EXHIBIT 1
SHAREHOLDER RIGHTS PLAN AGREEMENT
MADE AS OF
DECEMBER 17, 2003
BETWEEN
MDSI MOBILE DATA SOLUTIONS INC.
AND
COMPUTERSHARE TRUST COMPANY OF CANADA
AS RIGHTS AGENT
TABLE OF CONTENTS
ARTICLE 1 INTERPRETATION.....................................................2
1.1 Certain Definitions..............................................2
1.2 Currency.........................................................16
1.3 Headings.........................................................16
1.4 References to Agreement..........................................16
1.5 Calculation of Number and Percentage of Beneficial Ownership
of Outstanding Voting Shares...................................16
1.6 Acting Jointly or in Concert.....................................16
1.7 Generally Accepted Accounting Principles.........................17
ARTICLE 2 THE RIGHTS.........................................................17
2.1 Issuance and Evidence of Rights; Legend on Common
Share Certificates.............................................17
2.2 Initial Exercise Price; Exercise of Rights; Detachment
of Rights......................................................18
2.3 Adjustment to Exercise Price; Number of Rights...................21
2.4 Date on Which Exercise is Effective..............................25
2.5 Execution, Authentication, Delivery and Dating of
Rights Certificates............................................25
2.6 Registration, Registration of Transfer and Exchange..............26
2.7 Mutilated, Destroyed, Lost and Stolen Rights Certificates........26
2.8 Persons Deemed Owners............................................27
2.9 Delivery and Cancellation of Certificates........................27
2.10 Agreement of Rights Holders......................................27
2.11 Rights Certificate Holder not Deemed a Shareholder...............28
ARTICLE 3 ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS.....29
3.1 Flip-in Event....................................................29
3.2 Fiduciary Duties of the Board of Directors of the Corporation....30
ARTICLE 4 THE RIGHTS AGENT...................................................31
4.1 General..........................................................31
4.2 Merger, Amalgamation or Consolidation or Change of Name
of Rights Agent...............................................31
4.3 Duties of Rights Agent...........................................32
4.4 Change of Rights Agent...........................................34
ARTICLE 5 MISCELLANEOUS......................................................34
5.1 Redemption and Waiver............................................34
5.2 Expiration.......................................................37
5.3 Issuance of New Rights Certificates..............................37
5.4 Supplements and Amendments.......................................37
5.5 Fractional Rights and Fractional Shares..........................38
5.6 Rights of Action.................................................39
5.7 Regulatory Approvals.............................................39
5.8 Unlawful Distributions...........................................39
5.9 Notices..........................................................39
5.10 Costs of Enforcement.............................................40
5.11 Successors.......................................................41
5.12 Benefits of this Agreement.......................................41
5.13 Governing Law....................................................41
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5.14 Severability.....................................................41
5.15 Effective Date...................................................41
5.16 Determinations and Actions by the Board of Directors.............42
5.17 Time of the Essence..............................................42
5.18 Execution in Counterparts........................................42
5.19 Language.........................................................42
Exhibit A.................................................................44
1
THIS SHAREHOLDER RIGHTS PLAN AGREEMENT made as of December 17, 2003.
BETWEEN:
MDSI MOBILE DATA SOLUTIONS INC., a corporation incorporated under the
Canada Business Corporations Act (hereinafter referred to as the
"Corporation")
OF THE FIRST PART
AND:
COMPUTERSHARE TRUST COMPANY OF CANADA, a trust company incorporated under
the laws of Canada (hereinafter referred to as the "Rights Agent")
OF THE SECOND PART
WHEREAS on December 17, 1998 the Board of Directors of the Corporation
approved, and the Corporation implemented, a shareholder rights plan (the "1998
Plan") with a five-year term expiring on December 17, 2003;
AND WHEREAS the Board of Directors of the Corporation has determined that
it is in the best interests of the Corporation and all of its shareholders to
adopt a new shareholder rights plan to replace the 1998 Plan;
AND WHEREAS in order to implement the adoption of a new shareholder rights
plan the Board of Directors have:
(a) authorized the issuance and distribution, effective as of the Record
Time, of one Right in respect of each Common Share outstanding at the
Record Time; and
(b) authorized the issuance of one Right in respect of each Common Share
issued after the Record Time and prior to the earlier of the
Separation Time and the Expiration Time;
AND WHEREAS each Right entitles the holder thereof, after the Separation
Time, to purchase securities of the Corporation pursuant to the terms and
subject to the conditions set forth herein;
AND WHEREAS the Corporation desires to re-appoint the Rights Agent to act
on behalf of the Corporation and the holders of Rights, and the Rights Agent is
willing to so act, in connection with the issuance, transfer, exchange and
replacement of Rights Certificates, the exercise of Rights and other matters
referred to herein;
NOW THEREFORE, in consideration of the premises and the respective
covenants and agreements set forth herein, the preamble hereto forming an
integral part hereof, the parties hereby agree as follows:
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ARTICLE 1
INTERPRETATION
1.1 Certain Definitions
In this Agreement
(a) "Acquiring Person" means any Person who is the Beneficial Owner of 20%
or more of the outstanding Voting Shares; provided, however, that the
term "Acquiring Person" shall not include:
(i) the Corporation or any Subsidiary of the Corporation;
(ii) any Person who becomes the Beneficial Owner of 20% or more of the
outstanding Voting Shares as a result of any one or any
combination of: (A) Voting Share Reductions; (B) Permitted Bid
Acquisitions; (C) Exempt Acquisitions; (D) Convertible Security
Acquisitions; or (E) Pro Rata Acquisitions; provided, however,
that if a Person shall become the Beneficial Owner of 20% or more
of the outstanding Voting Shares by reason of any one or any
combination of Voting Share Reductions, Permitted Bid
Acquisitions, Exempt Acquisitions, Convertible Security
Acquisitions or Pro Rata Acquisitions and, if thereafter, such
Person, while such Person is the Beneficial Owner of 20% or more
of the outstanding Voting Shares, becomes the Beneficial Owner of
additional Voting Shares which result in an increase of such
Person's Beneficial Ownership of Voting Shares by more than 1% of
the number of such Voting Shares outstanding as at the time of
acquisition (other than pursuant to one or any combination of
Voting Share Reductions, Permitted Bid Acquisitions, Exempt
Acquisitions, Convertible Security Acquisitions or Pro Rata
Acquisitions), then, as of the date such Person becomes the
Beneficial Owner of such additional outstanding Voting Shares,
such Person shall be an "Acquiring Person";
(iii)for the period of ten days after the Disqualification Date, any
Person who becomes the Beneficial Owner of 20% or more of the
outstanding Voting Shares as a result of such Person becoming
disqualified from relying on paragraph 1.1(e)(v) solely because
such Person makes or proposes to make a Take-over Bid alone or
acting jointly or in concert with any other Person;
(iv) an underwriter or member of a banking or selling group that
becomes the Beneficial Owner of 20% or more of the outstanding
Voting Shares in connection with a distribution of securities; or
(v) any employee or executive or director stock ownership or other
employee or executive or director benefit plan, or trust for the
benefit of employees of the Corporation or any Subsidiary of the
Corporation or any Person organized, appointed or established by
the Corporation for or pursuant to the terms of any such plan or
trust;
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(b) "Affiliate", when used to indicate a relationship with a specified
Person, means a Person that, directly or indirectly (including through
one or more intermediaries), controls, is controlled by or is under
common control with, such specified Person and a Person shall be
deemed to be controlled by another Person if controlled in any manner
whatsoever that results in control in fact by that person, whether
directly or indirectly, and whether through securities ownership, a
trust, a contract or otherwise;
(c) "Associate", when used to indicate a relationship with a specified
Person, means:
(i) any body corporate, partnership or other organization of which
such specified Person is an officer or partner;
(ii) any trust or other estate in which such specified Person has a
substantial beneficial interest or as to which such specified
Person serves as trustee or in a similar fiduciary capacity;
(iii)any relative of such specified Person if that relative has the
same residence as such specified Person, or any person to whom
such specified Person is married, or any person with whom such
specified Person is living in a conjugal relationship outside
marriage, or any relative of such spouse or other person if that
relative has the same residence as such specified Person;
(iv) any Person who is a director of, officer of, partner in or
trustee of such specified Person or of any body corporate,
partnership or other organization which is an Affiliate or
Associate of such specified Person; and
(v) any body corporate of which such specified Person beneficially
owns, directly or indirectly, shares carrying more than 10% of
the voting rights attaching to all voting securities of the body
corporate for the time being outstanding;
(d) A Person shall be deemed the "Beneficial Owner" of, and to have
"Beneficial Ownership" of, and to "Beneficially Own":
(i) any securities as to which such Person, or any of such Person's
Affiliates or Associates is the direct or indirect 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 become the owner at law
or equity (within 60 days of the date of determination of
Beneficial Ownership and whether or not on condition or the
occurrence of any contingency) pursuant to any agreement,
arrangement, pledge or understanding, whether or not in writing
(other than customary agreements with and between underwriters
and banking group or selling group members with respect to a
distribution of securities pursuant to a prospectus or by way of
private placement and other than pledges of securities in the
ordinary course of business); and
(iii)any securities which are Beneficially Owned within the meaning
of paragraphs (i) or (ii) of this definition by any other Person
with which such Person is acting jointly or in concert;
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provided, however, that a Person shall not be deemed the "Beneficial Owner"
or to have "Beneficial Ownership" of, or to "Beneficially Own", any
security:
(iv) where such security has been, or has been agreed to be, deposited
or tendered pursuant to a Lock-up Agreement, or is otherwise
deposited or tendered to any Take-over Bid made by such Person,
made by any of such Person's Affiliates or Associates or made by
any other Person referred to in paragraph (iii) of this
definition, until such deposited or tendered security has been
unconditionally accepted for payment or exchange or taken up and
paid for, whichever shall first occur;
(v) because such Person, any of such Person's Affiliates or
Associates or any other Person referred to in paragraph (iii) of
this definition holds such security provided that:
A. the ordinary business of such person (the "Investment
Manager") includes the management of investment funds for
others (which others, for greater certainty, may include and
be limited to one or more employee benefit plans or pension
plans) and such security is held in the ordinary course of
such business in the performance of the duties of the
Investment Manager for the account of any other Person (the
"Client");
B. such Person (the "Trust Company") is licensed to carry on
the business of a trust company under applicable law 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 the estate of any such Estate Accounts or for such Other
Accounts;
C. such Person is a Crown agent or agency (in this definition,
the "Crown Agency");
D. the Person is established by statute for purposes that
include, and the ordinary business or activity of such
Person (in this definition, a "Statutory Body") includes,
the management of investment funds for employee benefit
plans, pension plans, insurance plans of various public
bodies and the Statutory Body holds such security for the
purposes of its activities as such; or
E. the Person (in this definition, an "Administrator") is the
administrator or trustee of one or more pension funds or
plans (each, in this definition, a "Plan") registered under
the laws of Canada or any province thereof or the
corresponding laws of the jurisdiction by which such Plan is
governed or is such a Plan and the Administrator or Plan
holds such security for the purposes of its activities as
such;
but only if the Investment Manager, the Trust Company, the Crown
Agent, the Statutory Body, the Administrator or the Plan, as the
case may be, is not then making and has not announced a current
intention to make a Take-over Bid,
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other than an Offer to Acquire Common Shares or other securities
pursuant to a distribution by the Corporation or by means of
ordinary market transactions (including prearranged trades
entered into in the ordinary course of business of such Person)
executed through the facilities of a stock exchange or an
organized over-the-counter market, alone or by acting jointly or
in concert with any other Person;
(vi) because such Person:
A. is a Client of the same Investment Manager as another Person
on whose account the Investment Manager holds such security;
B. has an Estate Account or an Other Account with the same
Trust Company as another Person on whose account the Trust
Company holds such security; or
C. is a Plan with the same Administrator as another Plan on
whose account the Administrator holds such security;
(vii) because such Person:
A. is a Client of an Investment Manager and such security is
owned at law or in equity by the Investment Manager;
B. has an Estate Account or an Other Account with a Trust
Company and such security is owned at law or in equity by
the Trust Company; or
C. is a Plan and such security is owned at law or in equity by
the Administrator of the Plan; or
(viii) because such Person is the registered holder of securities as a
result of carrying on the business of, or acting as nominee for,
a securities depositary;
(e) "Board of Directors" means the board of directors of the Corporation
or any duly constituted and empowered committee thereof;
(f) "Business Day" means any day other than a Saturday, Sunday or a day on
which banking institutions in Vancouver, British Columbia are
authorized or obligated by law to close;
(g) "Canada Business Corporations Act" means the Canada Business
Corporations Act, as amended from time to time, and the regulations
made thereunder, as in effect on the date of this Agreement or as the
same may be amended, re-enacted or replaced by any comparable or
successor laws or regulations thereto;
(h) "Canadian Dollar Equivalent" of any amount which is expressed in
United States dollars means, on any date, the Canadian dollar
equivalent of such amount determined by multiplying such amount by the
U.S. - Canadian Exchange Rate in effect on such date;
(i) "close of business" on any given date means the time on such date (or,
if such date is not a Business Day, the time on the next succeeding
Business Day) at which the Vancouver
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office of the principal transfer agent for the Common Shares (or,
after the Separation Time, the Vancouver office of the Rights Agent)
is closed to the public;
(j) "Common Shares" means the common shares without par value in the
capital of the Corporation and any other shares in the capital of the
Corporation into which such shares may be subdivided, consolidated,
reclassified or changed; provided, however, that "common shares", when
used with reference to any Person other than the Corporation, shall
mean the class or classes of shares (or similar equity interest) with
the greatest per share voting power entitled to vote generally in the
election of all directors of such other Person;
(k) "Competing Permitted Bid" means a Take-over Bid that:
(i) is made after a Permitted Bid has been made and prior to the
expiry of the Permitted Bid;
(ii) satisfies all components of the definition of a Permitted Bid
other than the requirements set out in clause 1.1(jj)(ii)(A)(I)
of the definition of Permitted Bid; and
(iii)contains an irrevocable and unqualified provision that no Voting
Shares will be taken up or paid for pursuant to the Take-over Bid
prior to the close of business on a date that is no earlier than
the later of (A) the date on which Voting Shares may be taken up
under the Permitted Bid that preceded the Competing Permitted Bid
(determined at the date of making the Take-over Bid and assuming
no amendment or variation to the terms and satisfaction of all
conditions to the completion of the Permitted Bid) and (B) 35
days following the date of the Take-over Bid constituting the
Competing Permitted Bid;
(l) "controlled": a corporation is "controlled" by another Person or two
or more Persons if:
(i) securities entitled to vote in the election of directors carrying
more than 50 percent of the votes for the election of directors
are held, directly or indirectly, by or on behalf of the other
Person or Persons; and
(ii) the votes carried by such securities are entitled, if exercised,
to elect a majority of the board of directors of such
corporation,
and "control", "controls" and "controlling" shall be interpreted
accordingly;
(m) "Convertible Securities" means at any time:
(i) any right (contractual or otherwise and regardless of whether
such right constitutes a security) to acquire Common Shares from
the Corporation; and
(ii) any securities issued by the Corporation from time to time (other
than the Rights) carrying any exercise, conversion or exchange
right;
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which is then exercisable or exercisable within a period of 60 days
from that time, pursuant to which the holder thereof may acquire
Common Shares or other securities which are convertible into or
exercisable or exchangeable for Common Shares (in each case, whether
such right is then exercisable or exercisable within a period of 60
days from that time and whether or not on condition or the happening
of any contingency), including at the relevant time of determination,
any outstanding options for the purchase of Common Shares issuable
under any existing stock option plans of the Corporation, which
options are exercisable at the time of determination or within 60 days
of such time;
(n) "Convertible Security Acquisition" means the acquisition of Common
Shares upon the exercise of Convertible Securities received by such
Person pursuant to a Permitted Bid Acquisition, Exempt Acquisition or
a Pro Rata Acquisition;
(o) "Co-Rights Agent" has the meaning ascribed thereto in subsection
4.1(a);
(p) "Disqualification Date" means the first date of public announcement
(which, for purposes of this definition, shall include, without
limitation, a report or filing made or filed pursuant to Section 111
of the Securities Act (British Columbia), Section 101 of the
Securities Act (Ontario) (both of the foregoing provisions as modified
by Canadian Securities Administrators National Instrument 62-103 ("NI
62-103")) or Sections 13(d) or 14 under the 1934 Exchange Act) that
any Person has made or proposes to make a Take-over Bid alone or
acting jointly or in concert with any other Person;
(q) "Dividend Reinvestment Acquisition" means an acquisition of Voting
Shares pursuant to a Dividend Reinvestment Plan;
(r) "Dividend Reinvestment Plan" means a regular dividend reinvestment or
other plan of the Corporation made available by the Corporation to
holders of its securities where such plan permits the holder to direct
that some or all of:
(i) dividends paid in respect of shares of any class of the
Corporation;
(ii) proceeds of redemption of shares of the Corporation;
(iii)interest paid on evidences of indebtedness of the Corporation;
or
(iv) optional cash payments;
be applied to the purchase from the Corporation of Common Shares;
(s) "Election to Exercise" has the meaning ascribed thereto in subsection
2.2(d);
(t) "Exempt Acquisition" means a share acquisition:
(i) in respect of which the Board of Directors has waived the
application of Section 3.1 pursuant to the provisions of
subsection 5.1(d), 5.1(e) or 5.1(f);
(ii) which was made on or prior to the Record Time;
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(iii) which was made pursuant to a Dividend Reinvestment Plan;
(iv) pursuant to the receipt or exercise of rights issued by the
Corporation to all the holders of the Common Shares to subscribe
for or purchase Common Shares or Convertible Securities, provided
that such rights are acquired directly from the Corporation and
not from any other Person;
(v) pursuant to a distribution by the Corporation of Common Shares or
Convertible Securities made pursuant to a prospectus; or
(vi) pursuant to a distribution by the Corporation of Common Shares or
Convertible Securities by way of a private placement by the
Corporation or upon the exercise by an individual employee of
stock options granted under a stock option plan of the
Corporation or rights to purchase securities granted under a
share purchase plan of the Corporation, where
A. all necessary stock exchange approvals for such private
placement, stock option plan or share purchase plan have
been obtained and such private placement, stock option plan
or share purchase plan complies with the terms and
conditions of such approvals; and
B. such Person does not become the Beneficial Owner of more
than 25% of the Common Shares of the Corporation outstanding
immediately prior to the distribution, and in making this
determination the Common Shares to be issued to such Person
in the distribution shall be deemed to be held by such
Person but shall not be included in the aggregate number of
outstanding Common Shares immediately prior to the
distribution;
(u) "Exercise Price" means the price at which a holder may purchase the
securities issuable upon exercise of one whole Right and, until
adjustment thereof in accordance with the terms hereof, the Exercise
price shall be equal to one hundred and forty ($140.00) dollars;
(v) "Expansion Factor" has the meaning ascribed thereto in subsection
2.3(a);
(w) "Expiration Time" means the earlier of:
(i) the Termination Time; or
(ii) the close of business on the fifth anniversary of the date
hereof;
(x) "Flip-in Event" means a transaction in or pursuant to which any Person
becomes an Acquiring Person;
(y) "holder" has the meaning ascribed thereto in Section 2.8;
(z) "Independent Shareholders" means holders of Voting Shares other than;
(i) any Acquiring Person;
(ii) any Offeror;
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(iii) any Associate or Affiliate of any Acquiring Person or Offeror;
(iv) any Person acting jointly or in concert with any Acquiring Person
or any Offeror; and
(v) any employee benefit plan, deferred profit sharing plan, stock
participation plan or trust for the benefit of employees of the
Corporation or any Subsidiary of the Corporation but excluding in
any event a plan or trust in respect of which the employee
directs the manner in which the Voting Shares are to be voted and
directs whether the Voting Shares be tendered to a Take-over Bid;
(aa) "Lock-up Agreement" means an agreement between the Offeror, any of its
Affiliates or Associates 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 the Voting Shares held by the Locked-up
Person to the Offeror's Take-over Bid or to any Take-over Bid made by
any of the Offeror's Affiliates or Associates or made by any other
Person acting jointly or in concert with the Offeror (the "Lock-up
Bid"), where the agreement:
(i) provides that any agreement to deposit or tender voting Shares
to, or to not withdraw Voting Shares from, the Lock-up Bid is
terminable at the option of the Locked-up Person if:
A. another Take-over Bid is made for Voting Shares prior to
Voting Shares being taken up and paid for under the Lock-up
Bid at a price or value for each Voting Share that is at
least 5% higher than the price or value contained in or
proposed to be contained in the Lock-up Bid, or
B. another Take-over Bid is made prior to Voting Shares being
taken up and paid for under the Lock-up Bid for a number of
Voting Shares at least 5% greater than the number of Voting
Shares that the Offeror offered to purchase under the
Lock-up Bid at a price or value per Voting Share that is not
less than the price or value per Voting Share offered under
the Lock-up Bid; and
(ii) does not provide for any "break-up" fees, "top-up" fees,
penalties, expenses or other amounts that exceed in the aggregate
the cash equivalent of 2.5% of the price or value payable to the
Locked-up Person in the event that the Lock-up Bid is not
successfully concluded;
(bb) "Market Price" per share of any securities on any date of
determination shall mean the average of the daily closing prices per
share of such securities (determined as described below) on each of
the 20 consecutive Trading Days through and including the Trading Day
immediately preceding such date; provided, however, that if an event
of a type analogous to any of the events described in Section 2.3
shall have caused the closing price in respect of any Trading Day used
to determine the Market Price not to be fully comparable with the
closing price on such date of determination or, if the date of
determination is not a Trading Day, on the immediately preceding
Trading Day, each such closing price so used shall be appropriately
adjusted in a manner analogous to the
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applicable adjustment provided for in Section 2.3 in order to make it
fully comparable with the closing price on such date of determination
or, if the date of determination is not a Trading Day, on the
immediately preceding Trading Day. The closing price per share of any
securities on any date shall be:
(i) the closing board lot sale price or, if no such sale takes place
on such date, the average of the closing bid and asked prices, as
reported by the principal Canadian stock exchange on which such
securities are listed or admitted to trading; or
(ii) if for any reason none of such prices is available on such day or
the securities are not listed or admitted to trading on a
Canadian stock exchange, the closing board lot sale price or, if
no such sale takes place on such date, the average of the closing
bid and asked prices, as reported by the principal national
United States securities exchange or quotation system on which
such securities are listed or admitted to trading; or
(iii)if for any reason none of such prices is available on such day
or the securities are not listed or admitted to trading on a
Canadian stock exchange or a national United States securities
exchange or quotation system, the last quoted price, or if not so
quoted, the average of the high bid and low asked prices for each
share of such securities in the over-the-counter market, as
reported by any reporting system then in use (as determined by
the Board of Directors); or
(iv) if for any reason none of such prices is available on such day or
the securities are not listed or admitted to trading on a
Canadian stock exchange or a national United States securities
exchange or quotation system or quoted by any such reporting
system, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the
securities, selected by the Board of Directors;
provided, however, that if for any reason none of such prices is
available on any such date, the closing price per share of such
securities on such date shall mean the fair value per share of such
securities on such date as determined by a nationally or
internationally recognized Canadian investment dealer or investment
banker with respect to the fair value per share of such securities.
The Market Price shall be expressed in Canadian dollars and, if
initially determined in respect of any day forming part of the 20
consecutive Trading Day period in United States dollars, such amount
shall be translated into Canadian dollars at the Canadian Dollar
Equivalent thereof on the relevant Trading Day.
Notwithstanding the foregoing, where the Board of Directors is
satisfied that the Market Price of securities as determined herein was
affected by an anticipated or actual Take-over Bid or by improper
manipulation, the Board of Directors may, acting in good faith,
determine the Market Price of securities, such determination to be
based on a finding as to the price at which a holder of securities of
that class could reasonably have expected to dispose of his, her or
its securities immediately prior to the relevant date excluding any
change in price reasonably attributable to the anticipated or actual
Take-over Bid or to the improper manipulation;
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(cc) "1933 Securities Act" means the Securities Act of 1933 of the United
States, as amended, and the rules and regulations thereunder, as in
effect on the date of this Agreement or as the same may be amended,
re-enacted or replaced by any comparable or successor laws or
regulations thereto;
(dd) "1934 Exchange Act" means the Securities Exchange Act of 1934 of the
United States, as amended, and the rules and regulations thereunder,
as in effect on the date of this Agreement or as the same may be
amended, re-enacted or replaced by any comparable or successor laws or
regulations thereto;
(ee) "Nominee" has the meaning ascribed thereto in subsection 2.2(c);
(ff) "Offer to Acquire" shall include:
(i) an offer to purchase, or a solicitation of an offer to sell,
Voting Shares or Convertible Securities, and
(ii) an acceptance of an offer to sell Voting Shares or Convertible
Securities, whether or not such offer to sell has been solicited,
or any combination thereof, and the Person accepting an offer to sell
shall be deemed to be making an Offer to Acquire to the Person that
made the offer to sell;
(gg) "Offeror" means a Person who has announced an intention to make or who
has made a Take-over Bid (including a Permitted Bid or Competing
Permitted Bid but excluding an Offer to Acquire made by an Investment
Manager, Trust Company, Crown Agency, Statutory Body, Administrator or
Plan referred to clause 1.1(e)(v) of the definition of Beneficial
Owner pursuant to a distribution by the Corporation or by means of
ordinary market transactions (including pre-arranged trades entered
into in the ordinary course of business of such Person) in the
circumstances contemplated in clause 1.1(e)(v)) but only so long as
the Take-over Bid so announced or made has not been withdrawn or
terminated or has not expired;
(hh) "Offeror's Securities" means the Voting Shares Beneficially Owned by
an Offeror on the date of an Offer to Acquire;
(ii) "ordinary course dividends" means cash dividends paid in any fiscal
year of the Corporation to the extent that such cash dividends, in the
aggregate, do not exceed the greatest of:
(i) 200% of the aggregate amount of cash dividends declared payable
by the Corporation on its Common Shares in its immediately
preceding fiscal year;
(ii) 300% of the arithmetic mean of the aggregate amounts of cash
dividends declared payable by the Corporation on its Common
Shares in its three immediately preceding fiscal years; and
(iii)100% of the aggregate consolidated net income of the
Corporation, before extraordinary items, for its immediately
preceding fiscal year;
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(jj) "Permitted Bid" means a Take-over Bid made by an Offeror by way of a
Take-over bid circular and made in compliance with, and not on a basis
which is exempt from or otherwise not subject to, sections 95 to 100
of the Securities Act (Ontario) which also complies with the following
additional provisions:
(i) the Take-over Bid is made for any and all Voting Shares to all
holders of record of Voting Shares wherever resident as
registered on the books of the Corporation, other than the
Offeror;
(ii) the Take-over Bid contains, and the take up and payment for
securities tendered or deposited thereunder shall be subject to,
an irrevocable and unqualified provision that:
A. no Voting Shares will be taken up or paid for pursuant to
the Take-over Bid:
I prior to the close of business on the sixtieth (60th)
day following the date of the Take-over Bid; and
II unless at such date more than 50% of the Voting Shares
held by Independent Shareholders have been deposited
pursuant to the Take-over Bid and not withdrawn;
B. unless the Take-over Bid is withdrawn, Voting Shares
may be deposited pursuant to such Take-over Bid at any
time prior to the close of business on the date of
first take-up or payment described in subparagraph
(ii)(A)(I) of this definition and that any Voting
Shares deposited pursuant to the Take-over Bid may be
withdrawn at any time prior to the close of business on
such date; and
C. if the condition set forth in subparagraph (ii)(A)(II)
is satisfied, the Offeror will make a public
announcement of that fact and the Take-over Bid will
remain open for deposits and tenders of Voting Shares
for not less than ten Business Days from the date of
such public announcement;
provided that if a Take-over Bid constitutes a Competing Permitted
Bid, the term "Permitted Bid" shall also mean the Competing Permitted
Bid;
(kk) "Permitted Bid Acquisition" means an acquisition made pursuant to a
Permitted Bid or a Competing Permitted Bid;
(ll) "Person" shall include any individual, firm, partnership, association,
trust, trustee, executor, administrator, legal personal
representative, body corporate, corporation, unincorporated
organization or association, syndicate, government and its agencies or
other entity or group, whether or not having legal personality and any
of the foregoing acting in any derivative, representative or fiduciary
capacity;
(mm) "Pro Rata Acquisition" means an acquisition by a person of Beneficial
Ownership of Voting Shares as a result of: a Dividend Reinvestment
Acquisition; a stock dividend, a stock split or other event pursuant
to which a Person becomes Beneficial Owner of
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Voting Shares on the same pro rata basis as all other holders of
Voting Shares; the acquisition or exercise by such Person of rights to
purchase Voting Shares distributed to such Person in the course of a
distribution to all holders of Voting Shares pursuant to a rights
offering or pursuant to a prospectus; or a distribution of Voting
Shares or securities convertible into or exchangeable for Voting
Shares (and the conversion or exchange of such convertible or
exchangeable securities), made pursuant to a prospectus or a
distribution by way of a private placement; provided that the Person
does not thereby acquire a greater percentage of such Voting Shares,
or securities convertible into or exchangeable for Voting Shares, so
offered than the Person's percentage of Voting Shares Beneficially
Owned immediately prior to such acquisition;
(nn) "Record Time" means 5:00 p.m. (Vancouver time) on December 17, 2003;
(oo) "Redemption Price" has the meaning ascribed thereto in subsection
5.1(a);
(pp) "Right" means a right to purchase a Common Share, upon the terms and
subject to the conditions set forth in this Agreement;
(qq) "Rights Agent" means Computershare Trust Company of Canada, the rights
agent appointed by the Corporation to act as agent for the Corporation
in accordance with the terms and conditions of this Agreement;
(rr) "Rights Certificate" has the meaning ascribed thereto in subsection
2.2(c) and shall be in substantially the form set out in Exhibit A to
this Agreement;
(ss) "Rights Registrar" means Computershare Trust Company of Canada, the
registrar for the Rights appointed pursuant to subsection 2.6(a) of
this Agreement;
(tt) "Rights Register" has the meaning ascribed thereto in subsection
2.6(a);
(uu) "Securities Act (British Columbia)" shall mean the Securities Act,
R.S.B.C 1996, c. 418, as amended, and the rules and regulations
thereunder, as in effect on the date of this Agreement or as the same
may be amended, re-enacted or replaced by any comparable or successor
laws or regulations thereto;
(vv) "Securities Act (Ontario)" shall mean the Securities Act, R.S.O. 2000,
c. S.5, as amended, and the rules and regulations thereunder, as in
effect on the date of this Agreement or as the same may be amended,
re-enacted or replaced by any comparable or successor laws or
regulations thereto;
(ww) "Separation Time" means the close of business on the tenth Trading Day
after the earlier of:
(i) the Stock Acquisition Date;
(ii) the date of the commencement of or first public announcement of
the intent of any Person (other than the Corporation or any
Subsidiary of the Corporation) to commence a Take-over Bid (other
than a Permitted Bid or Competing Permitted Bid); and
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(iii)the date upon which a Take-over Bid ceases to be a Permitted Bid
or Competing Permitted Bid;
or such later time as may be determined by the Board of Directors (or
any committee of the Board of Directors so designated by the Board of
Directors) acting in good faith provided that, if the foregoing
results in the Separation Time being prior to the Record Time, the
Separation Time shall be the Record Time, and further provided that:
A. if any Take-over Bid referred to in paragraph (ii) of this
definition expires, or is cancelled, terminated or otherwise
withdrawn prior to the Separation Time, such Take-over Bid
shall be deemed, for the purposes of this definition, never
to have been made; and
B. if the Board of Directors determines pursuant to subsection
5.1(d), (e) or (f) to waive the application of Section 3.1
to a Flip-in Event, the Separation Time in respect of such
Flip-in Event shall be deemed never to have occurred;
(xx) "Special Meeting" means a special meeting (including a combined annual
and special meeting) of the holders of Voting Shares called by the
Board of Directors for the purpose of:
(i) ratifying the distribution and continued existence of the Rights
in accordance with Section 5.15; or
(ii) approving an amendment, variation or rescission of any of the
provisions of this Agreement pursuant to subsections 5.4(b),
5.4(c) or 5.4(e);
(yy) "Stock Acquisition Date" means the first date of public announcement
(which, for purposes of this definition, shall include, without
limitation, a report or filing made or filed pursuant to Section 111
of the Securities Act (British Columbia), Section 101 of the
Securities Act (Ontario) (both of the foregoing provisions as modified
by NI 62-103) or Sections 13(d) or 14 of the 1934 Exchange Act) by the
Corporation or an Acquiring Person indicating that a Person has become
an Acquiring Person;
(zz) "Subsidiary": a corporation shall be deemed to be a Subsidiary of
another corporation if:
(i) it is controlled by:
A. that other; or
B. that other and one or more corporations each of which is
controlled by that other; or
C. two or more corporations each of which is controlled by that
other; or
(ii) it is a Subsidiary of a corporation that is that other's
Subsidiary;
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(aaa)"Take-over Bid" means an Offer to Acquire Voting Shares or other
securities if, assuming the Voting Shares or other securities subject
to the Offer to Acquire are acquired at the date of the Offer to
Acquire by the Person making the Offer to Acquire, such Voting Shares
(including all Voting Shares that may be acquired upon exercise of all
rights of conversion, exchange or purchase attaching to the other
securities) together with the Offeror's Securities would constitute in
the aggregate 20% or more of the outstanding Voting Shares at the date
of the Offer to Acquire;
(bbb)"Termination Time" means the time at which the right to exercise
Rights shall terminate pursuant to Sections 5.1 or 5.15;
(ccc)"Trading Day", when used with respect to any securities, means a day
on which the principal Canadian stock exchange or United States
securities exchange or quotation system on which such securities are
listed or admitted to trading is open for the transaction of business
or, if the securities are not listed or admitted to trading on any
Canadian stock exchange or United States securities exchange or
quotation system, a Business Day;
(ddd) "U.S. - Canadian Exchange Rate" means, on any date:
(i) if on such date the Bank of Canada sets an average noon spot rate
of exchange for the conversion of one United States dollar into
Canadian dollars, such rate, and
(ii) in any other case, the rate for such date for the conversion of
one United States dollar into Canadian dollars which is
calculated in the manner which shall be determined by the Board
of Directors from time to time acting in good faith, and
"Canadian - U.S. Exchange Rate" means, on any date:
(i) if on such date the Bank of Canada sets an average noon spot rate
of exchange for the conversion of one Canadian dollar into United
States dollars, such rate, and
(ii) in any other case, the rate for such date for the conversion of
one Canadian dollar into Unites States dollars which is
calculated in the manner which shall be determined by the Board
of Directors from time to time acting in good faith;
(eee)"U.S. Dollar Equivalent" of any amount which is expressed in Canadian
dollars means, on any date, the United States dollar equivalent of
such amount determined by multiplying such amount by the Canadian-U.S.
Exchange Rate in effect on such date;
(fff)"Voting Shares" means the Common Shares and any other shares of
capital stock or voting interests of the Corporation entitled to vote
generally in the election of all directors; and
(ggg)"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 or which may be
voted, increases the proportionate number of Voting Shares
Beneficially Owned by any Person.
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1.2 Currency
All sums of money which are referred to in this Agreement are expressed in
lawful money of Canada, unless otherwise specified.
1.3 Headings
The division of this Agreement into Articles, Sections, subsections,
paragraphs and subparagraphs and the insertion of headings, subheadings and a
table of contents are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement.
1.4 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, paragraph, subparagraph or other provision hereof and include any
and every instrument supplemental or ancillary hereto. Unless the context
otherwise requires, references in this Agreement to an Article, Section,
subsection, paragraph, subparagraph or Exhibit by number, letter or otherwise
refer to the Article, Section, subsection, paragraph, subparagraph or Exhibit,
respectively, bearing that designation in this Agreement.
1.5 Calculation of Number and Percentage of Beneficial Ownership of
Outstanding Voting Shares
For purposes of this Agreement, the percentage of outstanding Voting
Shares Beneficially Owned by any Person shall be and be deemed to be the
product determined by the formula:
100 x A
B
where:
A = the number of votes for the election of all directors
generally attaching to the outstanding Voting Shares
Beneficially Owned by such Person; and
B = the number of votes for the election of all directors
generally attaching to all outstanding Voting Shares.
For the purpose of the foregoing formula, where any person is deemed to
Beneficially Own unissued Voting Shares which may be acquired pursuant to
Convertible Securities, such Voting Shares shall be deemed to be
outstanding for the purpose of calculating the percentage of Voting Shares
Beneficially Owned by such Person in both the numerator and the
denominator, but no other unissued Voting Shares which may be acquired
pursuant to any other outstanding Convertible Securities shall, for the
purposes of that calculation, be deemed to be outstanding.
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 is a party to any agreement, commitment or
understanding, whether formal or informal and
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whether or not in writing, with the first mentioned Person for the purpose of
acquiring or offering to acquire Voting Shares (other than customary agreements
with and between underwriters and/or banking group and/or selling group members
with respect to a distribution of securities pursuant to a prospectus or by way
of private placement and other than pursuant to pledges of securities in the
ordinary course of business).
1.7 Generally Accepted Accounting Principles
Wherever in this Agreement reference is made to generally accepted
accounting principles, such reference shall be deemed to be the recommendations
at the relevant time of the Canadian Institute of Chartered Accountants, or any
successor institute, applicable on a consolidated basis (unless otherwise
specifically provided herein to be applicable on an unconsolidated basis) as at
the date on which a calculation is made or required to be made in accordance
with generally accepted accounting principles. Where the character or amount of
any asset or liability or item of revenue or expense is required to be
determined, or any consolidation or other accounting computation is required to
be made for the purpose of this Agreement or any document, such determination or
calculation shall, to the extent applicable and except as otherwise specified
herein or as otherwise agreed in writing by the parties, be made in accordance
with generally accepted accounting principles applied on a consistent basis.
ARTICLE 2
THE RIGHTS
2.1 Issuance and Evidence of Rights; Legend on Common Share Certificates
(a) The Corporation shall issue one Right in respect of each Common Share
outstanding at the Record Time and one Right in respect of each Common
Share which may be issued after the Record Time and prior to the
earlier of the Separation Time and the Expiration Time in accordance
with the terms hereof. Notwithstanding the foregoing, the Corporation
may, after the Separation Time but prior to the Expiration Time, issue
one Right in respect of each Common Share which is issued after the
Record Time pursuant to the exercise of Convertible Securities which
are outstanding at the Stock Acquisition Date.
(b) Certificates representing Common Shares issued after the Record Time
but prior to the earlier of the Separation Time and the Expiration
Time shall evidence, in addition to the Common Shares, one Right for
each Common Share evidenced thereby and shall have impressed on,
printed on, written on or otherwise affixed to them a legend in the
following (or substantially similar) form:
"Until the Separation Time (as defined in the Rights Agreement
referred to below), this certificate also evidences and entitles
the holder hereof to certain Rights as set forth in the
Shareholder Rights Plan Agreement made as of December 17, 2003
(the "Rights Agreement"), between MDSI Mobile Data Solutions Inc.
(the "Corporation") and Computershare Trust Company of Canada, as
rights agent, as amended from time to time, the terms of which
are hereby incorporated herein by reference and a copy of which
may be inspected during normal business hours at the principal
office of the Corporation. Under certain circumstances, as set
out in the
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Rights Agreement, the Rights may be amended, redeemed, may
expire, may become null and void or may be evidenced by separate
certificates and no longer evidenced by this certificate. The
Corporation will mail or arrange for the mailing of a copy of the
Rights Agreement to the holder of this certificate without charge
as soon as practicable after the receipt of a written request
therefor."
and may also have impressed on, printed on, written on or otherwise
affixed to them, where and when required, a French language version of
the above legend. Certificates representing Common Shares that are
issued and outstanding at the Record Time shall also evidence one
Right for each Common Share evidenced thereby, notwithstanding the
absence of the foregoing legend, until the earlier of the Separation
Time and the Expiration Time.
2.2 Initial Exercise Price; Exercise of Rights; Detachment of Rights
(a) Subject to adjustment as herein set forth, each Right will entitle the
holder thereof, from and after the Separation Time and prior to the
Expiration Time, to purchase, for the Exercise Price, one Common
Share. Notwithstanding any other provision of this Agreement, any
Rights held by the Corporation or any of its Subsidiaries shall be
void.
(b) Until the Separation Time:
(i) the Rights shall not be exercisable and no Right may be
exercised; and
(ii) each Right will be evidenced by the certificate for the
associated Common Share and will be transferable only together
with, and will be transferred by a transfer of, such associated
Common Share.
(c) From and after the Separation Time and prior to the Expiration Time:
(i) the Rights shall be exercisable; and
(ii) the registration and transfer of the Rights shall be separate from and
independent of Common Shares.
Promptly following the Separation Time, the Corporation will prepare and
the Rights Agent will mail or arrange to be mailed to each holder of record
of Common Shares as of the Separation Time or who subsequently becomes a
holder of record of Common Shares upon the exercise of rights attaching to
Convertible Securities outstanding at the Stock Acquisition Date (other
than an Acquiring Person and, in respect of any Rights Beneficially Owned
by such Acquiring Person which are not held of record by such Acquiring
Person, the holder of record of such Rights (a "Nominee")), at such
holder's address as shown by the records of the Corporation (the
Corporation hereby agreeing to furnish copies of such records to the Rights
Agent for this purpose):
A. a rights certificate ("Rights Certificate") representing the
number of Rights held by such holder at the Separation Time and
having such markers of identification or designation and such
legends, summaries or endorsements printed thereon as the
Corporation may deem appropriate
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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 of any self-regulatory organization, stock exchange
or quotation system on which the Rights may from time to time be
listed or traded, or to conform to usage; and
B. a disclosure statement describing the Rights;
provided that a Nominee shall be sent the materials provided for in
paragraphs (A) and (B) above 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 such first mentioned Person to furnish
such information and documents as the Corporation deems necessary.
(d) Rights may be exercised in whole or in part on any Business Day after
the Separation Time and prior to the Expiration Time by submitting to
the Rights Agent at its principal office in the city of βββββββββ,
βββββββ or New York, the Rights Certificate evidencing such Rights
together with:
(i) 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 executors or
administrators or other personal representatives or his or their
legal attorney duly appointed by an instrument in writing in form
and executed in a manner satisfactory to the Rights Agent; and
(ii) payment in cash or by certified cheque, banker's draft or money
order payable to the order of the Corporation, of a sum equal to
the Exercise Price multiplied by the number of Rights being
exercised and a sum sufficient to cover any transfer tax or
charge which may be payable in respect of any transfer involved
in the transfer or delivery or Rights Certificates or the
issuance or delivery of certificates for Common Shares in a name
other than that of the holder of the Rights being exercised.
(e) Upon receipt of a Rights Certificate, which is accompanied by a
completed Election to Exercise that does not indicate that such Right
is null and void as provided by subsection 3.1(b) and payment as set
forth in subsection 2.2(d), the Rights Agent (unless otherwise
instructed by the Corporation if the Corporation is of the opinion
that the Rights cannot be exercised in accordance with this Agreement)
will thereupon promptly:
(i) requisition from the transfer agent for the Common Shares
certificates representing the number of such Common Shares to be
purchased (the Corporation hereby irrevocably authorizing its
transfer agent to comply with all such requisitions);
(ii) after receipt of such certificate, deliver the Common Shares
referred to in subclause 2.2 (e)(i) to or upon the order of the
registered holder of such Rights Certificate, registered in such
name or names as may be designated by such holder;
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(iii)when appropriate, requisition from the Corporation the amount of
cash to be paid in lieu of issuing fractional Common Shares;
(iv) when appropriate, after receipt of such cash, deliver the same to
or to the order of the registered holder of the Rights
Certificate; and
(v) tender to the Corporation all payments received on exercise of
the Rights.
(f) If the holder of any Rights shall exercise less than all the Rights
evidenced by such holder's Rights Certificate, a new Rights
Certificate evidencing the Rights remaining unexercised (subject to
Section 5.5) will be issued by the Rights Agent to such holder or to
such holder's duly authorized assigns.
(g) The Corporation covenants and agrees that it will:
(i) take all such action as may be necessary and within its power to
ensure that all securities delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such
securities (subject to payment of the Exercise Price), be duly
and validly authorized, executed, issued and delivered 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 Canada Business
Corporations Act, the Securities Act (British Columbia), the
Securities Act (Ontario), the 1933 Securities Act, the 1934
Exchange Act and any other applicable laws in connection with the
issuance and delivery of the Rights, the Rights Certificates and
the issuance of any securities upon exercise of Rights;
(iii)use reasonable efforts to cause all securities issued upon
exercise of Rights to be listed on the stock exchanges and/or
quotation systems on which the Common Shares were listed and
traded immediately prior to the Stock Acquisition Date;
(iv) pay when due and payable any and all Canadian and, if applicable,
United States, federal, provincial and state transfer taxes and
charges (not including any income or capital taxes of the holder
or exercising holder or any liability of the Corporation to
withhold tax) which may be payable in respect of the original
issuance or delivery of the Rights Certificates or certificates
for Common Shares, provided that the Corporation shall not be
required to pay any transfer tax or charge which may be payable
in respect of any transfer involved in the transfer or delivery
of Rights Certificates or the issuance or delivery of
certificates for securities in a name other than that of the
holder of the Rights being transferred or exercised; and
(v) after the Separation Time, except as permitted by Section 5.1 or
Section 5.4, not take (or permit any Subsidiary to take) any
action if at the time such action is taken it is reasonably
foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the
Rights.
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2.3 Adjustment to Exercise Price; Number of Rights
The Exercise Price, the number and kind of securities subject to
purchase upon exercise of each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 2.3.
(a) If the Corporation shall at any time after the Record Time and prior
to the Expiration Time:
(i) declare or pay a dividend on its Common Shares payable in Common
Shares (or other securities exchangeable for or convertible into
or giving a right to acquire Common Shares) other than pursuant
to any optional stock dividend program, dividend reinvestment
plan or a dividend payable in Voting Shares in lieu of a regular
periodic cash dividend;
(ii) subdivide or change the outstanding Common Shares into a greater
number of Common shares;
(iii)combine or change the outstanding Common Shares into a smaller
number of Common Shares; or
(iv) issue any Common Shares (or other securities exchangeable for or
convertible into or giving a right to acquire Common Shares) in
respect of, in lieu of or in exchange for existing Common Shares;
except as otherwise provided in this Section 2.3, the Exercise Price
and the number of Rights outstanding, or, if the payment or effective
date therefor shall occur after the Separation Time, the securities
purchasable upon exercise of Rights shall be adjusted as of the
payment or effective date such that:
A. if the Exercise Price and number of Rights outstanding are
to be adjusted,
I the Exercise Price in effect after such adjustment will
be equal to the Exercise Price in effect immediately
prior to such adjustment divided by the number of
Common Shares (or other capital stock) (the "Expansion
Factor") that a holder of one Common share immediately
prior to such dividend, subdivision, change,
combination or issuance would hold thereafter as a
result thereof; and
II each Right held prior to such adjustment will become
that number of Rights equal to the Expansion Factor;
and the adjusted number of Rights will be deemed to be
distributed among the Common Shares with respect to which
the original Rights were associated (if they remain
outstanding) and the shares issued in respect of such
dividend, subdivision, change, combination or issuance, so
that each such Common Share (or other capital stock) will
have exactly one Right associated with it; and
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B. if the securities purchasable upon exercise of Rights are to
be adjusted, the securities purchasable upon exercise of
each Right after such adjustment will be the securities that
a holder of the securities purchasable upon exercise of one
Right immediately prior to such dividend, subdivision,
change, combination or issuance would hold thereafter as a
result thereof.
If after the Record Time and prior to the Expiration Time the
Corporation shall issue any securities other than Common Shares in a
transaction of a type described in paragraphs 2.3(a)(i) or (iv), such
securities shall be treated herein as nearly equivalent to Common
Shares as may be practicable and appropriate under the circumstances
and the Corporation and the Rights Agent agree to amend this Agreement
in order to effect such treatment.
(b) If the Corporation shall at any time after the Record Time and prior
to the Separation Time fix a record date for the issuance of rights,
options or warrants to all holders of Common Shares entitling them
(for a period expiring within 45 calendar days after such record date)
to subscribe for or purchase Common Shares (or securities convertible
into or exchangeable for or carrying a right to purchase Common
Shares) at a price per Common Share (or, if a security convertible
into or exchangeable for or carrying a right to purchase or subscribe
for Common Shares having a conversion, exchange or exercise price,
including the price required to be paid to purchase such convertible
or exchangeable security or right per share) less than the Market
Price per Common Share on such record date, the Exercise Price to be
in effect after such record date shall be adjusted to that price
determined by multiplying the Exercise Price in effect immediately
prior to such record date by a fraction:
(i) the numerator of which shall be the number of Common Shares
outstanding on such record date, plus the number of Common Shares
that the aggregate offering price of the total number of Common
Shares so to be offered (and/or the aggregate initial conversion,
exchange or exercise price of the convertible or exchangeable
securities or rights so to be offered, including the price
required to be paid to purchase such convertible or exchangeable
securities or rights) would purchase at such Market Price per
Common Share; and
(ii) the denominator of which shall be the number of Common Shares
outstanding on such record date, plus the number of additional
Common Shares to be offered for subscription or purchase (or into
which the convertible or exchangeable securities or rights so to
be offered are initially convertible, exchangeable or
exercisable).
If such subscription price may be paid by delivery of consideration,
part or all of which may be in a form other than cash, the value of
such consideration shall be as determined in good faith by the Board
of Directors, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent
and the holders of the Rights. Such adjustment shall be made
successively whenever such a record date is fixed, and in the event
that such rights or warrants are not so issued (or are issued but not
exercised), the Exercise Price shall be adjusted to be the Exercise
Price which would then be in effect if such record date had not been
fixed.
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For purposes of this Agreement, the granting of the right to purchase
Common Shares (whether from treasury shares or otherwise) pursuant to
any dividend or interest reinvestment plan and/or any Common Share
purchase plan providing for the reinvestment of dividends or interest
payable on securities of the Corporation and/or the investment of
periodic optional payments and/or employee benefit, stock option or
similar plans (so long as such right to purchase is in no case
evidenced by the delivery of rights or warrants) shall not be deemed
to constitute an issue of rights or warrants by the Corporation;
provided, however, that, in the case of any Dividend Reinvestment
Plan, the right to purchase Common Shares is at a price per share of
not less than 90 percent of the current market price per share
(determined as provided in such plans) of the Common Shares.
(c) If the Corporation shall at any time after the Record Time and prior
to the Separation Time fix a record date for a distribution to all
holders of Common Shares (including any such distribution made in
connection with a merger or amalgamation in which the Corporation is
the continuing corporation) of evidences of indebtedness, cash (other
than an ordinary course dividend or a dividend referred to in
paragraph 2.3(a)(i)), assets or rights or warrants (excluding those
referred to in subsection 2.3(b)), the Exercise Price to be in effect
after such record date shall be determined by multiplying the Exercise
Price in effect immediately prior to such record date by a fraction:
(i) the numerator of which shall be the Market Price per Common Share
on such record date, less the fair market value (as determined in
good faith by the Board of Directors, whose determination shall
be described in a statement filed with the Rights Agent and shall
be binding on the Rights Agent and the holders of Rights), on a
per share basis, of the portion of the cash, assets, evidences of
indebtedness, rights, options or warrants so to be distributed;
and
(ii) the denominator of which shall be such Market Price per Common
Share.
Such adjustments shall be made successively whenever such a record
date is fixed, and in the event that such a distribution is not so
made, the Exercise Price shall be adjusted to be the Exercise Price
which would have been in effect if such record date had not been
fixed.
(d) Each adjustment made pursuant to this Section 2.3 shall be made as of
(i) the payment or effective date for the applicable dividend,
subdivision, change, combination or issuance, in the case of an
adjustment made pursuant to subsection (a) above; and
(ii) the record date for the applicable distribution, in the case of
an adjustment made pursuant to subsection (b) or (c) above,
subject to readjustment to reverse the same if such distribution
shall not be made.
(e) Notwithstanding anything herein to the contrary, no adjustment in the
Exercise Price shall be required unless such adjustment would require
an increase or decrease of at least one percent in the Exercise Price;
provided, however, that any adjustments which by reason of this
subsection 2.3(e) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment. All calculations
under this Section 2.3
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shall be made to the nearest cent or to the nearest hundredth of a
share. Notwithstanding the first sentence of this subsection 2.3(e),
any adjustment required by this Section 2.3 shall be made no later
than the earlier of (i) three years from the date of the transaction
which mandates such adjustment and (ii) the Termination Date. Whenever
an adjustment to the Exercise Price is made pursuant to this Section
2.3, the Corporation shall:
(i) promptly prepare a certificate setting forth such adjustment and
a brief statement of the facts accounting for such adjustment;
and
(ii) promptly file with the Rights Agent and with each transfer agent
for the Common Shares a copy of such certificate and mail a brief
summary thereof to each holder of Rights.
(f) If the Corporation shall at any time after the Record Time and prior
to the Separation Time issue any shares of capital stock (other than
Common Shares), or rights or warrants to subscribe for or purchase any
such capital stock, or securities convertible into or exchangeable for
any such capital stock, in a transaction referred to in paragraph
(a)(i) or (a)(iv) above, if the Board of Directors acting in good
faith determines that the adjustments contemplated by subsections (a),
(b) and (c) above in connection with such transaction will not
appropriately protect the interests of the holders of Rights, the
Board of Directors may determine what other adjustments to the
Exercise Price, number of Rights and/or securities purchasable upon
exercise of Rights would be appropriate and, notwithstanding
subsections (a), (b) and (c) above, but subject to the prior consent
of the holders of Common Shares or Rights obtained in accordance with
Section 5.4, such adjustments, rather than the adjustments
contemplated by subsections (a), (b) and (c) above, shall be made. The
Corporation and the Rights Agent shall have authority without the
approval of the holders of the Common Shares or the holders of Rights
to amend this Agreement as appropriate to provide for such
adjustments.
(g) Each Right originally issued by the Corporation subsequent to any
adjustment made to the Exercise Price hereunder shall evidence the
right to purchase, at the adjusted Exercise Price, the number of
Common Shares purchasable from time to time hereunder upon exercise of
a Right, all subject to further adjustment as provided herein.
(h) Irrespective of any adjustment or change in the Exercise Price or the
number of Common Shares issuable upon the exercise of the Rights, the
Rights Certificates theretofore and thereafter issued may continue to
express the Exercise Price per Common Share and the number of Common
Shares which were expressed in the initial Rights Certificates issued
hereunder.
(i) In any case in which this Section 2.3 shall require that an adjustment
in the Exercise Price be made effective as of a record date for a
specified event, the Corporation may elect to defer until the
occurrence of such event the issuance to the holder of any Right
exercised after such record date the number of Common Shares and other
securities of the Corporation, if any, issuable upon such exercise
over and above the number of Common Shares and other securities of the
Corporation, if any, issuable upon such exercise on the basis of the
Exercise Price in effect prior to such adjustment; provided, however,
that the Corporation shall deliver to such holder an appropriate
instrument
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evidencing such holder's right to receive such additional shares
(fractional or otherwise) or securities upon the occurrence of the
event requiring such adjustment.
(j) Notwithstanding anything in this Section 2.3 to the contrary, the
Corporation shall be entitled to make such reductions in the Exercise
Price, in addition to those adjustments expressly required by this
Section 2.3, as and to the extent that the Board of Directors shall in
good faith determine to be advisable in order that any (i)
consolidation or subdivision of the Common Shares, (ii) issuance
wholly or in part for cash of any Common Shares or securities that by
their terms are convertible into or exchangeable for Common Shares,
(iii) stock dividends or (iv) issuance of rights, options or warrants
referred to in this Section 2.3, hereafter made by the Corporation to
holders of its Common Shares shall not be taxable to such
shareholders.
(k) If an event occurs which would require an adjustment under both this
Section 2.3 and Section 3.1, the adjustment provided for in this
Section 2.3 shall be in addition to and shall be made prior to, any
adjustment required pursuant to Section 3.1.
(l) If the Corporation shall at any time after the Record Time and prior
to the earlier of the Separation Time and the Expiration Time issue
any Common Shares otherwise than in a transaction referred to in
subsection 2.3(a) each such Common Share so issued shall automatically
have one new Right associated with it, which Right shall be evidenced
by the certificate representing such share.
2.4 Date on Which Exercise is Effective
Each Person in whose name any certificate for Common Shares is issued
upon the exercise of Rights shall for all purposes be deemed to have become the
holder of record of the Common Shares represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered in accordance with subsection 2.2(d)
hereof (together with a duly completed Election to Exercise) and payment of the
Exercise Price for such Rights (and any applicable transfer taxes and other
governmental charges payable by the exercising holder hereunder) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Common Share transfer books of the Corporation are closed, such Person
shall be deemed to have become the record holder of such Common Shares on, and
such certificate shall be dated, the next succeeding Business Day on which the
Common Share transfer books of the Corporation are open.
2.5 Execution, Authentication, Delivery and Dating of Rights Certificates
(a) The Rights Certificates shall be executed on behalf of the Corporation
by any two of its Chairman of the Board, President, Vice Presidents or
Secretary. The signature of any of these officers on the Rights
Certificates may be manual or facsimile. Rights Certificates bearing
the manual or facsimile signatures of individuals who were at any time
the proper officers of the Corporation shall bind the Corporation
notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the countersignature and delivery of such
Rights Certificates.
(b) Promptly after the Corporation learns of the Separation Time, the
Corporation will notify the Rights Agent in writing of such Separation
Time and will deliver Rights Certificates executed by the Corporation
to the Rights Agent for countersignature, and the Rights Agent shall
countersign (manually or by facsimile signature in a manner
satisfactory to
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the Corporation) and send such Rights Certificates to the holders of
the Rights pursuant to subsection 2.2(c). No Rights Certificate shall
be valid for any purpose until countersigned by the Rights Agent as
aforesaid.
(c) Each Rights Certificate shall be dated the date of countersignature
thereof.
2.6 Registration, Registration of Transfer and Exchange
(a) After the Separation Time, the Corporation will cause to be kept a
register (the "Rights Register") in which, subject to such reasonable
regulations as it may prescribe, the Corporation will provide for the
registration and transfer of Rights. The Rights Agent is hereby
appointed registrar for the Rights (the "Rights Registrar") for the
purpose of maintaining the Rights Register for the Corporation and
registering Rights and transfers of Rights as herein provided and the
Rights Agent hereby accepts such appointment. If the Rights Agent
shall cease to be the Rights Registrar, the Rights Agent will have the
right to examine the Rights Register at all reasonable times.
(b) After the Separation Time and prior to the Expiration Time, upon
surrender for registration of transfer or exchange of any Rights
Certificate, and subject to the provisions of subsections 2.6(d) and
3.1(b), the Corporation will execute, and the Rights Agent will
manually countersign and deliver, in the name of the holder or the
designated transferee or transferees, as required pursuant to the
holder's instructions, one or more new Rights Certificates evidencing
the same aggregate number of Rights as did the Rights Certificates so
surrendered.
(c) All Rights issued upon any registration of transfer or exchange of
Rights Certificates shall be the valid obligations of the Corporation,
and such Rights shall be entitled to the same benefits under this
Agreement as the Rights surrendered upon such registration of transfer
or exchange.
(d) Every Rights Certificate surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Corporation or the
Rights Agent, as the case may be, duly executed by the holder thereof
or such holder's attorney duly authorized in writing. As a condition
to the issuance of any new Rights Certificate under this Section 2.6,
the Corporation may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the
Rights Agent) connected therewith.
2.7 Mutilated, Destroyed, Lost and Stolen Rights Certificates
(a) If any mutilated Rights Certificate is surrendered to the Rights Agent
prior to the Expiration Time, the Corporation shall execute and the
Rights Agent shall countersign and deliver in exchange therefor a new
Rights Certificate evidencing the same number of Rights as did the
Rights Certificate so surrendered.
(b) If there shall be delivered to the Corporation and the Rights Agent
prior to the Expiration Time:
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(i) evidence to their reasonable satisfaction of the destruction,
loss or theft of any
(ii) Rights Certificate; and
(iii)such security or indemnity as may be reasonably required by them
in their sole discretion to save each of them and any of their
agents harmless,
then, in the absence of notice to the Corporation or the Rights Agent
that such Rights Certificate has been acquired by a bona fide
purchaser, the Corporation shall execute and upon the Corporation's
request the Rights Agent shall countersign and deliver, in lieu of any
such destroyed, lost or stolen Rights Certificate, a new Rights
Certificate evidencing the same number of Rights as did the Rights
Certificate so destroyed, lost or stolen.
(c) As a condition to the issuance of any new Rights Certificate under
this Section 2.7, the Corporation may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees
and expenses of the Rights Agent) connected therewith.
(d) Every new Rights Certificate issued pursuant to this Section 2.7 in
lieu of any destroyed, lost or stolen Rights Certificate shall
evidence the contractual obligation of the Corporation, whether or not
the destroyed, lost or stolen Rights Certificate shall be at any time
enforceable by anyone, and shall be entitled to all benefits of this
Agreement equally and proportionately with any and all other Rights
duly issued by the Corporation.
2.8 Persons Deemed Owners
The Corporation, the Rights Agent and any agent of the Corporation or
the Rights Agent may deem and treat the Person in whose name a Rights
Certificate (or, prior to the Separation Time, the associated Common Share
certificate) is registered as the absolute owner thereof and the Rights
evidenced thereby for all purposes whatsoever. As used in this Agreement, unless
the context otherwise requires, the term "holder" of any Rights shall mean the
registered holder of such Rights (or, prior to the Separation Time, the
associated Common Shares).
2.9 Delivery and Cancellation of Certificates
All Rights Certificates surrendered upon exercise or for redemption,
registration of transfer or exchange shall, if surrendered to any Person other
than the Rights Agent, be delivered to the Rights Agent and, in any case, shall
be promptly cancelled by the Rights Agent. The Corporation may at any time
deliver to the Rights Agent for cancellation any Rights Certificates previously
countersigned and delivered hereunder which the Corporation may have acquired in
any manner whatsoever, and all Rights Certificates so delivered shall be
promptly cancelled by the Rights Agent. No Rights Certificate shall be
countersigned in lieu of or in exchange for any Rights Certificates cancelled as
provided in this Section 2.9, except as expressly permitted by this Agreement.
The Rights Agent shall destroy all cancelled Rights Certificates and deliver a
certificate of destruction to the Corporation.
2.10 Agreement of Rights Holders
Every holder of Rights, by accepting the same, consents and agrees
with the Corporation and the Rights Agent and with every other holder of Rights:
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(a) to be bound by and subject to the provisions of this Agreement, as
amended from time to time in accordance with the terms hereof, in
respect of all Rights held;
(b) that, prior to the Separation Time, each Right will be transferable
only together with, and will be transferred by a transfer of, the
associated Common Share;
(c) that after the Separation Time, the Rights Certificate will be
transferable only upon registration of the transfer on the Rights
Register as provided herein;
(d) that, prior to due presentment of a Rights Certificate (or, prior to
the Separation Time, the associated Common Share certificate) for
registration of transfer, the Corporation, the Rights Agent and any
agent of the Corporation or the Rights Agent may deem and treat the
person in whose name the Rights Certificate (or, prior to the
Separation Time, the associated Common Share Certificate) is
registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on such
Rights Certificate or the associated Common Share certificate made by
anyone other than the Corporation or the Rights Agent) for all
purposes whatsoever, and neither the Corporation nor the Rights Agent
shall be affected by any notice to the contrary;
(e) that such holder of Rights has waived his, her or its right to receive
any fractional Rights or any fractional shares upon exercise of a
Right (except as provided herein);
(f) that, subject to the provisions of Section 5.4 hereof, without the
approval of any holder of Rights and upon the sole authority of the
Board of Directors acting in good faith, this Agreement may be
supplemented or amended from time to time pursuant to and as provided
herein; and
(g) that notwithstanding anything in this Agreement to the contrary,
neither the Corporation nor the Board of Directors nor the Rights
Agent shall have any liability to any holder of a Right or any other
Person as result of the inability of the Corporation, the Board of
Directors or the Rights Agent to perform any of their obligations
under this Agreement by reason of any preliminary or permanent
injunction or other order, decree, notice of hearing or ruling issued
by a court of competent jurisdiction or by a governmental, regulatory
or administrative agency or commission, or any statute, rule,
regulation, or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise inhibiting or
restraining performance of such obligation.
2.11 Rights Certificate Holder not Deemed a Shareholder
No holder, as such, of any Rights or Rights Certificate shall be
entitled to vote, receive dividends or be deemed for any purpose whatsoever the
holder of any Common Share or any other share or security of the Corporation
which may at any time be issuable on the exercise of the Rights represented
thereby, nor shall anything contained herein or in any Rights Certificate be
construed or deemed or confer upon the holder of any Right or Rights
Certificate, as such, any of the rights, titles, benefits or privileges of a
holder of Common Shares or any other shares or securities of the Corporation or
any right to vote at any meeting of shareholders of the Corporation whether for
the election of directors or otherwise or upon any matter submitted to holders
of shares of the Corporation at any meeting thereof, or to give or withhold
consent to any action of the Corporation, or to receive notice of any meeting or
other action affecting any holder of Common Shares or any other shares or
securities of the Corporation except as expressly provided herein, or to receive
dividends, distributions or subscription
-29-
rights, or otherwise, until the Right or Rights evidenced by Rights Certificates
shall have been duly exercised in accordance with the terms and provisions
hereof.
ARTICLE 3
ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS
3.1 Flip-in Event
(a) Subject to subsections 3.1(b), 5.1(d), 5.1(e) and 5.1(f), if prior to
the Expiration Time a Flip-in Event occurs, the Corporation shall take
such action as shall be necessary to ensure and provide, within ten
Business Days of such occurrence or such longer period as may be
required to satisfy the requirements of the applicable securities acts
or comparable legislation of each of the provinces and territories of
Canada and the states of the United States so that, except as provided
below, each Right shall thereafter constitute the right to purchase
from the Corporation, upon payment of the Exercise Price and otherwise
exercising such Right in accordance with the terms hereof, that number
of Common Shares having an aggregate Market Price on the date of
consummation or occurrence of such Flip-in Event equal to twice the
Exercise Price for an amount in cash equal to the Exercise Price (such
Right to be appropriately adjusted in a manner analogous to the
applicable adjustment provided for in Section 2.3 in the event that
after the Stock Acquisition Date an event of a type analogous to any
of the events described in Section 2.3 has occurred).
(b) Notwithstanding anything in this Agreement to the contrary, upon the
occurrence of any Flip-in Event, any Rights that are or were
Beneficially Owned on or after the earlier of the Separation Time 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 Associate or Affiliate of an Acquiring
Person); or
(ii) a transferee of Rights, direct or indirect, of an Acquiring
Person (or of any Affiliate or Associate of an Acquiring Person
or of any Person acting jointly or in concert with an Acquiring
Person or any Associate or Affiliate of an Acquiring Person) who
becomes a transferee 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 Associate or Affiliate of an Acquiring
Person), that has the purpose or effect of avoiding paragraph
3.1(b)(i);
shall become null and void without any further action, and any holder
of such Rights (including any transferee of, or other successor to,
such Rights whether directly or indirectly) shall not have any right
whatsoever to exercise such Rights under any provision of this
Agreement and shall not have thereafter any right whatsoever with
respect to such Rights, whether under any provision of this Agreement
or otherwise. The holder of any Rights represented by a Rights
Certificate which is submitted to the Rights Agent upon exercise or
for registration of transfer or exchange which does not contain the
necessary certifications set forth in the Rights Certificate
establishing that such
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Rights are not void under this subsection 3.1(b) shall be deemed to be
an Acquiring Person for the purposes of this subsection 3.1(b) and
such Rights shall become null and void.
(c) Any Rights Certificate that represents Rights Beneficially Owned by a
Person described in either paragraph 3.1(b)(i) or (ii) or transferred
to any Nominee of any such Person, and any Rights Certificate issued
upon transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain substantially
the following legend:
"The Rights represented by this Rights Certificate were
Beneficially Owned by a Person who was an Acquiring Person or an
Affiliate or an Associate of an Acquiring Person (as such terms
are defined in the Rights Agreement) or a Person acting jointly
or in concert with any of them. This Rights Certificate and the
Rights represented hereby are void in the circumstances specified
in subsection 3.1(b) of the Rights Agreement."
and may also contain, where and when required, a French language
version of such legend; provided that the Rights Agent shall not be
under any responsibility to ascertain the existence of facts that
would require the imposition of such legend but shall be required to
impose such legend only if instructed to do so in writing by the
Corporation or if a holder fails to certify upon transfer or exchange
in the space provided on the Rights Certificate that such holder is
not a Person described in either paragraph 3.1(b)(i) or (ii).
(d) From and after the Separation Time, the Corporation shall do all such
acts and things as shall be necessary and within its power to ensure
compliance with the provisions of this Section 3.1, including without
limitation, all such acts and things as may be required to satisfy the
requirements of the Canada Business Corporations Act, the Securities
Act (British Columbia), the Securities Act (Ontario), the 1933
Securities Act, the 1934 Exchange Act and any other applicable laws in
respect of the issue of Common Shares upon the exercise of Rights in
accordance with this Agreement.
(e) If, upon the occurrence of a Flip-In Event, the aggregate number of
Common Shares issuable upon the exercise of all Rights then
outstanding would exceed the aggregate number of Common Shares that
the Corporation is then authorized to issue pursuant to its constating
documents, the number of Common Shares acquirable pursuant to each
Right shall, notwithstanding subsection 3.1(a), be reduced pro rata to
the extent necessary such that the aggregate number of Common Shares
issuable upon the exercise of all outstanding Rights does not then
exceed the aggregate number of Common Shares that the Corporation is
then authorized to issue pursuant to its constating documents,
provided that any such pro rata reduction will not affect the Exercise
Price or any other term of this Agreement relating to the Rights.
3.2 Fiduciary Duties of the Board of Directors of the Corporation
For clarification it is understood that nothing contained in this
Article 3 shall be considered to affect the obligations of the Board of
Directors to exercise its fiduciary duties. Without limiting the generality of
the foregoing, nothing contained herein shall be construed to suggest or imply
-31-
that the Board of Directors shall not be entitled to recommend that holders of
the Voting Shares reject or accept any Take-over Bid or take any other action
(including, without limitation, the commencement, prosecution, defence or
settlement of any litigation and the submission of additional or alternative
Take-over Bids or other proposals to the shareholders of the Corporation with
respect to any Take-over Bid or otherwise) that the Board of Directors believes
is necessary or appropriate in the exercise of its fiduciary duties.
ARTICLE 4
THE RIGHTS AGENT
4.1 General
(a) The Corporation hereby appoints the Rights Agent to act as agent for
the Corporation in accordance with the terms and conditions hereof,
and the Rights Agent hereby accepts such appointment. The Corporation
may from time to time appoint such co-Rights Agents ("Co-Rights
Agents") as it may deem necessary or desirable. In the event that the
Corporation appoints one or more Co-Rights Agents, the respective
duties of the Rights Agents and the Co-Rights Agents shall be as the
Corporation may determine. The Corporation agrees to pay to the Rights
Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, the
reasonable expenses and counsel fees and other disbursements incurred
by the Rights Agent in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder,
including the reasonable fees and disbursements of any expert retained
by the Rights Agent. The Corporation also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss,
liability, costs, claims, actions, damages or expenses, incurred
without negligence, bad faith or willful default on the part of the
Rights Agent, for anything done or suffered or omitted to be done by
the Rights Agent in connection with the acceptance, execution and
administration of this Agreement and the performance of its duties
hereunder, including the costs and expenses of defending against any
claim of liability, which right to indemnification will survive the
termination of this Agreement or the resignation of the Rights Agent.
(b) The Rights Agent shall be protected and shall incur no liability for
or in respect of any action taken, suffered or omitted to be done by
it in connection with its acceptance, execution and administration of
this Agreement in reliance upon any certificate for Voting Shares or
Common Shares, or any Rights Certificate or certificate for other
securities of the Corporation, instrument of assignment or transfer,
power of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document believed
by it to be the genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons.
(c) The Corporation shall inform the Rights Agent in a reasonably timely
manner of events which may materially affect the administration of
this Agreement by the Rights Agent.
4.2 Merger, Amalgamation or Consolidation or Change of Name of Rights
Agent
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or amalgamated or with which it may be
consolidated, or any corporation resulting from any merger,
amalgamation, statutory arrangement or consolidation to
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which the Rights Agent or any successor Rights Agent is a party, or
any corporation succeeding to the shareholder or stockholder services
business of the Rights Agent or any successor Rights Agent, will be
the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any
of the parties hereto, provided that such corporation would be
eligible for appointment as a successor Rights Agent under the
provisions of Section 4.4. In case at the time each successor Rights
Agent succeeds to the agency created by this Agreement any of the
Rights Certificates have been countersigned but not delivered, any
such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates
have not been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent;
and in all such cases such Rights Certificates will have the full
force provided in the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent is changed and at
such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned;
and in case at that time any of the Rights Certificates shall not have
been countersigned, the Rights Agent may countersign such Rights
Certificates either in its prior name or in its changed name; and in
all such cases such Rights Certificates shall have the full force
provided in the Rights Certificates and in this Agreement.
4.3 Duties of Rights Agent
The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the
Corporation and the holders of Rights Certificates, by their acceptance thereof,
shall be bound:
(a) the Rights Agent may consult with legal counsel (who may be legal
counsel for the Corporation) and the opinion of such counsel will be
full and complete authorization and protection to the Rights Agent as
to any action taken, suffered or omitted to be done by it in good
faith and in accordance with such opinion; the Rights Agent may also,
with the approval of the Corporation (such approval not to be
unreasonably withheld), consult with such other experts as the Rights
Agent shall consider necessary or appropriate to properly carry out
the duties and obligations imposed under this Agreement and the Rights
Agent shall be entitled to rely in good faith on the advice of any
such expert;
(b) whenever in the performance of its duties under this Agreement the
Rights Agent deems it necessary or desirable that any fact or matter
be proved or established by the Corporation prior to taking or
suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proven and established by a certificate
signed by a Person reasonably believed by the Rights Agent to be the
Chairman of the Board, the President, any Vice President or the
Secretary of the Corporation and delivered to the Rights Agent; and
such certificate will be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the provisions
of this Agreement in reliance upon such certificate;
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(c) the Rights Agent will be liable hereunder only for its own negligence,
bad faith or willful misconduct;
(d) the Rights Agent will not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the
certificates for Voting Shares or Common Shares or the Rights
Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and will be
deemed to have been made by the Corporation only;
(e) the Rights Agent will not be under any responsibility in respect of
the validity of this Agreement or the authorization, execution and
delivery hereof (except the due authorization, execution and delivery
hereof by the Rights Agent) or in respect of the validity or execution
of any Common Share certificate or Rights Certificate (except its
countersignature thereof); nor will it be responsible for any breach
by the Corporation of any covenant or condition contained in this
Agreement or in any Rights Certificate; nor will it be responsible for
any change in the exercisability of the Rights (including the Rights
becoming void pursuant to subsection 3.1(b)) or any adjustment
required under the provisions of Section 2.3 or be responsible for the
manner, method or amount of any such adjustment or the ascertaining of
the existence of facts that would require any such adjustment (except
with respect to the exercise of Rights after receipt of the
certificate contemplated by Section 2.3 describing any such
adjustment); nor will it by any act hereunder be deemed to make any
representation or warranty as to the authorization of any Common
Shares to be issued pursuant to this Agreement or any Rights or as to
whether any Common Shares will, when issued, be duly and validly
authorized, executed, issued and delivered and fully paid and
non-assessable;
(f) the Corporation agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement;
(g) the Rights Agent is hereby authorized and directed to accept written
instructions with respect to the performance of its duties hereunder
from any person believed by the Rights Agent to be the Chairman of the
Board, the President, any Vice President or the Secretary of the
Corporation, and to apply to such individual for advice or
instructions in connection with its duties, and it shall not be liable
for any action taken or suffered by it in good faith in reliance upon
instructions of any such individual;
(h) subject to compliance with applicable laws, the Rights Agent and any
shareholder or stockholder, director, officer or employee of the
Rights Agent may buy, sell or deal in Common Shares, Rights or other
securities of the Corporation or become pecuniarily interested in any
transaction in which the Corporation may be interested, or contract
with or lend money to the Corporation or otherwise act as fully and
freely as though it were not Rights Agent under this Agreement.
Nothing herein shall preclude the Rights Agent from acting in any
other capacity for the Corporation or for any other legal entity; and
(i) the Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys or agents, and the Rights Agent will not be
answerable or accountable for any act, default, neglect or misconduct
of any such attorneys or agents or for any loss to the Corporation
resulting
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from any such act, default, neglect or misconduct, provided reasonable
care was exercised in the selection and continued employment thereof.
4.4 Change of Rights Agent
The Rights Agent may resign and be discharged from its duties under
this Agreement upon 90 days' notice (or such lesser notice as is acceptable to
the Corporation) in writing delivered or mailed to the Corporation and to each
transfer agent of Common Shares by registered or certified mail and to the
holders of the Rights in accordance with Section 5.9. The Corporation may remove
the Rights Agent upon 30 days' notice in writing, mailed to the Rights Agent and
to each transfer agent of the Common Shares by registered or certified mail and
to the holders of the Rights in accordance with Section 5.9. If the Rights Agent
should resign or be removed or otherwise become incapable of acting, the
Corporation will appoint a successor to the Rights Agent. If the Corporation
fails to make such appointment within a period of 30 days after such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent then the resigning Rights Agent or the
holder of any Rights may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Corporation or by such a court, shall be a corporation incorporated under
the laws of Canada or a province thereof authorized to carry on the business of
a trust company. After appointment, the successor Rights Agent will be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but upon payment
of its outstanding fees and expenses the predecessor Rights Agent shall deliver
and transfer to the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance, conveyance, act or
deed necessary for that 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 give
notice thereof to the holders of the Rights in accordance with Section 5.9.
Failure to give any notice provided for in this Section 4.4, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
ARTICLE 5
MISCELLANEOUS
5.1 Redemption and Waiver
(a) The Board of Directors acting in good faith may, with the prior
consent of holders of Voting Shares or the holders of Rights given in
accordance with subsection 5.1(j) or (k), as the case may be, at any
time prior to the occurrence of a Flip-in Event as to which the
application of Section 3.1 has not been waived pursuant to the
provisions of this Section 5.1, elect to redeem all but not less than
all of the then outstanding Rights at a redemption price of $0.0001
per Right appropriately adjusted in a manner analogous to the
applicable adjustment provided for in Section 2.3 if an event of the
type analogous to any of the events described in Section 2.3 shall
have occurred (such redemption price being herein referred to as the
"Redemption Price").
(b) If the Board of Directors elects or is deemed to have elected to
redeem the Rights, and, in circumstances where subsection 5.1(a) is
applicable, such redemption is approved by the holders of Voting
Shares or the holders of Rights in accordance with subsection 5.1(j)
or
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(k), as the case may be, the right to exercise the Rights will
thereupon, without further action and without notice, terminate and
the only right thereafter of the holders of Rights shall be to receive
the Redemption Price.
(c) Within ten days after the Board of Directors electing or having been
deemed to have elected to redeem the Rights, or, if subsection 5.1(a)
is applicable within ten days after the holders of Voting Shares or
the holders of Rights having approved a redemption of Rights in
accordance with subsection 5.1(j) or (k), as the case may be, the
Corporation shall give notice of redemption to the holders of the
Rights in accordance with Section 5.9. Each such notice of redemption
will state the method by which the payment of the Redemption Price
will be made. The Corporation may not redeem, acquire or purchase for
value any Rights at any time in any manner other than that
specifically set forth in this Section 5.1 or other than in connection
with the purchase of Common Shares prior to the Separation Time. If
the Redemption Price payable to any holder of Rights includes a
fraction of a cent, such Redemption Price shall be rounded up to the
nearest cent.
(d) The Board of Directors acting in good faith may, prior to the
occurrence of a Flip-in Event as to which the application of Section
3.1 has not been waived pursuant to this Section 5.1, determine to
waive the application of Section 3.1 to such particular Flip-in Event,
provided that such Flip-in Event would occur by way of a Takeover Bid
made by means of a takeover bid circular delivered to all holders of
Voting Shares; further provided that if the Board of Directors waives
the application of Section 3.1 to a such a Flip-in Event, the Board of
Directors shall be deemed to have waived the application of Section
3.1 to any other Flip-in Event occurring by reason of any Takeover Bid
made by means of a takeover bid circular to all holders of Voting
Shares which is made prior to the expiry of any Takeover Bid in
respect of which a waiver is, or is deemed to have been, granted under
this subsection 5.1(d).
(e) The Board of Directors acting in good faith may, with the prior
consent of the holders of Voting Shares given in accordance with
subsection 5.1(j), determine, at any time prior to the occurrence of a
Flip-in Event as to which the application of Section 3.1 has not been
waived pursuant to this Section 5.1, if such Flip-in Event would occur
by reason of an acquisition of Voting Shares otherwise than pursuant
to a Take-over Bid made by means of a Take-over Bid circular delivered
to all holders of Voting Shares and otherwise than in the
circumstances set forth in subsection 5.1(f), to waive the application
of Section 3.1 to such Flip-in Event. In the event that the Board of
Directors proposes such a waiver, the Board of Directors shall extend
the Separation Time to a date subsequent to and not more than ten
Business Days following the meeting of shareholders called to approve
such waiver.
(f) The Board of Directors may waive the application of Section 3.1 in
respect of the occurrence of any Flip-in Event if the Board of
Directors has determined within eight Trading Days following a Stock
Acquisition Date that a Person became an Acquiring Person by
inadvertence and without any intention to become, or knowledge that it
would become, an Acquiring Person under this Agreement and, in the
event that such a waiver is granted by the Board of Directors, such
Stock Acquisition Date shall be deemed not to have occurred. Any such
waiver pursuant to this subsection 5.1(f) must be on the condition
that such Person, within 10 days after the foregoing determination by
the Board of Directors or such earlier or later date as the Board of
Directors may determine (the "Disposition Date"), has reduced its
Beneficial ownership of Voting Shares such
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that the Person is no longer an Acquiring Person. If the Person
remains an Acquiring Person at the close of business on the
Disposition Date, the Disposition Date shall be deemed to be the date
of occurrence of a further Stock Acquisition Date and Section 3.1
shall apply thereto.
(g) If a Person makes a Permitted Bid or a Competing Permitted Bid
pursuant to which more than 50 per cent of the then outstanding Voting
Shares (other than those Voting Shares Beneficially Owned by the
Persons making the Permitted Bid or the Competing Permitted Bid, at
the date of the Permitted Bid or the Competing Permitted Bid) are
taken up and paid for by such Person, then the Board of Directors
shall, immediately upon the consummation of such acquisition, without
further formality, be deemed to have elected to redeem the Rights at
the Redemption Price on the expiry date of the Permitted Bid or
Competing Permitted Bid, as the case may be.
(h) Where a Take-over bid that is not a Permitted Bid Acquisition is
withdrawn or otherwise terminated after the Separation Time has
occurred and prior to the occurrence of a Flip-in Event, the Board of
Directors may elect to redeem all the outstanding Rights at the
Redemption Price.
(i) Upon the Rights being redeemed pursuant to subsection 5.1(h), all the
provisions of this Agreement shall continue to apply as if the
Separation Time had not occurred and Rights Certificates representing
the number of Rights held by each holder of record of Common Shares as
of the Separation Time had not been mailed to each such holder and for
all purposes of this Agreement the Separation Time shall be deemed not
to have occurred.
(j) If a redemption of Rights pursuant to subsection 5.1(a) or a waiver of
a Flip-in Event pursuant to subsection 5.1(e) is proposed at any time
prior to the Separation Time, such redemption or waiver shall be
submitted for approval to the holders of Voting Shares. Such approval
shall be deemed to have been given if the redemption or waiver is
approved by the affirmative vote of a majority of the votes cast by
Independent Shareholders represented in person or by proxy at a
meeting of such holders duly held in accordance with applicable laws
and the Corporation's Articles and By-Laws.
(k) If a redemption of Rights pursuant to subsection 5.1(a) is proposed at
any time after the Separation Time, such redemption shall be submitted
for approval to the holders of Rights. Such approval shall be deemed
to have been given if the redemption is approved by holders of Rights
by a majority of the votes cast by the holders of Rights represented
in person or by proxy at and entitled to vote at a meeting of such
holders. For the purposes hereof, each outstanding Right (other than
Rights which are Beneficially Owned by any Person referred to in
clauses (i) to (v) inclusive of the definition of Independent
Shareholders) shall be entitled to one vote, and the procedures for
the calling, holding and conduct of the meeting shall be those, as
nearly as may be, which are provided in the Corporation's Articles and
By-Laws and the Canada Business Corporations Act with respect to
meetings of shareholders of the Corporation.
(l) The Corporation shall give prompt written notice to the Rights Agent
of any waiver of the application of Section 3.1 made by the Board of
Directors under this Section 5.1.
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5.2 Expiration
No Person shall have any rights whatsoever pursuant to or arising out
of this Agreement or in respect of any Right after the Expiration Time, except
the Rights Agent as specified in subsections 4.1(a) and (b).
5.3 Issuance of New Rights Certificates
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Corporation may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by the Board of
Directors to reflect any adjustment or change in the number or kind or class of
shares purchasable upon exercise of Rights made in accordance with the
provisions of this Agreement.
5.4 Supplements and Amendments
(a) Without the approval of any holders of Voting Shares or Rights, the
Corporation may make amendments to this Agreement to correct any
clerical or typographical error or which are required to maintain the
validity of the Agreement as a result of any change in any applicable
legislation, regulations or rules thereunder. The Corporation may,
prior to the date of the shareholders' meeting referred to in Section
5.15, supplement or amend this Agreement without the approval of any
holders of Rights or Voting Shares in order to make any changes which
the Board of Directors acting in good faith may deem necessary or
desirable. Notwithstanding anything in this Section 5.4 to the
contrary, no supplement or amendment shall be made to the provisions
of Article 4 except with the written concurrence of the Rights Agent
to such change, supplement or amendment.
(b) Subject to subsection 5.4(a), the Corporation may, with the prior
consent of the holders of Voting Shares obtained as set forth below,
at any time before the Separation Time, amend, vary or rescind any of
the provisions of this Agreement and the Rights (whether or not such
action would materially adversely affect the interests of the holders
of Rights generally). Such consent shall be deemed to have been given
if the action requiring such approval is approved by the affirmative
vote of a majority of the votes cast by Independent Shareholders
represented in person or by proxy at the Special Meeting.
(c) The Corporation may, with the prior consent of the holders of Rights
obtained as set forth below, at any time on or after the Separation
Time amend, vary or rescind any of the provisions of this Agreement
and the Rights (whether or not such action would materially adversely
affect the interests of the holders of Rights generally), provided
that no such amendment, variation or deletion shall be made to the
provisions of Article 4 except with the written concurrence of the
Rights Agent thereto. Such consent shall be deemed to have been given
if such amendment, variation or deletion is authorized by the
affirmative votes of the holders of Rights present or represented at
and entitled to vote at a meeting of the holders and representing 50%
plus one of the votes cast in respect thereof.
(d) Any approval of the holders of Rights shall be deemed to have been
given if the action requiring such approval is authorized by the
affirmative votes of the holders of Rights present or represented at
and entitled to vote 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)
-38-
shall be entitled to one vote, and the procedures for the calling,
holding and conduct of the meeting shall be those, as nearly as may
be, which are provided in the Corporation's Articles and By-Laws and
the Canada Business Corporations Act with respect to meetings of
shareholders of the Corporation.
(e) Any amendments made by the Corporation to this Agreement pursuant to
subsection 5.4(a) which are required to maintain the validity of this
Agreement as a result of any change in any applicable legislation,
regulation or rule thereunder shall:
(i) if made before the Separation Time, be submitted to the
shareholders of the Corporation at the next meeting of
shareholders and the shareholders may, by the majority referred
to in subsection 5.4(b) confirm or reject such amendment; or
(ii) if made after the Separation Time, be submitted to the holders of
Rights at a meeting to be called for on a date not later than
immediately following the next meeting of shareholders of the
Corporation and the holders of Rights may, by resolution passed
by the majority referred to in subsection 5.4(d) confirm or
reject such amendment.
Any such amendment shall be effective from the date of the resolution
of the Board of Directors adopting such amendment, until it is
confirmed or rejected or until it ceases to be effective (as described
in the next sentence) and, where such amendment is confirmed, it
continues in effect in the form so confirmed. If such amendment is
rejected by the shareholders or the holders of Rights or is not
submitted to the shareholders or holders of Rights as required, then
such amendment shall cease to be effective from and after the
termination of the meeting at which it was rejected or to which it
should have been but was not submitted or from and after the date of
the meeting of holders of Rights that should have been but was not
held, and no subsequent resolution of the Board of Directors to amend
this Agreement to substantially the same effect shall be effective
until confirmed by the shareholders or holders of Rights as the case
may be.
5.5 Fractional Rights and Fractional Shares
(a) The Corporation shall not be required to issue fractions of Rights or
to distribute Rights Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the registered
holders of the Rights Certificates with regard to which such
fractional Rights would otherwise be issuable an amount in cash equal
to the same fraction of the Market Price of a whole Right determined
on the date on which such fractional Right would otherwise be
issuable.
(b) The Corporation shall not be required to issue fractions of Common
Shares upon exercise of the Rights or to distribute certificates which
evidence fractional Common Shares. Fractions of Common Shares may, at
the election of the Corporation, be evidenced by scrip certificates or
in lieu of issuing fractional Common Shares, the Corporation shall pay
to the registered holders of Rights Certificates, at the time such
Rights are exercised as herein provided, an amount in cash equal to
the same fraction of the Market Price of one Common Share at the date
of such exercise.
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5.6 Rights of Action
Subject to the terms of this Agreement, all rights of action in
respect of this Agreement, other than rights of action vested solely in the
Rights Agent, are vested in the respective registered holders of the Rights; and
any registered holder of any Rights, without the consent of the Rights Agent or
of the registered holder of any other Rights, may, on such holder's own behalf
and for such holder's own benefit and the benefit of other holders of Rights,
enforce, and may institute and maintain any suit, action or proceeding against
the Corporation to enforce such holder's right to exercise such holder's Rights
in the manner provided in such holder's Rights Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of the obligations of
any person subject to, this Agreement.
5.7 Regulatory Approvals
Any obligation of the Corporation or action or event contemplated by
this Agreement shall be subject to the receipt of any requisite approval or
consent from any governmental or regulatory authority, including but not limited
to the approval of The Toronto Stock Exchange. Notwithstanding any provision of
this Agreement, any amendment to this Agreement will be subject to the prior
written consent of The Toronto Stock Exchange.
5.8 Unlawful Distributions
If in the opinion of the Board of Directors (who may rely upon the
advice of counsel) any action or event contemplated by this Agreement would
require compliance by the Corporation with the securities laws or comparable
legislation of a jurisdiction outside Canada or the United States, the Board of
Directors acting in good faith shall take such actions as it may deem
appropriate to ensure that such compliance is not required, including, without
limitation, establishing procedures for the issuance to a Canadian or United
States resident trustee of Rights or securities issuable on exercise of Rights,
the holding thereof in trust for the Persons entitled thereto (but reserving to
the trustee or to the trustee and the Corporation, as the Corporation may
determine, absolute investment discretion with respect thereto) and the sale
thereof and remittance of proceeds of such sale, if any, to the Persons entitled
thereto. In no event shall the Corporation or the Rights Agent be required to
issue or deliver Rights or securities issuable on exercise of Rights to Persons
who are citizens, residents or nationals of any jurisdiction other than Canada
or the United States, in which jurisdiction such issue or delivery would be
unlawful without registration of the relevant Persons or securities for such
purposes. Notwithstanding the foregoing, to the extent that the issuance or
delivery of the Rights or securities issuable on exercise of Rights to Persons
who are citizens, residents or nationals of any such jurisdiction in which such
issue or delivery would be so unlawful, such Rights or securities shall be
issued and delivered to such Persons to the extent the same may be so issued and
delivered in reliance upon applicable exemptions from registration requirements
in such jurisdictions.
5.9 Notices
Any notice or demand authorized or required by this Agreement to be
given or made by the Rights Agent or by the holder of any Rights to or on the
Corporation shall be sufficiently given or made if delivered or sent by
first-class mail, postage prepaid, or sent by facsimile or other form of
recorded electronic communication, charges prepaid and confirmed in writing,
addressed (until another address is filed in writing with the Rights Agent) as
follows:
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MDSI Mobile Data Solutions Inc.
βββββ βββββββββββ βββ
ββββββββ, βββββββ ββββββββ
βββ βββ
Attention: Corporate Secretary
Any such notice or demand shall be deemed to have been received if delivered, on
the date of delivery, or if sent by prepaid first class mail, on the fifth
Business Day after mailing thereof, except in the case of interruption of
regular mail service, in which case such notice shall be delivered, and on the
day of telegraphing, telecopying or sending the same by other means of recorded
electronic communication (provided such sending is during the normal business
hours of the addressee on a Business Day and, if not, on the first Business Day
thereafter).
Any notice or demand authorized or required by this Agreement to be given or
made by the Corporation or by the holder of any Rights to or on the Rights Agent
shall be sufficiently given or made if delivered or sent by first-class mail,
postage prepaid, or sent by facsimile or other form of recorded electronic
communication, charges prepaid and confirmed in writing, addressed (until
another address is filed in writing with the Corporation) as follows:
Computershare Trust Company of Canada
βββ βββββ, βββ βββββββ ββββββ
βββββββββ, βββββββ ββββββββ
βββ βββ
Attention: Manager of Stock and Bond Transfer Department
Any such notice or demand shall be deemed to have been received if delivered, on
the date of delivery, or if sent by prepaid first class mail, on the fifth
Business Day after mailing thereof, except in the case of interruption of
regular mail service, in which case such notice shall be delivered, and on the
day of telegraphing, telecopying or sending the same by other means of recorded
electronic communication (provided such sending is during the normal business
hours of the addressee on a Business Day and, if not, on the first Business Day
thereafter).
Any notice or demand authorized or required by this Agreement to be given or
made by the Corporation or the Rights Agent to or on the holder of any Rights
shall be sufficiently given or made if delivered or sent by first-class mail,
postage prepaid, addressed to such holder at the address of such holder as it
appears upon the register of the Rights Agent or, prior to the Separation Time,
on the register of the Corporation for its Common Shares. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. In the event of any interruption of mail service,
such notice required or permitted to be given hereunder will be deemed to be
sufficiently given by advertisement of such notice in daily newspapers published
in each of the cities of Vancouver and Toronto.
5.10 Costs of Enforcement
The Corporation agrees that if the Corporation fails to fulfill any of
its obligations pursuant to this Agreement, then the Corporation will reimburse
the holder of any Rights for the costs and expenses (including legal fees)
incurred by such holder in actions to enforce his, her or its rights
-41-
pursuant to this Agreement in any action, suit or proceeding in which a court of
competent jurisdiction in a final non-appealable judgement has rendered
judgement in favour of the holder.
5.11 Successors
All the covenants and provisions of this Agreement by or for the
benefit of the Corporation or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.
5.12 Benefits of this Agreement
Nothing in this Agreement shall be construed to give to any Person
other than the Corporation, the Rights Agent and the holders of the Rights any
legal or equitable right, remedy or claim under this Agreement. This Agreement
shall be for the sole and exclusive benefit of the Corporation, the Rights Agent
and the holders of the Rights.
5.13 Governing Law
This Agreement and each Right issued hereunder shall be deemed to be a
contract made under the laws of the Province of British Columbia and for all
purposes shall be governed by and construed in accordance with the laws of such
province applicable to contracts to be made and performed entirely within such
province.
5.14 Severability
If any Section, subsection, paragraph, subparagraph or other provision
hereof or the application hereof to any circumstances or any right hereunder
shall, in any jurisdiction and to any extent, be invalid or unenforceable, such
Section, subsection, paragraph, subparagraph or other provision or such right
shall be ineffective only as to such jurisdiction and to the extent of such
invalidity or unenforceability in such jurisdiction without invalidating or
rendering unenforceable or ineffective the remaining Sections, subsections,
paragraphs, subparagraphs and other provisions hereof or rights hereunder in
such jurisdiction or the application of such Section, subsection, paragraph,
subparagraph or other provision or rights hereunder in any other jurisdiction or
to circumstances other than those as to which it is specifically held invalid or
unenforceable.
5.15 Effective Date
This Agreement is effective and in full force and effect in accordance
with its terms from the date hereof. If this Agreement is not confirmed by
resolution passed by a majority of the votes cast by holders of Common Shares
who vote in respect of confirmation of this Agreement (other than any holder who
does not qualify as an Independent Shareholder, with respect to all Common
Shares Beneficially Owned by such Person) at a meeting of shareholders to be
held not later than the date (the "2004 AGM Date") of the 2004 annual general
meeting of shareholders of the Corporation (which date shall be no later than
six months from the date of this Agreement), then this Agreement and any then
outstanding Rights shall terminate and be void and of no further force and
effect on and from that date which is the earlier of (a) the date of such
meeting and (b) the 2004 AGM Date.
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5.16 Determinations and Actions by the Board of Directors
The Board of Directors shall have the exclusive power and authority to
administer and amend this Agreement and to exercise all rights and powers
specifically granted to the Board of Directors or the Corporation, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to
(a) interpret the provisions of this Agreement; and
(b) make all determinations deemed necessary or advisable for the
administration of this Agreement (including a determination to redeem
or not to redeem the Rights or to amend the Agreement).
All actions, calculations and determinations (including, for purposes
of Clause (ii) below, all omissions with respect to the foregoing) which are
done or made by the Board of Directors in good faith, shall: (i) be final,
conclusive and binding on the Corporation, the Rights Agent, the holders of the
Rights and all other parties; and (ii) not subject the Board of Directors to any
liability to the holders of the Rights.
5.17 Time of the Essence
Time shall be of the essence in this Agreement.
5.18 Execution in Counterparts
This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute one and the same instrument.
5.19 Language
Les parties aux presentes ont exige que la presente convention ainsi
que tous les documents et avis qui s'y rattachent et/ou que en decoulent soient
rediges en langue anglaise. The parties
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hereto have required that his Agreement and all documents and notices related
thereto and/or resulting therefrom be drawn up in English.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
MDSI MOBILE DATA SOLUTIONS INC.
Per:
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Per:
--------------------------------------
COMPUTERSHARE TRUST COMPANY OF CANADA
Per:
--------------------------------------
Per:
--------------------------------------
EXHIBIT A
[Form of Rights Certificate]
Certificate No. ___________ Rights
THE RIGHTS ARE SUBJECT TO TERMINATION ON THE TERMS SET FORTH IN THE
SHAREHOLDER RIGHTS PLAN AGREEMENT. UNDER CERTAIN CIRCUMSTANCES
(SPECIFIED IN SECTION 3.1(b) OF THE SHAREHOLDER RIGHTS PLAN
AGREEMENT), RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR
TRANSFEREES OF AN ACQUIRING PERSON OR ITS AFFILIATES OR ASSOCIATES (AS
SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY PERSON ACTING
JOINTLY OR IN CONCERT WITH ANY OF THEM MAY BECOME VOID WITHOUT ANY
FURTHER ACTION.
Rights Certificate
This certifies that _________________________________________, or registered
assigns, is the registered holder of the number of Rights set forth above, each
of which entitles the registered holder thereof, subject to the terms,
provisions and conditions of the Shareholder Rights Plan Agreement dated as of
the 17th day of December, 2003 (the "Rights Agreement") between MDSI Mobile Data
Solutions Inc., a corporation incorporated under the Canada Business
Corporations Act (the "Corporation") and Computershare Trust Company of Canada,
a trust company, as rights agent (the "Rights Agent") (which term shall include
any successor Rights Agent under the Rights Agreement), to purchase from the
Corporation at any time after the Separation Time (as such term is defined in
the Rights Agreement) and prior to the Expiration Time (as such term is defined
in the Rights Agreement), one fully paid common share of the Corporation (a
"Common Share") at the Exercise Price referred to below, upon presentation and
surrender of this Rights Certificate together with the Form of Election to
Exercise duly executed and submitted to the Rights Agent at its principal office
in the city of Vancouver, Toronto or New York. Until adjustment thereof in
certain events as provided in the Rights Agreement, the Exercise Price is one
hundred and forty Canadian (CDN$140.00) dollars.
The Rights Certificate is subject to all of the terms, provisions and conditions
of the Rights Agreement which terms, provisions and conditions are hereby
incorporated herein by reference and made a part thereof 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 principal office of the Corporation
and are available upon written request.
The 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 the date evidencing an aggregate number of Rights equal to the
aggregate number of Rights evidenced by the Rights Certificate or Rights
Certificates surrendered. If this Rights Certificate shall be exercised in part,
the registered holder shall be entitled to receive, upon surrender hereof,
another Rights Certificate or Rights Certificates for the number of whole Rights
now exercised. No fractional Common Shares will be issued upon the exercise of
any Rights evidenced hereby, but in lieu thereof a cash payment will be made as
provided in the Rights Agreement.
-2-
Subject to the provisions of the Rights Agreement, the Rights evidenced by this
Certificate may be redeemed by the Corporation at a redemption price of $0.0001
per Right, subject to adjustment in certain events, under certain circumstances
at its option.
No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Common Shares or of
any other securities which may at any time be issuable upon the exercise hereof,
nor shall anything contained in the Rights Agreement or herein be construed to
confer upon the holder hereof, as such, any of the rights of a shareholder of
the Corporation or any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting shareholders (except as provided in the Rights Agreement), or
to receive dividends or subscription rights, or otherwise, until the Rights
evidenced by this Rights Certificate shall have been exercised as provided in
the Rights Agreement.
The Rights Certificate shall not be valid or obligatory for any purpose until it
shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Corporation and
its corporate seal.
DATED: MDSI MOBILE DATA SOLUTIONS INC.
Per:
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Per:
--------------------------------------
Countersigned:
COMPUTERSHARE TRUST COMPANY OF CANADA
Per:
--------------------------------
Authorized Signatory
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Rights Certificate)
FOR VALUE RECEIVED __________________ hereby sells, assigns and transfers unto
________________________________________________________________________________
________________________________________________________________________________
(please print name and address of transferee)
the Rights represented by this Rights Certificate, together with all right,
title and interest therein, and does hereby irrevocably constitute and appoint
__________________________________ attorney, to transfer the within Rights
Certificate on the books of the within-named Corporation, with full power of
substitution.
Date:
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Signature
Signature Guarantee: (Signature must correspond to name as written upon
the face of this Rights Certificate in every
particular, without alteration or enlargement or
any change whatsoever).
Signature must be guaranteed by a member firm of a stock exchange in Canada, a
registered national securities exchange in the United States, a member of the
Investment Dealers Association of Canada or National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in Canada or the United States.
_______________________________________________________________________________
(To be completed by the assignor if true)
The undersigned hereby represents, for the benefit of all holders of Rights and
Common Shares, that the Rights evidenced by this Rights Certificate are not,
and, to the knowledge of the undersigned, have never been, Beneficially Owned by
an Acquiring Person or an Affiliate or Associate thereof or by any Person acting
jointly or in concert therewith. Capitalized terms shall have the meaning
ascribed thereto in the Rights Agreement.
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Signature
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(please print name of signatory)
(To be attached to each Rights Certificate)
FORM OF ELECTION TO EXERCISE
TO:
The undersigned hereby irrevocably elects to exercise ____________________ whole
Rights represented by the Rights Certificate to purchase the Common Shares
issuable upon the exercise of such Rights and requests that certificates for
such shares be issued in the name of:
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
Address
____________________________________________________________________________
Social Insurance, Social Security or Other Taxpayer Identification Number
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights shall be
registered in the name of and delivered to:
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
Address
____________________________________________________________________________
Social Insurance, Social Security or Other Taxpayer Identification Number
Date:
----------------------------- -------------------------------------
Signature
Signature Guarantee: (Signature must correspond to name as written upon
the face of this Rights Certificate in every
particular, without alteration or enlargement or
any change whatsoever).
Signature must be guaranteed by a member firm of a stock exchange in Canada, a
registered national securities exchange in the United States, a member of the
Investment Dealers Association of Canada or National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in Canada or the United States.
_______________________________________________________________________________
(To be completed by the exerciser if true)
-2-
The undersigned hereby represents, for the benefit of all holders of Rights and
Common Shares, that the Rights evidenced by this Rights Certificate are not,
and, to the knowledge of the undersigned, have never been, Beneficially Owned by
an Acquiring Person or an Affiliate or Associate thereof or by any Person acting
jointly or in concert therewith. Capitalized terms shall have the meaning
ascribed thereto in the Rights Agreement.
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Signature
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(please print name of signatory)
NOTICE
In the event the Certificate set forth above in the applicable Forms of
Assignment or Election is not completed, the Corporation will deem the
Beneficial Owner of the Rights evidenced by this Rights Certificate to be an
Acquiring Person or an Affiliate or Associate thereof and, in the case of an
Assignment, will affix a legend to that effect on any Rights Certificates issued
in exchange for this Rights Certificate. Capitalized terms shall have the
meaning ascribed thereto in the Rights Agreement.