule or regulation made pursuant thereto or
with any rule or regulation of any stock exchange or
quotation system on which the Rights may be listed or
traded from time to time, or to conform to usage; and
(ii) a disclosure statement prepared by the Corporation
describing the Rights;
provided that a Nominee will be sent the materials provided
for in clauses (i) and (ii) only in respect of all Common
Shares held of record by it which are not Beneficially Owned
by an Acquiring Person. In order for the Corporation to
determine whether any Person is holding Common Shares which
are Beneficially Owned by another Person, the Corporation may
require the first-mentioned Person to furnish any information
and documentation as the Corporation deems necessary or
appropriate to make that determination.
(e) Rights may be exercised in whole or in part on any Business
Day after the Separation Time and prior to the Expiration Time
by submitting to the Rights Agent at its principal office in
the city of Toronto or any other office of the Rights Agent
designated for that purpose from time to time by the
Corporation:
(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 duly completed and executed by the
holder or his or her executors or administrators or
other personal representatives or his, her 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) by certified cheque, banker's draft or money order
payable to the order of the Rights Agent, of a sum equal
to the applicable Exercise Price multiplied by the
number of Rights being exercised and an amount
sufficient to cover any tax or other governmental charge
which may be payable in respect of any transfer or
delivery of Rights Certificates or the issuance or
delivery of certificates for the relevant Common Shares
in a name other than that of the holder of the Rights
being exercised.
(f) Upon receipt of the Rights Certificate which is accompanied by
a completed Election to Exercise that does not indicate that
such Right is null and void as provided by subsection 4.1(b)
and payment as set forth in subsection 3.1(e), the Rights
Agent (unless otherwise instructed by the Corporation if the
Corporation is of the opinion that the Rights cannot be
exercised in accordance with this agreement) will promptly:
(i) requisition from the transfer agent of the Common
Shares, certificates representing the number of such
Common Shares (rounded down to the nearest whole number
of Common Shares) to be purchased (the
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Corporation hereby irrevocably authorizes such transfer
agent to comply with all such requisitions);
(ii) after receipt of the Common Share certificates, deliver
them to, or to the order of, the registered holder of
such Rights Certificate, registered in such name or
names as may be designated by such holder; and
(iii) tender to the Corporation all payments received on
exercise of the Rights.
(g) 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
will be issued by the Rights Agent to such holder or to such
holder's duly authorized assigns.
(h) 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, at the time of delivery of the
certificates representing such Common Shares (subject to
payment of the Exercise Price), will be duly and validly
authorized, 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 any applicable requirements of the
Corporations Act, the Securities Act and the securities
legislation of each of the other 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
on exercise of Rights to be listed on the principal
exchanges or over-the-counter markets on which the
Common Shares are then listed or traded;
(iv) cause to be reserved and kept available out of its
authorized and unissued Common Shares the number of
Common Shares that, as provided in this agreement, will
be sufficient from time to time to permit the exercise
in full of all outstanding Rights; and
(v) pay when due and payable any Canadian and United States
federal and provincial and state transfer taxes and
charges (for greater certainty, not in the nature of
income or withholding taxes) which may be payable in
respect of the original issuance or delivery of the
Rights Certificates, provided that the Corporation will
not be required to pay any tax or other governmental
charge which may be payable in respect of any 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.
3.2. ADJUSTMENTS TO EXERCISE PRICE: NUMBER OF RIGHTS
The Exercise Price, the number of Common Shares or other
securities subject to purchase on the exercise of each Right and the number of
Rights outstanding are subject to adjustment from time to time as provided in
this section 3.2.
(a) If the Corporation at any time after the Record Time and prior to
the Expiration Time:
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(i) declares or pays a dividend on the 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 dividend reinvestment program and
other than a dividend payable in Common Shares (or other
securities exchangeable for or convertible into or giving a
right to acquire Common Shares) in lieu of (and having a value
no greater than) a dividend paid in the ordinary course;
(ii) subdivides or changes the outstanding Common Shares into a
greater number of Common Shares;
(iii) combines or changes the outstanding Common Shares into a
smaller number of Common Shares; or
(iv) 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 and the number of Rights outstanding (or, if the
payment or effective date therefor occurs after the Separation
Time, the securities purchasable on exercise of Rights) will be
adjusted in the following manner.
If the Exercise Price and number of Rights are to be adjusted (y)
the Exercise Price in effect after such adjustment will be equal to
the Exercise Price in effect immediately prior to such adjustment
divided by the number of Common Shares (or other securities of
the Corporation) (the "EXPANSION FACTOR") that a holder of one
Common Share immediately prior to such dividend, subdivision,
combination, change or issuance would hold thereafter as a result
thereof and (z) each Right held prior to such adjustment will become
that number of Rights equal to the Expansion Factor, and the
adjusted number of Rights will be deemed to be allocated among the
Common Shares with respect to which the original Rights were
associated (if they remain outstanding) and the securities of the
Corporation issued in respect of such dividend, subdivision,
consolidation, change or issuance, so that each such Common Share
(or other security of the Corporation) will have exactly one Right
associated with it.
For greater certainty, if the securities purchasable upon exercise
of Rights are to be adjusted, the securities purchasable on
exercise of each Right after such adjustment will be the securities
that a holder of the securities purchasable on exercise of one Right
immediately prior to such dividend, subdivision, consolidation,
change or issuance would hold thereafter as a result thereof.
Adjustments pursuant to this subsection will be made successively
whenever an event referred to in this subsection occurs.
(b) If the Corporation at any time after the Record Time and prior to
the Expiration Time fixes a record date for the issuance of rights,
options or warrants to all or substantially all holders of Common
Shares entitling them to subscribe for or purchase (for a period
expiring within 45 calendar days after such record date) Common
Shares (or securities convertible into or exchangeable for or
carrying a right to acquire Common Shares) at a price per Common
Share (or, if a security convertible into or exchangeable for or
carrying a right to acquire Common Shares, having a conversion,
exchange or exercise price, including the price required to be paid
to purchase such convertible or exchangeable security or right,
-20-
per share) less than 95% of the Market Price per Common Share on the
second Trading Day immediately preceding such record date, the
Exercise Price in respect of the Rights to be in effect after such
record date will be determined by multiplying the Exercise Price in
respect of the Rights in effect immediately prior to such record
date by a fraction (i) the numerator of which will be the number of
Common Shares outstanding on such record date, plus the number of
Common Shares that the aggregate offering price of the total number
of Common Shares so to be offered (and/or the aggregate initial
conversion, exchange or exercise price of the convertible or
exchangeable securities or rights so to be offered (including the
price required to be paid to purchase such convertible or
exchangeable securities or rights)) would purchase at such Market
Price per Common Share and (ii) the denominator of which will be the
number of Common Shares outstanding on such record date, plus the
number of additional Common Shares to be offered for subscription or
purchase (or into which the convertible or exchangeable securities
or rights so to be offered are initially convertible, exchangeable
or exercisable). In case such subscription price may be paid by
delivery of consideration, part or all of which is in a form other
than cash, the value of such consideration will be as determined in
good faith by the Board of Directors, whose determination will be
described in a statement filed with the Rights Agent and will be
binding on the Rights Agent and the holders of the Rights. Such
adjustment will be made successively whenever such a record date is
fixed. To the extent that such rights, options or warrants are not
exercised prior to the expiration thereof, the Exercise Price will
be readjusted to the Exercise Price which would then be in effect
based on the number of Common Shares (or securities convertible into
or exchangeable for Common Shares) actually issued on exercise of
such rights, options or warrants.
(c) For purpose of this agreement, the granting of the right to purchase
Common Shares (whether from treasury or otherwise) pursuant to a
dividend reinvestment plan or any employee benefit, stock option or
similar plans will be deemed not to constitute an issue of rights,
options or warrants by the Corporation; provided, however, that, in
all such cases, the right to purchase Common Shares is at a price
per share of not less than 90% of the then current market price per
share (determined as provided in such plans) of the Common Shares.
(d) If the Corporation at any time after the Record Time and prior to
the Expiration Time fixes a record date for a distribution to all or
substantially all holders of Common Shares (including any such
distribution made in connection with a merger in which the
Corporation is the continuing corporation) of (i) evidences of
indebtedness or assets, including cash (other than a dividend paid
in the ordinary course or a dividend paid in Common Shares, but
including any dividend payable in securities other than Common
Shares), (ii) rights, options or warrants entitling them to
subscribe for or purchase Common Shares (or securities convertible
into or exchangeable for or carrying a right to acquire Common
Shares) (excluding those referred to in subsection 3.2(b)) at a
price per Common Share (or, if a security convertible into or
exchangeable for or carrying a right to acquire Common Shares,
having a conversion, exchange or exercise price, including the price
required to be paid to purchase such convertible or exchangeable
security or
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right, per share) that is less than 95% of the Market Price per
Common Share on the second Trading Day immediately preceding such
record date or (iii) other securities of the Corporation, the
Exercise Price will be adjusted as follows. The Exercise Price in
effect after such record date will equal the Exercise Price in
effect immediately prior to such record date less the fair market
value (as determined in good faith by the Board of Directors) of the
portion of the evidences of indebtedness, assets, rights, options or
warrants or other securities so to be distributed applicable to the
securities purchasable on exercise of one Right. Such adjustments
will be made successively whenever such a record date is fixed and,
if such distribution is not so made, the Exercise Price in respect
of the Rights will be adjusted to be the Exercise Price in respect
of the Rights which would have been in effect if such record date
had not been fixed.
(e) Notwithstanding anything in this agreement to the contrary, no
adjustment of the Exercise Price will be required unless such
adjustment would require an increase or decrease of at least 1% in
the Exercise Price; provided, however, that any adjustments which by
reason of this subsection are not required to be made will be
carried forward and taken into account in any subsequent adjustment.
All calculations under section 3.2 will be made to the nearest cent
or to the nearest ten-thousandth of a Common Share or other share,
as the case may be.
(f) If as a result of an adjustment made pursuant to section 4.1, the
holder of any Right thereafter exercised will become entitled to
receive any shares other than Common Shares, thereafter the number
of such other shares so receivable upon exercise of any Right and
the applicable Exercise Price thereof will be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as
is practicable to the provisions with respect to the Common Shares
contained in this section 3.2, and the provisions of this agreement
with respect to the Common Shares will apply on like terms to any
such other shares.
(g) All Rights originally issued by the Corporation subsequent to any
adjustment made to the Exercise Price will evidence the right to
purchase, at the adjusted Exercise Price, the number of Common
Shares purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Corporation has exercised its election as provided in
subsection (i), upon each adjustment of an Exercise Price as a
result of the calculations made in subsections (b) and (d), each
Right outstanding immediately prior to the making of such adjustment
will thereafter evidence the right to purchase, at the adjusted
Exercise Price, that number of Common Shares obtained by:
(i) multiplying (A) the number of Common Shares covered by a Right
immediately prior to such adjustment by (B) the Exercise Price
in effect immediately prior to such adjustment; and
(ii) dividing the product so obtained by the Exercise Price in
effect immediately after such adjustment.
(i) The Corporation may elect on or after the date of any adjustment of
an Exercise Price to adjust the number of Rights, in lieu of any
adjustment in the number of Common Shares purchasable upon the
exercise of a Right. Each of the Rights outstanding after the
adjustment in the number of Rights will be exercisable for
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the number of Common Shares for which such a Right was exercisable
immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights will become that
number of Rights (calculated to the nearest one ten-thousandth)
obtained by dividing the relevant Exercise Price in effect
immediately prior to adjustment of the relevant Exercise Price by
the relevant Exercise Price in effect immediately after adjustment
of the relevant Exercise Price. The Corporation will make a public
announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may
be the date on which the relevant Exercise Price is adjusted or any
day thereafter, but, if the Rights Certificates have been issued,
will be at least 10 days later than the date of the public
announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this subsection, the
Corporation, as promptly as is practicable, will cause to be
distributed to holders of record of Rights Certificates on such
record date, Rights Certificates evidencing, subject to section 6.4,
the additional Rights to which such holders will be entitled as a
result of such adjustment, or, at the option of the Corporation,
will cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by
such holders prior to the date of adjustment, and upon surrender
thereof, if required by the Corporation, new Rights Certificates
evidencing all the Rights to which such holders will be entitled
after such adjustment. Rights Certificates to be so distributed will
be issued, executed and countersigned in the manner provided for
herein and may bear, at the option of the Corporation, the relevant
adjusted Exercise Price and will be registered in the names of
holders of record of Rights Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in an Exercise Price or the
number of Common Shares issuable upon the exercise of the Rights,
the Rights Certificates previously and thereafter issued may
continue to express the relevant Exercise Price per Common Share and
the number of Common Shares which were expressed in the initial
Rights Certificates issued hereunder.
(k) In any case in which this section 3.2 requires that an adjustment in
an Exercise Price be made effective as of a record date for a
specified event, the Corporation may elect to defer, until the
occurrence of such event, the issuance to the holder of any Right
exercised after such record date of the number of Common Shares and
other securities of the Corporation, if any, issuable upon such
exercise over and above the number of Common Shares and other
securities of the Corporation, if any, issuable upon such exercise
on the basis of the relevant Exercise Price in effect prior to such
adjustment; provided, however, that the Corporation delivers to such
holder a due ββββ or other appropriate instrument evidencing such
holder's right to receive such additional Common Shares or other
securities upon the occurrence of the event requiring such
adjustment.
(l) Notwithstanding anything in this section 3.2 to the contrary, the
Corporation will be entitled to make such reductions in the Exercise
Price, in addition to those adjustments expressly required by this
section 3.2, as and to the extent that in its good faith judgment
the Board of Directors determines to be advisable in order
-23-
that any (i) consolidation or subdivision of Common Shares,
(ii) issuance wholly for cash of any Common Share or securities that
by their terms are convertible into or exchangeable for Common
Shares, (iii) stock dividends or (iv) issuance of rights, options or
warrants referred to in this section 3.2, hereafter made by the
Corporation to holders of its Common Shares, will not be taxable to
such shareholders.
(m) The Corporation covenants and agrees that, after the Separation
Time, except as permitted by section 6.1 or 6.5, it will not take
(or permit any Subsidiary of the Corporation to take) any action if
at the time such action is taken it is reasonably foreseeable that
such action would diminish substantially or otherwise eliminate the
benefits intended to be afforded by the Rights.
(n) Whenever an adjustment to the Exercise Price or a change in the
securities purchasable upon exercise of the Rights is made pursuant
to this section 3.2, the Corporation will promptly:
(i) file with the Rights Agent and with the 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.
The failure to file such certificate or cause such notice to
be given as aforesaid, or any defect therein, will not affect the
validity of any such adjustment or change.
3.3. DATE ON WHICH EXERCISE IS EFFECTIVE
Each Person in whose name any certificate for Common Shares is
issued upon the exercise of Rights will be deemed for all purposes to have
become the holder of record of the Common Share represented thereby on, and such
certificate will be dated, the date upon which the Rights Certificate evidencing
such Rights was duly surrendered (together with a duly completed Election to
Exercise) and payment of the relevant Exercise Price for such Rights (and any
applicable transfer taxes and other governmental charges payable by the
exercising holder hereunder) was made; provided, however, that if the date of
such surrender and payment is a date upon which the relevant Common Share
transfer books of the Corporation are closed, such Person will be deemed to have
become the holder of record of such Common Shares on, and such certificate will
be dated, the next succeeding Business Day on which the relevant Common Share
transfer books of the Corporation are open.
ARTICLE 4.
ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS
4.1. FLIP-IN EVENT
(a) Subject to subsection 4.1(b) and section 6.1, if prior to the
Expiration Time a Flip-in Event occurs, each Right will
constitute, effective on and after the later of its date of
issue and the close of business on the tenth Trading Day
following the Stock Acquisition Date, the right to purchase
from the Corporation, upon payment of the relevant Exercise
Price and otherwise exercising such Right in accordance with
the terms hereof, that number of Common Shares (rounded down
to the nearest whole number of Common Shares) having an
aggregate Market Price on
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the date of occurrence of such Flip-in Event equal to
twice the Exercise Price for an amount in cash equal to the
Exercise Price (such right to be appropriately adjusted in a
manner analogous to the applicable adjustments provided for in
section 3.2 if, after such date of occurrence, an event of a
type analogous to any of the events described in section 3.2
has occurred with respect to the Common Share).
(b) Notwithstanding anything in this agreement to the contrary,
upon the occurrence of any Flip-in Event, any Rights that are
or were Beneficially Owned on or after the earlier of the
Separation Time and the Stock Acquisition Date 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 or other successor in
title, directly or indirectly, (a "TRANSFEREE") of Rights held
by an Acquiring Person (or any Affiliate or Associate of an
Acquiring Person or any Person acting jointly or in concert
with an Acquiring Person or any Affiliate or Associate of an
Acquiring Person) in a transfer that the Board of Directors
has determined is 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 (i), will become null and void without any further
action, and any holder of such Rights (including any
Transferee) will not have any right whatsoever to exercise
such Rights and will not have thereafter any other rights
whatsoever with respect to such Rights, whether under any
provision of this agreement or otherwise. The holder of any
Rights represented by a Rights Certificate which is submitted
to the Rights Agent on exercise or for registration of
transfer or exchange which does not contain the necessary
certifications set forth in the Rights Certificate
establishing that such Rights are not void under this
subsection will be deemed to be an Acquiring Person for the
purpose of this section 4.1 and such Rights will be null and
void.
(c) Any Rights Certificate that represents Rights Beneficially
Owned by a Person described in clause (b)(i) or (ii) or
transferred to any nominee of any such Person, and any Rights
Certificate issued on transfer, exchange, replacement or
adjustment of any other Rights Certificate referred to in this
sentence, will contain the following legend:
THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE
ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON OR A PERSON ACTING JOINTLY OR IN
CONCERT WITH ANY OF THEM (AS SUCH TERMS ARE DEFINED IN
THE SHAREHOLDER RIGHTS PLAN AGREEMENT). THIS RIGHTS
CERTIFICATE AND THE RIGHTS REPRESENTED BY THIS
CERTIFICATE WILL BE VOID IN THE CIRCUMSTANCES SPECIFIED
IN SUBSECTION 4.1(b) OF THE SHAREHOLDER RIGHTS PLAN
AGREEMENT.
The Rights Agent will not be under any responsibility to
ascertain the existence of facts that would require the
inclusion of that legend, but will be required to include the
legend only if instructed to do so by the Corporation or if a
holder fails to certify on transfer or exchange in the space
provided on the Rights Certificate that it is not an Acquiring
Person or other Person referred to in the legend. The issuance
of
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a Rights Certificate without the legend referred to in this
subsection will not affect the application of subsection (b).
(d) From and after the Separation Time, the Corporation will
do all such acts and things as will be necessary and within
its power to ensure compliance with the provisions of this
section 4.1, including all such acts and things as may be
required to satisfy the requirements of the Corporations Act
and the Securities Act or comparable legislation of any other
applicable jurisdiction and the rules of any stock exchange
where the Common Shares may then be listed or traded in
respect of the issuance of Common Shares upon the exercise of
Rights in accordance with this agreement.
(e) Notwithstanding any other provision of this agreement, any
Rights held by the Corporation or any of its Subsidiaries
will be void.
ARTICLE 5.
THE RIGHTS AGENT
5.1. GENERAL
(a) The Corporation hereby appoints the Rights Agent to act as
agent for the Corporation and the holders of Rights in
accordance with the terms and conditions hereof, and the
Rights Agent hereby accepts such appointment. The Corporation
may from time to time appoint one or more co-rights agents
(each, a "CO-RIGHTS AGENT") as it may deem necessary or
desirable, subject to the approval of the Rights Agent. In the
event the Corporation appoints one or more Co-Rights Agents,
the respective duties of the Rights Agents and Co-Rights
Agents will be as the Corporation may determine with the
approval of the Rights Agent. The Corporation agrees to pay to
the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of
the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and
execution of this agreement and the exercise and performance
of its duties hereunder (including the fees and disbursements
of any expert or advisor retained by the Rights Agent with the
approval of the Corporation, acting reasonably). The
Corporation also agrees to indemnify the Rights Agent, its
officers, directors and employees for, and to hold it and them
harmless against, any loss, liability cost, claim, action,
damage or expense, incurred without negligence, bad faith or
wilful misconduct on the part of the Rights Agent, 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 and/or the
resignation or removal of the Rights Agent.
(b) The Corporation will inform the Rights Agent in a reasonably
timely manner of events which may materially affect the
administration of this agreement by the Rights Agent and at
any time, upon request, will provide to the Rights Agent an
incumbency certificate with respect to the then current
directors of the Corporation, provided that failure to inform
the Rights Agent of any such events,
-26-
or any defect therein, will not affect the validity of any
action taken hereunder in relation to such events.
(c) The Rights Agent will be protected and will 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.
5.2. MERGER OR AMALGAMATION OR CHANGE OF NAME OF RIGHTS AGENT
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or amalgamated or with which it may
be consolidated, or any corporation resulting from any merger,
amalgamation or consolidation to which the Rights Agent or any
successor Rights Agent is a party, or any corporation
succeeding to the shareholder or stockholder services business
of the Rights Agent or any successor Rights Agent, will be the
successor to the Rights Agent under this agreement without the
execution or filing of any paper or any further act on the
part of any of the parties, provided that such corporation
would be eligible for appointment as a successor Rights Agent
under the provisions of section 5.4. In case at the time such
successor Rights Agent succeeds to the agency created by this
agreement any of the Rights Certificates have been
countersigned but not delivered, any such successor Rights
Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Rights Certificates so countersigned;
and in case at that time any of the Rights Certificates have
not been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the
predecessor Rights Agent or in the name of the successor
Rights Agent; and in all such cases such Rights Certificates
will have the full force provided in the Rights Certificates
and in this agreement.
(b) In case at any time the name of the Rights Agent is changed
and at such time any of the Rights Certificates 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 have not 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 will have the full force
provided in the Rights Certificates and in this agreement.
5.3. DUTIES OF RIGHTS AGENT
The Rights Agent undertakes the duties and obligations imposed
by this agreement upon the following terms and conditions, by all of which the
Corporation and the holders of Rights Certificates, by their acceptance thereof,
will be bound:
(a) the Rights Agent may consult with legal counsel (who may be
legal counsel for the Corporation) and the opinion of such
counsel will be full and complete
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authorization and protection to the Rights Agent as to
any action taken or omitted by it in good faith and in
accordance with such opinion; the Rights Agent may also, with
the approval of the Corporation (where such approval may
reasonably be obtained and such approval not to be
unreasonably withheld), consult with such other experts as the
Rights Agent considers necessary or appropriate to properly
carry out the duties and obligations imposed under the
agreement and the Rights Agent will be entitled to rely in
good faith on the advice of any such expert;
(b) whenever in the performance of its duties under this agreement
the Rights Agent deems it necessary or desirable that any fact
or matter be proved or established by the Corporation prior to
taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof is specifically
prescribed in this agreement) may be deemed to be conclusively
proved and established by a certificate signed by a Person
believed by the Rights Agent to be a senior officer of the
Corporation and delivered to the Rights Agent; and such
certificate will be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the
provisions of this agreement in reliance upon such
certificate;
(c) the Rights Agent will be liable hereunder only for its own
negligence, bad faith or wilful misconduct;
(d) the Rights Agent will not be liable for or by reason of any of
the statements of fact or recitals contained in this agreement
or in the certificates for Common Shares or the Rights
Certificates (except its countersignature thereof) or be
required to verify the same, but all such statements and
recitals are and will be deemed to have been made by the
Corporation only;
(e) the Rights Agent will not be under any responsibility in
respect of the validity of this agreement or the execution and
delivery hereof (except the due authorization, execution and
delivery hereof by the Rights Agent) or in respect of the
validity or execution of any Common Share certificate or
Rights Certificate (except its countersignature thereof); nor
will it be responsible for any breach by the Corporation of
any covenant or condition contained in this agreement or in
any Rights Certificate; nor will it be responsible for any
change in the exercisability of the Rights (including the
Rights becoming void pursuant to subsection 4.1(b)) or any
adjustment required under the provisions of section 3.2 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 3.2 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 Shares will, when issued, be duly
and validly authorized, executed, issued and delivered as
fully paid and non-assessable;
(f) the Corporation will perform, execute, acknowledge and deliver
or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as
may reasonably be required by the Rights Agent for the
carrying out or performing by the Rights Agent of the
provisions of this agreement;
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(g) the Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties
hereunder from any Person designated in writing by the
Corporation, and to apply to such Persons for advice or
instructions in connection with its duties, and it will not be
liable for any action taken or suffered by it in good faith in
accordance with the instructions of any such Person;
(h) the Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in Common
Shares, Rights or other securities of the Corporation or
become pecuniarily interested in any transaction in which the
Corporation may be interested, or contract with or lend money
to the Corporation or otherwise act as fully and freely as
though it were not the Rights Agent under this agreement.
Nothing herein will preclude the Rights Agent from acting in
any other capacity for the Corporation or for any other legal
entity; and
(i) the Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and
the Rights Agent will not be answerable or accountable for any
act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Corporation resulting from any
such act, default, neglect or misconduct, provided reasonable
care was exercised in the selection and continued employment
thereof.
5.4. CHANGE OF RIGHTS AGENT
The Rights Agent may resign and be discharged from its duties
under this agreement upon 60 days' notice in writing (or such lesser notice as
is acceptable to the Corporation) mailed to the Corporation and to each transfer
agent of Common Shares by registered or certified mail, and to the holders of
Rights in accordance with section 6.8, all of which will be at the Corporation's
expense. The Corporation may remove the Rights Agent upon 30 days' notice in
writing, mailed to the Rights Agent and to each transfer agent of the Common
Shares by registered or certified mail, and to the holders of the Rights in
accordance with section 6.8. If the Rights Agent should resign or be removed or
otherwise become incapable of acting, the Corporation will appoint a successor
to the Rights Agent. If the Corporation fails to make such appointment within a
period of 30 days after such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of any Rights (which holder, with such notice, must submit such
holder's Rights Certificate for inspection by the Corporation), then the holder
of any Rights may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Corporation or by such a court, must 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, upon payment by the
Corporation to the predecessor Rights Agent of all outstanding fees and expenses
owing by the Corporation to the predecessor Rights Agent pursuant to this
agreement, will 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
-29-
Rights. Failure to give any notice provided for in this section 5.4, however, or
any defect therein, will not affect the legality or validity of the resignation
or removal of the Rights Agent or the appointment of the successor Rights Agent,
as the case may be.
ARTICLE 6.
MISCELLANEOUS
6.1. REDEMPTION AND WAIVER
(a) Until the occurrence of a Flip-in Event as to which the
application of section 4.1 has not been waived pursuant to
this section 6.1, the Board of Directors may elect to redeem
all but not less than all of the then outstanding Rights at a
redemption price of $0.0001 per Right, appropriately adjusted
in a manner analogous to the applicable adjustment provided
for in section 3.2, if an event of the type analogous to any
of the events described in section 3.2 have occurred (such
redemption price being herein referred to as the "REDEMPTION
PRICE").
(b) Until the occurrence of a Flip-in Event as to which the
application of section 4.1 has not been waived pursuant to
this section 6.1, upon written notice to the Rights Agent, the
Board of Directors, may determine to waive the application of
section 4.1 to any Flip-in Event.
(c) Notwithstanding subsection (b), upon written notice to the
Rights Agent, the Board of Directors may waive the application
of section 4.1 in respect of any Flip-in Event, provided that
both of the following conditions are satisfied:
(i) the Board of Directors has determined that the Person
became an Acquiring Person by inadvertence and without
any intention to become, or knowledge that it would
become, an Acquiring Person; and
(ii) such Person has reduced its Beneficial Ownership of
Voting Shares such that at the time of the granting of a
waiver pursuant to this subsection, such Person is no
longer an Acquiring Person;
In the event of any such waiver, for the purposes of this
agreement, such Flip-in Event will be deemed not to have
occurred and the Separation Time will be deemed not to have
occurred as a result of such Person having inadvertently
become an Acquiring Person.
(d) The Board of Directors will be deemed to have elected to
redeem, without further formality, the Rights at the
Redemption Price on the date that a Person who has made a
Permitted Bid, a Competing Permitted Bid or Take-over Bid in
respect of which the Board of Directors has waived, or is
deemed to have waived, pursuant to this section 6.1 the
application of section 4.1, takes up and pays for Voting
Shares pursuant to the terms and conditions of such Permitted
Bid, Competing Permitted Bid or Take-over Bid, as the case may
be.
(e) Where a Take-over Bid that is not a Permitted Bid is withdrawn
or otherwise terminated after the Separation Time has occurred
and prior to the occurrence of a Flip-in Event, the Board of
Directors may elect to redeem all the then outstanding Rights
without the consent of the holders of Voting Shares or the
holders of Rights, as the case may be, at the Redemption Price
and reissue Rights under this agreement to holders of record
of Common Shares immediately following the
-30-
time of such redemption and, thereafter, all of the
provisions of this agreement will continue in full force and
effect and such Rights, without any further formality, will be
attached to the outstanding Common Shares in the same manner
as prior to the occurrence of such Separation Time.
(f) If the Board of Directors elects or is deemed to have elected
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 will be to receive the Redemption Price.
(g) Within 10 days after the Board of Directors electing or having
been deemed to have elected to redeem the Rights, the
Corporation will give notice of redemption to the holders of
the then outstanding Rights by issuing a press release, at
least once, in both Canada and the United States. The notice
of redemption will state, among other things, that a holder of
Rights shall be entitled to its PRO RATA portion of the
Redemption Price by requesting such payment in writing from
the Corporation at the address set out in section 6.8 on or
before the expiration of one year following the giving of the
notice of redemption. The Corporation shall be deemed to have
validly redeemed all of the Rights upon the publication of the
notice of redemption as contemplated herein. The Corporation
may not redeem, acquire or purchase for value any Rights at
any time in any manner other than that specifically set forth
in this section 6.1, and other than in connection with the
purchase of Common Shares prior to the Separation Time.
6.2. EXPIRATION
No Person will have any rights pursuant to this agreement or
in respect of any Right after the Expiration Time, except the Rights Agent as
specified in section 5.1.
6.3. ISSUANCE OF NEW RIGHTS CERTIFICATES
Notwithstanding any of the provisions of this agreement or of
the Rights to the contrary, the Corporation, at its option, may 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.
6.4. FRACTIONAL RIGHTS AND FRACTIONAL SHARES
(a) The Corporation will not be required to issue fractions of
Rights or to distribute Rights Certificates which evidence
fractional Rights. The number of Rights issued at any time
shall be rounded down to the nearest whole number of Rights.
(b) The Corporation will not be required to issue fractions of
Common Shares upon exercise of the Rights as all such Common
Shares will be rounded down to the nearest whole number of
Common Shares.
6.5. SUPPLEMENTS AND AMENDMENTS
(a) The Corporation may make amendments to this agreement from
time to time 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,
-31-
rules or regulations or decision of a court or regulatory
authority. The Corporation, at or prior to the meeting of
shareholders of the Corporation, or any adjournment or
postponement thereof, to be held for shareholders of the
Corporation to consider and, if deemed advisable, to adopt a
resolution approving, ratifying and confirming this agreement
and the Rights issued pursuant thereto, may 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 to make this agreement effective (provided such
action would not materially adversely affect the interests of
the holders of Rights generally). Notwithstanding anything in
this section 6.5 to the contrary, no such supplement or
amendment may be made to the provisions of Article 5 except
with the written concurrence of the Rights Agent to such
supplement or amendment.
(b) Subject to subsection (a), the Corporation, with the prior
consent of the holders of Voting Shares obtained as set forth
below, at any time prior to the Separation Time, may
supplement or amend 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 will 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 vote at a meeting of the holders of Voting Shares
duly called and held in compliance with applicable laws and
the Corporation's by-laws.
(c) Subject to subsection (a), the Corporation, with the prior
consent of the holders of Rights, at any time on or after the
Separation Time, may supplement or amend 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 supplement or
amendment may be made to the provisions of Article 5 except
with the written concurrence of the Rights Agent thereto.
(d) Any approval of the holders of Rights will 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) will be entitled to one vote, and
the procedures for the calling, holding and conduct of the
meeting will be those, as nearly as may be, which are provided
in the Corporation's by-laws and the Corporations Act with
respect to meetings of shareholders of the Corporation.
(e) Any amendments made by the Corporation to this agreement
pursuant to subsection (a) which are required to maintain the
validity of this agreement shall:
(i) if made before the Separation Time, be submitted to the
holders of Voting Shares of the Corporation at the next
meeting of shareholders and the holders of Voting Shares
may, by the majority referred to in subsection (b), may
confirm or reject such amendment; and
(ii) if made after the Separation Time, be submitted to the
holders of Rights at a meeting to be called for a date
not later than immediately following the next meeting of
shareholders of the Corporation and the holders of
Rights,
-32-
by resolution passed by the majority referred to in
subsection (d), may confirm or reject such amendment.
Any such amendment will 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 holders of Voting Shares or the holders
of Rights or is not submitted to the holders of Voting Shares or
holders of Rights as required, then such amendment will 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 amendment to
this agreement to substantially the same effect will be effective
until confirmed by the shareholders or holders of Rights, as the
case may be.
(f) The Corporation will give notice in writing to the Rights Agent of
any amendment or supplement to this agreement pursuant to this
section 6.5 within five Business Days of the date of any such
amendment or supplement, provided that failure to give such notice,
or any defect therein, will not affect the validity of any such
supplement or amendment.
(g) For greater certainty, neither the exercise by the Board of
Directors of any power or discretion conferred on it under this
agreement nor the making by the Board of Directors of any
determination or the granting of any waiver it is permitted to make
or give under this agreement will constitute an amendment, variation
or rescission of the provisions of this agreement or Rights for
purposes of this section 6.5 or otherwise.
6.6. 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; and any holder
of any Rights, without the consent of the Rights Agent or of the holder of any
other Rights, on such holder's own behalf and for such holder's own benefit and
the benefit of other holders of Rights, may enforce, and may institute and
maintain, any suit, action or proceeding against the Corporation to enforce, or
otherwise act in respect of, such holder's right to exercise such holder's
Rights in the manner provided in such holder's Rights Certificate and in this
agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this agreement and
will be entitled to specific performance of the obligations under, and
injunctive relief against, actual or threatened violations of the obligations of
any Person subject to, this agreement.
6.7. NOTICE OF PROPOSED ACTIONS
If the Corporation proposes after the Separation Time and
prior to the Expiration Time to effect the liquidation, dissolution or
winding-up of the Corporation or the sale of all or substantially all of the
Corporation's assets, then, in each such case, the Corporation will give to each
holder of a Right, in accordance with section 6.8, a notice of such proposed
action. The notice must specify the date on which such liquidation, dissolution,
winding-up or sale is to take
-33-
place, and such notice must be so given at least 20 Business Days prior to the
date of taking such proposed action.
6.8. 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 will be sufficiently given or made if
delivered or sent by facsimile or by first-class mail, postage
prepaid, addressed (until another facsimile number or address is
filed in writing with the Rights Agent) as follows:
724 Solutions Inc.
ββββ βββββ ββββββ, βββββ βββ
βββββββ, βββββββ βββ βββ
Attention: General Counsel and Corporate Secretary
Facsimile: (βββ) βββ-ββββ
(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 will be sufficiently given or made if
delivered or sent by facsimile or by first-class mail, postage
prepaid, addressed (until another facsimile number or address is
filed in writing with the Corporation) as follows:
Computershare Trust Company of Canada
βββ ββββββββββ ββββββ
βββ βββββ
βββββββ, βββββββ βββ βββ
Attention: Senior Manager, Client Services
Facsimile: (βββ) βββ-ββββ
(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 behalf
of the holder of any Rights will 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
registry books of the Rights Agent or, prior to the Separation Time,
on the registry books of the Corporation for the Common Shares. Any
notice which is mailed in the manner herein provided will be deemed
given, whether or not the holder receives the notice.
(d) Notices will be deemed to have been received as follows:
(i) in the case of personal delivery, on the day of delivery,
unless delivered on a day that is not a Business Day or after
4:00 p.m. on the day of delivery, in which case notice will be
deemed to have been received on the next Business Day;
(ii) in the case of facsimile, on the Business Day of transmission
if transmitted before 4:00 p.m. on that Business Day or,
otherwise, on the next Business Day following the day of
transmission; and
(iii) in the case of first class mail, on the fifth Business Day
following mailing.
(e) Any accidental error, omission or failure in giving or delivering or
mailing any such notice will not invalidate or otherwise
prejudicially affect any action or proceeding founded thereon.
-34-
6.9. COSTS OF ENFORCEMENT
The Corporation agrees that, if it or any other Person the
securities of which are purchasable upon exercise of Rights fails to fulfil any
of its obligations pursuant to this agreement, then the Corporation or such
Person will reimburse the holder of any Rights for the costs and expenses
(including reasonable legal fees) incurred by such holder in actions to enforce
the holder's rights pursuant to any Rights or this agreement.
6.10. SUCCESSORS
All the covenants and provisions of this agreement by or for
the benefit of the Corporation or the Rights Agent bind and enure to the benefit
of their respective successors and assigns hereunder.
6.11. BENEFITS OF THIS AGREEMENT
Nothing in this agreement will be construed to give to any
Person other than the Corporation, the Rights Agent and the holders of the
Rights any legal or equitable right, remedy or claim under this agreement; but
this agreement will be for the sole and exclusive benefit of the Corporation,
the Rights Agent and the holders of the Rights.
6.12. GOVERNING LAW
This agreement and each Right issued hereunder will be deemed
to be a contract made under the laws of the Province of Ontario and for all
purposes will be governed by and construed in accordance with the laws of such
province applicable to contracts to be made and performed entirely within such
province.
6.13. COUNTERPARTS
This agreement may be executed in any number of counterparts
and each of such counterparts for all purposes will be deemed to be an original,
and all such counterparts together will constitute one and the same instrument.
6.14. SEVERABILITY
If any term or provision hereof or the application thereof to
any circumstance is, in any jurisdiction and to any extent, invalid or
unenforceable, such term or provision will be ineffective as to such
jurisdiction to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable the remaining terms and provisions
hereof or the application of such term or provision to circumstances other than
those as to which it is held invalid or unenforceable.
6.15. EFFECTIVE DATE
This agreement is in force in accordance with its terms from
the date hereof. If the Rights Plan is not ratified by resolution passed by a
majority of the votes cast by Independent Shareholders present or represented by
proxy at a meeting of shareholders of the Corporation
-35-
held on or before July 21, 2003, then, unless a Flip-in Event (as to which the
application of section 4.1 has not been waived pursuant to section 6.1) has
occurred on or prior to such date, this agreement and any then outstanding
Rights, without further formality, will be of no further force or effect as at
such date.
6.16. SHAREHOLDER APPROVAL
At each annual meeting of shareholders of the Corporation
commencing in 2004 and every one year anniversary thereafter and so on, provided
that a Flip-in Event has not occurred prior to such time (other than a Flip-in
Event in respect of which the application of section 4.1 has been waived
pursuant to section 6.1), the board of directors may submit a resolution to the
Independent Shareholders for their consideration and approval ratifying this
agreement (as may be amended and restated) and its continued existence after
each such meeting. If a majority of the votes cast by Independent Shareholders
present or represented by proxy at any such meeting are not voted in favour of
this agreement and its continued existence, then the board of directors,
immediately upon confirmation by the chair of such shareholders meeting of the
results of the vote on such resolution, without further formality, will be
deemed to have elected to redeem the Rights at the Redemption Price.
6.17. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS
All 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 in connection with this agreement will not subject the
Board of Directors or any director of the Corporation to any liability to the
holders of the Rights.
6.18. TIME OF THE ESSENCE
Time will be of the essence of this agreement.
6.19. REGULATORY APPROVALS
Any obligation of the Corporation or action contemplated by
this agreement, including any amendment hereto, will be subject to the receipt
of any requisite approval or consent from any applicable regulatory authority,
including any necessary approvals of the Nasdaq National Market, the Toronto
Stock Exchange or any other stock exchange.
6.20. DECLARATION AS TO NON-CANADIAN AND NON-UNITED STATES HOLDERS
If in the opinion of the Board of Directors (who may rely on
the advice of legal 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 or the United States,
the Board of Directors acting in good faith may take such actions as it may deem
appropriate to ensure that such compliance is not required, including
establishing procedures for the issuance to a Canadian resident fiduciary of
Rights or securities issuable on exercise of Rights, the holding thereof in
trust for the Persons entitled thereto and the sale thereof and remittance of
the proceeds of such sale (if any) to the Persons entitled thereto. In no event
will the Corporation or the Rights Agent be required to issue or deliver Rights
or securities
-36-
issuable on exercise of Rights to Persons who are citizens, residents or
nationals of any jurisdiction other than Canada and the United States of America
in which such issue or delivery would be unlawful without registration of the
relevant Persons or securities for such purposes.
6.21. FIDUCIARY DUTIES OF THE BOARD OF DIRECTORS
For greater certainty, this agreement will not be construed to
suggest or imply that the Board of Directors is not entitled to recommend that
holders of Voting Shares reject or accept any Take-over Bid (whether or not such
Take-over Bid is a Permitted Bid or a Competing Permitted Bid) or take any other
action (including the commencement, prosecution, defence or settlement of any
litigation) with respect to any Take-over Bid or otherwise that the Board of
Directors believes is necessary or appropriate in the exercise of its fiduciary
duties.
6.22. LANGUAGE
Les parties aux presentes ont exige que la presente convention
ainsi que tous les documents et avis qui s'y rattachent et/ou qui en decouleront
soient rediges en langue anglaise. The parties hereto have required that this
agreement and all documents and notices related thereto and/or resulting
therefrom be drawn up in the English language.
-37-
IN WITNESS WHEREOF, the parties have caused this agreement to
be duly executed as of the date first written above.
724 SOLUTIONS INC.
By: /s/ ββββ ββββ
---------------------------------
Name: ββββ ββββ
Title: General Counsel and
Corporate Secretary
COMPUTERSHARE TRUST COMPANY
OF CANADA
By: /s/ ββββββββ βββββ
---------------------------------
Authorized Signatory
Professional, Client Services
/s/ ββββ ββββββββ
---------------------------------
Authorized Signatory
Professional, Client Services
EXHIBIT A
FORM OF RIGHTS CERTIFICATE
Certificate No.______________ ___________ Rights
RIGHTS CERTIFICATE
This certifies that __________________ is the registered
holder of the number of Rights set forth above, each of which entitles the
registered holder thereof, subject to the terms, provisions and conditions of
the Shareholder Rights Plan Agreement dated as of February 10, 2003, as the
same may be amended, restated or supplemented from time to time (the "RIGHTS
AGREEMENT") between 724 Solutions Inc. (the "CORPORATION"), and Computershare
Trust Company of Canada, as rights agent (the "RIGHTS AGENT", which term
includes any successor Rights Agent under the Rights Agreement), to purchase
from the Corporation at any time after the Separation Time and prior to the
Expiration Time (as such terms are defined in the Rights Agreement), one
fully paid Common Share of the Corporation (a "COMMON SHARE") at the Exercise
Price referred to below, upon presentation and surrender of this Rights
Certificate together with the Form of Election to Exercise and Declaration of
Ownership duly executed and submitted to the Rights Agent at its principal
office in the city of Toronto or any other office of the Rights Agent
designated for that purpose from time to time by the Rights Agent. The
Exercise Price initially is $100 per Right and will be subject to adjustment
in certain events as provided in the Rights Agreement.
In certain circumstances described in the Rights Agreement,
each Right evidenced hereby may entitle the registered holder thereof to
purchase or receive assets, debt securities or shares in the capital of the
Corporation other than Common Shares, or more or less than one Common Share, all
as provided in the Rights Agreement.
This Rights Certificate is subject to all of the terms and
conditions of the Rights Agreement which terms and conditions are incorporated
herein by reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights, limitations of
rights, obligations, duties and immunities thereunder of the Rights Agent, the
Corporation and the holders of the Rights Certificates. Copies of the Rights
Agreement are on file at the registered office of the Corporation and are
available upon written request.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at any of the offices of the Rights Agent
designated for such purpose, may be exchanged for another Rights Certificate or
Rights Certificates of like tenor and date evidencing an aggregate number of
Rights equal to the aggregate number of Rights evidenced by the Rights
Certificate or Rights Certificates surrendered. If this Rights Certificate is
exercised in part, the registered holder will be entitled to receive, upon
surrender hereof, another Rights Certificate or Rights Certificates for the
number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Rights Certificate may be, and under certain circumstances are
required to be, redeemed by the Corporation at a redemption price of $0.0001 per
Right, subject to adjustment in certain events.
- ii -
Fractional Common Shares will not be issued upon the exercise
of any Right or Rights evidenced hereby as all such Common Shares will be
rounded down to the nearest whole number of Common Shares.
No holder of this Rights Certificate, as such, will be
entitled to vote or receive dividends or be deemed for any purpose the holder of
Common Shares or of any other shares of the Corporation which may at any time be
issuable upon the exercise hereof, nor will anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a shareholder of the Corporation or any right to vote for the
election of directors or upon any matter submitted to shareholders of the
Corporation 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 of the Corporation (except as provided in the Rights Agreement), or
to receive dividends or subscription rights, or otherwise, until the Rights
evidenced by this Rights Certificate have been exercised as provided in the
Rights Agreement.
This Rights Certificate will not be valid or obligatory for
any purpose until it will have been manually countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Corporation and its corporate seal.
Date: _________________
724 SOLUTIONS INC.
By:
---------------------------------
By:
---------------------------------
Countersigned:
COMPUTERSHARE TRUST COMPANY
OF CANADA
By:
---------------------------------
Authorized Signature
FORM OF ELECTION TO EXERCISE
(to be attached to each Rights Certificate)
TO: 724 SOLUTIONS INC.
The undersigned hereby irrevocably elects to
exercise ___________________ whole Rights represented by the attached Rights
Certificate to purchase the Common Shares issuable upon the exercise of such
Rights and requests that certificates for such Common Shares be issued to:
_______________________________________________________________
Name
_______________________________________________________________
Address
_______________________________________________________________
City and Province
_______________________________________________________________
Social Insurance Number or other taxpayer identification number
If such number of Rights are not 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.)
Signature must be guaranteed by an Eligible Institution being
either a Canadian Schedule I chartered bank or major trust company in Canada, a
member of the Securities Transfer Association Medallion Program (STAMP), a
member of the Stock Exchange Medallion Program (SEMP) or a member of the New
York Stock Exchange, Inc. Medallion Signature Program (MSP). Members of these
programs are usually members of a recognized stock exchange in Canada and the
United States, members of the Investment Dealers Association of Canada, member
of the National Association of Securities Dealers of banks and trust companies
in the United States.
(To be completed if true)
- ii -
The undersigned hereby represents, for the benefit of the
Corporation and all holders of Rights and Common Shares, that the Rights
evidenced by this Rights Certificate are not, and, to the knowledge of the
undersigned, have never been, Beneficially Owned by an Acquiring Person, an
Affiliate or Associate of an Acquiring Person or any Person acting jointly or in
concert with an Acquiring Person or with an Associate or Affiliate of an
Acquiring Person (as such terms are defined in the Rights Agreement).
____________________________________________
Signature
FORM OF ASSIGNMENT
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.
Dated: _____________________
Signature Guaranteed: _______________________________________
Signature
(Signature must correspond to name as
written upon the face of this Rights
Certificate in every particular,
without alteration or enlargement or
any change whatsoever.)
Signature must be guaranteed by an Eligible Institution being
either a Canadian Schedule I chartered bank or major trust company in Canada, a
member of the Securities Transfer Association Medallion Program (STAMP), a
member of the Stock Exchange Medallion Program (SEMP) or a member of the New
York Stock Exchange, Inc. Medallion Signature Program (MSP). Members of these
programs are usually members of a recognized stock exchange in Canada and the
United States, members of the Investment Dealers Association of Canada, member
of the National Association of Securities Dealers of banks and trust companies
in the United States.
(To be completed if true)
The undersigned hereby represents, for the benefit of the
Corporation and all holders of Rights and Common Shares, that the Rights
evidenced by this Rights Certificate are not, and, to the knowledge of the
undersigned, have never been, Beneficially Owned by an Acquiring Person, an
Affiliate or Associate of an Acquiring Person or any Person acting jointly or in
concert with an Acquiring Person or with an Associate or Affiliate of an
Acquiring Person (as such terms are defined in the Rights Agreement).
____________________________________________
Signature
NOTICE
If the certification set forth above in the Form of Election
to Exercise or the Form of Assignment is not completed, the Corporation reserves
the right to treat the Beneficial Owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and accordingly such Rights will be null and
void.