EXHIBIT 4.28
SHAREHOLDER RIGHTS PLAN AGREEMENT
DATED AS OF APRIL 23, 2002
BETWEEN
DRAXIS HEALTH INC.
AND
COMPUTERSHARE TRUST COMPANY OF CANADA
AS RIGHTS AGENT
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
SHAREHOLDER RIGHTS PLAN AGREEMENT
TABLE OF CONTENTS
ARTICLE 1 - INTERPRETATION........................................................................................1
1.1 CERTAIN DEFINITIONS......................................................................................1
1.2 CURRENCY................................................................................................12
1.3 HEADINGS................................................................................................12
1.4 CALCULATION OF NUMBER AND PERCENTAGE OF BENEFICIAL OWNERSHIP OF OUTSTANDING VOTING SHARES...............13
1.5 ACTING JOINTLY OR IN CONCERT............................................................................13
1.6 GENERALLY ACCEPTED ACCOUNTING PRINCIPLES................................................................13
ARTICLE 2 - THE RIGHTS...........................................................................................13
2.1 ISSUE OF RIGHTS: LEGEND ON COMMON SHARE CERTIFICATES...................................................13
2.2 INITIAL EXERCISE PRICE; EXERCISE OF RIGHTS; DETACHMENT OF RIGHTS........................................14
2.3 ADJUSTMENTS TO EXERCISE PRICE; NUMBER OF RIGHTS.........................................................17
2.4 DATE ON WHICH EXERCISE IS EFFECTIVE.....................................................................21
2.5 EXECUTION, AUTHENTICATION, DELIVERY AND DATING OF RIGHTS CERTIFICATES...................................21
2.6 REGISTRATION, TRANSFER AND EXCHANGE.....................................................................22
2.7 MUTILATED, DESTROYED, LOST AND STOLEN RIGHTS CERTIFICATES...............................................22
2.8 PERSONS DEEMED OWNERS OF RIGHTS.........................................................................23
2.9 DELIVERY AND CANCELLATION OF CERTIFICATES...............................................................23
2.10 AGREEMENT OF RIGHTS HOLDERS...........................................................................23
2.11 RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER....................................................24
ARTICLE 3 - ADJUSTMENTS TO THE RIGHTS............................................................................25
3.1 FLIP-IN EVENT...........................................................................................25
ARTICLE 4 - THE RIGHTS AGENT.....................................................................................26
4.1 GENERAL.................................................................................................26
4.2 MERGER, AMALGAMATION OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.................................27
4.3 DUTIES OF RIGHTS AGENT..................................................................................27
4.4 CHANGE OF RIGHTS AGENT..................................................................................29
ARTICLE 5 - MISCELLANEOUS........................................................................................29
5.1 REDEMPTION AND WAIVER...................................................................................29
5.2 EXPIRATION..............................................................................................31
5.3 ISSUANCE OF NEW RIGHTS CERTIFICATES.....................................................................31
5.4 SUPPLEMENTS AND AMENDMENTS..............................................................................31
5.5 FRACTIONAL RIGHTS AND FRACTIONAL SHARES.................................................................32
5.6 RIGHTS OF ACTION........................................................................................33
5.7 REGULATORY APPROVALS....................................................................................33
5.8 DECLARATION AS TO NON-CANADIAN OR NON-U.S. HOLDERS......................................................33
5.9 NOTICES.................................................................................................34
5.10 COSTS OF ENFORCEMENT..................................................................................35
5.11 SUCCESSORS............................................................................................35
5.12 BENEFITS OF THIS AGREEMENT............................................................................35
5.13 GOVERNING LAW.........................................................................................35
5.14 SEVERABILITY..........................................................................................35
5.15 COMING INTO EFFECT....................................................................................35
5.16 RECONFIRMATION........................................................................................36
5.17 DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS..................................................36
5.18 TIME OF THE ESSENCE...................................................................................36
5.19 EXECUTION IN COUNTERPARTS.............................................................................36
SHAREHOLDER RIGHTS PLAN AGREEMENT
MEMORANDUM OF AGREEMENT dated as of April 23, 2002 between Draxis Health
Inc. (the "Corporation"), a corporation incorporated under the CANADA BUSINESS
CORPORATIONS ACT and Computershare Trust Company of Canada, a trust company
incorporated under the laws of Canada (the "Rights Agent");
WHEREAS the Shareholder Rights Plan Agreement made as of April 23, 1997
between the Corporation and the Rights Agent expires in accordance with its
terms at the close of business on the date hereof;
AND WHEREAS the Board of Directors of the Corporation has determined that
it is in the best interests of the Corporation to adopt, with effect on the
Effective Date (as defined below), a shareholder rights plan to ensure, to the
extent possible, that all shareholders of the Corporation are treated fairly in
connection with any take-over bid for the Corporation;
AND WHEREAS each Right entitles the holder thereof, after the Separation
Time, to purchase securities of the Corporation pursuant to the terms and
subject to the conditions set forth herein;
AND WHEREAS the Corporation desires to appoint the Rights Agent to act on
behalf of the Corporation and the holders of Rights and the Rights Agent is
willing to so act, in connection with the issuance, transfer, exchange and
replacement of Rights Certificates (as hereinafter defined), the exercise of
Rights and other matters referred to herein;
AND WHEREAS the Board of Directors proposes that this Agreement be in place
for a period of ten years, subject to the Agreement being reconfirmed by
shareholders of the Corporation every three years;
NOW THEREFORE, in consideration of the premises and the respective
covenants and agreements set forth herein, and subject to such covenants and
agreements, the parties hereby agree as follows:
ARTICLE 1 - INTERPRETATION
1.1 CERTAIN DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
indicated:
(a) "Acquiring Person" means any Person who is the Beneficial Owner of 20% or
more of the outstanding Voting Shares provided, however, that the term
"Acquiring Person" shall not include:
(i) the Corporation or any Subsidiary of the Corporation;
(ii) any Person who becomes the Beneficial Owner of 20% or more of the
outstanding Voting Shares as a result of one or any combination of (A)
a Voting Share Reduction, (B) Permitted Bid Acquisitions, (C) an
Exempt Acquisition or (D) Pro Rata Acquisitions; provided, however,
that if a Person becomes the Beneficial Owner of 20% or more of the
outstanding Voting Shares by reason of
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one or any combination of the operation of Paragraphs (A), (B), (C) or
(D) above and such Person's Beneficial Ownership of Voting Shares
thereafter increases by more than 1.0% of the number of Voting Shares
outstanding (other than pursuant to one or any combination of a Voting
Share Reduction, a Permitted Bid Acquisition, an Exempt Acquisition or
a Pro Rata Acquisition), then as of the date such Person becomes the
Beneficial Owner of such additional Voting Shares, such Person shall
become an "Acquiring Person";
(iii) for a period of ten days after the Disqualification Date (as defined
below), any Person who becomes the Beneficial Owner of 20% or more of
the outstanding Voting Shares as a result of such Person becoming
disqualified from relying on Clause 1.1(f)(v) solely because such
Person or the Beneficial Owner of such Voting Shares is making or has
announced an intention to make a Take-over Bid, either alone or by
acting jointly or in concert with any other Person. For the purposes
of this definition, "Disqualification Date" means the first date of
public announcement that any Person is making or has announced an
intention to make a Take-over Bid;
(iv) an underwriter or member of a banking or selling group that becomes
the Beneficial Owner of 20% or more of the Voting Shares in connection
with a distribution of securities of the Corporation; or
(v) a Person (a "Grandfathered Person") who is the Beneficial Owner of 20%
or more of the outstanding Voting Shares of the Corporation determined
as at the Record Time, provided, however, that this exception shall
not be, and shall cease to be, applicable to a Grandfathered Person in
the event that such Grandfathered Person shall, after the Record Time,
become the Beneficial Owner of additional Voting Shares of the
Corporation that increases its Beneficial Ownership of Voting Shares
by more than 1% of the number of Voting Shares outstanding as at the
Record Time (other than pursuant to one or any combination of a Voting
Share Reduction, a Permitted Bid Acquisition, an Exempt Acquisition or
a Pro Rata Acquisition);
(b) "Affiliate": when used to indicate a relationship with a Person means a
Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, such
specified Person;
(c) "Agreement" means this shareholder rights plan agreement dated as of April
23, 2002 between the Corporation and the Rights Agent, as the same may be
further amended or supplemented from time to time; "hereof", "herein",
"hereto" and similar expressions mean and refer to this Agreement as a
whole and not to any particular part of this Agreement;
(d) "annual cash dividend" means cash dividends paid in any fiscal year of the
Corporation to the extent that such cash dividends do not exceed, in the
aggregate, the greatest of:
(i) 200 per cent of the aggregate amount of cash dividends declared
payable by the Corporation (including any predecessor thereto) on its
Common Shares in its immediately preceding fiscal year;
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(ii) 300 per cent of the arithmetic mean of the aggregate amounts of the
annual cash dividends declared payable by the Corporation (including
any predecessor thereto) on its Common Shares in its three immediately
preceding fiscal years; and
(iii) 100 per cent of the aggregate consolidated net income of the
Corporation (including any predecessor thereto), before extraordinary
items, for its immediately preceding fiscal year;
(e) "Associate" means, when used to indicate a relationship with a specified
Person, a spouse of that Person, any Person of the same or opposite sex
with whom that Person is living in a conjugal relationship outside
marriage, a child of that Person or a relative of that Person if that
relative has the same residence as that Person;
(f) A Person shall be deemed the "Beneficial Owner" of, and to have "Beneficial
Ownership" of, and to "Beneficially Own",
(i) any securities as to which such Person or any of such Person's
Affiliates or Associates is the owner at law or in equity;
(ii) any securities as to which such Person or any of such Person's
Affiliates or Associates has the right to become the owner at law or
in equity (where such right is exercisable immediately or within a
period of 60 days 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 (x) customary agreements with and between
underwriters and/or banking group members and/or selling group members
with respect to a public offering or private placement of securities
and (y) pledges of securities in the ordinary course of business), or
upon the exercise of any conversion right, exchange right, share
purchase right (other than the Rights), warrant or option; or
(iii) any securities which are Beneficially Owned within the meaning of
Clauses 1.1(f)(i) and (ii) by any other Person with whom such Person
is acting jointly or in concert;
provided, however, that a Person shall not be deemed the "Beneficial Owner"
of, or to have "Beneficial Ownership" of, or to "Beneficially Own", any
security:
(iv) where such security has been agreed to be deposited or tendered
pursuant to a Lock-up Agreement or is otherwise deposited to any
Take-over Bid made by such Person, made by any of such Person's
Affiliates or Associates or made by any other Person acting jointly or
in concert with such Person until such deposited or tendered security
has been taken up or paid for, whichever shall first occur;
(v) where such Person, any of such Person's Affiliates or Associates or
any other Person acting jointly or in concert with such Person holds
such security provided that:
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(A) the ordinary business of any such Person (the "Investment
Manager") includes the management of investment funds for others
(which others, for greater certainty, may include or be limited
to one or more employee benefit plans or pension plans) and such
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") including
a non-discretionary account held on behalf of a Client by a
broker or dealer registered under applicable law;
(B) such Person (the "Trust Company") is licensed to carry on the
business of a trust company under applicable laws and, as such,
acts as trustee or administrator or in a similar capacity in
relation to the estates of deceased or incompetent Persons (each
an "Estate Account") or in relation to other accounts (each an
"Other Account") and holds such security in the ordinary course
of such duties for such Estate Account or for such Other
Accounts;
(C) such Person is established by statute for purposes that include,
and the ordinary business or activity of such Person (the
"Statutory Body") includes, the management of investment funds
for employee benefit plans, pension plans, insurance plans or
various public bodies;
(D) such Person (the "Administrator") is the administrator or trustee
of one or more pension funds or plans (a "Plan"), or is a Plan,
registered or qualified under the laws of Canada or any Province
thereof or the laws of the United States of America or any State
thereof; or
(E) such Person (the "Crown Agent") is a Crown agent or agency;
provided, in any of the above cases, that the Investment Manager, the
Trust Company, the Statutory Body, the Administrator, the Plan or the
Crown Agent, as the case may be, is not then making a Take-over Bid or
has not then announced an intention to make a Take-over Bid alone or
acting jointly or in concert with any other Person, other than an
Offer to Acquire Voting Shares or other securities (x) pursuant to a
distribution by the Corporation, (y) by means of a Permitted Bid or
(z) by means of ordinary market transactions (including prearranged
trades entered into in the ordinary course of business of such Person)
executed through the facilities of a stock exchange or organized
over-the-counter market;
(vi) where such Person is (A) a Client of the same Investment Manager as
another Person on whose account the Investment Manager holds such
security, (B) an Estate Account or an Other Account of the same Trust
Company as another Person on whose account the Trust Company holds
such security or (C) a Plan with the same Administrator as another
Plan on whose account the Administrator holds such security;
(vii) where such Person is (A) a Client of an Investment Manager and such
security is owned at law or in equity by the Investment Manager, (B)
an Estate Account or an Other Account of a Trust Company and such
security is owned at law or in
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equity by the Trust Company or (C) a Plan and such security is owned
at law or in equity by the Administrator of the Plan; or
(viii) where such Person is a registered holder of such security as a
result of carrying on the business of, or acting as a nominee of, a
securities depositary;
(g) "Board of Directors" means the board of directors of the Corporation or any
duly constituted and empowered committee thereof;
(h) "Business Day" means any day other than a Saturday, Sunday or a day on
which banking institutions in Toronto are authorized or obligated by law to
close;
(i) "CANADA BUSINESS CORPORATIONS ACT" means the CANADA BUSINESS CORPORATIONS
ACT, R.S.C. 1985, C. 44, as amended, and the regulations made thereunder,
and any comparable or successor laws or regulations thereto;
(j) "Canadian Dollar Equivalent" of any amount which is expressed in United
States Dollars means, on any date, the Canadian dollar equivalent of such
amount determined by multiplying such amount by the U.S. - Canadian
Exchange Rate in effect on such date;
(k) "Canadian - U.S. Exchange Rate" means, on any date, the inverse of the U.S.
- Canadian Exchange Rate in effect on such date;
(l) "close of business" on any given date means the time on such date (or, if
such date is not a Business Day, the time on the next succeeding Business
Day) at which the principal transfer office in Toronto of the transfer
agent for the Common Shares of the Corporation (or, after the Separation
Time, the principal transfer office in Toronto of the Rights Agent) is
closed to the public;
(m) "Common Shares" means the common shares in the capital of the Corporation;
(n) "Competing Permitted Bid" means a Take-over Bid that:
(i) is made after a Permitted Bid has been made and prior to the expiry of
the Permitted Bid;
(ii) satisfies all components of the definition of a Permitted Bid other
than the requirements set out in Clause 1.1(kk)(ii)(A) of the
definition of a Permitted Bid; and
(iii) contains, and the take-up and payment for securities tendered or
deposited is subject to, an irrevocable and unqualified condition that
no Voting Shares will be taken up or paid for pursuant to the
Take-over Bid prior to the close of business on a date that is no
earlier than the later of: (A) the 60th day after the date on which
the earliest Permitted Bid which preceded the Competing Permitted Bid
was made; and (B) 35 days after the date of the Take-over Bid
constituting the Competing Permitted Bid;
(o) "controlled": a Person is "controlled" by another Person or two or more
other Persons acting jointly or in concert if:
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(i) in the case of a body corporate, securities entitled to vote in the
election of directors of such body corporate carrying more than 50% of
the votes for the election of directors are held, directly or
indirectly, by or for the benefit of the other Person or Persons and
the votes carried by such securities are entitled, if exercised, to
elect a majority of the board of directors of such body corporate; or
(ii) in the case of a Person which is not a body corporate, more than 50%
of the voting or equity interests of such entity are held, directly or
indirectly, by or for the benefit of the other Person or Persons;
and "controls", "controlling" and "under common control with" shall be
interpreted accordingly;
(p) "Co-Rights Agents" has the meaning ascribed thereto in Subsection 4.1(a);
(q) "Disposition Date" has the meaning ascribed thereto in Subsection 5.1(h);
(r) "Dividend Reinvestment Acquisition" means an acquisition of Voting Shares
pursuant to a Dividend Reinvestment Plan;
(s) "Dividend Reinvestment Plan" means a regular dividend reinvestment or other
plan of the Corporation made available by the Corporation to holders of its
securities or holders of securities of a Subsidiary where such plan permits
the holder to direct that some or all of:
(i) dividends paid in respect of shares of any class of the Corporation or
a Subsidiary;
(ii) proceeds of redemption of shares of the Corporation or a Subsidiary;
(iii) interest paid on evidences of indebtedness of the Corporation or a
Subsidiary; or
(iv) optional cash payments;
be applied to the purchase from the Corporation of Voting Shares;
(t) "Election to Exercise" has the meaning ascribed thereto in Clause
2.2(d)(ii);
(u) "Effective Date" means the date hereof;
(v) "Exempt Acquisition" means a share acquisition in respect of which the
Board of Directors has waived the application of Section 3.1 pursuant to
the provisions of Subsection 5.1(a) or (h);
(w) "Exercise Price" means, as of any date, the price at which a holder may
purchase the securities issuable upon exercise of one whole Right which,
until adjustment thereof in accordance with the terms hereof, shall be 5
times the weighted average trading price of the Common Shares on The
Toronto Stock Exchange on the Effective Date and the immediately following
four consecutive trading days on The Toronto Stock Exchange;
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(x) "Expansion Factor" has the meaning ascribed thereto in Clause 2.3(a)(x);
(y) "Expiration Time" means the close of business on that date which is the
earlier of the date of termination of this Agreement pursuant to Section
5.15 or, if this Agreement is confirmed pursuant to Section 5.15, the date
of termination of this Agreement pursuant to Section 5.16 or, if this
Agreement is reconfirmed pursuant to Section 5.16, the close of business on
the tenth anniversary following the Effective Date;
(z) "Flip-in Event" means a transaction or other event, including the
occurrence of the Effective Date, in or pursuant to which any Person
becomes an Acquiring Person;
(aa) "holder" has the meaning ascribed thereto in Section 2.8;
(bb) "Independent Shareholders" means holders of Voting Shares, other than:
(i) any Acquiring Person;
(ii) any Offeror (other than any Person who, by virtue of Clause 1.1(f)(v),
is not deemed to Beneficially Own the Voting Shares held by such
Person);
(iii) any Affiliate or Associate of any Acquiring Person or Offeror;
(iv) any Person acting jointly or in concert with any Acquiring Person or
Offeror; and
(v) any employee benefit plan, deferred profit sharing plan, stock
participation plan and any other similar plan or trust for the benefit
of employees of the Corporation or a Subsidiary unless the
beneficiaries of the plan or trust direct the manner in which the
Voting Shares are to be voted or withheld from voting or direct
whether the Voting Shares are to be tendered to a Take-over Bid;
(cc) "Lock-up Agreement" means an agreement between an Offeror, any of its
Affiliates or Associates or any other Person acting jointly or in concert
with the Offeror and a Person (the "Locked-up Person") who is not an
Affiliate or Associate of the Offeror or a Person acting jointly or in
concert with the Offeror whereby the Locked-up Person agrees to deposit or
tender the Voting Shares held by the Locked-up Person to the Offeror's
Take-over Bid or to any Take-over Bid made by any of the Offeror's
Affiliates or Associates or made by any other Person acting jointly or in
concert with the Offeror (the "Subject Bid") where the agreement:
(i) permits the Locked-up Person to withdraw the Voting Shares from the
agreement in order to tender or deposit the Voting Shares to another
Take-over Bid or to support another transaction that in either case
will provide greater value to the Locked-up Person than the Subject
Bid; or
(ii) (a) permits the Locked-up Person to withdraw the Voting Shares from
the agreement in order to tender or deposit the Voting Shares to
another Take-over Bid or to support another transaction that contains
an offering price for each Voting Share that exceeds by as much as or
more than a specified amount (the "Specified Amount") the offering
price for each Voting Share contained in or proposed to be contained
in the Subject Bid; and (b) does not by its terms provide
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for a Specified Amount that is greater than 7% of the offering price
contained in or proposed to be contained in the Subject Bid;
and, for greater clarity, an agreement may contain a right of first refusal
or require a period of delay to give an offeror an opportunity to match a
higher price in another Take-over Bid or other similar limitation on a
Locked-up Person as long as the Locked-up Person can accept another bid or
tender to another transaction;
(dd) "Market Price" per share of any securities on any date of determination
means the average of the daily closing prices per share of the securities
(determined as described below) on each of the 20 consecutive Trading Days
through and including the Trading Day immediately preceding such date;
provided, however, that if an event of a type analogous to any of the
events described in Section 2.3 hereof shall have caused the closing prices
used to determine the Market Price on any Trading Days not to be fully
comparable with the closing price on the date of determination or, if the
date of determination is not a Trading Day, on the immediately preceding
Trading Day, each 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 the
date of determination or, if the date of determination is not a Trading
Day, on the immediately preceding Trading Day. The closing price per share
of any securities on any date shall be:
(i) the closing board lot sale price or, in case no such sale takes place
on such date, the average of the closing bid and asked prices for each
of the securities as reported by the principal Canadian stock exchange
(as determined by volume of trading) on which the securities are
listed or admitted to trading;
(ii) if for any reason none of such prices is available on such day or the
securities are not listed or admitted to trading on a Canadian stock
exchange, the last sale price or, in case no such sale takes place on
the date, the average of the closing bid and asked prices for each of
the securities as reported by the principal national United States
securities exchange (as determined by volume of trading) on which the
securities are listed or admitted to trading;
(iii) if for any reason none of such prices is available on such day or the
securities are not listed or admitted to trading on a Canadian stock
exchange or a national United States securities exchange, the last
sale price or, in case no sale takes place on such date, the average
of the high bid and low asked prices for each of the securities in the
over-the-counter market, as quoted by any recognized reporting system
then in use; or
(iv) if for any reason none of such prices is available on such day or the
securities are not listed or admitted to trading on a Canadian stock
exchange or a national United States securities exchange or quoted by
any reporting system, the average of the closing bid and asked prices
as furnished by a recognized professional market maker making a market
in the securities;
provided, however, that if for any reason none of such prices is available
on such day, the closing price per share of the securities on such date
means the fair value per share of the securities on such date as determined
by an internationally recognized investment dealer
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or investment banker; provided further that if an event of a type analogous
to any of the events described in Section 2.3 hereof has caused any price
used to determine the Market Price on any Trading Day not to be fully
comparable with the price as so determined on the Trading Day immediately
preceding such date of determination, each 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 price on the Trading Day immediately preceding such date of
determination. 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 that date at the
Canadian Dollar Equivalent thereof;
(ee) "1933 SECURITIES ACT" means the SECURITIES ACT OF 1933 of the United
States, as amended, and the rules and regulations thereunder, as now in
effect or as the same may from time to time be amended, re-enacted or
replaced;
(ff) "1934 EXCHANGE ACT" means the SECURITIES EXCHANGE ACT OF 1934 of the United
States, as amended, and the rules and regulations thereunder as now in
effect or as the same may from time to time be amended, re-enacted or
replaced;
(gg) "Nominee" has the meaning ascribed thereto in Subsection 2.2(c);
(hh) "Offer to Acquire" includes:
(i) an offer to purchase or a solicitation of an offer to sell Voting
Shares; and
(ii) an acceptance of an offer to sell Voting Shares, whether or not such
offer to sell has been solicited;
or any combination thereof, and the Person accepting an offer to sell shall
be deemed to be making an Offer to Acquire to the Person that made the
offer to sell;
(ii) "Offeror" means a Person who has announced, and has not withdrawn, an
intention to make or who has made, and has not withdrawn, a Take-over Bid,
other than a Person who has completed a Permitted Bid, a Competing
Permitted Bid or an Exempt Acquisition;
(jj) "Offeror's Securities" means Voting Shares Beneficially Owned by an Offeror
on the date of the Offer to Acquire;
(kk) "Permitted Bid" means a Take-over Bid made by an Offeror by way of
take-over bid circular 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;
(ii) the Take-over Bid contains, and the take-up and payment for securities
tendered or deposited is subject to, an irrevocable and unqualified
provision that no Voting Shares will be taken up or paid for pursuant
to the Take-over Bid:
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(A) prior to the close of business on the date which is not less than
60 days following the date of the Take-over Bid; and
(B) only if at such date more than 50% of the Voting Shares held by
Independent Shareholders shall have been deposited or tendered
pursuant to the Take-over Bid and not withdrawn;
(iii) unless the Take-over Bid is withdrawn, the Take-over Bid contains an
irrevocable and unqualified provision that Voting Shares may be
deposited pursuant to such Take-over Bid at any time during the period
of time described in Clause 1.1(kk)(ii)(A) and that any Voting Shares
deposited pursuant to the Take-over Bid may be withdrawn until taken
up and paid for; and
(iv) unless the Take-over Bid is withdrawn, the Take-over Bid contains an
irrevocable and unqualified provision that in the event that the
deposit condition set forth in Clause 1.1(kk)(ii)(B) is satisfied the
Offeror will make a public announcement of that fact and the Take-over
Bid will remain open for deposits and tenders of Voting Shares for not
less than ten Business Days from the date of such public announcement;
(ll) "Permitted Bid Acquisition" means an acquisition of Voting Shares made
pursuant to a Permitted Bid or a Competing Permitted Bid;
(mm) "Person" includes any individual, firm, partnership, association, trust,
trustee, executor, administrator, legal personal representative, body
corporate, corporation, unincorporated organization, syndicate,
governmental entity or other entity;
(nn) "Pro Rata Acquisition" means an acquisition by a Person of Voting Shares
pursuant to:
(i) a Dividend Reinvestment Acquisition;
(ii) a stock dividend, stock split or other event in respect of securities
of the Corporation of one or more particular classes or series
pursuant to which such Person becomes the Beneficial Owner of Voting
Shares on the same pro rata basis as all other holders of securities
of the particular class, classes or series;
(iii) the acquisition or the exercise by the Person of only those rights to
purchase Voting Shares distributed to that Person in the course of a
distribution to all holders of securities of the Corporation of one or
more particular classes or series pursuant to a rights offering or
pursuant to a prospectus, provided that the Person does not thereby
acquire a greater percentage of such Voting Shares, or securities
convertible into or exchangeable for Voting Shares, so offered than
the Person's percentage of Voting Shares Beneficially Owned
immediately prior to such acquisition; or
(iv) a distribution of Voting Shares, or securities convertible into or
exchangeable for Voting Shares (and the conversion or exchange of such
convertible or exchangeable securities), made pursuant to a prospectus
or by way of a private placement, provided that the Person does not
thereby acquire a greater percentage of such Voting Shares, or
securities convertible into or exchangeable for Voting
11
Shares, so offered than the Person's percentage of Voting Shares
Beneficially Owned immediately prior to such acquisition;
(oo) "Record Time" means the close of business on the date hereof;
(pp) "Right" means a right to purchase a Common Share of the Corporation upon
the terms and subject to the conditions set forth in this Agreement;
(qq) "Rights Certificate" means the certificates representing the Rights after
the Separation Time, which shall be substantially in the form attached
hereto as Attachment 1;
(rr) "Rights Register" has the meaning ascribed thereto in Subsection 2.6(a);
(ss) "SECURITIES ACT (Ontario)" means the SECURITIES ACT, R.S.O. 1990, c.S.5, as
amended, and the regulations thereunder, and any comparable or successor
laws or regulations thereto;
(tt) "Separation Time" means the close of business on the tenth Trading Day
after the earlier of:
(i) the Stock Acquisition Date;
(ii) the date of the commencement of or first public announcement of the
intent of any Person (other than the Corporation or any Subsidiary of
the Corporation) to commence a Take-over Bid (other than a Permitted
Bid or a Competing Permitted Bid), or such later time as may be
determined by the Board of Directors, provided that, if any Take-over
Bid referred to in this Clause (ii) expires, is cancelled, terminated
or otherwise withdrawn prior to the Separation Time, such Take-over
Bid shall be deemed, for the purposes of this definition, never to
have been made; and
(iii) the date on which a Permitted Bid or Competing Permitted Bid ceases
to be such;
(uu) "Stock Acquisition Date" means the first date of public announcement
(which, for purposes of this definition, shall include, without limitation,
a report filed pursuant to section 101 of the SECURITIES ACT (Ontario) or
Section 13(d) of the 1934 EXCHANGE ACT by the Corporation or an Acquiring
Person that an Acquiring Person has become such;
(vv) "Subsidiary": a corporation is a Subsidiary of another corporation if:
(i) it is controlled by:
(A) that other; or
(B) that other and one or more corporations, each of which is
controlled by that other; or
(C) two or more corporations, each of which is controlled by that
other; or
(ii) it is a Subsidiary of a corporation that is that other's Subsidiary;
12
(ww) "Take-over Bid" means an Offer to Acquire Voting Shares, or securities
convertible into Voting Shares if, assuming that the Voting Shares or
convertible securities subject to the Offer to Acquire are acquired and are
Beneficially Owned at the date of such Offer to Acquire by the Person
making such Offer to Acquire, such Voting Shares (including Voting Shares
that may be acquired upon conversion of securities convertible into Voting
Shares) together with the Offeror's Securities, constitute in the aggregate
20% or more of the outstanding Voting Shares at the date of the Offer to
Acquire;
(xx) "Trading Day", when used with respect to any securities, means a day on
which the principal Canadian stock exchange on which such securities are
listed or admitted to trading is open for the transaction of business or,
if the securities are not listed or admitted to trading on any Canadian
stock exchange, a Business Day;
(yy) "U.S.-Canadian Exchange Rate" means, on any date:
(i) if on such date the Bank of Canada sets an average noon spot rate of
exchange for the conversion of one United States dollar into Canadian
dollars, such rate; and
(ii) in any other case, the rate for such date for the conversion of one
United States dollar into Canadian dollars calculated in such manner
as may be determined by the Board of Directors from time to time
acting in good faith;
(zz) "U.S. Dollar Equivalent" of any amount which is expressed in Canadian
dollars means, on any date, the United States dollar equivalent of the
amount determined by multiplying the amount by the Canadian-U.S. Exchange
Rate in effect on such date;
(aaa) "Voting Share Reduction" means an acquisition or redemption by the
Corporation of Voting Shares which, by reducing the number of Voting Shares
outstanding, increases the proportionate number of Voting Shares
Beneficially Owned by any Person to 20% or more of the Voting Shares then
outstanding; and
(bbb) "Voting Shares" means the Common Shares of the Corporation and any other
shares in the capital of the Corporation entitled to vote generally in the
election of all directors.
1.2 CURRENCY
All sums of money which are referred to in this Agreement are expressed in
lawful money of Canada, unless otherwise specified.
1.3 HEADINGS
The division of this Agreement into Articles, Sections, Subsections,
Clauses, Paragraphs, Subparagraphs or other portions hereof and the insertion of
headings, subheadings and a table of contents are for convenience of reference
only and shall not affect the construction or interpretation of this Agreement.
13
1.4 CALCULATION OF NUMBER AND PERCENTAGE OF BENEFICIAL OWNERSHIP OF OUTSTANDING
VOTING SHARES
For purposes of this Agreement, the percentage of Voting Shares
Beneficially Owned by any Person, shall be and be deemed to be the product
(expressed as a percentage) determined by the formula:
100 x A/B
where:
A = the number of votes for the election of all directors generally
attaching to the Voting Shares Beneficially Owned by such Person; and
B = the number of votes for the election of all directors generally
attaching to all outstanding Voting Shares.
Where any Person is deemed to Beneficially Own unissued Voting Shares, such
Voting Shares shall be deemed to be outstanding for the purpose of calculating
the percentage of Voting Shares Beneficially Owned by such Person.
1.5 ACTING JOINTLY OR IN CONCERT
For the purposes hereof, a Person is acting jointly or in concert with
every Person who, as a result of any agreement, commitment or understanding,
whether formal or informal, with the first Person or any Affiliate thereof,
acquires or offers to acquire Voting Shares (other than customary agreements
with and between underwriters and/or banking group members and/or selling group
members with respect to a public offering or private placement of securities or
pledges of securities in the ordinary course of business).
1.6 GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
Wherever in this Agreement reference is made to generally accepted
accounting principles, such reference shall be deemed to be the recommendations
at the relevant time of the Canadian Institute of Chartered Accountants, or any
successor institute, applicable on a consolidated basis (unless otherwise
specifically provided herein to be applicable on an unconsolidated basis) as at
the date on which a calculation is made or required to be made in accordance
with generally accepted accounting principles. Where the character or amount of
any asset or liability or item of revenue or expense is required to be
determined, or any consolidation or other accounting computation is required to
be made for the purpose of this Agreement or any document, such determination or
calculation shall, to the extent applicable and except as otherwise specified
herein or as otherwise agreed in writing by the parties, be made in accordance
with generally accepted accounting principles applied on a consistent basis.
ARTICLE 2 - THE RIGHTS
2.1 ISSUE OF RIGHTS: LEGEND ON COMMON SHARE CERTIFICATES
(a) One Right shall be issued on the Effective Date in respect of each Common
Share of the Corporation outstanding at the Record Time and one Right shall
be issued in respect of
14
each Common Share of the Corporation issued after the Record Time and prior
to the earlier of the Separation Time and the Expiration Time.
(b) Certificates representing Common Shares which are issued at and after the
Record Time but prior to the earlier of the Separation Time and the
Expiration Time, shall also evidence one Right for each Common Share
represented thereby and shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
Until the Separation Time (defined in the Agreement below), this
certificate also evidences the holder's rights described in a
Shareholder Rights Plan Agreement dated as of April 23, 2002 (the
"Agreement") between Draxis Health Inc. and Computershare Trust
Company of Canada, as amended, the terms of which are incorporated
herein and a copy of which is available on demand without charge.
Under certain circumstances set out in the Agreement, the rights may
expire, may become null and void or may be evidenced by separate
certificates and no longer evidenced by this certificate.
2.2 INITIAL EXERCISE PRICE; EXERCISE OF RIGHTS; DETACHMENT OF RIGHTS
(a) Subject to adjustment as herein set forth, each Right will entitle the
holder thereof, from and after the Separation Time and prior to the
Expiration Time, to purchase one Common Share for the Exercise Price (and
the Exercise Price and number of Common Shares are subject to adjustment as
set forth below). Notwithstanding any other provision of this Agreement,
any Rights held by the Corporation or any of its Subsidiaries shall be
void.
(b) Until the Separation Time:
(i) the Rights shall not be exercisable and no Right may be exercised; and
(ii) each Right will be evidenced by the certificate for the associated
Common Share of the Corporation registered in the name of the holder
thereof (which certificate shall also be deemed to represent a Rights
Certificate) and will be transferable only together with, and will be
transferred by a transfer of, such associated Common Share of the
Corporation.
(c) From and after the Separation Time and prior to the Expiration Time:
(i) the Rights shall be exercisable; and
(ii) the registration and transfer of Rights shall be separate from and
independent of Common Shares of the Corporation.
Promptly following the Separation Time, the Corporation will prepare and
the Rights Agent will mail to each holder of record of Common Shares as of
the Separation Time (other than an Acquiring Person and, in respect of any
Rights Beneficially Owned by such Acquiring Person which are not held of
record by such Acquiring Person, the holder of record of such Rights (a
"Nominee")) at such holder's address as shown by the records of the
Corporation (the Corporation hereby agreeing to furnish copies of such
records to the Rights Agent for this purpose):
15
(x) a Rights Certificate appropriately completed, representing the number
of Rights held by such holder at the Separation Time and having such
marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Corporation may deem appropriate
and as are not inconsistent with the provisions of this Agreement, or
as may be required to comply with any law, rule or regulation or with
any rule or regulation of any self-regulatory organization, stock
exchange or quotation system on which the Rights may from time to time
be listed or traded, or to conform to usage; and
(y) a disclosure statement prepared by the Corporation describing the
Rights,
provided that a Nominee shall be sent the materials provided for in (x) and
(y) in respect of all Common Shares of the Corporation held of record by it
which are not Beneficially Owned by an Acquiring Person.
(d) Rights may be exercised, in whole or in part, on any Business Day after the
Separation Time and prior to the Expiration Time by submitting to the
Rights Agent:
(i) the Rights Certificate evidencing such Rights;
(ii) an election to exercise such Rights (an "Election to Exercise")
substantially in the form attached to the Rights Certificate
appropriately completed and executed by the holder or his executors or
administrators or other personal representatives or his or their legal
attorney duly appointed by an instrument in writing in form and
executed in a manner satisfactory to the Rights Agent; and
(iii) payment by certified cheque, banker's draft or money order payable to
the order of the Corporation, of a sum equal to the Exercise Price
multiplied by the number of Rights being exercised and a sum
sufficient to cover any transfer tax or governmental charge which may
be payable in respect of any transfer involved in the transfer or
delivery of Rights Certificates or the issuance or delivery of
certificates for Common Shares in a name other than that of the holder
of the Rights being exercised.
(e) Upon receipt of a Rights Certificate, together with a completed Election to
Exercise executed in accordance with Clause 2.2(d)(ii), which does not
indicate that such Right is null and void as provided by Subsection 3.1(b),
and payment as set forth in Clause 2.2(d)(iii), the Rights Agent (unless
otherwise instructed by the Corporation in the event that the Corporation
is of the opinion that the Rights cannot be exercised in accordance with
this Agreement) will thereupon promptly:
(i) requisition from the transfer agent certificates representing the
number of such Common Shares to be purchased (the Corporation hereby
irrevocably authorizing its transfer agent to comply with all such
requisitions);
(ii) when appropriate, requisition from the Corporation the amount of cash
to be paid in lieu of issuing fractional Common Shares in accordance
with Subsection 5.5(b);
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(iii) after receipt of the certificates referred to in Clause 2.2(e)(i),
deliver the same to or upon the order of the registered holder of such
Rights Certificates, registered in such name or names as may be
designated by such holder;
(iv) when appropriate, after receipt, deliver the cash referred to in
Clause 2.2(e)(ii) to or to the order of the registered holder of such
Rights Certificate; and
(v) tender to the Corporation all payments received on exercise of 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 (subject to the provisions of
Subsection 5.5(a)) will be issued by the Rights Agent to such holder or to
such holder's duly authorized assigns.
(g) The Corporation covenants and agrees that it will:
(i) take all such action as may be necessary and within its power to
ensure that all Common Shares delivered upon exercise of Rights shall,
at the time of delivery of the certificates for such Common Shares
(subject to payment of the Exercise Price), be duly and validly
authorized, executed, issued and delivered as fully paid and
non-assessable;
(ii) take all such action as may be necessary and within its power to
comply with the requirements of the CANADA BUSINESS CORPORATIONS ACT,
the SECURITIES ACT (Ontario), the securities laws or comparable
legislation of each of the provinces of Canada, the 1933 SECURITIES
ACT and the 1934 EXCHANGE ACT and the rules and regulations thereunder
and any other applicable law, rule or regulation, in connection with
the issuance and delivery of the Rights Certificates and the issuance
of any Common Shares upon exercise of Rights;
(iii) use reasonable efforts to cause all Common Shares issued upon
exercise of Rights to be listed on the principal stock exchanges on
which such Common Shares were traded immediately prior to the Stock
Acquisition Date;
(iv) cause to be reserved and kept available out of the authorized and
unissued Common Shares, the number of Common Shares that, as provided
in this Agreement, will from time to time be sufficient to permit the
exercise in full of all outstanding Rights;
(v) pay when due and payable, if applicable, any and all federal,
provincial and municipal transfer taxes and charges (not including any
income or capital taxes of the holder or exercising holder or any
liability of the Corporation to withhold tax) which may be payable in
respect of the original issuance or delivery of the Rights
Certificates, or certificates for Common Shares to be issued upon
exercise of any Rights, provided that the Corporation shall not be
required to pay any transfer tax or charge which may be payable in
respect of any transfer involved in the transfer or delivery of Rights
Certificates or the issuance or delivery of certificates for Common
Shares in a name other than that of the holder of the Rights being
transferred or exercised; and
17
(vi) after the Separation Time, except as permitted by Section 5.1, not
take (or permit any Subsidiary to take) any action if at the time such
action is taken it is reasonably foreseeable that such action will
diminish substantially or otherwise eliminate the benefits intended to
be afforded by the Rights.
2.3 ADJUSTMENTS TO EXERCISE PRICE; NUMBER OF RIGHTS
The Exercise Price, the number and kind of securities subject to purchase
upon exercise of each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 2.3.
(a) In the event the Corporation shall at any time after the date of this
Agreement:
(i) declare or pay a dividend on Common Shares payable in Common Shares
(or other securities exchangeable for or convertible into or giving a
right to acquire Common Shares or other securities of the Corporation)
other than pursuant to any optional stock dividend program;
(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 (or other securities exchangeable for or
convertible into or giving a right to acquire Common Shares or other
securities 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 and the number of Rights outstanding, or, if the payment
or effective date therefor shall occur after the Separation Time, the
securities purchasable upon exercise of Rights shall be adjusted as of the
payment or effective date in the manner set forth below.
If the Exercise Price and number of Rights outstanding are to be adjusted:
(x) the Exercise Price in effect after such adjustment will be equal to
the Exercise Price in effect immediately prior to such adjustment
divided by the number of Common Shares (or other capital stock) (the
"Expansion Factor") that a holder of one Common Share immediately
prior to such dividend, subdivision, change, consolidation or issuance
would hold thereafter as a result thereof; and
(y) each Right held prior to such adjustment will become that number of
Rights equal to the Expansion Factor,
and the adjusted number of Rights will be deemed to be distributed among
the Common Shares with respect to which the original Rights were associated
(if they remain outstanding) and the shares issued in respect of such
dividend, subdivision, change, consolidation or issuance, so that each such
Common Share (or other capital stock) will have exactly one Right
associated with it.
18
For greater certainty, if the securities purchasable upon exercise of
Rights are to be adjusted, the securities purchasable upon exercise of each
Right after such adjustment will be the securities that a holder of the
securities purchasable upon exercise of one Right immediately prior to such
dividend, subdivision, change, consolidation or issuance would hold
thereafter as a result of such dividend, subdivision, change, consolidation
or issuance.
If, after the Record Time and prior to the Expiration Time, the Corporation
shall issue any shares of capital stock other than Common Shares in a
transaction of a type described in Clause 2.3(a)(i) or (iv), shares of such
capital stock shall be treated herein as nearly equivalent to Common Shares
as may be practicable and appropriate under the circumstances and the
Corporation and the Rights Agent agree to amend this Agreement in order to
effect such treatment. If an event occurs which would require an adjustment
under both this Section 2.3 and Section 3.1(a) hereof, the adjustment
provided for in this Section 2.3 shall be in addition to and shall be made
prior to any adjustment required pursuant to Section 3.1(a) hereof.
Adjustments pursuant to subsection 2.3(a) shall be made successively,
whenever an event referred to in Section 2.3(a) occurs.
In the event the Corporation shall at any time after the Record Time and
prior to the Separation Time issue any Common Shares otherwise than in a
transaction referred to in this Subsection 2.3(a), each such Common Share
so issued shall automatically have one new Right associated with it, which
Right shall be evidenced by the certificate representing such associated
Common Share.
(b) In the event the Corporation shall at any time after the Record Time and
prior to the Separation Time fix a record date for the issuance of rights,
options or warrants to all holders of Common Shares entitling them (for a
period expiring within 45 calendar days after such record date) to
subscribe for or purchase Common Shares (or securities convertible into or
exchangeable for or carrying a right to purchase Common Shares) at a price
per Common Share (or, if a security convertible into or exchangeable for or
carrying a right to purchase or subscribe for Common Shares, having a
conversion, exchange or exercise price, including the price required to be
paid to purchase such convertible or exchangeable security or right per
share) less than the Market Price per Common Share on such record date, the
Exercise Price to be in effect after such record date shall be determined
by multiplying the Exercise Price in effect immediately prior to such
record date by a fraction:
(i) the numerator of which shall be the number of Common Shares
outstanding on such record date, plus the number of Common Shares that
the aggregate offering price of the total number of Common Shares so
to be offered (and/or the aggregate initial conversion, exchange or
exercise price of the convertible or exchangeable securities or rights
so to be offered, including the price required to be paid to purchase
such convertible or exchangeable securities or rights) would purchase
at such Market Price per Common Share; and
(ii) the denominator of which shall be the number of Common Shares
outstanding on such record date, plus the number of additional Common
Shares to be offered for subscription or purchase (or into which the
convertible or exchangeable securities or rights so to be offered are
initially convertible, exchangeable or exercisable).
19
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 then be 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 (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 purposes of this Agreement, the granting of the right to purchase
Common Shares (whether from treasury or otherwise) pursuant to any 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 95 per
cent of the current market price per share (determined as provided in such
plans) of the Common Shares.
(c) In the event the Corporation shall at any time after the Record Time and
prior to the Separation 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 or amalgamation) of evidences
of indebtedness, cash (other than an annual cash dividend or a dividend
referred to in Section 2.3(a)(i), but including any dividend payable in
other securities of the Corporation other than Common Shares), assets or
rights, options or warrants (excluding those referred to in Subsection
2.3(b)), the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to
such record date by a fraction:
(i) the numerator of which shall be the Market Price per Common Share on
such record date, less the fair market value (as determined in good
faith by the Board of Directors, whose determination shall be
described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent and the holders of Rights), on a per share
basis, of the portion of the cash, assets, evidences of indebtedness,
rights, options or warrants so to be distributed; and
(ii) the denominator of which shall be such Market Price per Common Share.
Such adjustments shall be made successively whenever such a record date is
fixed, and in the event that such a distribution is not so made, the
Exercise Price shall be adjusted to be the Exercise Price which would have
been in effect if such record date had not been fixed.
(d) Notwithstanding anything herein to the contrary, no adjustment in the
Exercise Price shall be required unless such adjustment would require an
increase or decrease of at least one per cent in the Exercise Price;
provided, however, that any adjustments which by reason of this Subsection
2.3(d) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under Section 2.3
shall
20
be made to the nearest cent or to the nearest ten-thousandth of a share.
Notwithstanding the first sentence of this Subsection 2.3(d), any
adjustment required by Section 2.3 shall be made no later than the earlier
of:
(i) three years from the date of the transaction which gives rise to such
adjustment; or
(ii) the Expiration Date.
(e) In the event the Corporation shall at any time after the Record Time and
prior to the Separation Time issue any shares of capital stock (other than
Common Shares), or rights, 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(a)(i) or
(iv), if the Board of Directors acting in good faith determines that the
adjustments contemplated by Subsections 2.3(a), (b) and (c) in connection
with such transaction will not appropriately protect the interests of the
holders of Rights, the Board of Directors may determine what other
adjustments to the Exercise Price, number of Rights and/or securities
purchasable upon exercise of Rights would be appropriate and,
notwithstanding Subsections 2.3(a), (b) and (c), and subject to prior
approval of the holders of Voting Shares or of Rights, as the case may be,
as provided in section 5.4, such adjustments, rather than the adjustments
contemplated by Subsections 2.3(a), (b) and (c), shall be made. The
Corporation and the Rights Agent shall have authority to amend this
Agreement as appropriate to provide for such adjustments.
(f) Each Right originally issued by the Corporation subsequent to any
adjustment made to the Exercise Price hereunder shall evidence the right to
purchase, at the adjusted Exercise Price, the number of Common Shares
purchasable from time to time hereunder upon exercise of a Right
immediately prior to such issue, all subject to further adjustment as
provided herein.
(g) Irrespective of any adjustment or change in the Exercise Price or the
number of Common Shares issuable upon the exercise of the Rights, the
Rights Certificates theretofore and thereafter issued may continue to
express the Exercise Price per Common Share and the number of Common Shares
which were expressed in the initial Rights Certificates issued hereunder.
(h) In any case in which this Section 2.3 shall require that an adjustment in
the Exercise Price be made effective as of a record date for a specified
event, the Corporation may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record
date the number of Common Shares and other securities of the Corporation,
if any, issuable upon such exercise over and above the number of Common
Shares and other securities of the Corporation, if any, issuable upon such
exercise on the basis of the Exercise Price in effect prior to such
adjustment; provided, however, that the Corporation shall deliver to such
holder an appropriate instrument evidencing such holder's right to receive
such additional shares (fractional or otherwise) or other securities upon
the occurrence of the event requiring such adjustment.
(i) Notwithstanding anything contained in this Section 2.3 to the contrary, the
Corporation shall be entitled to make such reductions in the Exercise
Price, in addition to those
21
adjustments expressly required by this Section 2.3, as and to the extent
that in their good faith judgment the Board of Directors determines to be
advisable, in order that any:
(i) consolidation or subdivision of Common Shares;
(ii) issuance (wholly or in part for cash) of Common Shares or securities
that by their terms are convertible into or exchangeable for Common
Shares;
(iii) stock dividends; or
(iv) issuance of rights, options or warrants 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.
2.4 DATE ON WHICH EXERCISE IS EFFECTIVE
Each Person in whose name any certificate for Common Shares or other
securities, if applicable, is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of the Common Shares or
other securities, if applicable, represented thereon, and such certificate shall
be dated the date upon which the Rights Certificate evidencing such Rights was
duly surrendered in accordance with Subsection 2.2(d) (together with a duly
completed Election to Exercise) and payment of the Exercise Price for such
Rights (and any applicable transfer taxes and other governmental charges payable
by the exercising holder hereunder) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Common Share
transfer books of the Corporation are closed, such Person shall be deemed to
have become the record holder of such shares on, and such certificate shall be
dated, the next succeeding Business Day on which the Common Share transfer books
of the Corporation are open.
2.5 EXECUTION, AUTHENTICATION, DELIVERY AND DATING OF RIGHTS CERTIFICATES
(a) The Rights Certificates shall be executed on behalf of the Corporation by
its Chairman of the Board, President or any Vice-President and by its
Corporate Secretary or any Assistant Secretary under the corporate seal of
the Corporation reproduced thereon. The signature of any of these officers
on the Rights Certificates may be manual or facsimile. Rights Certificates
bearing the manual or facsimile signatures of individuals who were at any
time the proper officers of the Corporation shall bind the Corporation,
notwithstanding that such individuals or any of them have ceased to hold
such offices either before or after the countersignature and delivery of
such Rights Certificates.
(b) Promptly after the Corporation learns of the Separation Time, the
Corporation will notify the Rights Agent of such Separation Time and will
deliver Rights Certificates executed by the Corporation to the Rights Agent
for countersignature, and the Rights Agent shall manually countersign (in a
manner satisfactory to the Corporation) and send such Rights Certificates
to the holders of the Rights pursuant to Subsection 2.2(c) hereof. No
Rights Certificate shall be valid for any purpose until countersigned by
the Rights Agent as aforesaid.
(c) Each Rights Certificate shall be dated the date of countersignature
thereof.
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2.6 REGISTRATION, TRANSFER AND EXCHANGE
(a) The Corporation will cause to be kept a register (the "Rights Register") in
which, subject to such reasonable regulations as it may prescribe, the
Corporation will provide for the registration and transfer of Rights. The
Rights Agent is hereby appointed registrar for the Rights (the "Rights
Registrar") for the purpose of maintaining the Rights Register for the
Corporation and registering Rights and transfers of Rights as herein
provided and the Rights Agent hereby accepts such appointment. In the event
that the Rights Agent shall cease to be the Rights Registrar, the Rights
Agent will have the right to examine the Rights Register at all reasonable
times.
After the Separation Time and prior to the Expiration Time, upon surrender
for registration of transfer or exchange of any Rights Certificate, and
subject to the provisions of Subsection 2.6(c), the Corporation will
execute, and the Rights Agent will manually countersign and deliver, in the
name of the holder or the designated transferee or transferees, as required
pursuant to the holder's instructions, one or more new Rights Certificates
evidencing the same aggregate number of Rights as did the Rights
Certificates so surrendered.
(b) All Rights issued upon any registration of transfer or exchange of Rights
Certificates shall be the valid obligations of the Corporation, and such
Rights shall be entitled to the same benefits under this Agreement as the
Rights surrendered upon such registration of transfer or exchange.
(c) Every Rights Certificate surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument
of transfer satisfactory in form 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 reasonable fees and expenses of the Rights Agent) connected
therewith.
2.7 MUTILATED, DESTROYED, LOST AND STOLEN RIGHTS CERTIFICATES
(a) If any mutilated Rights Certificate is surrendered to the Rights Agent
prior to the Expiration Time, the Corporation shall execute and the Rights
Agent shall countersign and deliver in exchange therefor a new Rights
Certificate evidencing the same number of Rights as did the Rights
Certificate so surrendered.
(b) If there shall be delivered to the Corporation and the Rights Agent prior
to the Expiration Time:
(i) evidence to their reasonable satisfaction of the destruction, loss or
theft of any Rights Certificate; and
(ii) such security or indemnity as may be reasonably required by them to
save each of them and any of their agents harmless;
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then, in the absence of notice to the Corporation or the Rights Agent that
such Rights Certificate has been acquired by a BONA FIDE purchaser, the
Corporation shall execute and upon the Corporation's request the Rights
Agent shall countersign and deliver, in lieu of any such destroyed, lost or
stolen Rights Certificate, a new Rights Certificate evidencing the same
number of Rights as did the destroyed, lost or stolen Rights Certificate.
(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 reasonable fees and expenses
of the Rights Agent) connected therewith.
(d) Every new Rights Certificate issued pursuant to this Section 2.7 in lieu of
any destroyed, lost or stolen Rights Certificate shall evidence the
contractual obligation of the Corporation, whether or not the destroyed,
lost or stolen Rights Certificate shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Agreement equally
and proportionately with any and all other Rights duly issued hereunder.
2.8 PERSONS DEEMED OWNERS OF RIGHTS
The Corporation, the Rights Agent and any agent of the Corporation or the
Rights Agent may deem and treat the Person in whose name a Rights Certificate
(or, prior to the Separation Time, the associated Common Share certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby for
all purposes whatsoever. As used in this Agreement, unless the context otherwise
requires, the term "holder" of any Rights shall mean the registered holder of
such Rights (or, prior to the Separation Time, of the associated Common Shares).
2.9 DELIVERY AND CANCELLATION OF CERTIFICATES
All Rights Certificates surrendered upon exercise or for redemption,
registration of transfer or exchange shall, if surrendered to any Person other
than the Rights Agent, be delivered to the Rights Agent and, in any case, shall
be promptly cancelled by the Rights Agent. The Corporation may at any time
deliver to the Rights Agent for cancellation any Rights Certificates previously
countersigned and delivered hereunder which the Corporation may have acquired in
any manner whatsoever, and all Rights Certificates so delivered shall be
promptly cancelled by the Rights Agent. No Rights Certificate shall be
countersigned in lieu of or in exchange for any Rights Certificates cancelled as
provided in this Section 2.9, except as expressly permitted by this Agreement.
The Rights Agent shall, subject to applicable laws, and its ordinary business
practices, destroy all cancelled Rights Certificates and deliver a certificate
of destruction to the Corporation.
2.10 AGREEMENT OF RIGHTS HOLDERS
Every holder of Rights, by accepting the same, consents and agrees with the
Corporation and the Rights Agent and with every other holder of Rights:
(a) to be bound by and subject to the provisions of this Agreement, as amended
from time to time in accordance with the terms hereof, in respect of all
Rights held;
(b) that prior to the Separation Time, each Right will be transferable only
together with, and will be transferred by a transfer of, the associated
Common Share certificate representing such Right;
24
(c) that after the Separation Time, the Rights Certificates will be
transferable only on the Rights Register as provided herein;
(d) that prior to due presentment of a Rights Certificate (or, prior to the
Separation Time, the associated Common Share certificate) for registration
of transfer, the Corporation, the Rights Agent and any agent of the
Corporation or the Rights Agent may deem and treat the Person in whose name
the Rights Certificate (or, prior to the Separation Time, the associated
Common Share certificate) is registered as the absolute owner thereof and
of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on such Rights Certificate or the associated Common Share
certificate made by anyone other than the Corporation or the Rights Agent)
for all purposes whatsoever, and neither the Corporation nor the Rights
Agent shall be affected by any notice to the contrary;
(e) that such holder of Rights has waived his right to receive any fractional
Rights or any fractional shares or other securities upon exercise of a
Right (except as provided herein);
(f) that, subject to the provisions of Section 5.4, without the approval of any
holder of Rights or Voting Shares and upon the sole authority of the Board
of Directors, acting in good faith, this Agreement may be supplemented or
amended from time to time to cure any ambiguity or to correct or supplement
any provision contained herein which may be inconsistent with the intent of
this Agreement or is otherwise defective, as provided herein; and
(g) notwithstanding anything in this Agreement to the contrary, neither the
Corporation nor the Rights Agent shall have any liability to any holder of
a Right or any other Person as a result of its inability to perform any of
its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or executive order
promulgated or enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation.
2.11 RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER
No holder, as such, of any Rights or Rights Certificate shall be entitled
to vote, receive dividends or be deemed for any purpose whatsoever the holder of
any Common Share or any other share or security of the Corporation which may at
any time be issuable on the exercise of the Rights represented thereby, nor
shall anything contained herein or in any Rights Certificate be construed or
deemed or confer upon the holder of any Right or Rights Certificate, as such,
any right, title, benefit or privilege of a holder of Common Shares or any other
shares or securities of the Corporation or any right to vote at any meeting of
shareholders of the Corporation whether for the election of directors or
otherwise or upon any matter submitted to holders of Common Shares or any other
shares of the Corporation at any meeting thereof, or to give or withhold consent
to any action of the Corporation, or to receive notice of any meeting or other
action affecting any holder of Common Shares or any other shares of the
Corporation except as expressly provided herein, or to receive dividends,
distributions or subscription rights, or otherwise, until the Right or Rights
evidenced by Rights Certificates shall have been duly exercised in accordance
with the terms and provisions hereof.
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ARTICLE 3 - ADJUSTMENTS TO THE RIGHTS
3.1 FLIP-IN EVENT
(a) Subject to Subsection 3.1(b) and Section 5.1, if prior to the Expiration
Time a Flip-in Event occurs, each Right shall constitute, effective 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 in the
event that after such consummation or occurrence, an event of a type
analogous to any of the events described in Section 2.3 shall have
occurred).
(b) Notwithstanding anything in this Agreement to the contrary, upon the
occurrence of any Flip-in Event, any Rights that are or were Beneficially
Owned on or after the earlier of the Separation Time or the Stock
Acquisition Date by:
(i) an Acquiring Person (or any Affiliate or Associate of an Acquiring
Person or any Person acting jointly or in concert with an Acquiring
Person or any Affiliate or Associate of an Acquiring Person); or
(ii) a transferee of Rights, directly or indirectly, from an Acquiring
Person (or any Affiliate or Associate of an Acquiring Person or any
Person acting jointly or in concert with an Acquiring Person or any
Affiliate or Associate of an Acquiring Person), where such transferee
becomes a transferee concurrently with or subsequent to the Acquiring
Person becoming such in a transfer that the Board of Directors has
determined is part of a plan, arrangement or scheme of an Acquiring
Person (or any Affiliate or Associate of an Acquiring Person or any
Person acting jointly or in concert with an Acquiring Person or any
Affiliate or Associate of an Acquiring Person), that has the purpose
or effect of avoiding Clause 3.1(b)(i),
shall become null and void without any further action, and any holder of
such Rights (including transferees) shall thereafter have no right to
exercise such Rights under any provision of this Agreement and further
shall thereafter not have any other rights whatsoever with respect to such
Rights, whether under any provision of this Agreement or otherwise.
(c) From and after the Separation Time, the Corporation shall do all such acts
and things as shall be necessary and within its power to ensure compliance
with the provisions of this Section 3.1, including without limitation, all
such acts and things as may be required to satisfy the requirements of the
CANADA BUSINESS CORPORATIONS ACT, the SECURITIES ACT (Ontario) 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
26
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 issued to a
Person who was an Acquiring Person or an Affiliate or an Associate of
an Acquiring Person (as such terms are defined in the Shareholder
Rights Plan Agreement) or a Person who was acting jointly or in
concert with an Acquiring Person or an Affiliate or Associate of an
Acquiring Person. This Rights Certificate and the Rights represented
hereby are void or shall become void in the circumstances specified in
Subsection 3.1(b) of the Shareholder Rights Plan Agreement.
provided, however, that the Rights Agent shall not be under any
responsibility to ascertain the existence of facts that would require the
imposition of such legend but shall impose such legend only if instructed
to do so by the Corporation in writing or if a holder fails to certify upon
transfer or exchange in the space provided on the Rights Certificate that
such holder is not a Person described in such legend.
ARTICLE 4 - THE RIGHTS AGENT
4.1 GENERAL
(a) The Corporation hereby appoints the Rights Agent to act as agent for the
Corporation and the holders of the Rights in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment.
The Corporation may from time to time appoint such co-Rights Agents
("Co-Rights Agents") as it may deem necessary or desirable, subject to the
approval of the Rights Agent. In the event the Corporation appoints one or
more Co-Rights Agents, the respective duties of the Rights Agent and
Co-Rights Agents shall be as the Corporation may determine, with the
approval of the Rights Agent and the Co-Rights Agent. The Corporation
agrees to pay all reasonable fees and expenses of the Rights Agent in
respect of the performance of its duties under this Agreement. The
Corporation also agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or wilful misconduct on the part of the Rights Agent,
for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability, which right to
indemnification will survive the termination of this Agreement or the
resignation or removal of the Rights Agent.
(b) The Rights Agent shall be protected and shall incur no liability for or in
respect of any action taken, suffered or omitted by it in connection with
its administration of this Agreement in reliance upon any certificate for
Common Shares, Rights Certificate, certificate for other securities of the
Corporation, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
opinion, 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.
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4.2 MERGER, AMALGAMATION OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT
(a) Any corporation into which the Rights Agent may be merged or amalgamated or
with which it may be consolidated, or any corporation resulting from any
merger, amalgamation, statutory arrangement or consolidation to which the
Rights Agent is a party, or any corporation succeeding to the shareholder
or stockholder services business of the Rights Agent, will be the successor
to the Rights Agent under this Agreement without the execution or filing of
any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 4.4 hereof. If, 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, the successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and if, at that time, any of the Rights have not been
countersigned, any successor Rights Agent may countersign such Rights
Certificates in the name of the predecessor Rights Agent or in the name of
the 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) If, at any time, the name of the Rights Agent is changed and at such time
any of the Rights Certificates have been countersigned but not delivered,
the Rights Agent may adopt the countersignature under its prior name and
deliver Rights Certificates so countersigned; and if, at that time, any of
the Rights Certificates have not been countersigned, the Rights Agent may
countersign such Rights Certificates either in its prior name or in its
changed name; and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this Agreement.
4.3 DUTIES OF RIGHTS AGENT
The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, all of which the Corporation
and the holders of certificates for Common Shares and the holders of Rights
Certificates, by their acceptance thereof, shall be bound:
(a) the Rights Agent, at the expense of the Corporation, may consult with and
retain legal counsel (who may be legal counsel for the Corporation) and
such other experts as it reasonably considers necessary to perform its
duties hereunder, and the opinion of such counsel or other expert will be
full and complete authorization and protection to the Rights Agent as to
any action taken or omitted by it in good faith and in accordance with such
opinion;
(b) whenever in the performance of its duties under this Agreement, the Rights
Agent deems it necessary or desirable that any fact or matter be proved or
established by the Corporation prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof is
specifically prescribed herein) is deemed to be conclusively proved and
established by a certificate signed by a Person believed by the Rights
Agent to be the Chairman of the Board, President, Chief Executive Officer,
Chief Financial Officer, any Vice-President, Treasurer, Corporate
Secretary, or any Assistant Secretary of the Corporation and delivered to
the Rights Agent; and such certificate will be full authorization to the
Rights Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate;
28
(c) the Rights Agent will be liable hereunder for its own negligence, bad faith
or wilful misconduct;
(d) the Rights Agent will not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the
certificates for Common Shares or the Rights Certificates (except its
countersignature thereof) or be required to verify the same, but all such
statements and recitals are and will be deemed to have been made by the
Corporation only;
(e) the Rights Agent will not have any responsibility in respect of the
validity of this Agreement or the execution and delivery hereof (except the
due authorization, execution and delivery hereof by the Rights Agent) or in
respect of the validity or execution of any certificate for a Common Share
or a Rights Certificate (except its countersignature thereof); nor will it
be responsible for any breach by the Corporation of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor
will it be responsible for any change in the exerciseability of the Rights
(including the Rights becoming void pursuant to Subsection 3.1(b) hereof)
or any adjustment required under the provisions of Section 2.3 hereof or
responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights after receipt of
the certificate contemplated by Section 2.3 describing any such
adjustment); nor is it deemed by any act hereunder to make any
representation or warranty as to the authorization of any Common Shares to
be issued pursuant to this Agreement or any Rights or as to whether any
Common Shares will, when issued, be duly and validly authorized, executed,
issued and delivered and fully paid and non-assessable;
(f) the Corporation agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably
be required by the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement;
(g) the Rights Agent is hereby authorized and directed to accept instructions
in writing with respect to the performance of its duties hereunder from any
individual believed by the Rights Agent to be the Chairman of the Board,
President, Chief Executive Officer, Chief Financial Officer, any
Vice-President, Treasurer, Corporate Secretary or any Assistant Secretary
of the Corporation, and to apply to such individuals for advice or
instructions in connection with its duties, and it shall not be liable for
any action taken or suffered by it in good faith in accordance with
instructions of any such individual;
(h) the Rights Agent and any shareholder or stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in Common Shares, Rights
or other securities of the Corporation or become pecuniarily interested in
any transaction in which the Corporation may be interested, or contract
with or lend money to the Corporation or otherwise act as fully and freely
as though it were not Rights Agent under this Agreement and nothing herein
shall preclude the Rights Agent from acting in any other capacity for the
Corporation or for any other legal entity; and
(i) the Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent will not be
answerable or accountable for any act, default, neglect or
29
misconduct of any such attorneys or agents or for any loss to the
Corporation resulting from any such act, default, neglect or misconduct,
provided reasonable care was exercised in the selection and continued
employment thereof.
4.4 CHANGE OF RIGHTS AGENT
The Rights Agent may resign and be discharged from its duties under this
Agreement upon 60 days" notice (or such lesser notice as is acceptable to the
Corporation) in writing mailed to the Corporation and to each transfer agent of
Common Shares by registered or certified mail. The Corporation may remove the
Rights Agent upon 60 days" notice in writing, mailed to the Rights Agent and to
each transfer agent of the Common Shares by registered or certified mail. If the
Rights Agent should resign or be removed or otherwise become incapable of
acting, the Corporation will appoint a successor to the Rights Agent. If the
Corporation fails to make such appointment within a period of 60 days after
removal or after it has been notified in writing of the resignation or
incapacity by the resigning or incapacitated Rights Agent, then by prior written
notice to the Corporation the resigning Rights Agent or the holder of any Rights
(which holder shall, with such notice, submit such holder's Rights Certificate,
if any, for inspection by the Corporation), may apply to a 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 the
Province of Ontario. After appointment, the successor Rights Agent will be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent, upon receipt of all outstanding fees and expenses
owing to it, shall deliver and transfer to the successor Rights Agent any
property at the time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment, the Corporation will file notice thereof
in writing with the predecessor Rights Agent and each transfer agent of the
Common Shares and mail a notice thereof in writing to the holders of the Rights
in accordance with Section 5.9. Failure to give any notice provided for in this
Section 4.4, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
any successor Rights Agent, as the case may be.
ARTICLE 5 - MISCELLANEOUS
5.1 REDEMPTION AND WAIVER
(a) The Board of Directors acting in good faith may, until the occurrence of a
Flip-in Event, upon prior written notice delivered to the Rights Agent,
waive the application of Section 3.1 to a particular Flip-in Event that
would result from a Take-over Bid made by way of take-over bid circular to
all holders of record of Voting Shares (which for greater certainty shall
not include the circumstances described in Subsection 5.1(h)); provided
that if the Board of Directors waives the application of Section 3.1 to a
particular Flip-in Event pursuant to this Subsection 5.1(a), the Board of
Directors shall be deemed to have waived the application of Section 3.1 to
any other Flip-in Event occurring by reason of any Take-over Bid which is
made by means of a take-over bid circular to all holders of record of
Voting Shares prior to the expiry of any Take-over Bid (as the same may be
extended from time to time) in respect of which a waiver is, or is deemed
to have been, granted under this Subsection 5.1(a).
30
(b) Subject to the prior consent of the holders of the Voting Shares or the
Rights as set forth in Subsection 5.4(b) or (c) the Board of Directors of
the Corporation acting in good faith may, at its option, at any time prior
to the provisions of Section 3.1 becoming applicable as a result of the
occurrence of a Flip-in Event, elect to redeem all but not less than all of
the outstanding Rights at a redemption price of $0.000001 per Right
appropriately adjusted in a manner analogous to the applicable adjustment
provided for in Section 2.3 if an event of the type analogous to any of the
events described in Section 2.3 shall have occurred (such redemption price
being herein referred to as the "Redemption Price").
(c) Where, pursuant to a Permitted Bid, a Competing Permitted Bid or an Exempt
Acquisition under Subsection 5.1(a), a Person acquires outstanding Voting
Shares, other than Voting Shares Beneficially Owned by such Person at the
date of the Permitted Bid, the Competing Permitted Bid or the Exempt
Acquisition under Subsection 5.1(a), then the Board of Directors of the
Corporation shall immediately upon the consummation of such acquisition
without further formality and without any approval under Subsection 5.4(b)
or (c) be deemed to have elected to redeem the Rights at the Redemption
Price.
(d) Where a Take-over Bid that is not a Permitted Bid Acquisition is withdrawn
or otherwise terminated after the Separation Time has occurred and prior to
the occurrence of a Flip-in Event, the Board of Directors may elect to
redeem all the outstanding Rights at the Redemption Price.
(e) If the Board of Directors is deemed under Subsection 5.1(c) to have
elected, or elects under either of Subsection 5.1(b) or (d), to redeem the
Rights, the right to exercise the Rights will thereupon, without further
action and without notice, terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price.
(f) Within 10 days after the Board of Directors is deemed under Subsection
5.1(c) to have elected, or elects under Subsection 5.1(b) or (d), to redeem
the Rights, the Corporation shall give notice of redemption to the holders
of the then outstanding Rights by mailing such notice to each such holder
at his last address as it appears upon the registry books of the Rights
Agent or, prior to the Separation Time, on the registry books of the
transfer agent for the Voting Shares. Any notice which is mailed in the
manner provided herein shall be deemed given, whether or not the holder
receives the notice. Each notice of redemption will state the method by
which the payment of the Redemption Price will be made.
(g) Upon the Rights being redeemed pursuant to Subsection 5.1(d), all the
provisions of this Agreement shall continue to apply as if the Separation
Time had not 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 the
Rights shall remain attached to the outstanding Common Shares, subject to
and in accordance with the provisions of this Agreement.
(h) The Board of Directors may waive the application of Section 3.1 in respect
of the occurrence of any Flip-in Event if the Board of Directors has
determined within ten Trading Days following a Stock Acquisition Date that
a Person became an Acquiring Person by inadvertence and without any
intention to become, or knowledge that it would become, an Acquiring Person
under this Agreement and, in the event that such a waiver
31
is granted by the Board of Directors, such Stock Acquisition Date shall be
deemed not to have occurred. Any such waiver pursuant to this Subsection
5.1(h) must be on the condition that such Person, within 14 days after the
foregoing determination by the Board of Directors or such earlier or later
date as the Board of Directors may determine (the "Disposition Date"), has
reduced its Beneficial Ownership of Voting Shares so that the Person is no
longer an Acquiring Person. If the Person remains an Acquiring Person at
the close of business on the Disposition Date, the Disposition Date shall
be deemed to be the date of occurrence of a further Stock Acquisition Date
and Section 3.1 shall apply thereto.
(i) The Corporation shall give prompt written notice to the Rights Agent of any
waiver of the application of Section 3.1 made by the Board of Directors
under this Section 5.1.
5.2 EXPIRATION
No Person shall have any rights whatsoever pursuant to this Agreement or in
respect of any Right after the Expiration Time, except the Rights Agent as
specified in Subsection 4.1(a) of this Agreement.
5.3 ISSUANCE OF NEW RIGHTS CERTIFICATES
Notwithstanding any of the provisions of this Agreement or the Rights to
the contrary, the Corporation may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by the Board of Directors to
reflect any adjustment or change in the number or kind or class of securities
purchasable upon exercise of Rights made in accordance with the provisions of
this Agreement.
5.4 SUPPLEMENTS AND AMENDMENTS
(a) The Corporation may make amendments to this Agreement to correct any
clerical or typographical error or, subject to Subsection 5.4(e), which are
required to maintain the validity of this Agreement as a result of any
change in any applicable legislation, rules or regulations thereunder. The
Corporation may, prior to the date of its shareholders" meeting referred to
in Section 5.15, supplement or amend this Agreement without the approval of
any holders of Rights or Voting Shares in order to make any changes which
the Board of Directors acting in good faith may deem necessary or
desirable. Notwithstanding anything in this Section 5.4 to the contrary, no
such supplement or amendment shall be made to the provisions of Article 4
except with the written concurrence of the Rights Agent to such supplement
or amendment.
(b) Subject to Section 5.4(a), the Corporation may, with the prior consent of
the holders of Voting Shares obtained as set forth below, at any time prior
to the Separation Time, amend, vary or rescind any of the provisions of
this Agreement and the Rights (whether or not such action would materially
adversely affect the interests of the holders of Rights generally). Such
consent shall be deemed to have been given if the action requiring such
approval is authorized by the affirmative vote of a majority of the votes
cast by Independent Shareholders present or represented at and entitled to
be voted at a meeting of the holders of Voting Shares duly called and held
in compliance with applicable laws and the articles and by-laws of the
Corporation.
32
(c) 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
votes of the holders of Rights present or represented at and entitled to be
voted at a meeting of the holders and representing 50% plus one of the
votes cast in respect thereof.
(d) Any approval of the holders of Rights shall be deemed to have been given if
the action requiring such approval is authorized by the affirmative votes
of the holders of Rights present or represented at and entitled to be voted
at a meeting of the holders of Rights and representing a majority of the
votes cast in respect thereof. For the purposes hereof, each outstanding
Right (other than Rights which are void pursuant to the provisions hereof)
shall be entitled to one vote, and the procedures for the calling, holding
and conduct of the meeting shall be those, as nearly as may be, which are
provided in the Corporation's by-laws and the CANADA BUSINESS CORPORATIONS
ACT with respect to meetings of shareholders of the Corporation.
(e) Any amendments made by the Corporation to this Agreement pursuant to
Subsection 5.4(a) which are required to maintain the validity of this
Agreement as a result of any change in any applicable legislation, rule or
regulation thereunder shall:
(i) if made before the Separation Time, be submitted to the shareholders
of the Corporation at the next meeting of shareholders and the
shareholders may, by the majority referred to in Subsection 5.4(b),
confirm or reject such amendment;
(ii) if made after the Separation Time, be submitted to the holders of
Rights at a meeting to be called for on a date not later than
immediately following the next meeting of shareholders of the
Corporation and the holders of Rights may, by resolution passed by the
majority referred to in Subsection 5.4(d), confirm or reject such
amendment.
Any such amendment shall be effective from the date of the resolution of
the Board of Directors adopting such amendment, until it is confirmed or
rejected or until it ceases to be effective (as described in the next
sentence) and, where such amendment is confirmed, it continues in effect in
the form so confirmed. If such amendment is rejected by the shareholders or
the holders of Rights or is not submitted to the shareholders or holders of
Rights as required, then such amendment shall cease to be effective from
and after the termination of the meeting at which it was rejected or to
which it should have been but was not submitted or from and after the date
of the meeting of holders of Rights that should have been but was not held,
and no subsequent resolution of the Board of Directors to amend this
Agreement to substantially the same effect shall be effective until
confirmed by the shareholders or holders of Rights as the case may be.
5.5 FRACTIONAL RIGHTS AND FRACTIONAL SHARES
(a) The Corporation shall not be required to issue fractions of Rights or to
distribute Rights Certificates which evidence fractional Rights. After the
Separation Time, in lieu of
33
issuing fractional Rights, the Corporation shall pay to the holders of
record of the Rights Certificates (provided the Rights represented by such
Rights Certificates are not void pursuant to the provisions of Subsection
3.1(b), at the time such fractional Rights would otherwise be issuable), an
amount in cash equal to the fraction of the Market Price of one whole Right
that the fraction of a Right that would otherwise be issuable is of one
whole Right.
(b) The Corporation shall not be required to issue fractions of Common Shares
upon exercise of Rights or to distribute certificates which evidence
fractional Common Shares. In lieu of issuing fractional Common Shares, the
Corporation shall pay to the registered holders of Rights Certificates, at
the time such Rights are exercised as herein provided, an amount in cash
equal to the fraction of the Market Price of one Common Share that the
fraction of a Common Share that would otherwise be issuable upon the
exercise of such Right is of one whole Common Share at the date of such
exercise.
5.6 RIGHTS OF ACTION
Subject to the terms of this Agreement, all rights of action in respect of
this Agreement, other than rights of action vested solely in the Rights Agent,
are vested in the holders of the Rights. Any holder of Rights, without the
consent of the Rights Agent or of the holder of any other Rights, may, on such
holder's own behalf and for such holder's own benefit and the benefit of other
holders of Rights, enforce, and may institute and maintain any suit, action or
proceeding against the Corporation to enforce such holder's right to exercise
such holder's Rights, or Rights to which such holder is entitled, in the manner
provided in such holder's Rights and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this Agreement.
5.7 REGULATORY APPROVALS
Any obligation of the Corporation or action or event contemplated by this
Agreement shall be subject to the receipt of requisite approval or consent from
any governmental or regulatory authority, and without limiting the generality of
the foregoing, necessary approvals of The Toronto Stock Exchange and other
exchanges shall be obtained, in relation to the issuance of Common Shares upon
the exercise of Rights under Subsection 2.2(d).
5.8 DECLARATION AS TO NON-CANADIAN OR NON-U.S. HOLDERS
If in the opinion of the Board of Directors (who may rely upon the advice
of counsel) any action or event contemplated by this Agreement would require
compliance by the Corporation with the securities laws or comparable legislation
of a jurisdiction outside Canada, the Board of Directors acting in good faith
shall take such actions as it may deem appropriate to ensure such compliance. In
no event shall the Corporation or the Rights Agent be required to issue or
deliver Rights or securities issuable on exercise of Rights to persons who are
citizens, residents or nationals of any jurisdiction 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.
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5.9 NOTICES
(a) Notices or demands authorized or required by this Agreement to be given or
made by the Rights Agent or by the holder of any Rights to or on the
Corporation shall be sufficiently given or made if delivered, sent by
registered or certified mail, postage prepaid (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:
Draxis Health Inc.
2nd Floor
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: Corporate Secretary
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
(b) Notices or demands authorized or required by this Agreement to be given or
made by the Corporation or by the holder of any Rights to or on the Rights
Agent shall be sufficiently given or made if delivered, sent by registered
or certified mail, postage prepaid (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 Trust Company of Canada
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
12th Floor, South Tower
Toronto, Ontario
M5J 2Y1
Attention: Stock Transfer Services
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
(c) Notices or demands authorized or required by this Agreement to be given or
made by the Corporation or the Rights Agent to or on the holder of any
Rights shall be sufficiently given or made if delivered or sent by first
class mail, postage prepaid, addressed to such holder at the address of
such holder as it appears upon the register of the Rights Agent or, prior
to the Separation Time, on the register of the Corporation for its Common
Shares. Any notice which is mailed or sent in the manner herein provided
shall be deemed given, whether or not the holder receives the notice.
(d) Any notice given or made in accordance with this Section 5.9 shall be
deemed to have been given and to have been received on the day of delivery,
if so delivered, on the third Business Day (excluding each day during which
there exists any general interruption of postal service due to strike,
lockout or other cause) following the mailing thereof, if so mailed, and on
the day of telegraphing, telecopying or sending of the same by other means
of recorded electronic communication (provided such sending is during the
normal business hours of the addressee on a Business Day and if not, on the
first Business Day
35
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.
5.10 COSTS OF ENFORCEMENT
The Corporation agrees that if the Corporation fails to fulfil any of its
obligations pursuant to this Agreement, then the Corporation will reimburse the
holder of any Rights for the costs and expenses (including legal fees) incurred
by such holder to enforce his rights pursuant to any Rights or this Agreement.
5.11 SUCCESSORS
All the covenants and provisions of this Agreement by or for the benefit of
the Corporation or the Rights Agent shall bind and enure to the benefit of their
respective successors and assigns hereunder.
5.12 BENEFITS OF THIS AGREEMENT
Nothing in this Agreement shall be construed to give to any Person other
than the Corporation, the Rights Agent and the holders of the Rights any legal
or equitable right, remedy or claim under this Agreement; further, this
Agreement shall be for the sole and exclusive benefit of the Corporation, the
Rights Agent and the holders of the Rights.
5.13 GOVERNING LAW
This Agreement and each Right issued hereunder shall be deemed to be a
contract made under the laws of the Province of Ontario and for all purposes
shall be governed by and construed in accordance with the laws of such Province
applicable to contracts to be made and performed entirely within such Province.
5.14 SEVERABILITY
If any term or provision hereof or the application thereof to any
circumstance shall, in any jurisdiction and to any extent, be invalid or
unenforceable, such term or provision shall be ineffective only as to such
jurisdiction and to the extent of such invalidity or unenforceability in such
jurisdiction without invalidating or rendering unenforceable or ineffective the
remaining terms and provisions hereof in such jurisdiction or the application of
such term or provision in any other jurisdiction or to circumstances other than
those as to which it is specifically held invalid or unenforceable.
5.15 COMING INTO EFFECT
This Agreement is effective and in full force and effect in accordance with
its terms from and after the Effective Date. If this Agreement is not confirmed
by resolution passed by a majority of the votes cast by holders of Voting Shares
of the Corporation who vote in respect of confirmation of this Agreement at a
meeting of the Corporation's shareholders to be held on or prior to May 16,
2002, then this Agreement and all outstanding Rights shall terminate and be void
and of no further force and effect on and from that date which is the earlier of
(a) the date of termination of the meeting called to consider the confirmation
of this Agreement under this Section 5.15 and (b) May 16, 2002.
36
5.16 RECONFIRMATION
This Agreement must be reconfirmed by a resolution passed by a majority of
greater than 50 percent of the votes cast by all holders of Voting Shares who
vote in respect of such reconfirmation at the annual meeting of the Corporation
to be held in 2005 and at every third annual meeting of the Corporation
thereafter. If the Agreement is not so reconfirmed or is not presented for
reconfirmation at such annual meeting, the Agreement and all outstanding Rights
shall terminate and be void and of no further force and effect on and from the
date of termination of the annual meeting; provided that termination shall not
occur if a Flip-in Event has occurred (other than a Flip-in Event which has been
waived pursuant to Subsection 5.1(a) or (h) hereof), prior to the date upon
which this Agreement would otherwise terminate pursuant to this Section 5.16.
5.17 DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS
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 hereof shall not subject the Board of Directors or
any director of the Corporation to any liability to the holders of the Rights.
5.18 TIME OF THE ESSENCE
Time shall be of the essence in this Agreement.
5.19 EXECUTION IN COUNTERPARTS
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
DRAXIS HEALTH INC.
By:
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By:
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c/s
COMPUTERSHARE TRUST COMPANY OF CANADA
By:
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By:
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c/s