AMENDED AND RESTATED SHAREHOLDER RIGHTS PLAN AGREEMENT Dated as of August 3, 2007 Between MAG SILVER CORP. and COMPUTERSHARE INVESTOR SERVICES INC. as Rights Agent
UNEXECUTED COPY
AMENDED
AND RESTATED
Dated
as of August 3, 2007
Between
and
COMPUTERSHARE
INVESTOR SERVICES INC.
as
Rights Agent
TABLE
OF CONTENTS
ARTICLE 1
INTERPRETATION
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1.1
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Certain
Definitions
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1.2
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Currency
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1.3
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Headings
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1.4
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Number and
Gender
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1.5
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Calculation
of Number and Percentage of
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Beneficial
Ownership of Outstanding Voting
Shares
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1.6
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Acting Jointly or in
Concert
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1.7
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Statutory
References
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ARTICLE 2
THE
RIGHTS
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2.1
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Legend on Common Share
Certificates
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2.2
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Initial Exercise Price, Exercise
of Rights and Detachment of Rights
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2.3
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Adjustments to Exercise Price;
Number of Rights
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2.4
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Date on Which Exercise is
Effective
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2.5
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Execution, Authentication,
Delivery and Dating of Right
Certificates
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2.6
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Registration, Registration of
Transfer and Exchange
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2.7
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Mutilated, Destroyed, Lost and
Stolen Rights Certificates
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2.8
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Persons Deemed
Owners
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2.9
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Delivery and Cancellation of
Certificates
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2.10
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Agreement of Rights
Holders
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2.11
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Rights Certificate Holder not
Deemed a Shareholder
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ARTICLE 3
ADJUSTMENTS TO THE RIGHTS ON
FLIP-IN EVENT
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3.1
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Flip-in
Event
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3.2
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Exchange
Option
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ARTICLE 4
THE RIGHTS
AGENT
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4.1
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General
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4.2
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Merger or Amalgamation or Change
of Name of Rights Agent
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4.3
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Duties of Rights
Agent
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4.4
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Change of Rights
Agent
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ARTICLE 5
MISCELLANEOUS
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5.1
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Redemption of
Rights
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5.2
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Waiver of Flip-In
Event
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5.3
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Expiration
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5.4
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Issuance of New Rights
Certificates
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5.5
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Supplements and
Amendments
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5.6
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Fractional Rights and Fractional
Shares
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5.7
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Rights of
Action
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5.8
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Notices
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5.9
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Costs of
Enforcement
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5.10
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Benefits of this
Agreement
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5.11
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Governing
Law
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5.12
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Language
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5.13
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Severability
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5.14
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Effective
Date
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5.15
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Determinations and Actions by the
Board of Directors
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5.16
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Rights of Board of Directors and
the Corporation
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5.17
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Regulatory
Approvals
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5.18
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Declaration as to Non-Canadian
Holders
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5.19
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Time of the
Essence
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5.20
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Successors
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5.21
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Execution in
Counterparts
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- -
AMENDED
AND RESTATED
THIS
AMENDED AND RESTATED SHAREHOLDER RIGHTS PLAN AGREEMENT is dated as of the 3rd day of
August, ▇▇▇▇
▇ ▇ ▇ ▇ ▇
▇ ▇:
a
corporation incorporated under the laws of the Province of British Columbia (the
"Corporation"),
- and
-
COMPUTERSHARE
INVESTOR SERVICES INC.,
a
corporation existing under the laws of Canada and authorized to carry on the
business of a trust company in each of the provinces and territories of Canada
(the "Rights
Agent").
WHEREAS
the Board of Directors (as hereinafter defined) of the Corporation, in the
exercise of their fiduciary duties to the Corporation, has determined that it is
advisable and in the best interests of the Corporation to adopt a shareholder
rights plan (the "Rights
Plan") to (a) ensure, to the extent possible, that all holders of the
Common Shares (as hereinafter defined) of the Corporation and the Board of
Directors have adequate time to consider and evaluate any unsolicited bid for
the Common Shares, (b) provide the Board of Directors with adequate time to
identify, develop and negotiate value-enhancing alternatives, if considered
appropriate, to any such unsolicited bid, (c) encourage the fair treatment of
the Corporation's securityholders in connection with any Take-over Bid (as
hereinafter defined) made for the Common Shares and (d) generally to assist the
Board of Directors in enhancing shareholder value;
AND
WHEREAS the Board of Directors has determined that the Rights Plan should take
effect immediately, but that its ongoing effectiveness should be subject to the
approval of the Independent Shareholders (as hereinafter defined);
AND
WHEREAS in order to implement the Rights Plan, the Board of Directors has
authorized the issuance of:
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(a)
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one
right (a "Right")
effective at the Record Time (as hereinafter defined) in respect of each
Common Share outstanding at the Record Time;
and
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(b)
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one
Right in respect of each Common Share issued after the Record Time and
prior to the earlier of the Separation Time (as hereinafter defined) and
the Expiration Time (as hereinafter
defined);
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AND
WHEREAS each Right entitles the Holder (as hereinafter defined) thereof, after
the Separation Time, to purchase securities of the Corporation pursuant to the
terms and subject to the conditions set forth herein;
AND
WHEREAS the Corporation desires to appoint the Rights Agent to act on behalf of
the Corporation and the holders of Rights, and the Rights Agent has agreed to
act on behalf of the Corporation and the holders of Rights in connection with
the issuance, transfer, exchange and replacement of Rights Certificates (as
hereinafter defined), the exercise of Rights and other matters referred to
herein;
NOW
THEREFORE, in consideration of the foregoing premises and the respective
covenants and agreements set forth herein, the parties hereby agree as
follows:
ARTICLE 1
INTERPRETATION
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1.1
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Certain
Definitions
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For
purposes of this Agreement, the following terms have the meanings
indicated:
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(a)
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"Acquiring Person" shall
mean 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:
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(i)
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the
Corporation or any Subsidiary of the
Corporation;
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(ii)
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any
Person who becomes the Beneficial Owner of 20% or more of the outstanding
Voting Shares as a result of one or any combination
of
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(A)
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a
Corporate Acquisition which, by reducing the number of Voting Shares
outstanding, increases the percentage of Voting Shares Beneficially Owned
by such Person to or above 20% or more of the Voting Shares then
outstanding;
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(B)
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an
Exempt Acquisition;
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(C)
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a
Permitted Bid Acquisition;
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(D)
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a
Shareholder Endorsed Insider Bid
Acquisition;
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(E)
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a
Pro Rata Acquisition; or
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(F)
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a
Convertible Security Acquisition;
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provided,
however, that if a Person becomes the Beneficial Owner of 20% or more of the
Voting Shares then outstanding by reason of one or any combination of a
Corporate Acquisition, an Exempt Acquisition, a Permitted Bid Acquisition, a
Shareholder Endorsed Insider Bid Acquisition, a Pro Rata Acquisition or a
Convertible Security Acquisition, and thereafter becomes the Beneficial Owner of
any additional Voting Shares (other than pursuant to any one or a combination of
a Corporate Acquisition, an Exempt Acquisition, a Permitted Bid Acquisition, a
Shareholder Endorsed Insider Bid Acquisition, a Pro Rata Acquisition or a
Convertible Security Acquisition), then as of the date such Person becomes the
Beneficial Owner of such additional Voting Shares, such Person shall become an
Acquiring Person;
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(iii)
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a
Person who is the Beneficial Owner of 20% or more of the outstanding
Voting Shares determined as at the Record Time (a "Grandfathered Person"); provided,
however, that this exemption shall not be, and shall cease to be,
applicable to a Grandfathered Person in the event that such Grandfathered
Person shall, after the Record Time, become the Beneficial Owner of any
Voting Shares not Beneficially Owned by such Person as at the Record Time
(other than through any one or any combination of a Corporate Acquisition,
an Exempt Acquisition, a Permitted Bid Acquisition, a Shareholder Endorsed
Insider Bid Acquisition, a Pro Rata Acquisition or a Convertible Security
Acquisition);
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(iv)
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a
Subsequent Grandfathered Person, provided, however, that this exemption
shall not be, and shall cease to be, applicable to a Subsequent
Grandfathered Person in the event that such Subsequent Grandfathered
Person shall, after the completion of the transaction pursuant to which
such Person became a Subsequent Grandfathered Person, become the
Beneficial Owner of any additional Voting Shares (other than through any
one or any combination of a Corporate Acquisition, an Exempt Acquisition,
a Permitted Bid Acquisition, a Shareholder Endorsed Insider Bid
Acquisition, a Pro Rata Acquisition or a Convertible Security
Acquisition);
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(v)
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for
a period of ten days after the Disqualification Date (as hereinafter
defined), any Person who becomes the Beneficial Owner of 20% or more of
the outstanding Voting Shares as a result of such Person becoming
disqualified from relying on Clause (vi) of the definition of Beneficial
Owner solely because such Person makes or announces an intention to make a
Take-over Bid in respect of Voting Shares and/or Convertible Securities
either alone or by acting jointly or in concert with any other
Person. For the purposes of this definition, "Disqualification Date"
means the first date of a public announcement of facts indicating that any
Person is making or intends to make a Take-over Bid, either alone, through
such Person's Affiliates or Associates or by acting jointly or in concert
with any other Person; or
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(vi)
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an
underwriter or member of a banking or selling group that acquires Voting
Shares from the Corporation in connection with a distribution of
securities of the Corporation pursuant to a prospectus or by way of
private placement;
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(b)
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"Affiliate" when used to
indicate a relationship with a Person, shall mean a Person that directly,
or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such specified
Person;
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(c)
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"Agreement" means this
agreement as amended, modified or supplemented from time to time; "hereof", "herein", "hereto" and similar
expressions mean and refer to this shareholder rights plan agreement as a
whole and not to any particular part of this
Agreement;
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(d)
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"Associate", when used to
indicate a relationship with a specified Person, shall mean (a) any
corporation or trust of which such Person beneficially owns, directly or
indirectly, voting securities carrying more than 10% of the voting rights
attached to all voting securities of such corporation or trust for the
time being outstanding, (b) any partner of that Person, (c) any trust or
estate in which such Person has a substantial beneficial interest or as to
which such Person serves as trustee or in a similar capacity, (d) a spouse
of such specified Person, (e) any Person of either sex with whom such
specified Person is living in conjugal relationship outside marriage or
(f) any relative of such specified Person or of a Person mentioned in
Clauses (d) or (e) of this definition if that relative has the same
residence as the specified Person;
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(e)
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"BCBCA" shall mean the
Business Corporations
Act (British Columbia), S.B.C. 2002, c. 57, as amended, and
the regulations made thereunder and any comparable or successor laws or
regulations thereto;
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(f)
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a
Person shall be deemed the "Beneficial Owner" of,
and to have "Beneficial Ownership" of, and to
"Beneficially
Own":
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(i)
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any
securities as to which such Person or any of such Person's Affiliates or
Associates is the owner at law or in equity including, for greater
certainty, pursuant to the take-over bid provisions of the Securities Act
(British Columbia);
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(ii)
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any
securities as to which such Person or any of such Person's Affiliates or
Associates has the right to acquire or become the owner at law or in
equity, where such right is exercisable immediately or after the passage
of time and whether or not on condition or the happening of any
contingency or the making of any payment, upon the exercise of any
conversion right, exchange right or purchase right attaching to
Convertible Securities, or pursuant to any agreement, arrangement, pledge
or understanding (including, for greater certainty, any lock-up
agreement), whether or not in writing, (other than (x) customary
agreements with and between underwriters and/or banking group members
and/or selling group members with respect to a distribution of securities
pursuant to a prospectus or by way of private placement and (y) pledges of
securities in the ordinary course of business of the lender granted as
security for bona
fide
indebtedness) or otherwise;
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(iii)
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any
securities as to which such Person or any of such Person's Affiliates or
Associates has the right to vote, where such right is exercisable
immediately or after the passage of time and whether or not on condition
or the happening of any contingency or the making of any payment, pursuant
to any agreement, arrangement, pledge or understanding, whether or not in
writing, (other than pursuant to pledges of securities in the ordinary
course of business of the lender granted as security for bona fide indebtedness)
or otherwise; provided, however, that this paragraph (iii) shall not
apply to a right to vote arising under any agreement, arrangement or
understanding among or between holders of Voting Shares where no Person,
whether alone or together with any of such Person's Affiliates or
Associates or any other Person with whom such Person or any of such
Person's Affiliates or Associates is acting jointly or in concert, is in a
position to exercise de
jure or de
facto control of the Corporation as a result of such agreement,
arrangement or understanding; and
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(iv)
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any
securities which are Beneficially Owned within the meaning of Clauses (i),
(ii) and (iii) of this definition by any other Person with whom such
Person is acting jointly or in concert with respect to the Corporation or
any of its securities or assets;
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provided,
however, that a Person shall not be deemed the "Beneficial Owner" of, or to have
"Beneficial Ownership" of, or to "Beneficially Own", any security:
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(v)
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by
reason of such security having been deposited or tendered pursuant to any
Take-over Bid made by such Person or any of such Person's Affiliates or
Associates or any other Person referred to in Clause (iv) of this
definition until the earlier of such deposited or tendered security being
accepted unconditionally for payment or exchange or being taken up or paid
for;
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(vi)
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where
such Person, any of such Person's Affiliates or Associates or any other
Person referred to in Clause (iv) of this definition holds such security
provided that:
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(A)
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the
ordinary business of any such Person (the "Investment Manager") includes the
management of investment funds for others (which others, for greater
certainty, may include or be limited to one or more employee benefit plans
or pension plans) and includes the acquisition or holding of securities
for a non-discretionary account of a Client (as defined below) by a dealer
or broker registered under applicable securities laws to the extent
required and such security is held by the Investment Manager in the
ordinary course of such business in the performance of such Investment
Manager's duties for the account of any other Person (a "Client");
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(B)
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such
Person (the "Trust
Company") is licensed to carry on the business of a trust company
under applicable laws and, as such, acts as trustee or administrator or in
a similar capacity in relation to the estates of deceased or incompetent
Persons (each an "Estate Account") or in relation
to other accounts (each an "Other Account") and holds such
security in the ordinary course of such duties for the estate of any such
deceased or incompetent Person or for such other
accounts;
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(C)
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such
Person (the "Statutory
Body") is established by statute for purposes that include, and the
ordinary business or activity of such Person includes, the management of
investment funds for employee benefit plans, pension plans, insurance
plans or various public bodies and the Statutory Body holds such security
in the ordinary course of and for the purposes of the management of such
investment funds;
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(D)
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such
person (the "Administrator") is the
administrator or trustee of one or more pension funds or plans (a "Plan") registered under
the laws of Canada or any Province thereof or the corresponding laws of
the jurisdiction by which such Plan is governed and the Administrator
holds such security for the purposes of its activities as such;
or
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(E)
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such
Person is a Crown agent or agency;
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but only
if the Investment Manager, the Trust Company, the Statutory Body, the
Administrator or the Crown agent or agency, as the case may be, (A) did not
acquire and does not Beneficially Own or hold such security for the purpose of
or with the effect of changing or influencing the control of the issuer thereof,
either alone or acting jointly or in concert with any other Person, or in
connection with or as a participant in any transaction having that purpose or
effect, (B) is not then making a Take-over Bid in respect of securities of the
Corporation or has not then announced an intention to make a Take-over Bid in
respect of securities of the Corporation and (C) is not then acting jointly or
in concert with any other Person who is making a Take-over Bid or who has
announced an intention to make a Take-over Bid, other than an Offer to Acquire
Voting Shares or other securities of the Corporation (1) pursuant to a
distribution by the Corporation or (2) by means of a Permitted Bid or a
Competing Permitted Bid, or (3) by means of ordinary market transactions
(including prearranged trades entered into in the ordinary course of the
business of such Person) executed through the facilities of a stock exchange or
organized over-the-counter market;
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(vii)
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because
such Person is
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(A)
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a
Client of or has an account with the same Investment Manager as another
Person on whose account the Investment Manager holds such
security,
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(B)
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an
Estate Account or an Other Account of the same Trust Company as another
Person on whose account the Trust Company holds such security;
or
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(C)
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a
Plan with the same Administrator as another Plan on whose account the
Administrator holds such security;
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(viii)
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where
such Person is
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(A)
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a
Client of an Investment Manager and such security is owned at law or in
equity by the Investment Manager;
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(B)
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an
Estate Account or an Other Account of a Trust Company and such security is
owned at law or in equity by the Trust Company;
or
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(C)
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a
Plan and such security is owned at law or in equity by the Administrator
of the Plan; or
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(ix)
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where
such Person is the registered holder of securities as a result of carrying
on the business of or acting as a nominee of the securities
depository;
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(g)
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"Board of Directors"
shall mean the board of directors of the Corporation, as constituted from
time to time;
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(h)
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"Business Day" shall mean
any day other than a Saturday, Sunday or a day on which banking
institutions in Vancouver are authorized or obligated by law to
close;
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(i)
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"Canadian Dollar
Equivalent" of any amount which is expressed in United States
dollars shall mean, 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;
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(j)
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"close of business" on
any given date shall mean the time on such date (or, if such date is not a
Business Day, the time on the next succeeding Business Day) at which the
office of the transfer agent for the Common Shares in Vancouver (or, after
the Separation Time, the office of the Rights Agent in Vancouver) is
closed to the public;
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(k)
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"Common Shares" shall
mean the common shares in the capital of the Corporation and any other
share of the Corporation into which such shares may be sub-divided,
consolidated, re-classified or
changed;
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(l)
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"Competing Permitted Bid"
shall mean a Take-over Bid that:
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(i)
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is
made after a Permitted Bid has been made and prior to the expiry of that
Permitted Bid (in this definition, the "Prior
Bid");
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(ii)
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satisfies
all the components of the definition of a Permitted Bid except the
requirements set out in Clause (ii) of that definition;
and
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(iii)
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contains,
and the take-up and payment for securities tendered or deposited is
subject to, an irrevocable and unqualified condition that no Voting Shares
shall be taken up or paid for pursuant to the Take-over Bid prior to the
close of business on the date that is no earlier than the later of: (i) 35
days (or such other minimum period of days as may be prescribed by the
Securities Act (British Columbia)) after the announcement of such
Competing Permitted Bid; and (ii) the 60th date after the date on which
the earliest Prior Bid was made and then only if at that date more than
50% of the then outstanding Voting Shares held by Independent Shareholders
have been deposited or tendered pursuant to such Take-over Bid and not
withdrawn;
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(m)
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"controlled": a Person is
considered to be "controlled" by another Person or two or more Persons
if:
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(i)
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in
the case of a Person other than a partnership or a limited partnership,
including, without limitation, a corporation or body
corporate:
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(A)
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securities
entitled to vote in the election of directors or trustees carrying more
than 50% of the votes for the election of directors or trustees of such
Person are held, directly or indirectly, by or on behalf of the other
Person or Persons; and
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(B)
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the
votes carried by such securities are entitled, if exercised, to elect a
majority of the board of directors or trustees of such
Person;
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(ii)
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in
the case of a partnership other than a limited partnership, more than 50%
of the interests in such partnership are held by the other Person or
Persons; and
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(iii)
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in
the case of a limited partnership, the other Person or each of the other
Persons is a general partner of the limited
partnership,
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and
unless the context otherwise requires, "controls", "controlling" and "under common control with"
shall be interpreted accordingly;
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(n)
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"Convertible Securities"
shall mean at any time any securities issued by the Corporation (including
rights, warrants and options but excluding the Rights) carrying any
purchase, exercise, conversion or exchange rights, pursuant to which the
holder thereof may acquire Voting Shares or other securities convertible
into or exercisable or exchangeable for Voting Shares (in each case,
whether such right is exercisable immediately or after a specified period
and whether or not on conditions or the happening of any contingency or
the making of any payment);
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(o)
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"Convertible Security
Acquisition" shall mean the acquisition of Voting Shares upon the
exercise, conversion or exchange of Convertible Securities acquired by a
Person pursuant to a Permitted Bid Acquisition, an Exempt Acquisition or a
Pro Rata Acquisition;
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(p)
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"Co-Rights Agents" shall
have the meaning ascribed thereto in Subsection 4.1(a);
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(q)
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"Corporate Acquisition"
shall mean an acquisition or a redemption of Voting Shares by the
Corporation which by reducing the number of Voting Shares outstanding
increases the proportionate number of Voting Shares Beneficially Owned by
any Person;
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(r)
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"Election to Exercise"
shall have the meaning attributed thereto in Subsection 2.2(d)(ii);
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(s)
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"Exempt Acquisition"
shall mean an acquisition of Voting Shares or Convertible
Securities:
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(i)
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(ii)
|
pursuant
to a distribution of Voting Shares or Convertible Securities (and the
exercise, conversion or exchange of such Convertible Securities) made by
the Corporation pursuant to a prospectus or private placement or other
distribution made by the Corporation exempt from the prospectus
requirements of applicable law;
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(t)
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"Exercise Price" shall
mean, as of any date, the price at which a Holder may purchase the
securities issuable upon exercise of one whole Right. Until
adjustment thereof in accordance with the terms hereof, the Exercise Price
shall be $75;
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(u)
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"Expiration Time" shall
mean the earlier of:
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(i)
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the
Termination Time;
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(ii)
|
the
termination of the third annual meeting of the shareholders of the
Corporation occurring after the date of ratification of this Agreement
pursuant to Section 5.14 hereof if
the continuation of the Rights Plan is not submitted to holders of Voting
Shares for their approval at such meeting or, if so submitted, is not
approved by a majority of the votes cast by Independent Shareholders
present or represented by proxy;
and
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(iii)
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the
close of the third annual meeting of shareholders of the Corporation
occurring after the date of approval of the continuation of the Rights
Plan pursuant to paragraph (ii) above or this paragraph (iii) if the
continuation of the Rights Plan is not submitted to holders of Voting
Shares for their approval at such meeting or, if so submitted, is not
approved by a majority of the votes cast by Independent Shareholders
present or represented by proxy;
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(v)
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"Flip-in Event" shall
mean a transaction in or pursuant to which any Person becomes an Acquiring
Person;
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(w)
|
"Holder" of any Rights,
unless the context otherwise requires, shall mean the registered holder of
such Rights (or, prior to the Separation Time, of the associated Common
Shares);
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(x)
|
"Independent
Shareholders" shall mean the holders of Voting Shares other
than:
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(i)
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any
Acquiring Person;
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(ii)
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any
Grandfathered Person;
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(iii)
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any
Offeror;
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(iv)
|
any
Associate or Affiliate of any Acquiring Person, any Grandfathered Person
or any Offeror;
|
|
(v)
|
any
Person acting jointly or in concert with any Acquiring Person, any
Grandfathered Person or any Offeror;
and
|
|
(vi)
|
any
employee benefit plan, stock purchase plan, deferred profit sharing plan
and any other similar plan or trust for the benefit of employees of the
Corporation or a Subsidiary of the Corporation, unless the beneficiaries
of the plan or trust direct the manner in which the Voting Shares are to
be voted or direct whether the Voting Shares are to be tendered to a
Take-over Bid;
|
|
(y)
|
"Insider" shall mean a
Person who together with its Affiliates or Associates and any other Person
with whom such Person or any of such Person's Affiliates or Associates is
acting jointly or in concert has beneficial ownership, directly or
indirectly, of securities of the Corporation carrying 10 per cent or more
of the voting rights attached to all the Corporation's Voting
Shares;
|
|
(z)
|
"Market Price" per
security of any securities on any date of determination shall mean the
average of the daily closing prices per security of such securities
(determined as described below) on each of the 20 consecutive Trading Days
ending on the Trading Day immediately preceding such date; provided,
however, that if an event of a type analogous to any of the events
described in Section 2.3 hereof
shall have caused the closing prices used to determine the Market Price on
any such Trading Day not to be fully comparable with the closing price on
such date of determination (or, if the date of determination is not a
Trading Day, on the immediately preceding Trading Day), each such closing
price so used shall be appropriately adjusted in a manner analogous to the
applicable adjustment provided for in Section 2.3 hereof in order to make it fully
comparable with the closing price on such date of determination (or, if
the date of determination is not Trading Day, on the immediately preceding
Trading Day). The closing price per security of any securities on any date
shall be:
|
|
(i)
|
the
closing board lot sale price or, in case no such sale takes place on such
date, the average of the closing bid and asked prices for each such
security on such date, as reported by the principal stock exchange in
Canada on which such securities are listed or admitted to
trading;
|
|
(ii)
|
if
for any reason none of such prices described in (i) above is available for
such day or the securities are not listed or admitted to trading on a
Canadian stock exchange, the last sale price or, if such price is not
available, the average of the closing bid and asked prices, for each such
security on such date, as reported by such other securities exchange on
which such securities are listed or admitted to
trading;
|
|
(iii)
|
if
for any reason none of such prices described in (ii) above is available
for such day or the securities are not listed or admitted to trading on a
Canadian stock exchange or other securities exchange, the last sale price,
or if no sale takes place, the average of the high bid and low asked
prices for each such security on such date in the over-the-counter market,
as quoted by any reporting system then in use (as determined by the Board
of Directors); or
|
|
(iv)
|
if
for any such date none of such prices described in (iii) above is
available or the securities are not listed or admitted to trading on a
Canadian stock exchange or any other securities exchange and are not
quoted by any such reporting system, the average of the closing bid and
asked prices for such date as furnished by a professional market maker
making a market in the securities selected in good faith by the Board of
Directors,
|
provided,
however, that if on any such date none of such prices is available, the closing
price per security of such securities on such date shall mean the fair value per
security of such securities on such date as determined in good faith by a
nationally or internationally recognized firm of investment dealers or
investment bankers selected by the Board of Directors. The Market Price shall be
expressed in Canadian dollars and, if initially determined in respect of any day
forming part of the 20 consecutive Trading Day period in question in United
States dollars, such amount shall be translated into Canadian dollars on such
date at the Canadian Dollar Equivalent thereof;
|
(aa)
|
"1933 Securities Act"
shall mean the United States Securities Act of 1933,
as amended, and the rules and regulations promulgated thereunder, and any
comparable or successor laws or regulations
thereto;
|
|
(bb)
|
"1934 Exchange Act" shall
mean the United States Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated
thereunder, and any comparable or successor laws or regulations
thereto;
|
|
(cc)
|
"Nominee" shall have the
meaning ascribed thereto in Subsection 2.2(c);
|
|
(dd)
|
"Offer to Acquire" shall
include:
|
|
(i)
|
an
offer to purchase, a public announcement of an intention to make an offer
to purchase, or a solicitation of an offer to sell, Voting Shares,
and
|
|
(ii)
|
an
acceptance of an offer to sell Voting Shares, whether or not such offer to
sell has been solicited;
|
or any
combination thereof, and the Person accepting an offer to sell shall be deemed
to be making an Offer to Acquire to the Person that made the offer to
sell;
|
(ee)
|
"Offeror" shall mean a
Person who has announced an intention to make or who has made a Take-over
Bid;
|
|
(ff)
|
"Offeror's Securities"
shall mean Voting Shares Beneficially Owned by an Offeror, on the date of
an Offer to Acquire;
|
|
(gg)
|
"Permitted Bid" shall
mean a Take-over Bid made by an Offeror that is made by means of a
take-over bid circular and which also complies with the following
additional provisions:
|
|
(i)
|
the
Take-over Bid is made to all holders of Voting Shares as registered on the
books of the Corporation, other than the Offeror, for all Voting Shares
held by them;
|
|
(ii)
|
the
Take-over Bid contains, and the take-up and payment for securities
tendered or deposited thereunder is subject to, an irrevocable and
unqualified condition that no Voting Shares shall be taken up or paid for
pursuant to the Take-over Bid prior to the close of business on a date
which is not less than 60 days after the date of the Take-over Bid, and
only if at such date more than 50% of the Voting Shares held by
Independent Shareholders shall have been deposited or tendered pursuant to
the Take-over Bid and not
withdrawn;
|
|
(iii)
|
the
Take-over Bid contains an irrevocable and unqualified provision that,
unless the Take-over Bid is withdrawn, Voting Shares may be deposited
pursuant to such Take-over Bid at any time during the period of time
between the date of the Take-over Bid and the date on which the Voting
Shares subject to the Take-over Bid may be taken up and paid for and that
any Voting Shares deposited pursuant to the Take-over Bid may be withdrawn
until taken up and paid for; and
|
|
(iv)
|
the
Take-over Bid contains an irrevocable and unqualified provision that if,
on the date on which Voting Shares may be taken up and paid for, more than
50% of the Voting Shares held by Independent Shareholders shall have been
deposited or tendered pursuant to the Take-over Bid and not withdrawn, the
Offeror will make a public announcement of that fact and the Take-over Bid
will remain open for deposits and tenders of Voting Shares for not less
than 10 Business Days from the date of such public
announcement;
|
|
(hh)
|
"Permitted Bid
Acquisitions" shall mean acquisitions of Voting Shares made
pursuant to a Permitted Bid or a Competing Permitted
Bid;
|
|
(ii)
|
"Person" shall include
any individual, firm, partnership, association, trust, trustee, executor,
administrator, legal personal representative, government, governmental
entity or authority, body corporate, corporation, incorporated or
unincorporated organization, syndicate or other
entity;
|
|
(jj)
|
"Pro Rata Acquisition"
shall mean an acquisition by a Person of Voting Shares or Convertible
Securities:
|
|
(i)
|
as
a result of a stock dividend, a stock split or other event in respect of
securities of the Corporation of one or more particular classes or series
pursuant to which a Person becomes the Beneficial Owner of Voting Shares
or Convertible Securities on the same pro rata basis as all other holders
of securities of the particular class, classes or
series;
|
|
(ii)
|
pursuant
to any regular dividend reinvestment plan or other plan made available by
the Corporation to holders of its securities where such plan permits the
holder to direct that some or all of: (A) dividends paid in respect of
shares of any class of the Corporation, (B) proceeds of redemption of
shares of the Corporation, (C) interest paid on evidences of indebtedness
of the Corporation, or (D) optional cash payments be applied to the
purchase from the Corporation of further securities of the
Corporation;
|
|
(iii)
|
pursuant
to the receipt and/or exercise by the Person of rights (other than the
Rights) issued by the Corporation to all of the holders of a series or
class of Voting Shares on a pro rata basis to subscribe for or purchase
Voting Shares or Convertible Securities, provided that such rights are
acquired directly from the Corporation and not from any other Person;
or
|
|
(iv)
|
pursuant
to a plan of arrangement, amalgamation or other statutory procedure
requiring shareholder approval;
|
|
(kk)
|
"Record Time" shall mean
4:00 p.m. (Vancouver time) on the date of this
Agreement;
|
|
(ll)
|
"Redemption Price" shall
have the meaning attributed thereto in Subsection 5.1(a);
|
|
(mm)
|
"regular periodic cash
dividend" shall mean cash dividends paid in any fiscal year of the
Corporation to the extent that such cash dividends do not exceed, in the
aggregate, the greatest of
|
|
(i)
|
200%
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 the annual 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;
|
|
(nn)
|
"Rights" shall mean the
herein described rights to purchase securities pursuant to the terms and
subject to the conditions set forth
herein;
|
|
(oo)
|
"Rights Certificate"
shall have the meaning attributed thereto in Clause 2.2(c)(i);
|
|
(pp)
|
"Rights Register" shall
have the meaning ascribed thereto in Subsection 2.6(a);
|
|
(qq)
|
"Securities Act (British
Columbia)" shall mean the Securities Act,
R.S.B.C. 1996, c. 418, and the rules and regulations thereunder, each as
may be amended from time to time, and any comparable or successor laws,
rules, instruments or regulations
thereto;
|
|
(rr)
|
"Separation Time" shall
mean, subject to Section 5.2, the
close of business on the tenth Trading Day after the earliest
of:
|
|
(i)
|
the
Stock Acquisition Date;
|
|
(ii)
|
the
date of the commencement of, or first public announcement of the intent of
any Person (other than the Corporation or any Subsidiary of the
Corporation) to make, a Take-over Bid (other than a Permitted Bid or a
Competing Permitted Bid); and
|
|
(iii)
|
the
date upon which a Permitted Bid or Competing Permitted Bid ceases to be
such;
|
or such
later date as may be determined by the Board of Directors acting in good faith,
provided that if the foregoing results in a Separation Time being prior to the
Record Time, the Separation Time shall be the Record Time, and provided further
that if any Take-over Bid referred to in Clause 1.1(ii) of this definition
expires, is cancelled, terminated or otherwise withdrawn prior to the Separation
Time, such Take-over Bid shall be deemed, for the purposes of this definition,
never to have been made;
|
(ss)
|
"Shareholder Endorsed Insider
Bid" shall mean a Take-over Bid made by an Insider by means of a
take-over bid circular to all holders of Voting Shares as registered on
the books of the Corporation, other than the Insider, for all Voting
Shares held by them, and in respect of
which:
|
|
(i)
|
at
the time of first take-up on the first date on which Voting Shares are
taken up for payment under the Take-over Bid, more than 50% of the Voting
Shares held by Independent Shareholders shall have been deposited or
tendered pursuant to the Take-over Bid and not
withdrawn;
|
|
(ii)
|
the
date of such first take-up of Voting Shares occurs not later than the
120th
calendar day following the date on which the Take-over Bid is commenced,
as determined under Multilateral Instrument 62-104 – Take-Over Bids and Issuer
Bids; and
|
|
(iii)
|
immediately
prior to or contemporaneously with such first take-up of Voting Shares,
the Offeror makes a public
announcement:
|
|
(A)
|
informing
the holders of Voting Shares of such take-up and specifying the number of
Voting Shares taken up or to be so taken up, and the number and percentage
of Voting Shares that, after giving effect to such take-up, will be
beneficially owned and/or over which control or direction will be
exercised by the Insider and its Associates and Affiliates together with
any other Person with whom the Insider or its Associates or Affiliates is
acting jointly or in concert;
|
|
(B)
|
verifying
compliance with the conditions in clauses (i) and (ii) of this definition;
and
|
|
(C)
|
confirming
that the Insider has extended or forthwith thereafter will be extending
its Take-over Bid such that it will remain open for deposits and tenders
of Voting Shares for not less than 10 Business Days from the date of such
public announcement;
|
|
(tt)
|
"Shareholder Endorsed Insider
Bid Acquisition" shall mean acquisitions of Voting Shares made
pursuant to a Shareholder Endorsed Insider
Bid;
|
|
(uu)
|
"Stock Acquisition Date"
shall mean the first date of public announcement (which, for purposes of
this definition, shall include, without limitation, an early warning
report filed pursuant to the Securities Act (British Columbia) or a report
filed pursuant to Section 13(d) under the 1934 Exchange Act) by the
Corporation or a Person of facts indicating that any Person has become an
Acquiring Person;
|
|
(vv)
|
"Subsequent Grandfathered
Person" shall mean a Person who, after the Record Time, acquires
all of the Voting Shares Beneficially Owned by a Grandfathered Person,
provided that:
|
|
(i)
|
such
Person does not Beneficially Own any other Voting Shares at the time of
such acquisition; and
|
|
(ii)
|
such
transaction is completed in compliance with applicable securities
laws;
|
|
(ww)
|
"Subsidiary": a body
corporate is a Subsidiary of another body corporate
if:
|
|
(i)
|
it
is controlled by (A) that other, or (B) that other and one or more bodies
corporate, each of which is controlled by that other, or (C) two or more
bodies corporate, each of which is controlled by that other,
or
|
|
(ii)
|
it
is a Subsidiary of a body corporate that is that other's
Subsidiary;
|
|
(xx)
|
"Take-over Bid" shall
mean an Offer to Acquire Voting Shares or Convertible Securities (or both)
if, assuming that the Voting Shares or Convertible Securities that are the
subject of the Offer to Acquire are acquired at the date of such Offer to
Acquire by the Person making such Offer to Acquire, the Voting Shares
Beneficially Owned by the Person making the Offer to Acquire would
constitute, in the aggregate, 20% or more of the outstanding Voting
Shares;
|
|
(yy)
|
|
(zz)
|
"Trading Day", when used
with respect to any securities, shall mean a day on which the principal
Canadian stock exchange on which such securities are listed or admitted to
trading is open for the transaction of business or, if the securities are
not listed or admitted to trading on any Canadian stock exchange, a
Business Day;
|
|
(aaa)
|
"U.S. - Canadian Exchange
Rate" shall mean, on any
date:
|
|
(i)
|
if,
on such date, the Bank of Canada sets an average noon spot rate
of exchange for the conversion of one United States dollar into
Canadian dollars, such rate; or
|
|
(ii)
|
in
any other case, the rate for such date for the conversion of one United
States dollar into Canadian dollars calculated in such manner as may be
determined by the Board of Directors from time to time acting in good
faith; and
|
|
(bbb)
|
"Voting Shares" shall
mean, collectively, the Common Shares of the Corporation and any other
shares of capital stock or voting interests of the Corporation entitled to
vote generally in the election of all
directors.
|
|
1.2
|
Currency
|
All sums
of money which are referred to in this Agreement are expressed in lawful money
of Canada, unless otherwise specified.
|
1.3
|
Headings
|
The
division of this Agreement into Articles, Sections, Subsections, Clauses and
Subclauses and the insertion of headings, subheadings and a table of contents
are for convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
|
1.4
|
Number and
Gender
|
Wherever
the context so requires, terms used herein importing the singular number only
shall include the plural and vice-versa and words importing only one gender
shall include all others.
|
1.5
|
Calculation
of Number and Percentage of
|
|
|
Beneficial Ownership
of Outstanding Voting Shares
|
For
purposes of this Agreement, the percentage of Voting Shares Beneficially Owned
by any Person shall be and be deemed to be the product determined by the
formula:
100 ×
A/B
Where:
|
A
|
=
|
the
number of votes for the election of all directors generally attaching to
the Voting Shares Beneficially Owned by such Person;
and
|
|
B
|
=
|
the
number of votes for the election of all directors generally attaching to
all outstanding Voting Shares.
|
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
above, 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, it is a question of fact as to whether a Person is
acting jointly or in concert with another Person and, without limiting the
generality of the foregoing, the following shall be deemed to be acting jointly
or in concert with a Person (the "First Person"):
|
(a)
|
every
Person who has any agreement, arrangement, commitment or understanding
(whether formal or informal and whether or not in writing) with the First
Person, any Associate or Affiliate of the First Person or any other Person
acting jointly or in concert with the First Person, for the purpose of
acquiring or making an Offer to Acquire any Voting Shares of the
Corporation, including, without limitation, any one or more of, or any
combination of, (i) a put, call, option, forward sale purchase or other
right or obligation relating to the sale or disposition of any Voting
Shares of the Corporation to the First Person, any Associate or Affiliate
of the First Person or any other Person acting jointly or in concert with
the First Person (whether settled by delivery of securities, cash or a
combination thereof) (including, for greater certainty, any lock-up
agreement), (ii) any security the value of which varies with the value of
Voting Shares of the Corporation, or (iii) any agreement, arrangement,
commitment or understanding (whether formal or informal and whether or not
in writing) pursuant to which all or substantially all of the economic or
market risk underlying a Voting Share of the Corporation, directly or
indirectly, is transferred to, or assumed by, the First Person, any
Associate or Affiliate of the First Person or any other Person acting
jointly or in concert with the First
Person;
|
|
(b)
|
every
Person who has any agreement, arrangement, commitment or understanding
(whether formal or informal and whether or not in writing) with the First
Person, any Associate or Affiliate of the First Person or any other Person
acting jointly or in concert with the First Person, for the purpose or
with the intention of exercising jointly or in concert with the First
Person, any Associate or Affiliate of the First Person or any other Person
acting jointly or in concert with the First Person, any voting rights
attaching to any securities of the Corporation;
and
|
|
(c)
|
every
Person who has any agreement, arrangement, commitment or understanding
(whether formal or informal and whether or not in writing) with the First
Person, any Associate or Affiliate of the First Person or any other Person
acting jointly or in concert with the First Person, for the purpose of
selling, offering to sell, acquiring or offering to acquire any business,
asset, subsidiary or investee company of the Corporation through any one
transaction or series of transactions where the aggregate value of the
business, asset, Subsidiary or investee company to be acquired exceeds
$1,000,000, such value to be determined in good faith by the Board of
Directors, after consultation with a nationally or internationally
recognized investment dealer or investment banker with respect to the
value of such business, asset, Subsidiary or investee
company.
|
Notwithstanding
the foregoing and for greater certainty, the phrase "acting jointly or in
concert" shall not include conduct consisting solely of:
|
|
(1)
|
voting
or directing the vote of securities of the Corporation pursuant to a
revocable proxy given in response to a particular proxy solicitation
(other than a proxy solicitation initiated by an Offeror or any Associate
or Affiliate of an Offeror or any other Person acting jointly or in
concert with an Offeror); or
|
|
|
(2)
|
voting
or directing the vote of securities of the Corporation in connection with
or in order to participate in a particular proxy solicitation (other than
a proxy solicitation initiated by an Offeror or any Associate or Affiliate
of an Offeror or any other Person acting jointly or in concert with an
Offeror).
|
|
1.7
|
Statutory
References
|
Unless
the context otherwise requires or except as expressly provided herein, any
reference herein to a specific part, section, subsection, clause or rule of any
Act or regulation shall refer to the same as it exists on the date
hereof.
ARTICLE 2
THE
RIGHTS
|
2.1
|
Legend on Common Share
Certificates
|
(a) Certificates
issued for Common Shares, including without limitation Common Shares issued upon
the exercise, conversion or exchange of Convertible Securities, after the date
hereof but prior to the close of business on the earlier of the Separation Time
and the Expiration Time shall evidence one Right for each Common Share
represented thereby and shall have impressed on, printed on, written on or
otherwise affixed to them a legend in substantially the following
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, dated as of the 3rd day of
August, 2007, as amended from time to time (the "Rights Agreement"), between MAG
Silver Corp. (the "Corporation") and Computershare Investor Services Inc., as
Rights Agent, the terms of which are hereby incorporated herein by reference and
a copy of which is on file and may be inspected during normal business hours at
the principal executive offices of the Corporation. Under certain circumstances,
as set forth in the Rights Agreement, such Rights may be amended, redeemed, may
expire, may become null and void (if, in certain cases, they are "Beneficially
Owned" by an "Acquiring Person", as such terms are defined in the Rights
Agreement, or a transferee thereof) or may be evidenced by separate certificates
and may no longer be evidenced by this certificate. The Corporation
will mail or arrange for the mailing of a copy of the Rights Agreement to the
holder of this certificate without charge as soon as is reasonably practicable
after the receipt of a written request therefor.
Certificates
representing Common Shares that are issued and outstanding as at the date hereof
shall 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.
(b) Registered
holders of Common Shares who have not received a share certificate and are
entitled to do so on the earlier of the Separation Time and the Expiration Time
shall be entitled to Rights as if such certificates had been issued and such
Rights shall for all purposes hereof be evidenced by the corresponding entries
on the Corporation's securities registers for the Common Shares.
|
2.2
|
Initial Exercise
Price, Exercise of Rights and Detachment of
Rights
|
(a) Subject
to adjustment as provided herein, each Right will entitle the Holder thereof,
after the Separation Time and prior to the Expiration Time, to purchase, for the
Exercise Price as at the Business Day immediately preceding the date of exercise
of the Right, one Common Share (which Exercise Price and number of Common Shares
are subject to adjustment as set forth herein). Notwithstanding any
other provision of this Agreement, any Rights Beneficially Owned by the
Corporation or any of its Subsidiaries shall be void.
(b) Until the
Separation Time, (i) the Rights shall not be exercisable and no Right may be
exercised, and (ii) for administrative purposes, each Right will be evidenced by
the certificates for the associated Common Share registered in the name of the
holder thereof (which certificate shall also be deemed to be a Rights
Certificate) and will be transferable only together with, and will be
transferred by a transfer of, such associated Common Share.
(c) From and
after the Separation Time and prior to the Expiration Time, the Rights shall be
exercisable and the registration and transfer of the Rights shall be separate
from and independent of the Common Shares. Promptly following the
Separation Time, the Corporation will prepare and the Rights Agent will mail to
each holder of record of Common Shares as of the Separation Time and, in respect
of each Convertible Security converted into or exchanged or exercised for Common
Shares after the Separation Time and prior to the Expiration Time, promptly
after such conversion, exchange or exercise to the holder so converting,
exchanging or exercising (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 on the records of the Corporation (the Corporation hereby
agreeing to furnish copies of such records to the Rights Agent for this
purpose),
|
(i)
|
a
certificate (a "Rights
Certificate") in substantially the form of Exhibit A hereto
appropriately completed, representing the number of Rights held by such
Holder at the Separation Time and having such marks of identification or
designation and such legends, summaries or endorsements printed thereon as
the Corporation may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any
law, rule, regulation or judicial or administrative order or with any rule
or regulation made pursuant thereto or with any 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 admitted to trading, or to
conform to standard usage; and
|
|
(ii)
|
a
disclosure statement prepared by or on behalf of the Corporation
describing the Rights;
|
provided
that a Nominee shall be sent the materials provided for in Clauses (i) and (ii)
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 it with such information and documentation as the Corporation
considers advisable.
(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 Vancouver or any other office of the Rights
Agent or Co-Rights Agent in the cities designated from time to time for that
purpose by the Corporation with the approval of the Rights Agent:
|
(i)
|
the
Rights Certificate evidencing such
Rights;
|
|
(ii)
|
an
election to exercise such Rights (an "Election to Exercise")
substantially in the form attached to the Rights Certificate appropriately
completed and duly executed by the Holder or his executors or
administrators or other personal representatives or his or their legal
attorney duly appointed by an instrument in writing in form and executed
in a manner satisfactory to the Rights Agent;
and
|
|
(iii)
|
payment
by certified cheque, banker's draft or money order payable to or to the
order of the Rights Agent, of a sum equal to the Exercise Price multiplied
by the number of Rights being exercised and a sum sufficient to cover any
transfer tax or charge which may be payable in respect of any transfer
involved in the transfer or delivery of Rights Certificates or the
issuance or delivery of certificates for Common Shares in a name other
than that of the Holder of the Rights being
exercised.
|
(e) Upon
receipt of a Rights Certificate, accompanied by an Election to Exercise
appropriately completed and duly exercised that does not indicate that such
Right is null and void as provided by Subsection 3.1(b) and by payment as set forth in
Subsection 2.2(d)(iii), the Rights Agent
(unless otherwise instructed in writing by the Corporation in the event that the
Corporation is of the opinion that the Rights cannot by exercised in accordance
with this Agreement) will thereupon promptly:
|
(i)
|
requisition
from the transfer agent for the Common Shares, certificates representing
the number of Common Shares to be purchased (the Corporation hereby
irrevocably authorizing its transfer agent to comply with all such
requisitions);
|
|
(ii)
|
after
receipt of any certificates referred to in Clause 2.2(e)(i), deliver such certificates
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;
|
|
(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, deliver such cash (less any amounts required
to be withheld) by way of cheque 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) In case
the Holder of any Rights shall exercise less than all the Rights evidenced by
such Holder's Rights Certificate, a new Rights Certificate evidencing the Rights
remaining unexercised will be issued by the Rights Agent to such Holder or to
such Holder's duly authorized assigns.
(g) The
Corporation covenants and agrees that it will:
|
(i)
|
take
all such action as may be necessary and within its power to ensure that
all Common Shares delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares (subject to payment of the
Exercise Price), be duly and validly authorized, executed, issued and
delivered and 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 BCBCA, the Securities Act (British
Columbia), the 1933 Securities Act, the 1934 Exchange Act and the
comparable securities legislation of each of the provinces and territories
of Canada and any other applicable law, rule or regulation, in connection
with the issuance and delivery of the Rights Certificates and the issuance
of any Common Shares upon exercise of
Rights;
|
|
(iii)
|
on
or before the issuance thereof, use reasonable efforts to cause all Common
Shares issued upon exercise of Rights to be listed or admitted to trading
upon issuance on the principal exchange or exchanges on which the Common
Shares are then listed or admitted to trading at that
time;
|
|
(iv)
|
cause
to be reserved and kept available out of its authorized and unissued
Common Shares, the number of Common Shares that, as provided in this
Agreement, will from time to time be sufficient to permit the exercise in
full of all outstanding Rights; and
|
|
(v)
|
pay
when due and payable any and all Canadian and United States federal,
provincial and state transfer taxes (not including any tax in the nature
of income or capital gains taxes of the Holder or exercising
Holder or any liability of the Corporation to withhold tax) and charges
which may be payable in respect of the original issuance or delivery of
the Rights Certificates or certificates for Common Shares or registration
of the Common Shares in the securities register of the Corporation,
provided that the Corporation shall not be required to pay any transfer
tax or charge which may be payable in respect of the transfer or delivery
of Rights Certificates or the issuance or delivery of certificates for
Common Shares or registration of the Common Shares in the securities
register of the Corporation in a name other than that of the Holder of the
Rights being transferred or
exercised.
|
|
2.3
|
Adjustments to
Exercise Price; Number of
Rights
|
(a) The
Exercise Price, the number and kind of securities subject to purchase upon
exercise of each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 2.3 and in Subsection 3.1(a).
(b) In the
event the Corporation shall at any time after the Record Time and prior to the
Expiration Time:
|
(i)
|
declare
or pay a dividend on Common Shares payable in Common Shares or
Convertible Securities other than pursuant to any regular dividend
reinvestment plan of the Corporation providing for the acquisition of
Common Shares;
|
|
(ii)
|
subdivide
or change the then outstanding Common Shares into a greater number of
Common Shares;
|
|
(iii)
|
consolidate
or change the then outstanding Common Shares into a smaller number of
Common Shares; or
|
|
(iv)
|
issue
any Common Shares, Convertible Securities or other capital stock of the
Corporation 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 in effect at the time of the record date for such dividend or of
the effective date of such subdivision, consolidation, other change or issuance
and the number of Common Shares or other securities, as the case may be,
issuable on such date, shall be proportionately adjusted so that the holder of
any Right shall be entitled to receive, upon payment of the applicable Exercise
Price then in effect, the aggregate number of Common Shares or other securities,
as the case may be, which, if such Right had been exercised immediately prior to
such date and at a time when the share transfer books of the Corporation were
open, such holder would have been entitled to receive as a result of such
dividend, subdivision, consolidation, other change or issuance.
(c) In the
event the Corporation shall at any time after the Record Time and prior to the
Expiration Time fix a record date for 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, shares having the same rights, privileges, restrictions and
conditions as Common Shares ("equivalent common shares"), or
securities convertible into or exchangeable for or carrying a right to purchase
Common Shares or equivalent common shares at a price per Common Share or per
equivalent common share (or, if a security convertible into or exchangeable for
or carrying a right to purchase or subscribe for Common Shares or equivalent
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 90% of the Market Price per Common Share on the
second Trading Day immediately preceding such record date, the Exercise Price to
be in effect after such record date shall be determined by multiplying the
Exercise Price in effect immediately prior to such record date by a
fraction:
|
(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 and/or equivalent
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 and/or
equivalent common shares to be offered for subscription or purchase (or
into which the convertible or exchangeable securities or rights so to be
offered are initially convertible, exchangeable or
exercisable).
|
In case
such subscription price may be paid by delivery of consideration, part or all of
which may be in a form other than cash, the value of such consideration shall be
as determined in good faith by the Board of Directors, whose determination shall
be described in a statement filed with the Rights Agent and shall be binding on
the Rights Agent and the Holders of Rights. Such adjustment shall be
made successively whenever such a record date is fixed, and in the event that
such rights, options or warrants are not so issued, or if issued, are not
exercised prior to the expiration thereof, the Exercise Price shall be
readjusted to the Exercise Price which would have been in effect if such record
date had not been fixed, or to the Exercise Price which would be in effect based
upon the number of Common Shares, equivalent common shares or securities
convertible into or exchangeable or exercisable for Common Shares actually
issued upon the exercise of such rights, options or warrants, as the case may
be.
For the
purposes of this Agreement, the granting of the right to purchase Common Shares
(whether from treasury or otherwise) pursuant to a dividend reinvestment plan or
any employee benefit, stock option or similar plans shall be deemed not to
constitute an issue of rights, options or warrants by the Corporation; provided,
however, that, in all such cases, the right to purchase Common Shares is at a
price per share of not less than 90% of the current market price per share
(determined as provided in such plans) of the Common Shares.
(d) In the
event the Corporation shall at any time after the Record Time and prior to the
Expiration Time fix a record date for the making of a distribution to all
holders of Common Shares (including any such distribution made in connection
with a merger in which the Corporation is the continuing corporation or an
amalgamation) of evidences of indebtedness or assets, including cash (other than
a regular periodic cash dividend or a dividend paid in Common Shares, but
including any dividend payable in securities other than Common Shares), or
subscription rights, options or warrants (excluding those referred to in
Subsection 2.3(c) hereof) at a price per
Common Share that is less than 90% of the Market Price per Common Share on the
second Trading Day immediately preceding such record date, the Exercise Price in
respect of the Rights to be in effect after such record date shall be determined
by multiplying the Exercise Price in respect of the Rights in effect immediately
prior to such record date by a fraction:
|
(i)
|
the
numerator of which 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 evidences of indebtedness, cash, assets, subscription 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 readjusted to be the Exercise Price which would have been in effect if such
record date had not been fixed.
(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 1% 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 Section 2.3 shall be made to the nearest cent or to
the nearest ten-thousandth of a Common Share or
Right. 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 Expiration Time.
(f) In the
event the Corporation shall at any time after the Record Time and prior to the
Expiration Time issue any shares of capital stock (other than Common Shares), or
rights, options or warrants to subscribe for or purchase any such capital stock,
or securities convertible into or exchangeable for any such capital stock, in a
transaction referred to in Clause 2.3(b)(i) or (iv), if the Board of Directors acting in
good faith determines that the adjustments contemplated by Subsection 2.3(b) in connection with such transaction
will not appropriately protect the interests of the Holders of Rights, the Board
of Directors acting in good faith 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 Subsection 2.3(b), such adjustments, rather than the
adjustments contemplated by Subsection 2.3(b), shall be made. The
Corporation and the Rights Agent shall have authority, with such prior approval
of the holders of the Common Shares or the Holders of Rights as may be required
to amend this Agreement in accordance with Section 5.5 hereof, as appropriate to provide for
such adjustments.
(g) Unless
the Corporation shall have exercised its election as provided in
Subsection 2.3(h), upon each
adjustment of an Exercise Price as a result of the calculations made in
Subsections 2.3(c) and (d), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Exercise Price, that number of Common Shares, as the
case may be (calculated to the nearest one ten-thousandth), obtained
by:
|
(i)
|
multiplying:
|
|
(A)
|
the
number of such Common Shares which would have been issuable upon the
exercise of a Right immediately prior to this adjustment;
by
|
|
(B)
|
the
relevant Exercise Price in effect immediately prior to such adjustment of
the relevant Exercise Price; and
|
|
(ii)
|
dividing
the product so obtained by the relevant Exercise Price in effect
immediately after such adjustment of the relevant Exercise
Price.
|
(h) The
Corporation may elect on or after the date of any adjustment of an Exercise
Price to adjust the number of Rights, in lieu of any adjustment in the number of
Common Shares purchasable upon the exercise of a Right. Each of the
Rights outstanding after the adjustment in the number of Rights shall be
exercisable for the number of Common Shares for which such a Right was
exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that number
of Rights (calculated to the nearest one ten-thousandth) obtained by dividing
the relevant Exercise Price in effect immediately prior to adjustment of the
relevant Exercise Price by the relevant Exercise Price in effect immediately
after adjustment of the relevant Exercise Price. The Corporation
shall make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the date
on which the relevant Exercise Price is adjusted or any day thereafter, but, if
the Rights Certificates have been issued, shall be at least 10 days later than
the date of the public announcement. If Rights Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this
Subsection 2.3(h), the Corporation
shall, as promptly as is practicable, cause to be distributed to holders of
record of Rights Certificates on such record date, Rights Certificates
evidencing, subject to Section 5.6, the
additional Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Corporation, shall cause to be distributed
to such holders of record in substitution and replacement for the Rights
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Corporation, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates to be so distributed shall be issued,
executed and countersigned in the manner provided for herein and may bear, at
the option of the Corporation, the relevant adjusted Exercise Price and shall be
registered in the names of holders of record of Rights Certificates on the
record date specified in the public announcement.
(i) Each
Right originally issued by the Corporation subsequent to any adjustment made to
the Exercise Price hereunder shall evidence the right to purchase, at the
adjusted Exercise Price, the number of Common Shares purchasable from time to
time hereunder upon exercise of a Right immediately prior to such issue, all
subject to further adjustment as provided herein.
(j) If as a
result of an adjustment made pursuant to this Section 2.3 or an authorization made pursuant to
Section 3.2, the holder of any Right
thereafter exercised (in the case of Section 2.3) or surrendered (in the case of Section
3.2) shall become entitled to receive any
securities other than Common Shares, thereafter the number of such other
securities so receivable upon exercise of any Right and the applicable Exercise
Price thereof shall be subject to adjustment from time to time in a manner and
on terms as nearly equivalent as is practicable to the provisions with respect
to the Common Shares contained in this Section 2.3, and the provisions of this Agreement
with respect to the Common Shares shall apply on like terms to any such other
securities.
(k) 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 Certificate 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.
(l) 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 of the number of Common Shares and other securities of the
Corporation, if any, issuable upon such exercise over and above the number of
Common Shares and other securities of the Corporation, if any, issuable upon
such exercise on the basis of the Exercise Price in effect prior to such
adjustment; provided, however, that the Corporation shall deliver to such Holder
a due ▇▇▇▇ or other appropriate instrument evidencing such Holder's right to
receive such additional Common Shares (fractional or otherwise) or other
securities upon the occurrence of the event requiring such
adjustment.
(m) Notwithstanding
anything in this Section 2.3 to the
contrary, the Corporation shall be entitled to make such reductions in the
Exercise Price, in addition to those adjustments expressly required by this
Section 2.3, as and to the extent
that in its good faith judgment the Board of Directors shall determine to be
advisable in order that any: (i) consolidation or subdivision of Common Shares;
(ii) issuance wholly for cash of any Common Share or Convertible Securities;
(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.
(n) The
Corporation covenants and agrees that, after the Separation Time, it will not,
except as permitted by Sections 5.1, 5.2 and 5.5, take (or permit any Subsidiary of the
Corporation to take) any action if at the time such action is taken it is
reasonably foreseeable that such action will diminish substantially or otherwise
eliminate the benefits intended to be afforded by the Rights.
(o) Whenever
an adjustment to the Exercise Price or a change in the securities purchasable
upon exercise of the Rights is made at any time after the Separation Time
pursuant to this Section 2.3, the
Corporation shall promptly:
|
(i)
|
file
with the Rights Agent and with the transfer agent for the Common Shares a
certificate specifying the particulars of such adjustment or change;
and
|
|
(ii)
|
give,
or cause the Rights Agent to give, notice of the particulars of such
adjustment or change to Holders of the Rights who request a
copy;
|
provided
that failure to file such certificate or cause such notice to be given as
aforesaid, or any defect therein, shall not affect the validity of any such
adjustment or change.
|
2.4
|
Date on Which Exercise
is Effective
|
Each
Person in whose name any certificate for Common Shares is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of the Common Shares represented thereby on, and such certificate shall
be dated the date upon which the Rights Certificate evidencing such Rights was
duly surrendered (together with a duly completed Election to Exercise) and
payment of the Exercise Price for such Rights (and any applicable transfer taxes
and other governmental charges payable by the exercising Holder hereunder) was
made; provided, however, that if the date of such surrender and payment is a
date upon which the Common Share transfer books of the Corporation are closed,
such person shall be deemed to have become the record holder of such shares on,
and such certificate shall be dated, the next succeeding Business Day on which
the Common Share transfer books of the Corporation are open.
|
2.5
|
Execution,
Authentication, Delivery and Dating of Right
Certificates
|
(a) The
Rights Certificates shall be executed on behalf of the Corporation by any two of
its officers or directors, provided that at the time of such execution none of
such officer or director, any Affiliate or Associate of such officer or director
or any person with whom such officer or director or any such Affiliate or
Associate is acting jointly or in concert has commenced or publicly announced an
intention to commence a Take-over Bid. The signature of any officers
or directors on the Rights Certificates may be manual or
facsimile. Rights Certificates bearing the manual or facsimile
signatures of individuals who were at any time the proper officers or directors
of the Corporation shall bind the Corporation, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
countersignature and delivery of such Rights Certificates.
(b) Promptly
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 the Corporation) and send such
Rights Certificates to the Holders of the Rights pursuant to Subsection 2.2(d) hereof. No Rights
Certificate shall be valid for any purpose until countersigned by the Rights
Agent as aforesaid.
(c) Each
Rights Certificate shall be dated the date of countersignature
thereof.
|
2.6
|
Registration,
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 "Rights Registrar" for the purpose of maintaining the Rights
Register for the Corporation and registering Rights and transfers of Rights as
herein provided. In the event that the Rights Agent shall cease to be
the Rights Registrar, the Rights Agent will have the right to examine the Rights
Register at all reasonable times.
After the
Separation Time and prior to the Expiration Time, upon surrender for
registration of transfer or exchange of any Rights Certificate, and subject to
the provisions of Subsection 2.6(c) and
the other provisions of this Agreement, the Corporation will execute, and the
Rights Agent will countersign and deliver, in the name of the Holder or the
designated transferee or transferees as required pursuant to the Holder's
instructions, one or more new Rights Certificates evidencing the same aggregate
number of Rights as did the Rights Certificates so surrendered.
(b) All
Rights issued upon any registration of transfer or exchange of Rights
Certificates shall be valid obligations of the Corporation, and such Rights
shall be entitled to the same benefits under this Agreement as the Rights
surrendered upon such registration of transfer or exchange.
(c) Every
Rights Certificate surrendered for registration of transfer or exchange shall be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Corporation or the Rights Agent, as the case may be, duly
executed by the Holder thereof or such Holder's attorney duly authorized in
writing. As a condition to the issuance of any new Rights Certificate
under this Section 2.6, the Corporation
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Rights Agent) connected
therewith.
(d) The
Corporation shall not be required to register the transfer or exchange of any
Rights after the Rights have been terminated pursuant to the provisions of this
Agreement.
|
2.7
|
Mutilated, Destroyed,
Lost and Stolen Rights
Certificates
|
(a) If any
mutilated Rights Certificate is surrendered to the Rights Agent prior to the
Expiration Time, the Corporation shall execute and the Rights Agent shall
countersign and deliver in exchange therefor a new Rights Certificate evidencing
the same number of Rights as did the Rights Certificate so
surrendered.
(b) If there
shall be delivered to the Corporation and the Rights Agent prior to the
Expiration Time (i) evidence to their reasonable satisfaction of the
destruction, loss or theft of any Rights Certificate and (ii) such security or
indemnity as may be required by each of 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 its
request the Rights Agent shall countersign and deliver, in lieu of any such
destroyed, lost or stolen Rights Certificate, a new Rights Certificate
evidencing the same number of Rights as did the Rights Certificate so destroyed,
lost or stolen.
(c) As a
condition to the issuance of any new Rights Certificate under this Section 2.7, the Corporation may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees and
expenses of the Rights Agent) connected therewith.
(d) Every new
Rights Certificate issued pursuant to this Section 2.7 in lieu of any destroyed, lost or stolen
Rights Certificate shall evidence a contractual obligation of the Corporation,
whether or not the destroyed, lost or stolen Rights Certificate shall be at any
time enforceable by anyone, and shall entitle the Holder of the Rights to all
the benefits of this Agreement equally and proportionately with any and all
other Rights duly issued by the Corporation hereunder.
|
2.8
|
Persons Deemed
Owners
|
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 a Rights Certificate (or,
prior to the Separation Time, the associated Common Share certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby for
all purposes whatsoever.
|
2.9
|
Delivery and
Cancellation of Certificates
|
All
Rights Certificates surrendered upon exercise or for redemption or for
registration of transfer or exchange shall, if surrendered to any Person other
than the Rights Agent, be delivered to the Rights Agent and, in any case, shall
be promptly cancelled by the Rights Agent. The Corporation may at any
time deliver to the Rights Agent for cancellation any Rights Certificates
previously countersigned and delivered hereunder which the Corporation may have
acquired in any manner whatsoever, and all Rights Certificates so delivered
shall be promptly cancelled by the Rights Agent. No Rights
Certificate shall be countersigned in lieu of or in exchange for any Rights
Certificates cancelled as provided in this Section 2.9, except as expressly permitted by this
Agreement. The Rights Agent shall destroy all cancelled Rights
Certificates and deliver a certificate of destruction to the Corporation on
request by the Corporation.
|
2.10
|
Agreement of Rights
Holders
|
Every
Holder of Rights, by accepting such Rights, becomes a party to this Agreement
and for greater certainty is bound by the provisions herein and consents and
agrees with the Corporation and the Rights Agent and with every other Holder of
Rights that:
|
(a)
|
such
holder shall be bound by and subject to the provisions of this Agreement,
as amended from time to time in accordance with the terms hereof, in
respect of all Rights held;
|
|
(b)
|
prior
to the Separation Time, each Right will be transferable only together
with, and will be transferred by a transfer of, the associated Common
Share certificate representing such
Right;
|
|
(c)
|
after
the Separation Time, the Rights Certificates will be transferable only on
the Rights Register as provided
herein;
|
|
(d)
|
prior
to due presentment of a Rights Certificate (or, prior to the Separation
Time, the associated Common Share certificate) for registration of
transfer or exchange, the Corporation, the Rights Agent and any agent of
the Corporation or the Rights Agent may deem and treat the Person in whose
name the Rights Certificate (or, prior to the Separation Time, the
associated Common Share certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations
of ownership or writing on such Rights Certificate or the associated
Common Share certificate made by anyone other than the Corporation or the
Rights Agent) for all purposes whatsoever, and neither the Corporation nor
the Rights Agent shall be affected by any notice to the
contrary;
|
|
(e)
|
such
holder is not entitled and has waived his right to receive any fractional
Rights or any fractional Common Shares upon exercise of a Right (except as
provided herein);
|
|
(f)
|
subject
to the provisions of Section 5.5,
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)
|
notwithstanding
anything in this Agreement to the contrary, neither the Corporation nor
the Rights Agent shall have any liability to any Holder of a Right or any
other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of a preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order
promulgated or enacted by any governmental authority, prohibiting or
otherwise restraining performance of such
obligation.
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2.11
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Rights Certificate
Holder not Deemed a
Shareholder
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No
Holder, as such, of any Rights or Rights Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose whatsoever to be 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 to confer upon the Holder of any Right or Rights Certificate, as such,
any of the rights, title, benefits or privileges of a holder of Common Shares or
any other shares or securities or assets 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 or
assets of the Corporation except as expressly provided herein, or to receive
dividends, distributions or subscription rights, or otherwise, until such Rights
shall have been duly exercised in accordance with the terms and provisions
hereof.
ARTICLE 3
ADJUSTMENTS TO THE RIGHTS ON
FLIP-IN EVENT
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3.1
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Flip-in
Event
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(a) Subject
to Subsection 3.1(b) and Section 5.2, in the event that prior to the
Expiration Time a Flip-in Event shall occur, each Right shall constitute,
effective from and after the later of its date of issue and at the close of
business on the tenth Trading Day after the Stock Acquisition Date, the right to
purchase from the Corporation, upon exercise thereof in accordance with the
terms hereof, that number of Common Shares having an aggregate Market Price on
the date 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, without
duplication, in the event that after such date of consummation or occurrence, an
event of a type analogous to any of the events described in Section 2.3 shall have occurred with respect to such
Common Shares).
(b) Notwithstanding
anything in this Agreement to the contrary, upon the occurrence of a Flip-in
Event, any Rights that are or were Beneficially Owned on or after the earlier of
the Separation Time or the Stock Acquisition Date by:
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(i)
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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 an
Affiliate or Associate of an Acquiring Person);
or
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(ii)
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a
transferee or other successor in title, direct or indirect, of Rights held
by an Acquiring Person (or any Affiliate or Associate of an Acquiring
Person or any Person acting jointly or in concert with an Acquiring Person
or an Affiliate or Associate of an Acquiring Person), whether or not for
consideration, in a transfer that the Board of Directors acting in good
faith has determined is part of a plan, arrangement, understanding 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 an Affiliate or Associate of an Acquiring Person),
that has the purpose or effect of avoiding Clause 3.1(b)(i),
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shall
become null and void without any further action, and any Holder of such Rights
(including transferees or other successors in title) shall thereafter have no
right to exercise such Rights under any provision of this Agreement and further
shall thereafter not have any other rights whatsoever with respect to such
Rights, whether under any provision of this Agreement or otherwise. The Holder
of any Rights represented by a Rights Certificate which is submitted to the
Rights Agent upon exercise or for registration of transfer or exchange which
does not contain the necessary certifications set forth in the Rights
Certificate establishing that such Rights are not void under this Subsection 3.1(b) shall be deemed to be an Acquiring
Person for the purposes of this Subsection 3.1(b) and such rights shall be null and
void.
(c) From and
after the Separation Time, the Corporation shall do all such acts and things as
shall be necessary and within its power to ensure compliance with the provisions
of this Section 3.1, including without
limitation, all such acts and things as may be required to satisfy the
requirements of the BCBCA, the Securities Act (British Columbia) and the
securities laws or comparable legislation of each of the provinces of Canada and
of the United States and each of the states thereof in respect of the issue of
Common Shares upon the exercise of Rights in accordance with this
Agreement.
(d) Any
Rights Certificate that represents Rights Beneficially Owned by a Person
described in either Clause 3.1(b)(i) or
(ii) or transferred to any nominee of any
such Person, and any Rights Certificate issued upon transfer, exchange,
replacement or adjustment of any other Rights Certificate referred to in this
sentence, shall contain the following legend:
The
Rights represented by this Rights Certificate were Beneficially Owned by a
Person who was an Acquiring Person or who was an Affiliate or an Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement) or was
acting jointly or in concert with any of them. This Rights
Certificate and the Rights represented hereby are void or shall become void in
the circumstances specified in Subsection 3.1(b) of the Rights
Agreement.
provided,
however, that the Rights Agent shall not be under any responsibility to
ascertain the existence of facts that would require the imposition of such
legend but shall impose such legend only if instructed to do so by the
Corporation in writing or if a Holder fails to certify upon transfer or exchange
in the space provided on the Rights Certificate that such Holder is not a Person
described in such legend. The issuance of a Rights Certificate
without the legend referred to in this Subsection 3.1(d) shall be of no effect on the
provisions of Subsection 3.1(b).
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3.2
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Exchange
Option
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(a) The Board
of Directors may, at its sole option and without seeking the approval of holders
of Voting Shares or Rights but with the prior written consent of any stock
exchange on which the Common Shares are then listed if required by such
exchange, at any time after a Flip-in Event has occurred, authorize the Company
to issue or deliver in respect of each Right which is not void pursuant to
Subsection 3.1(b), either: (i) in return
for the applicable Exercise Price and the Right, debt, equity or other
securities or assets (or a combination thereof) having a value equal to twice
the applicable Exercise Price; or (ii) in return for the Right, subject to any
amounts that may be required to be paid under applicable law, debt, equity or
other securities or assets (or a combination thereof) having a value equal to
the value of the Right, in full and final settlement of all rights attaching to
the Rights, where in either case the value of such debt, equity or other
securities or other assets (or a combination thereof) and, in the case of clause
(ii), the value of the Right, shall be determined by the Board of Directors
which may rely upon the advice of a nationally or internationally recognized
firm of investment dealers or investment bankers selected by the Board of
Directors.
(b) If the
Board of Directors authorizes the exchange of debt or equity securities or
assets (or a combination thereof) for Rights pursuant to Subsection 3.2(a), without any further action or
notice, the right to exercise the Rights will terminate and the only right
thereafter of a holder of Rights shall be to receive the debt or equity
securities or assets (or a combination thereof) in accordance with the exchange
formula authorized by the Board of Directors. Within 10 Business Days
after the Board of Directors has authorized the exchange of debt or equity
securities or assets (or a combination thereof) for Rights pursuant to
Subsection 3.2(a), the Company shall give
notice of exchange to the holders of such Rights by mailing such notice to all
such holders at their last addresses as they appear upon the register of Rights
holders maintained by the Rights Agent. Each such notice of exchange
will state the method by which the exchange of debt or equity securities or
assets (or a combination thereof) for Rights will be effected.
ARTICLE 4
THE RIGHTS
AGENT
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4.1
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General
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(a) The
Corporation hereby appoints the Rights Agent to act as agent for the Corporation
and the Holders of the Rights in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The
Corporation may from time to time appoint one or more co-rights agents ("Co-Rights Agents") as it may
deem necessary or desirable, subject to the prior written approval of the Rights
Agent. In the event the Corporation appoints one or more Co-Rights
Agents, the respective duties of the Rights Agent and Co-Rights Agents shall be
as the Corporation may determine with the written approval of the Rights Agent
and the Co-Rights Agents. The Corporation agrees to pay to the Rights
Agent reasonable compensation for all services rendered by it hereunder and,
from time to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder (including the reasonable fees and disbursements of any expert or
advisor retained by the Rights Agent with the prior approval of the
Corporation). The Corporation also agrees to indemnify the Rights
Agent and its directors, officers, employees and agents for, and to hold them
harmless against, any loss, liability, cost, claim, action, damage, suit or
expense, incurred without negligence, bad faith or wilful misconduct on the part
of the Rights Agent, its officers, directors, employees and agents, for anything
done, suffered or omitted by the Rights Agent in connection with the acceptance,
execution and administration of this Agreement and the exercise and 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 on the resignation or removal of the Rights
Agent. In the event of any disagreement arising regarding the terms
of this Agreement, the Rights Agent shall be entitled, at its option, to refuse
to comply with any and all demands whatsoever until the dispute is settled
either by written agreement between the parties to this Agreement or by a court
of competent jurisdiction.
(b) The
Rights Agent shall be protected and shall incur no liability for or in respect
of any action taken, suffered or omitted by it in connection with its
administration of this Agreement in reliance upon any certificate for Common
Shares or any Rights Certificate or certificate for other securities of the
Corporation, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged by the proper
Person or Persons.
(c) The
Corporation will inform the Rights Agent in a reasonably timely manner of events
which may materially affect the administration of this Agreement by the Rights
Agent, and at any time, upon request, shall provide to the Rights Agent an
incumbency certificate with respect to the then current directors and officers
of the Corporation, provided that failure to inform the Rights Agent of any such
events, or any defect therein, shall not affect the validity of any action taken
hereunder in relation to such events.
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4.2
|
Merger or Amalgamation
or Change of Name of Rights
Agent
|
(a) Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or amalgamated or with which it may be consolidated, or any corporation
resulting from any merger, amalgamation, statutory arrangement or consolidation
to which the Rights Agent or any successor Rights Agent is a party, or any
corporation succeeding to the shareholder or stockholder services business of
the Rights Agent or any successor Rights Agent, will be the successor to the
Rights Agent under this Agreement without the execution or filing of any paper
or any further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 4.4
hereof. In case at the time such successor Rights Agent succeeds to
the agency created by this Agreement any of the Rights Certificates have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates have not been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such cases
such Rights Certificates will have the full force provided in the Rights
Certificates and in this Agreement.
(b) In case
at any time the name of the Rights Agent is changed and at such time any of the
Rights Certificates shall have been countersigned but not delivered, the Rights
Agent may adopt the countersignature under its prior name and deliver Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, the Rights Agent may countersign
such Rights Certificates either in its prior name or in its changed name; and in
all such cases such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.
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4.3
|
Duties of Rights
Agent
|
The
Rights Agent undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the Corporation and the
Holders of Rights Certificates, by their acceptance thereof, shall be
bound:
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(a)
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The
Rights Agent may retain and consult with legal counsel (who may be legal
counsel for the Corporation) and the opinion of such counsel will be full
and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such
opinion; the Rights Agent may also, with the approval of the Corporation
(where such approval may reasonably be obtained and such approval not be
unreasonably withheld), retain and consult with such other experts or
advisors as the Rights Agent shall consider necessary or appropriate to
properly carry out the duties and obligations imposed under this Agreement
(at the Corporation's expense) and the Rights Agent shall be entitled to
act and rely in good faith on the advice of any such expert or
advisor.
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(b)
|
Whenever
in the performance of its duties under this Agreement the Rights Agent
deems it necessary or desirable that any fact or matter be proved or
established by the Corporation prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved
and established by a certificate signed by a person believed by the Rights
Agent to be an officer or a director 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 wilful misconduct.
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(d)
|
The
Rights Agent will not be liable for or by reason of any of the statements
of fact or recitals contained in this Agreement or in the certificates for
Common Shares or the Rights Certificates (except its countersignature
thereof) 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.
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(e)
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The
Rights Agent will not be under any responsibility in respect of the
validity of this Agreement or the execution and delivery hereof (except
the due authorization, execution and delivery hereof by the Rights Agent)
or in respect of the validity or execution of any Common Share certificate
or Rights Certificate (except its countersignature thereof); nor will it
be responsible for any breach by the Corporation of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor
will it be responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Subsection 3.1(b) hereof) or any adjustment
required under the provisions of Section 2.3 hereof or responsible for the
manner, method or amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment (except with
respect to the exercise of Rights after receipt of the certificate
contemplated by Section 2.3 hereof
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.
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(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.
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(g)
|
The
Rights Agent is hereby authorized and directed to accept instructions with
respect to the performance of its duties hereunder from any person
believed by the Rights Agent to be an officer or a director of the
Corporation, and to apply to such persons for advice or instructions in
connection with its duties, and it shall not be liable for any action
taken or suffered by it in good faith in accordance with instructions of
any such person. All such instruction shall, except where
circumstances make it impracticable or the Rights Agent otherwise agrees,
be given in writing and, where not in writing, such instructions will be
confirmed in writing as soon as is reasonably practicable after the giving
of such instructions.
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(h)
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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 the Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Corporation or for any other legal
entity.
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(i)
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The
Rights Agent may execute and exercise any of the rights or powers hereby
vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent will not be answerable or
accountable for any act, default, neglect or misconduct of any such
attorneys or agents or for any loss to the Corporation resulting from any
such act, default, neglect or misconduct, provided reasonable care was
exercised in good faith in the selection and continued employment
thereof.
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4.4
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Change of Rights
Agent
|
The
Rights Agent may resign and be discharged from its duties under this Agreement
upon 60 days' notice (or such lesser notice as is acceptable to the Corporation)
in writing mailed to the Corporation and to the transfer agent of Common Shares
by registered or certified mail, and to the Holders of the Rights in accordance
with Section 5.8 at the Corporation's
expense. The Corporation may remove the Rights Agent upon 30 days'
notice in writing, mailed to the Rights Agent and to the transfer agent of the
Common Shares by registered or certified mail, and to the Holders of the Rights
in accordance with Section 5.8. If the Rights Agent should
resign or be removed or otherwise become incapable of acting, the Corporation
will appoint a successor to the Rights Agent. If the Corporation
fails to make such appointment within a period of 30 days after such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the Holder of any Rights (which
Holder shall, with such notice, submit such Holder's Rights Certificate for
inspection by the Corporation), then the outgoing Rights Agent or Holder of any
Rights may apply to any court of competent jurisdiction for the appointment of a
new Rights Agent at the Corporation's expense. Any successor Rights
Agent, whether appointed by the Corporation or by such a court, shall be a
corporation incorporated under the laws of Canada or a province thereof
authorized to carry on the business of a trust company in each of the provinces
and territories of Canada. After appointment, the successor Rights
Agent will be vested with the same powers, rights, duties and responsibilities
as if it had been originally named as Rights Agent without further act or deed;
but the predecessor Rights Agent, upon payment by the Corporation to the
predecessor Rights Agent of all outstanding fees and expenses, owed by the
Corporation to the predecessor Rights Agent pursuant to this Agreement, shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date
of any such appointment, the Corporation will file notice thereof in writing
with the predecessor Rights Agent and the transfer agent of the Common Shares,
and mail or cause to be mailed a notice thereof in writing to the Holders of the
Rights. Failure to give any notice provided for in this Section 4.4, however, or any defect therein, shall
not affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may
be.
ARTICLE 5
MISCELLANEOUS
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5.1
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Redemption of
Rights
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(a) Redemption of Holders of
Voting Shares
Until the
occurrence of a Flip-in Event as to which the application of Section 3.1 has not been waived pursuant to Section
5.2 and provided that the provisions of
Subsection 5.2(c) are not applicable to
such Flip-in Event, the Board of Directors may elect to redeem all but not less
than all of the then outstanding Rights at a redemption price of $0.0001 per
Right, appropriately adjusted in a manner analogous to the applicable adjustment
provided for in Section 2.3 if an event
of a 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) Deemed
Redemption
The Board
of Directors shall, without further formality, be deemed to have elected to
redeem the Rights at the Redemption Price on the date that a Person who has made
a Permitted Bid, a Competing Permitted Bid, a Shareholder Endorsed Insider Bid
or a Take-over Bid in respect of which the Board of Directors has waived the
application of Section 3.1 takes up and
pays for Voting Shares pursuant to the terms and conditions of such Permitted
Bid, Competing Permitted Bid, Shareholder Endorsed Insider Bid or Take-over Bid,
as the case may be.
(c) Redemption on Withdrawal or
Termination of Bid
Where a
Take-over Bid that is not a Permitted Bid or a Competing Permitted Bid expires,
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.
(d) Effect of
Redemption
If the
Board of Directors elects or is deemed to have elected to redeem the Rights, (i)
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, and (ii) subject to Subsection 5.1(f) no further Rights shall be
issued.
(e) Notice of
Redemption
Within
ten Business Days after the Board of Directors elects or is deemed to have
elected to redeem the Rights, the Corporation shall give notice of redemption to
the Holders of the then outstanding Rights by mailing such notice to each such
Holder at its last address as it appears upon the Rights Register or, prior to
the Separation Time, on the share register maintained by the Corporation's
transfer agent or transfer agents for the Common Shares. Any notice
which is mailed in the manner herein provided shall be deemed to have been
given, whether or not the Holder receives the notice. Each such
notice of redemption will state the method by which the payment of the
Redemption Price will be made. The Corporation 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, except in connection with the purchase
of Common Shares prior to the Separation Time.
(f) Reissuance of
Rights
Upon the
Rights being redeemed pursuant to this Section 5.1, Rights may be reissued under this
Agreement to holders of record of Common Shares immediately following such
redemption, and thereafter, 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 and such reissued Rights shall, without any further formality, be
attached to the outstanding Common Shares in the same manner as prior to the
occurrence of such Separation Time.
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5.2
|
Waiver of Flip-In
Event
|
(a) In
accordance with the remainder of this Section 5.2, the Board of Directors may, at any time
prior to the occurrence of a Flip-in Event as to which the application of
Section 3.1 has not been waived pursuant
to this Section 5.2, waive the
application of Section 3.1 to a Flip-in
Event.
(b) The Board
of Directors may waive the application of Section 3.1 to a Flip-in Event provided that the
following conditions are satisfied:
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(i)
|
the
Board of Directors has determined that the Acquiring Person became an
Acquiring Person by inadvertence and without any intention to become, or
knowledge that it would become, an Acquiring Person;
and
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|
(ii)
|
such
Acquiring Person has reduced its Beneficial Ownership of Voting Shares
such that at the time of the granting of the waiver pursuant to this
Subsection 5.2(b), it is no longer
an Acquiring Person;
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and, in
the event of any such waiver, for the purposes of this Agreement, such Flip-in
Event shall be deemed not to have occurred and the Separation Time shall be
deemed not to have occurred as a result of such Person having inadvertently
become an Acquiring Person. Written notice of any such waiver shall
be given to the Rights Agent as soon as is reasonably practicable.
(c) Upon
written notice to the Rights Agent, the Board of Directors may, with the prior
consent of the holders of Voting Shares given in accordance with Subsection 5.2(e), determine, if a 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 to all holders of record
of Voting Shares other than the Offeror and otherwise than in the circumstances
set forth in Subsection 5.2(b), to waive
the application of Section 3.1 to such
Flip-in Event (prior to the occurrence of 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.
(d) Upon
written notice to the Rights Agent, the Board of Directors may determine to
waive the application of Section 3.1 to
any Flip-in Event (prior to the occurrence of such Flip-in Event) provided that
the Flip-in Event would occur by reason of an acquisition of Voting Shares
pursuant to a Take-over Bid made by means of a take-over bid circular to all
holders of record of Voting Shares other than the Offeror and provided further
that if the Board of Directors waives the application of Section 3.1 to such Flip-in Event pursuant to this
Subsection 5.2(d), 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 an acquisition of Voting Shares pursuant to any Take-over Bid made by
means of a take-over bid circular to all holders of record of Voting Shares
other than the respective Offeror which is made prior to the expiry of any
Take-over Bid (as the same may be extended from time to time) made by means of a
take-over bid circular in respect of which a waiver is, or is deemed to have
been, granted under this Subsection 5.2(d).
(e) If a
waiver of a Flip-in Event pursuant to Subsection 5.2(c) is proposed at any time prior to the
Separation Time, such waiver shall be submitted for approval to the holders of
Voting Shares. Such approval shall be deemed to have been given if
the 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
by-laws.
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5.3
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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 Subsection 4.1(a)
hereof.
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5.4
|
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.
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5.5
|
Supplements and
Amendments
|
(a) The
Corporation may from time to time supplement or amend this Agreement without the
approval of any Holders of Rights or Voting Shares (i) in order to correct any
clerical or typographical error or (ii) as required to maintain the validity or
effectiveness of this Agreement as a result of any change in any applicable
legislation, rules or regulations thereunder. In addition, the Board
of Directors acting in good faith may by resolution, at or prior to the
shareholders' meeting referred to in Section 5.14, or any adjournment or postponement
thereof, 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 may deem necessary or desirable (whether or not such action would
materially adversely affect the interests of the Holders of Rights
generally). Notwithstanding anything in this Section 5.5 to the contrary, no such supplement or
amendment shall be made to the provisions of Article 4 except with the written
concurrence of the Rights Agent to such supplement or amendment.
(b) Subject
to the ability of the Board of Directors to supplement or amend this Agreement
without the approval of any Holders of Rights or Voting Shares as provided in
Section 5.5(a), the Corporation may, with
the prior consent of the holders of Common Shares obtained as set forth below,
at any time prior to the Separation Time, amend, vary or delete any of the
provisions of this Agreement and the Rights (whether or not such action would
materially adversely affect the interests of the Holders of Rights generally),
provided that no such amendment, variation or deletion shall be made to the
provisions of Article 4 except with
the written concurrence of the Rights Agent to such amendment, variation or
deletion. Such consent shall be deemed to have been given if such
amendment, variation or deletion is authorized by the affirmative vote of a
majority of the votes cast by Independent Shareholders present or represented at
and entitled to be voted at a meeting of the holders of Common Shares duly
called and held in compliance with applicable laws and the memorandum and
articles of the Corporation.
(c) Subject
to the ability of the Board of Directors to supplement or amend this Agreement
without the approval of any Holders of Rights or Voting Shares as provided in
Section 5.5(a), the Corporation may, with
the prior consent of the Holders of Rights, at any time on or after the
Separation Time, amend, vary or delete any of the provisions of this Agreement
and the Rights (whether or not such action would materially adversely affect the
interests of the Holders of Rights generally), provided that no such amendment,
variation or deletion shall be made to the provisions of Article 4 except with the written
concurrence of the Rights Agent thereto. Such consent shall be deemed
to have been given if such amendment, variation or deletion is authorized by the
affirmative vote of a majority of the votes cast by the Holders of Rights (other
than Rights which are void pursuant to the provisions hereof) present or
represented at and entitled to vote at a meeting of the Holder of
Rights. For the purposes, hereof, 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 memorandum and articles and the BCBCA with
respect to meetings of shareholders of the Corporation and each Right shall be
entitled to one vote at any such meeting.
(d) Any
amendments, variations or deletions to or from this Agreement made by the
Corporation pursuant to Section 5.5(b) or
Section 5.5(c) shall:
|
(i)
|
if
made before the Separation Time, be submitted to the holders of the Common
Shares at the next meeting of such holders and the holders of the Common
Shares may, by the majority referred to in Subsection 5.5(b), confirm or reject such
amendment, variation or deletion;
|
|
(ii)
|
if
made on or after the Separation Time, be submitted to the Holders of
Rights at a meeting to be called for a date not later than immediately
following the next meeting of shareholders and the Holders of Rights may,
by resolution passed by the majority referred to in Subsection 5.5(c), confirm or reject such
amendment, variation or deletion.
|
Any such
amendment, variation or deletion shall, unless the Board of Directors otherwise
stipulates, be effective from the date of the resolution of the Board of
Directors adopting such amendment, variation or deletion, until it is confirmed
or rejected or until it ceases to be effective (as described in the next
sentence) and, where such amendment, variation or deletion is confirmed, it
continues in effect in the form so confirmed. If such amendment,
variation or deletion is rejected by the holders of the Common Shares or the
Holders of Rights or is not submitted to the holders of the Common Shares or the
Holders of Rights as required, then such amendment, variation or deletion shall
cease to be effective from and after the termination of the meeting at which it
was rejected or to which it should have been but was not submitted or from and
after the date of the meeting of Holders of Rights that should have been but was
not held, and no subsequent resolution of the Board of Directors to amend, vary
or delete all or any portion of this Agreement to substantially the same effect
shall be effective until confirmed by the holders of the Common Shares or the
Holders of Rights, as the case may be.
(e) The
Corporation shall give notice in writing to the Rights Agent of any supplement,
amendment, deletion, variation or rescission to or of this Agreement pursuant to
this Section 5.5 within five Business
Days of the date of any such supplement, amendment, deletion, variation or
rescission, provided that failure to give such notice, or any defect therein,
shall not affect the validity of any such supplement, amendment, deletion,
variation or rescission.
(f) Any
amendment or supplement to this Agreement shall be subject to the receipt of any
requisite approvals or consent from any applicable regulatory authority
including, without limitation, any necessary approvals of any stock exchange on
which the Common Shares are listed for trading.
|
5.6
|
Fractional Rights and
Fractional Shares
|
(a) The
Corporation shall not be required to issue fractions of Rights or to distribute
Rights Certificates which evidence fractional Rights. After the
Separation Time, in lieu of issuing fractional Rights, the Corporation shall pay
to the Holders of record of the Rights Certificates (provided the Rights
represented by such Rights Certificates are not void pursuant to the provisions
of Subsection 3.1(b) at the time such
fractional Rights would otherwise be issuable), an amount in cash equal to the
same fraction of the Market Price of one whole Right in lieu of such fractional
Rights.
(b) Share
Certificates for Common Shares shall only be issued upon written request to the
Corporation and the Corporation shall not be required in any circumstances to
issue fractional Common Shares upon exercise of the Rights or to distribute
certificates which evidence fractional Common Shares. In lieu of
issuing fractional Common Shares, the Corporation shall pay to the registered
Holders of Rights Certificates at the time such Rights are exercised as herein
provided, an amount in cash equal to the same fraction of the Market Price of
one Common Share.
(c) The
Rights Agent shall have no obligation to make any payments in lieu of issuing
fractions of Rights or Common Shares pursuant to Subsections 5.6(a) or (b), respectively, unless and until the
Corporation shall have provided to the Rights Agent the amount of cash to be
paid in lieu of issuing such fractional Rights or Common Shares, as the case may
be.
|
5.7
|
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, or otherwise act in respect of, such Holder's right to
exercise such Holder's Rights in the manner provided in such Holder's Rights
Certificate and in this Agreement. Without limiting the foregoing or
any remedies available to the Holders of Rights, it is specifically acknowledged
that the Holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of the obligations of any Person subject to, this Agreement.
|
5.8
|
Notices
|
Notices
or demands authorized or required by this Agreement to be given or made by the
Rights Agent or by the Holder of any Rights to or on the Corporation shall be
sufficiently given or made if delivered or sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent), or sent by facsimile or other form of recorded electronic communication,
charges prepaid and confirmed in writing, as follows:
▇▇▇-▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇ ▇▇▇
Attention: President
and Chief Executive Officer
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
Any
notice or demand authorized or required by this Agreement to be given or made by
the Corporation or by a Holder of Rights to or on the Rights Agent shall be
sufficiently given or made if delivered or sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the
Corporation), or sent by facsimile or other form of recorded electronic
communication, charges prepaid and confirmed in writing, as
follows:
Computershare
Investor Services Inc.
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇ ▇▇▇
Attention: Manager,
Client Services
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
Notices
or demands authorized or required by this Agreement to be given or made by the
Corporation or the Rights Agent to or on any Holder of 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 Rights Register or, prior to the Separation Time, on the registry books
of the transfer agent for the Common Shares. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
Holder receives the notice.
Any
notice given or made in accordance with this Section 5.8 shall be deemed to have been given and
to have been received on the day of delivery, if so delivered; on the third
Business Day (excluding each day during which there exists any general
interruption of postal service due to strike, lockout or other cause) following
the mailing thereof, if so mailed; and on the day of telegraphing, telecopying
or sending of the same by other means of recorded electronic communication
(provided such sending is during the normal business hours of the addressee on a
Business Day and if not, on the first Business Day thereafter). Each
of the Corporation and the Rights Agent may from time to time change its address
for notice by notice to the other given in the manner aforesaid.
|
5.9
|
Costs of
Enforcement
|
The
Corporation agrees that if the Corporation or any other Person the securities of
which are purchasable upon exercise of Rights fails to fulfil any of its
obligations pursuant to this Agreement, then the Corporation or such Person will
reimburse the Holder of any Rights for the costs and expenses (including
reasonable legal fees) incurred by such Holder in actions to enforce his rights
pursuant to any Rights or this Agreement.
|
5.10
|
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; and this Agreement shall
be for the sole and exclusive benefit of the Corporation, the Rights Agent and
the Holders of the Rights.
|
5.11
|
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.
|
5.12
|
Language
|
Les
parties aux présentes ont exigées que la présente convention ainsi que tous les
documents et avis qui s'y rattachent et/ou qui en découleront soient rédigés en
langue anglaise. The parties hereto have required that this Agreement
and all documents and notices related thereto and/or resulting therefrom be
drawn up in the English language.
|
5.13
|
Severability
|
If any
Section, Subsection, Clause, Subclause, term or provision hereof or the
application thereof to any circumstance or any right hereunder shall, in any
jurisdiction and to any extent, be invalid or unenforceable, such Section,
Subsection, Clause, Subclause, term or provision or such right shall be
ineffective only as to such jurisdiction and to the extent of such invalidity or
unenforceability in such jurisdiction without invalidating or rendering
unenforceable or ineffective the remaining Sections, Subsections, Clauses,
Subclauses, terms and provisions hereof or rights hereunder in such jurisdiction
or the application of such Section, Subsection, Clause, Subclause, term or
provision or rights hereunder in any other jurisdiction or to circumstances
other than those as to which it is specifically held invalid or
unenforceable.
|
5.14
|
Effective
Date
|
This
Agreement is in full force and effect in accordance with its terms from and
after the Record Time; provided, however, that if this Agreement is not ratified
by a resolution passed by a majority of the votes cast by the Independent
Shareholders present or represented by proxy at a meeting of shareholders to be
held not later than February 3, 2008, then this Agreement and all outstanding
Rights shall, without further formality, terminate and be void and of no further
force and effect on and from that date which is the earlier of (i) the date of
termination of the meeting called to consider the confirmation of this
Agreement, and (ii) February 3, 2008.
|
5.15
|
Determinations and
Actions by the Board of
Directors
|
All
actions, calculations and determinations (including all omissions with respect
to the foregoing) which are done or made by the Board of Directors, in good
faith, for the purposes of this Agreement shall not subject the Board of
Directors or any director of the Corporation to any liability to the Holders of
the Rights.
|
5.16
|
Rights of Board of
Directors and the
Corporation
|
Without
limiting the generality of the foregoing, nothing contained herein shall be
construed to suggest or imply that the Board of Directors shall not be entitled
to recommend that holders of 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 holders of
the Voting Shares 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.
|
5.17
|
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 any necessary approvals of any
stock exchange on which the Common Shares are listed.
|
5.18
|
Declaration as to
Non-Canadian Holders
|
If, in
the opinion of the Board of Directors (who may rely upon the advice of counsel),
any action or event contemplated by this Agreement would require compliance by
the Corporation with the securities laws or comparable legislation of a
jurisdiction outside Canada, the Board of Directors acting in good faith shall
take such actions as it may deem appropriate to ensure compliance. In
no event shall the Corporation or the Rights Agent be required to issue or
deliver Rights or securities issuable on exercise of Rights to persons who are
citizens, residents or nationals of any jurisdiction other than Canada or the
United States, in which such issue or delivery would be unlawful without
registration of the relevant Persons or securities for such
purposes.
|
5.19
|
Time of the
Essence
|
Time
shall be of the essence in this Agreement.
|
5.20
|
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.
|
5.21
|
Execution in
Counterparts
|
This
Agreement may be executed in any number of counterparts; each of such
counterparts shall for all purposes be deemed to be an original; and all such
counterparts shall together constitute one and the same instrument.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.
|
By:
|
|||||
|
Name:
|
|||||
|
Title:
|
|||||
|
By:
|
|||||
|
Name:
|
|||||
|
Title:
|
|||||
|
COMPUTERSHARE
INVESTOR SERVICES INC.
|
|||||
|
By:
|
|||||
|
Name:
|
|||||
|
Title:
|
|||||
|
By:
|
c/s
|
||||
|
Name:
|
|||||
|
Title:
|
|||||
Exhibit
A
[FORM OF
RIGHTS CERTIFICATE]
RIGHTS
CERTIFICATE
Certificate
No. __________ __________ Rights
THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE CORPORATION, ON THE TERMS
SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES (SPECIFIED IN
SUBSECTION 3.1(b) OF THE RIGHTS AGREEMENT), RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON, OR TRANSFEREES OF AN ACQUIRING PERSON OR ITS ASSOCIATES OR
AFFILIATES (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.
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 3rd day of
August, 2007, (the "Rights Agreement") between Mag Silver Corp., a corporation
incorporated under the Business Corporations Act
(British Columbia), (the "Corporation") and Computershare Investor Services
Inc., a corporation existing under the laws of Canada, as rights agent (the
"Rights Agent", which term shall include any successor Rights Agent under the
Rights Agreement) to purchase from the Corporation at any time after the
Separation Time (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 and non-assessable 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. The Exercise Price shall initially be $75 (Canadian) per
Right and shall be subject to adjustment in certain events as provided in the
Rights Agreement.
In
certain circumstances described in the Rights Agreement, the number of Common
Shares which each Right entitles the registered holder thereof to purchase shall
be adjusted as provided in the Rights Agreement.
This
Rights Certificate is subject to all of the terms, provisions and conditions of
the Rights Agreement, which terms, provisions and conditions are hereby
incorporated herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Rights Agent, the Corporation and the holders of the Rights. Copies
of the Rights Agreement are on file at the registered office of the Corporation
and are available upon written request.
This
Rights Certificate, with or without other Rights Certificates, upon surrender at
any of the offices of the Rights Agent designated for such purpose, may be
exchanged for another Rights Certificate or Rights Certificates of like tenor
and date evidencing an aggregate number of Rights entitling the holder to
purchase a like aggregate number of Common Shares as the Rights evidenced by the
Rights Certificate or Rights Certificates surrendered. If this Rights
Certificate shall be exercised in part, the registered holder shall be entitled
to receive, upon surrender hereof, another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.
Subject
to the provisions of the Rights Agreement, the Rights evidenced by this Rights
Certificate may be, and under certain circumstances are required to be, redeemed
by the Corporation at a redemption price of $0.0001 per Right.
No
fractional Common Shares will be issued upon the exercise of any Right or Rights
evidenced hereby, but in lieu thereof, a payment by cheque will be made, as
provided in the Rights Agreement.
No holder
of this Rights Certificate, as such, shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of Common Shares or of any
other securities of the Corporation 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, any of the rights of a
shareholder of the Corporation or any right to vote for the election of
directors or upon any matter submitted to shareholders of the Corporation at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders of the
Corporation (except as provided in the Rights Agreement), or to receive
dividends, distributions or subscription rights, or otherwise, until the Rights
evidenced by this Rights Certificate shall have been exercised as provided in
the Rights Agreement.
- -
This
Rights Certificate shall not be valid or obligatory for any purpose until it
shall have been countersigned by the Rights Agent.
WITNESS
the facsimile signature of the proper officers of the Corporation.
Date:
____________________
|
By:
|
By:
|
||
Countersigned:
|
COMPUTERSHARE
INVESTOR SERVICES INC.
|
|||
|
By:
|
|||
|
Authorized
Signature
|
|||
(To be
attached to each Rights Certificate)
FORM
OF ELECTION TO EXERCISE
TO: MAG
SILVER CORP.
AND
TO: COMPUTERSHARE
INVESTOR SERVICES INC.
The
undersigned hereby irrevocably elects to exercise _______________
whole Rights represented by the attached Rights Certificate to purchase the
Common Shares issuable upon the exercise of such Rights and requests that
certificates for such Shares be issued to:
|
(Name)
|
|
|
(Address)
|
|
|
(City
and Province or State)
|
|
|
(Social
Insurance Number or other taxpayer identification
number)
|
|
If such
number of Rights are not all the Rights evidenced by this Rights Certificate, a
new Rights Certificate for the balance of such Rights shall be registered in the
name of and delivered to:
|
(Name)
|
|
|
(Address)
|
|
|
(City
and Province or State)
|
|
|
(Social
Insurance Number or other taxpayer identification
number)
|
|
|
Dated:
|
Signature:
|
|||
|
Signature
Guaranteed:
|
(Signature
must correspond to name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or any
change whatsoever)
|
|||
Signature
must be guaranteed by a Schedule 1 Canadian chartered bank, a major Canadian
trust company or a member of a recognized Medallion Guarantee
Program.
CERTIFICATE
(To be
completed if true)
The
undersigned hereby represents, for the benefit of all holders of Rights and
Common Shares, that the Rights evidenced by this Rights Certificate are not,
and, to the knowledge of the undersigned, have never been, Beneficially Owned by
an Acquiring Person or an Affiliate or Associate thereof or any Person acting
jointly or in concert with any of the foregoing (all capitalized terms are used
as defined in the Rights Agreement).
Signature:
NOTICE
In the
event the certification set forth in the Form of Election to Exercise 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 (all capitalized terms are used as defined in the Rights
Agreement) and accordingly such Rights shall be null and void.
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 constitutes and appoints
, as attorney, to transfer the within Rights on the books of the Corporation,
with full power of substitution.
|
Dated:
|
Signature:
|
|||
|
Signature
Guaranteed:
|
(Signature
must correspond to name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or any
change whatsoever)
|
|||
Signature
must be guaranteed by a Schedule 1 Canadian chartered bank, a major Canadian
trust company or a member of a recognized Medallion Guarantee
Program.
CERTIFICATE
(To be
completed if true)
The
undersigned hereby represents, for the benefit of all holders of Rights and
Common Shares, that the Rights evidenced by this Rights Certificate are not,
and, to the knowledge of the undersigned, have never been, Beneficially Owned by
an Acquiring Person or an Affiliate or Associate thereof or any Person acting
jointly or in concert with any of the foregoing (all capitalized terms are used
as defined in the Rights Agreement).
Signature:
NOTICE
In the
event the certification set forth in the Form of Assignment 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 (all capitalized terms are used as defined in the Rights Agreement) and
accordingly such Rights shall be null and void.