SHAREHOLDER PROTECTION RIGHTS PLAN AGREEMENT
DATED AS OF
December 18, 1996
BETWEEN
SOLUCORP INDUSTRIES LTD.
AND
CIBC MELLON TRUST COMPANY
AS RIGHTS AGENT
XXXXX, XXXXXX
Vancouver
SHAREHOLDER PROTECTION RIGHTS PLAN AGREEMENT
TABLE OF CONTENTS
Page
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ARTICLE 1
INTERPRETATION.............................................................. 2
1.1 Certain Definitions........................................... 2
1.2 Continuation to Another Jurisdiction.......................... 14
1.3 Currency...................................................... 14
1.4 Description Headings.......................................... 14
1.5 References to Agreement....................................... 14
1.6 Number and Gender............................................. 14
1.7 Acting in Good Faith.......................................... 14
1.8 Holder........................................................ 15
1.9 Grandfather Provision......................................... 15
1.10 Calculation of Number and Percentage of
Beneficial Ownership Of Outstanding Voting Shares........... 16
ARTICLE 2
THE RIGHTS.................................................................. 16
2.1 Legend on Certificates........................................ 16
2.2 Execution, Authentication, Delivery and Dating of Rights
Certificates................................................ 17
2.3 Registration, Registration of Transfer and Exchange........... 18
2.4 Mutilated, Destroyed, Lost and Stolen Rights Certificates..... 18
2.5 Persons Deemed Owners of Rights............................... 19
2.6 Delivery and Cancellation of Certificates..................... 19
2.7 Agreement of Rights Holders................................... 20
2.8 Rights Certificate Holder Not Deemed a Shareholder............ 20
ARTICLE 3
EXERCISE OF THE RIGHTS...................................................... 21
3.1 Initial Exercise Price; Exercise of Rights; Detachment of
Rights...................................................... 21
3.2 Adjustments to Exercise Prices; Number of Rights.............. 24
3.3 Date on Which Exercise is Effective........................... 29
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Page
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ARTICLE 4
ADJUSTMENTS TO THE RIGHTS
IN THE EVENT OF CERTAIN TRANSACTIONS........................................ 30
4.1 Flip-in Event................................................. 30
4.2 Exchange Option............................................... 31
ARTICLE 5
THE RIGHTS AGENT............................................................ 32
5.1 General....................................................... 32
5.2 Merger or Amalgamation or Change of Name of Rights Agent...... 33
5.3 Duties of Rights Agent........................................ 33
5.4 Change of Rights Agent........................................ 35
ARTICLE 6
MISCELLANEOUS............................................................... 36
6.1 Redemption and Waiver......................................... 36
6.2 Expiration.................................................... 37
6.3 Shareholder Review............................................ 37
6.4 Issuance of New Rights Certificate............................ 37
6.5 Fractional Rights and Fractional Shares....................... 38
6.6 Supplements and Amendments.................................... 38
6.7 Rights of Action.............................................. 38
6.8 Notice of Proposed Actions.................................... 39
6.9 Notices....................................................... 39
6.10 Costs of Enforcement.......................................... 40
6.11 Successors.................................................... 40
6.12 Benefits of this Agreement.................................... 40
6.13 Governing Law................................................. 40
6.14 Counterparts.................................................. 40
6.15 Severability.................................................. 40
6.16 Effective Date................................................ 41
6.17 Determination and Actions by the Board of Directors........... 41
6.18 Successor Corporations........................................ 41
6.19 Time of the Essence........................................... 42
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SHAREHOLDER PROTECTION RIGHTS PLAN AGREEMENT
MEMORANDUM OF AGREEMENT made as of the 18th day of December, 1996.
BETWEEN:
SOLUCORP INDUSTRIES LTD., a corporation existing under the laws of the
Province of British Columbia
(hereinafter called the "Corporation")
OF THE FIRST PART
AND:
CIBC MELLON TRUST COMPANY, a trust company incorporated under the laws of
Canada, as rights agent
(hereinafter called the "Rights Agent")
OF THE SECOND PART
WHEREAS the Board of Directors of the Corporation has determined that it is
advisable for the Corporation to adopt a shareholder protection rights plan (the
"Rights Plan") to protect the Corporation and its shareholders from unfair,
abusive or coercive acquisition tactics;
AND WHEREAS in order to implement the Rights Plan the Board of Directors of
the Corporation has:
1. authorized the issuance, effective 5:00 p.m. (Vancouver time) on
December 18, 1996 of one right (a "Right") in respect of each Common
Share of the Corporation in each case outstanding at 5:00
p.m.(Vancouver time) on December 17, 1996 (the "Record Time"); and
2. authorized the issuance of one Right in respect of each Common Share
issued after the Record Time and prior to the earlier of the
Separation Time (as hereinafter defined) and the Expiration Time (as
hereinafter defined);
AND WHEREAS each Right entitles the holder thereof, after the Separation
Time, to purchase securities of the Corporation (or, in certain cases, of
certain other entities) pursuant to the terms and subject to the conditions set
forth herein;
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AND WHEREAS the Corporation desires to appoint the Rights Agent to act on
behalf of the Corporation and holders of Rights, and the Rights Agent is willing
so to 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;
NOW THEREFORE, in consideration of the premises and the respective
covenants and agreements set forth herein, the parties hereby agree as follows:
ARTICLE 1
INTERPRETATION
1.1 CERTAIN DEFINITIONS
For the purposes of this Agreement, the following terms have the meanings
indicated:
(a) "Acquiring Person" shall mean, subject to Section 1.6, any Person who
is the Beneficial owner of 20% or more of the outstanding Voting
Shares of the Corporation; provided, however, that the term "Acquiring
Person" shall not include:
(i) the Corporation or any Subsidiary of the Corporation or any
employee benefit plan, deferred profit sharing plan, stock
participation plan or trust for the benefit of employees, in each
case of the Corporation or any Subsidiary of the Corporation, or
any Person organized, appointed or established by the Corporation
or any Subsidiary of the Corporation for or pursuant to the terms
of any such plan or trust;
(ii) any Person who becomes the Beneficial Owner of 20% or more of the
outstanding Voting Shares of the Corporation as a result of:
(1) an acquisition or redemption by the Corporation or a
Subsidiary of the Corporation of Voting Shares of the
Corporation that, by reducing the number of Voting Shares of
the Corporation outstanding, increases the percentage of
outstanding Voting Shares of the Corporation Beneficially
Owned by such Person to 20% or more;
(2) share acquisitions made pursuant to a Permitted Bid
("Permitted Bid Acquisitions"); or
(3) share acquisitions in respect of which the Board of
Directors has waived the application of Section pursuant to
the provisions of subsection or 6.1(b) or 6.1 (c) or
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that were made on or prior to the date of this Agreement
("Exempt Acquisitions");
provided, however, that if a Person shall become the Beneficial
Owner of 20% or more of the Voting Shares of the Corporation then
outstanding by reason of share acquisitions or redemptions by the
Corporation (or a Subsidiary of the Corporation) or Permitted Bid
Acquisitions or Exempt Acquisitions and, after such share
acquisitions or redemptions by the Corporation (or a Subsidiary
of the Corporation) or Permitted Bid Acquisitions or Exempt
Acquisitions, such Person, while such Person is the Beneficial
Owner of 20% or more of the Voting Shares of the Corporation then
outstanding, becomes the Beneficial Owner of any additional
outstanding Voting Shares of the Corporation other than pursuant
to Permitted Bid Acquisitions or through Exempt Acquisitions or
as a result of a Pro Rata Acquisition, then as of the date such
Person becomes the Beneficial Owner of such additional
outstanding Voting Shares, such Person shall be an "Acquiring
Person"; and
(iii) for the period of 10 days after the Disqualification Date (as
hereinafter defined), any Person who becomes the Beneficial Owner
of 20% or more of the outstanding Voting Shares of the
Corporation as a result of such Person becoming disqualified from
relying on clause hereof where such disqualification results
solely because such Person has made or proposes to make a
Take-over Bid in respect of securities of the Corporation alone
or by acting jointly or in concert with any other Person (the
first date of public announcement (which, for purposes of this
definition, shall include, without limitation, a report filed
pursuant to Section 111 of the Securities Act (British Columbia)
or Section 13(d) of the 1934 Exchange Act) by such Person or the
Corporation of the intent of such Person to commence such a
Take-over Bid being herein referred to as the "Disqualification
Date");
(b) "Affiliate" shall mean a Person that directly, or indirectly through
one or more intermediaries, controls or is controlled by, or is under
common control with, another Person;
(c) "Associate" shall have the meaning ascribed to such term in the
Company Act (British Columbia) as at the date of this Agreement;
provided, however, that a Person shall not be an Associate of a trust
by reason only of the fact that such Person serves as trustee or in a
similar capacity in relation to such trust if such Person is duly
licensed to carry on the business of a trust company under the laws of
Canada or a province
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thereof or if a substantial portion of the ordinary business of such
Person is the management of investment funds for unaffiliated
investors and such Person acts as trustee or in a similar capacity in
relation to such trust in the ordinary course of such business;
(d) subject to Section 1.6, a Person shall be deemed the "Beneficial
Owner" of, and to have "Beneficial Ownership" of, and to "Beneficially
Own":
(i) any securities as to which such Person, or any of such Person's
Affiliates or Associates, is the direct or indirect beneficial
owner (including through being a beneficiary of a trust that owns
such securities whether or not such Person's interest in the
trust is present or future, vested or contingent) or would be
deemed to be the beneficial owner pursuant to the provisions of
the Securities Act (British Columbia) or pursuant to Rule 13-3
and 13d-5 under the 1934 Exchange Act (or pursuant to any
comparable or successor laws or regulations) for the purposes of
the xxxxxxx xxxxxxx or take-over bid provisions thereof or, if
such provisions shall be rescinded and there shall be no
comparable or successor laws or regulations, pursuant to the
provisions of the Securities Act (British Columbia) or pursuant
to Rule 13-3 and 13d-5 under the 1934 Exchange Act, as in effect
on the date of this Agreement, whether or not such beneficial
owner or deemed beneficial owner is the holder of record of such
securities;
(ii) any securities as to which such Person or any of such Person's
Affiliates or Associates has, directly or indirectly:
(1) the right to acquire (whether such right is exercisable
immediately or after the lapse or passage of time or upon
the occurrence of a contingency or otherwise) pursuant to
any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and
banking group or selling group members with respect to a
bona fide public offering of securities and other than
pledges of securities in the ordinary course of business) or
upon the exercise of any conversion right, exchange right,
share purchase right (other than a Right), warrant or
option, or otherwise; or
(2) the right to vote (whether such right is exercisable
immediately or after the lapse or passage of time or upon
the occurrence of a contingency or otherwise) pursuant to
any agreement, arrangement or understanding, or otherwise;
and
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(iii) any securities that are Beneficially Owned, directly or
indirectly, within the meaning of the foregoing provisions of
this subsection 1.1(d) by any other Person with which such Person
or any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding (whether or not in
writing) with respect to or for the purpose of acquiring,
holding, voting or disposing of any Voting Shares of the
Corporation (other than customary agreements with and between
underwriters and banking group or selling group members with
respect to a bona fide public offering of securities) or
acquiring, holding or disposition of property or assets of the
Corporation or any Subsidiary of the Corporation that represent a
significant portion of the properties and assets of the
Corporation on a consolidated basis;
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) solely because such security has been deposited or tendered
pursuant to any Take-over Bid made by such Person or made by any
of such Person's Affiliates or Associates until such deposited
security has been taken up or paid for, whichever shall occur
first;
(v) solely because such Person or any of such Person's Affiliates or
Associates has or shares the right to vote or direct the voting
of such security pursuant to a revocable proxy given in response
to a public proxy solicitation made pursuant to, and in
accordance with, the applicable rules and regulations under the
Company Act (British Columbia), the Securities Act (British
Columbia) or the 1934 Exchange Act, except if such power or the
arrangements relating thereto) is then reportable under Item 6 of
Schedule 13D under the 1934 Exchange Act (or any similar
provision of a comparable or successor report);
(vi) solely because such Person or any of such Person's Affiliates or
Associates has or shares the power to vote or direct the voting
of such security in connection with or in order to participate in
a public proxy solicitation, made or to be made pursuant to and
in accordance with the applicable rules and regulations referred
to in clause above; or
(vii) solely because such Person holds or exercises voting or
disposition power over such security; provided that:
(1) a substantial portion of the ordinary business of such
Person (the "Investment Manager") is the management of
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investment funds for others and such voting or disposition
power over such security is held by the Investment Manager
in the ordinary course of such business in the performance
of such Investment Manager's duties for the fully managed
account of any other Person who is not an Associate or
Affiliate of the Investment Manager; or
(2) such Person (the "Trust Company") is licensed to carry on
the business of a trust company under the laws of Canada or
any province thereof and, as such, acts as trustee or
administrator or in a similar capacity in relation to the
estates of deceased or incompetent Persons and holds such
voting or disposition power over such security in the
ordinary course of such duties for the estate of any such
deceased or incompetent Person, where such estate or any
beneficiary thereof is not an Associate or Affiliate of the
Trust Company;
provided, in either such case that:
(3) the Voting Shares of the Corporation Beneficially Owned by
the Investment Manager or the Trust Company, as the case may
be, other than those in respect of which the exemption in
this clause 1.1(d)(vii) applies, do not exceed 5% of the
outstanding Voting Shares of the Corporation; and
(4) the Investment Manager or the Trust Company, as the case may
be, has not made and does not propose to make a Take-over
Bid alone or by acting jointly or in concert with any other
Person;
(e) "Board of Directors" shall mean the board of directors of the
Corporation or, if duly constituted and whenever duly empowered, the
executive committee of the board of directors of the Corporation;
(f) "Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which banking institutions in Vancouver are authorized or
obligated by law to close;
(g) "Close of Business" on any given date shall mean the time on such date
(or, if such date is not a Business Day, the time on the next
succeeding Business Day) at which the offices of the transfer agent
for the Common Shares (or, after the Separation Time, the offices of
the Rights Agent) are closed to the public in the city in which such
transfer agent or Rights Agent has an office for the purposes of this
Agreement;
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(h) "Common Shares" shall mean the Common Shares of the Corporation, and,
when used with reference to any Person other than the Corporation,
shall mean the class or classes of shares (or similar equity interest)
with the greatest per share (or similar interest) voting power
entitled to vote generally in the election of all directors of such
other Person or the equity securities or other equity interest having
power (whether or not exercised) to control or direct the management
of such other Person or, if such other Person is a Subsidiary of
another Person, the Person or Persons that ultimately control such
first-mentioned Person;
(i) "Company Act (British Columbia)" shall mean the Company Act (British
Columbia) R.S.B.C. 1996, c. 62, as amended, and the regulations
thereunder, and any comparable or successor laws or regulations
thereto;
(j) "Disqualification Date" shall have the meaning assigned thereto in
subclause 1.1(a)(iii);
(k) "Dividends Paid in the Ordinary Course" shall mean cash dividends paid
at regular intervals in any fiscal year of the Corporation to the
extent that such cash dividends do not exceed, in the aggregate, the
greatest of:
(i) 200% of the aggregate amount of cash dividends declared payable
by the Corporation on its Common Shares in its immediately
preceding fiscal year;
(ii) 300% of the arithmetic average of the aggregate amounts of cash
dividends declared payable by the Corporation on its Common
Shares in its three immediately preceding fiscal years; and
(iii) 100% of the aggregate consolidated net income of the
Corporation, before extraordinary items, for its immediately
preceding fiscal year;
(l) "Exempt Acquisition" shall have the meaning ascribed thereto in
subclause 1.1(a)(ii)(3);
(m) "Exercise Price" shall mean, as of any date, the price at which a
holder of a Right may purchase the securities issuable upon exercise
of such Right. Until adjustment thereof in accordance with the terms
hereof, the Exercise Price for each Right shall be $100;
(n) "Expiration Time" shall mean the earlier of:
(i) the Termination Time; or
(ii) the Close of Business on the 10th anniversary of the date hereof;
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(o) "Flip-in Event" shall mean a transaction in or pursuant to which any
Person shall become an Acquiring Person;
(p) "Independent Shareholders" shall mean holders of Voting Shares of the
Corporation other than:
(i) any Acquiring Person;
(ii) any Offeror;
(iii) any Associate or Affiliate of any Offeror or Acquiring Person;
(iv) any Person acting jointly or in concert with an Offeror,
Acquiring Person or with any Associate or Affiliate of any
Offeror or Acquiring Person; and
(v) any Person holding Voting Shares which are Beneficially Owned by
way of the Persons referred to in this clause 1.1(p);
(q) "Market Price" per share of any securities on any date of
determination shall mean the average of the daily closing prices per
share of such securities (determined as described below) on each of
the 20 consecutive Trading Days through and including the Trading Day
immediately preceding such date; provided, however, that if an event
of a type analogous to any of the events described in Section 3.2
shall have caused the closing price in respect of any Trading Day used
to determine the Market Price not to be fully comparable with the
closing price on such date of determination or, if the date of
determination is not a Trading Day, on the immediately preceding
Trading Day, each such closing price so used shall be appropriately
adjusted in a manner analogous to the applicable adjustment provided
for in Section 3.2 in order to make it fully comparable with the
closing price on such date of determination or, if the date of
determination is not a Trading Day, on the immediately preceding
Trading Day. The closing price per share of any securities on any date
shall be:
(i) the closing board lot sale price or, in case no such sale takes
place on such date, the average of the closing bid and asked
prices, for each share of such securities as reported by the
principal stock exchange in Canada on which such securities are
listed and posted for trading;
(ii) if the securities are not listed and posted for trading on any
stock exchange in Canada, the last sale price, regular way, or,
in case no such sale takes place on such date, the average of the
closing bid and asked prices, regular way, for each share of such
securities
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as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading
on the principal national securities exchange in the United
States on which such securities are listed or admitted to
trading;
(iii) if for any reason none of such prices is available on such day
or the securities are not listed and posted for trading on a
stock exchange in Canada or a national securities exchange in
the United States, the last quoted price, or if not so quoted,
the average of the high bid and low asked prices for each share
of such securities in the over-the-counter market, as reported
by the Canadian Over-The-Counter Automated Trading System or
such other comparable system then in use; or
(iv) if on any such date the securities are not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the
securities selected in good faith by the Board of Directors;
provided, however, that if on any such date the securities are not
traded on any exchange or in the over-the-counter market, the closing
price per share of such securities on such date shall mean the fair
value per share of such securities on such date as determined in good
faith by the Board of Directors, after consultation with a nationally
or internationally recognized investment dealer or investment banker
with respect to the fair value per share of such securities. The
Market Price shall be expressed in Canadian dollars and if initially
determined in respect of any day forming part of the 20 consecutive
Trading Day period in question in the United States, such amount shall
be translated to Canadian dollars at the then current exchange rate
for the conversion of United States dollars, into Canadian dollars;
(r) "1933 Securities Act" shall mean the Securities Act of 1933 of the
United States, as amended and the rules and regulations thereunder,
and any comparable or successor laws or regulations thereto;
(s) "1934 Exchange Act" shall mean the Securities Exchange Act of 1934 of
the United States, as amended, and the rules and regulations
thereunder, and any comparable or successor laws or regulations
thereto;
(t) "Offer to Acquire" shall include:
(i) an offer to purchase, or a solicitation of an offer to sell
Votin Shares; and
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(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;
(u) "Offeror" shall mean a Person who has announced an intention to make
or who has made a Take-over Bid;
(v) "Offeror's Securities" shall mean Voting Shares Beneficially Owned on
the date of an Offer to Acquire by any Person who makes a Take-over
Bid or by any Person acting jointly or in concert with such Person;
(w) "Permitted Bid" means a Take-over Bid made in compliance with, and not
on a basis that is exempt from, the provisions of Part 13 of the
Securities Act (British Columbia) and the regulations thereunder, and
if applicable, Section 10, 13(d) and 14 of the 1934 Exchange Act and
the regulations thereunder (or such comparable or successor laws or
regulations or, if such provisions shall be repealed and there shall
be no comparable or successor laws or regulations, Part 13 of the
Securities Act (British Columbia) and the regulations thereunder as
they read on the date of this Agreement) and in compliance with all
other applicable laws (including the securities laws of all other
relevant jurisdictions) and that also complies with the following
additional provisions:
(i) the Take-over Bid is made for all outstanding Voting Shares of a
particular class and to all holders of record of Voting Shares
wherever resident or registered on the books of the Corporation
for all Voting Shares on identical terms;
(ii) the Take-over Bid is made on terms and conditions that comply
with all laws, regulations, rules, policy statements, cabinet
directions or conditions of licence or franchise relating to a
change of ownership or effective control of the Corporation or
any Subsidiary of the Corporation or any undertaking carried on
by the Corporation or any Subsidiary of the Corporation, and all
other applicable laws, and that do not and will not, upon the
consummation of the bid, result in the Corporation or any
Subsidiary of the Corporation being in default under, or in
contravention of, any such laws, regulations, rules, policy
statements, cabinet directions, conditions of licence or
franchise or any other applicable laws;
(iii) the Person making the Take-over Bid:
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(1) together with its Affiliates and Associates and any Person
acting jointly or in concert with such Person or with its
Affiliates and Associates does not, either at the start of
such Take-over Bid or while it is outstanding, Beneficially
Own more than 5% of the Voting Shares of the Corporation; or
(2) is a Person described in subsection 1.9(b),
and in either case undertakes that none of such Person, any
Affiliate or Associate of such Person or any Person acting
jointly or in concert with such Person or with its Affiliates or
Associates will acquire any Voting Shares of the Corporation
while such Take-over Bid is outstanding;
(iv) 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 of the
particular class that is subject to the Take-over Bid will be
taken up or paid for pursuant to the Take-over Bid prior to the
Close of Business on the date which is not less than 60 days
following the date of the Take-over Bid and only if at such date
more than 50% of the Voting Shares held by Independent
Shareholders shall have been deposited or tendered pursuant to
the Take-over Bid and not withdrawn;
(v) 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(w)(iv) and that any Voting Shares deposited pursuant
to the Take-over Bid may be withdrawn until taken up and paid
for;
(vi) the Take-over Bid contains an irrevocable and unqualified
provision that in the event that the condition set forth in
clause 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; and
(vii) the Offeror shall provide the Rights Agent, within two Business
Days of the announcement of the Take-over Bid, with a list of
all securities of the Corporation Beneficially Owned by each of
the Offeror and such Offeror's Associates and Affiliates and any
Person acting jointly or in concert with the Offeror or any of
the Offeror's Associates and Affiliates, together with the
particulars of the registration of all such securities, and an
undertaking to update
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such list on a daily basis to reflect any changes occurring or
to occur in such Beneficial Ownership prior to the termination
or expiration of the Take-over Bid, and the Offeror shall
perform its obligation under such undertaking;
provided always that a Permitted Bid shall cease to be a Permitted Bid
at the time when such bid ceases to meet any of the provisions of
subsection 1.1(w), and any acquisitions of Voting Shares of any class
theretofore made, shall cease to be a Permitted Bid Acquisition;
(x) "Permitted Bid Acquisitions" shall have the meaning ascribed thereto
in subclause 1.1(a)(ii)(2);
(y) "Person" shall include any individual, firm, partnership, association,
trust, trustee, executor, administrator, legal personal
representative, group, body corporate, corporation, unincorporated
organization, syndicate or other entity;
(z) "Pro Rata Acquisition" shall mean the acquisition of Voting Shares of
the Corporation as a result of a stock dividend, a stock split or
other event pursuant to which a Person receives or acquires Voting
Shares of the Corporation on the same pro rata basis as all other
holders of Voting Shares of the Corporation, or pursuant to any
regular dividend reinvestment plan or other plan made available by the
Corporation to all holders of the same class of Voting Shares, which
plan permits the holder to direct that dividends paid in respect of
such Voting Shares of the Corporation be applied to the purchase from
the Corporation of further securities of the Corporation;
(aa) "Record Time" shall have the meaning ascribed thereto in the recitals
to this Agreement;
(ab) "Right" shall mean the herein described right to purchase securities
pursuant to the terms and subject to the conditions set forth herein;
(ac) "Rights Certificates" shall mean the certificates representing the
Rights after the Separation Time, which shall be in the form attached
hereto as Exhibit A;
(ad) "Securities Act (British Columbia)" shall mean the Securities Act,
R.S.B.C 1996, c. 418, as amended, and the regulations thereunder, and
any comparable or successor laws or regulations thereto;
(ae) "Separation Time" shall mean, subject to subsection 6.1(c), the Close
of Business on the eighth Trading Day after the earlier of:
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(i) the Stock Acquisition Date; and
(ii) the date of the commencement of, or first public announcement
(provided such announcement is made after the Record Time) 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 such later time as may be
determined by the Board of Directors;
provided that, if the foregoing results in the Separation Time being
prior to the Record Time, the Separation Time shall be the Record Time
and provided further that, if any Take-over Bid referred to in clause
1.1(ae)(ii) of this subsection expires, or is cancelled, terminated or
otherwise withdrawn prior to the Separation Time, such Take-over Bid
shall be deemed, for the purposes of this subsection 1.1(ae), never to
have been made;
(af) "Shares" shall mean shares in the capital of the Corporation;
(ag) "Stock Acquisition Date" shall mean the date of the first public
announcement (which, for purposes of this definition, shall include,
without limitation, the filing of a report pursuant to Section 111 of
the Securities Act (British Columbia) or Section 13(d) under the 1934
Exchange Act) by the Corporation or an Acquiring Person of facts
indicating that a Person has become an Acquiring Person;
(ah) "Subsidiary" of a Person shall mean any corporation or organization of
which a majority of the voting power of the equity securities or a
majority of the equity interest is Beneficially Owned, directly or
indirectly, by such Person;
(ai) "Take-over Bid" shall mean an Offer to Acquire Voting Shares of the
Corporation or securities convertible into Voting Shares, where the
Voting Shares subject to the Offer to Acquire, together with the
Voting Shares into which the securities subject to the Offer to
Acquire are convertible, and the Offeror's securities constitute in
the aggregate 20% or more of the Voting Shares of the Corporation then
outstanding;
(aj) "Termination Time" shall mean the time at which the right to exercise
Rights shall terminate pursuant to subsection 4.2(b) or subsection
6.1(e);
(ak) "Trading Day", when used with respect to any securities, shall mean a
day on which the principal Canadian securities exchange on which such
securities are listed or admitted to trading is open for the
transaction of business or, if the securities are not listed or
admitted to trading on any Canadian securities exchange, a Business
Day; and
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(al) "Voting Share", when used with reference to the Corporation, shall
mean any share in the capital of the Corporation to which is attached
a right to vote for the election of all directors, generally, and when
used with reference to any Person other than the Corporation, shall
mean a Common Share of such Person and any other share of capital
stock or voting interests of such Person entitled to vote generally in
the election of all directors.
1.2 CONTINUATION TO ANOTHER JURISDICTION
If the Corporation is continued under the laws of another jurisdiction, all
references herein to provisions of the Company Act (British Columbia) shall be
deemed to refer to comparable provisions of the corporate laws of that other
jurisdiction to which the Corporation shall then be subject, and the regulations
thereunder, and any successor laws or regulations thereto; provided that if
there are no comparable provisions under the corporate laws of the other
jurisdiction, or the regulations thereunder, or under the successor laws or
regulations thereto, such references shall continue to be to the relevant
provisions of the Company Act (British Columbia).
1.3 CURRENCY
All sums of money that are referred to in this Agreement are expressed in
lawful money of Canada, unless otherwise specified.
1.4 DESCRIPTION HEADINGS
Descriptive headings appear herein for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
1.5 REFERENCES TO AGREEMENT
References to "this Agreement", "hereto", "herein", "hereby", "hereunder",
"hereof" and similar expressions refer to this Agreement and not to any
particular Article, section, subsection, clause, subclause, subdivision or other
portion hereof and include any and every instrument supplemental or ancillary
hereto.
1.6 NUMBER AND GENDER
Wherever the context so requires, terms used herein importing the singular
number only shall include the plural and vice versa and words importing any one
gender shall include all others.
1.7 ACTING IN GOOD FAITH
For the purposes of this Agreement, when any determination or decision is
made by the Board of Directors pursuant to this Agreement, the Board of
Directors shall exercise its
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power and discharge its duties honestly and in good faith with a view to the
best interests of the Corporation and each director shall exercise the care,
diligence and skill that a reasonably prudent person would exercise in
comparable circumstances.
1.8 HOLDER
As used in this Agreement, unless the context otherwise requires, the term
"holder" when used with reference to Rights, means the registered holder of such
Rights or, prior to the Separation Time, the Shares with which such Rights are
associated.
1.9 GRANDFATHER PROVISION
(a) For the purposes of determining whether a Person is an Acquiring Person
and interpreting the definition of Acquiring Person, a Person shall not be and
shall not be deemed to be an Acquiring Person if such Person (a "Grandfathered
Person"):
(i) is the Beneficial Owner of 20% or more of the outstanding Voting
Shares of the Corporation determined as at the Record Time; or
(ii) becomes the Beneficial Owner of 20% or more of the outstanding
Voting Shares of the Corporation after the Record Time and such
Person's Beneficial ownership of Voting Shares of the Corporation
does not exceed the number of Voting Shares of the Corporation
Beneficially Owned by such Person immediately prior to the Record
Time by more than 2% of the then issued and outstanding Voting
Shares of the Corporation;
provided, however, that this exception shall not be, and shall cease
to be, applicable to a Grandfathered Person in the event that a
Grandfathered Person shall, after the Record Time, become the
Beneficial Owner of additional Voting Shares of the Corporation
constituting more than 2% of the Voting Shares of the Corporation then
outstanding other than pursuant to Permitted Bid Acquisitions or
through Exempt Acquisitions or Pro Rata Acquisitions; provided
further, however, that such Grandfathered Person shall not become an
Acquiring Person as a result of an acquisition or redemption of Voting
Shares of the Corporation by the Corporation or a Subsidiary of the
Corporation; and provided further that, in the event that this
exception shall cease to be applicable to a Grandfathered Person as
aforesaid, such a Grandfathered Person shall be and shall be deemed to
be an Acquiring Person as at and from the time that this exception
shall not be so applicable.
(b) For the purposes of determining whether a Person is entitled to make a
Permitted Bid, a Person shall not be restricted from making a Permitted Bid
under clause 1.1(9w)(iii) if such Person is, at the Record Time, the Beneficial
Owner of more than 5% of the outstanding Voting Shares of the Corporation;
provided, however, that this exception shall not be, and shall
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cease to be, applicable to any such Person in the event that such Person shall
become, after the Record Time:
(i) the Beneficial Owner of an additional 2% or more of the Voting
Shares of the Corporation other than through Permitted Bid
Acquisitions, Exempt Acquisitions or Pro Rata Acquisitions; or
(ii) an Acquiring Person.
1.10 CALCULATION OF NUMBER AND PERCENTAGE OF BENEFICIAL OWNERSHIP OF OUTSTANDING
VOTING SHARES
For the purposes of this Agreement, in determining the percentage of the
outstanding Voting Shares of the Corporation with respect to which a Person is
or is deemed to be the Beneficial Owner, all Voting Shares of the Corporation as
to which such Person is deemed the Beneficial Owner shall be deemed to be
outstanding.
The percentage of outstanding Voting Shares Beneficially Owned by any
Person shall, for the purpose of this Agreement, be and be deemed to be the
product determined by the formula:
A
100 x -
B
where:
A = the number of votes for the election of all directors generally
attaching to the outstanding Voting Shares Beneficially Owned by such
Person; and
B = the number of votes for the election of all directors generally
attaching to all outstanding Voting Shares.
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.
ARTICLE 2
THE RIGHTS
2.1 LEGEND ON CERTIFICATES
Certificates for Common Shares issued after the Record Time but prior to
the earlier of the Separation Time and the Expiration Time shall evidence one
Right for each Common Share represented thereby and, at the option of the Board
of Directors, may have impressed on, printed on, written on or otherwise affixed
to them the following legend:
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Until the Separation Time (as defined in the Rights Agreement referred to
below), this certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Shareholder Protection Rights Plan
Agreement, dated as of the 18th day of December, 1996, (the "Rights
Agreement"), between Solucorp Industries Ltd. (the "Corporation") and CIBC
Mellon Trust Company, as Rights Agent, the terms of which are hereby
incorporated herein by reference and a copy of which may be inspected
during normal business hours at the registered office of the Corporation.
Under certain circumstances, as set forth in the Rights Agreement, such
Rights may be amended, redeemed, terminated, may expire, may become void
(if, in certain cases, they are "Beneficially Owned" by an "Acquiring
Person", as such terms are defined in the Rights Agreement, whether
currently held by or on behalf of such Person or any subsequent holder) or
may be evidenced by separate certificates and may no longer be evidenced by
this certificate. The Corporation will mail or arrange for the mailing of a
copy of the Rights Agreement to the holder of this certificate without
charge as soon as is practicable after the receipt of a written request
therefor.
Certificates representing Common Shares that are issued and outstanding at
and after the Record Time shall evidence one Right for each Common Share
evidenced thereby, notwithstanding the absence of the foregoing legend until the
earlier of the Separation Time and the Expiration Time.
2.2 EXECUTION, AUTHENTICATION, DELIVERY AND DATING OF RIGHTS CERTIFICATES
(a) The Rights Certificates shall be executed on behalf of the
Corporation by any of the Chairman of the Board, the President or any
Vice-President (including any Senior Vice-President), together with any other of
such persons or together with any one of the Secretary, the Treasurer, any
Assistant Secretary or any Assistant Treasurer, under the corporate seal of the
Corporation or otherwise. The signature of any of the officers of the
Corporation on the Rights Certificates may be manual or facsimile. Rights
Certificates bearing the manual or facsimile signatures of individuals who were
at any time the proper officers of the Corporation shall bind the Corporation,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the countersignature and delivery of such Rights Certificates.
(b) Promptly after the Corporation learns of the Separation Time, the
Corporation will notify the Rights Agent 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 and deliver
such Rights Certificates to the holders of the Rights pursuant to subsection
3.1(d). No Rights Certificate shall be valid for any purpose until countersigned
by the Rights Agent as aforesaid.
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(c) Each Rights Certificate shall be dated the date of the countersignature
thereof.
2.3 REGISTRATION, REGISTRATION OF 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 the "Rights Registrar" for the purpose of
maintaining the Rights Register for the Corporation and registering Rights and
transfers of Rights as herein provided. In the event that the Rights Agent shall
cease to be the Rights Registrar, the Rights Agent will have the right to
examine the Rights Register at all reasonable times. After the Separation Time
and prior to the Expiration Time, upon surrender for registration of transfer or
exchange of any Rights Certificate, and subject to the provisions of subsection
(c) of this Section 2.3, 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 valid obligations of the Corporation, and such
Rights shall be entitled to the same benefits under this Agreement as the Rights
surrendered upon such registration of transfer or exchange.
(c) Every Rights Certificate surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Corporation or the Rights Agent, as the
case may be, duly executed by the holder thereof or such holder's attorney duly
authorized in writing. As a condition to the issuance of any new Rights
Certificate under this Section 2.3, the Corporation may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other expenses (including the fees and expenses of
the Rights Agent) in connection therewith.
2.4 MUTILATED, DESTROYED, LOST AND STOLEN RIGHTS CERTIFICATES
(a) If any mutilated Rights Certificate is surrendered to the Rights Agent
prior to the Expiration Time, the Corporation shall execute and the Rights Agent
shall manually countersign and deliver in exchange therefor a new Rights
Certificate evidencing the same number of Rights as the Rights Certificate so
surrendered.
(b) If there shall be delivered to the Corporation and the Rights Agent
prior to the Expiration Time:
(i) evidence to their satisfaction of the destruction, loss or theft
of any Rights Certificate; and
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(ii) such security or indemnity as may be required by them to save
each of them and any of their agents harmless,
then, in the absence of notice to the Corporation or the Rights Agent that such
Rights Certificate has been acquired by a bona fide purchaser, the Corporation
shall execute and upon its request the Rights Agent shall countersign and
deliver, in lieu of any such destroyed, lost or stolen Rights Certificate, a new
Rights Certificate evidencing the same number of Rights as did the Rights
Certificate so destroyed, lost or stolen.
(c) As a condition to the issuance of any new Rights Certificate under this
Section 2.4, the Corporation may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Rights
Agent) in connection therewith.
(d) Every new Rights Certificate issued pursuant to this Section 2.4 in
lieu of any destroyed, lost or stolen Rights Certificate 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 by the Corporation.
2.5 PERSONS DEEMED OWNERS OF RIGHTS
Prior to due presentment of a Rights Certificate (or, prior to the
Separation Time, the associated 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 such Rights Certificate (or,
prior to the Separation Time, the associated 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, the associated Shares).
2.6 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 that 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 2.6, except as expressly permitted by this Agreement.
The Rights Agent shall destroy all cancelled Rights Certificates and deliver a
certificate of destruction to the Corporation.
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2.7 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 the 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
Share representing such Right;
(c) that after the Separation Time, the Rights Certificates will be
transferable only upon registration of the transfer on the Rights
Register as provided herein;
(d) that prior to due presentment of a Rights Certificate (or, prior to
the Separation Time, the associated 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 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 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 have waived his right to receive any
fractional Right or any fractional Shares upon exercise of a Right
(except as provided herein); and
(f) that without the approval of any holder of Rights and upon the sole
authority of the Board of Directors acting in good faith, this
Agreement may be supplemented or amended from time to time pursuant to
and as provided herein.
2.8 RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER
No holder, as such, of any Right or Rights Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose whatsoever the holder of
any Share that may at any time be issuable on the exercise of such Rights, nor
shall anything contained herein or in any Rights Certificate be construed or
deemed to confer upon the holder of any Right or Rights Certificate, as such,
any of the rights, titles, benefits or privileges of a shareholder of the
Corporation or any right to vote at any meeting of shareholders of the
Corporation whether for
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the election of directors or otherwise or upon any matter submitted to holders
of any Shares at any meeting thereof, or to give or withhold consent to any
action of the Corporation, or to receive notice of any meeting or other action
affecting any shareholder of the Corporation except as expressly provided
herein, or to receive dividends, distributions or subscription rights, or
otherwise, until the Right or Rights evidenced by any Rights Certificate shall
have been duly exercised in accordance with the terms and provisions hereof.
ARTICLE 3
EXERCISE OF THE RIGHTS
3.1 INITIAL EXERCISE PRICE; EXERCISE OF RIGHTS; DETACHMENT OF RIGHTS
(a) Subject to adjustment as herein set forth, from and after the
Separation Time and prior to the Expiration Time, each Right will entitle the
holder thereof to purchase one Common Share for the Exercise Price (which
Exercise Price and number of Shares are subject to adjustment as set forth
below).
(b) Until the Separation Time:
(i) the Rights shall not be exercisable and no Right may be
exercised; and
(ii) for administrative purposes, each Right will be evidenced by the
certificate for the associated Share and will be transferable
only together with, and will be transferred by a transfer of,
such associated Share.
(c) From and after the Separation Time and prior to the Expiration Time:
(i) the Rights shall be exercisable; and
(ii) the registration and transfer of the Rights shall be separate
from and independent of Common Shares.
(d) Promptly following the Separation Time, the Rights Agent will mail to
each holder of record of Common Shares as of the Separation Time (other than an
Acquiring Person and other than, in respect of any Rights Beneficially Owned by
such Acquiring Person that are not held of record by such Acquiring Person, the
holder of Record of such Rights (a "Nominee")), at such holder's address as
shown by the records of the Corporation (and the Corporation hereby agrees to
furnish copies of such records to the Rights Agent for this purpose):
(i) Rights Certificates representing the number of Rights held by
such holder at the Separation Time in substantially the form of
Exhibit A hereto, appropriately completed and having such marks
of identification or designation and such legends, summaries or
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endorsements printed thereon as the Corporation may deem
appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any law,
rule, regulation or judicial or administrative order or with any
rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange or quotation system on which the
Rights may from time to time be listed or traded, or to conform
to usage; and
(ii) a disclosure statement describing the Rights;
provided that a Nominee shall be sent the materials provided for in subclauses
3.1(d)(i) and 3.1(d)(ii) only in respect of all Common Shares held of record by
it that are not Beneficially Owned by an Acquiring Person.
(e) Rights may be exercised in whole or in part on any Business Day after
the Separation Time and prior to the Expiration Time by submitting to the Rights
Agent the Rights Certificate evidencing such Rights together with:
(i) the Rights Certificate evidencing such Rights;
(ii) an election to exercise such Rights (an "Election to Exercise")
substantially in the form attached to the Rights Certificate
duly completed and executed by the holder or his 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;
(iii) payment in cash, or by certified cheque, banker's draft or money
order payable to the order of the Corporation, of a sum equal to
the applicable Exercise Price multiplied by the number of Rights
being exercised and a sum sufficient to cover any transfer tax
or charge that 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 the relevant Shares
in a name other than that of the holder of the Rights being
exercised.
(f) Upon receipt of the Rights Certificate that is accompanied by:
(i) a completed Election to Exercise that does not indicate that
such Right is null and void as provided by subsection 4.1(b);
and
(ii) payment as set forth in subsection 3.1(e),
the Rights Agent (unless otherwise instructed by the Corporation) will thereupon
promptly:
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(iii) requisition from a transfer agent for the relevant Shares,
certificates representing the number of such Shares to be
purchased (the Corporation hereby irrevocably authorizing its
transfer agents to comply with all such requisitions);
(iv) when appropriate, requisition from the Corporation the amount of
cash to be paid in lieu of issuing fractional Shares;
(v) after receipt of such certificate, deliver the same to or to the
order of the registered holder of such Rights Certificate,
registered in such name or names as may be designated by such
holder; and
(vi) when appropriate, after receipt, deliver such cash to or to the
order of the registered holder of the Rights Certificate.
(g) In case the holder of any Rights shall exercise less than all the
Rights evidenced by such holder's Rights Certificate, a new Rights Certificate
evidencing the Rights remaining unexercised will be issued by the Rights Agent
to such holder or to such holder's duly authorized assigns.
(h) The Corporation covenants and agrees that it will:
(i) take all such action as may be necessary and within its power to
ensure that all Shares delivered upon exercise of Rights shall,
at the time of delivery of the certificates representing such
Shares (subject to payment of the Exercise Price), be duly and
validly authorized, issued and delivered as fully paid and
non-assessable;
(ii) take all such action as may be necessary and within its power to
comply with any applicable requirements of the Securities Act
(British Columbia) or comparable legislation of each of the
other provinces of Canada and the 1933 Securities Act or the
1934 Exchange Act, and the rules and regulations thereunder or
any other applicable law, rule or regulation, in connection with
the issuance and delivery of the Rights Certificates and the
issuance of any Shares upon exercise of Rights;
(iii) use reasonable efforts to cause all Shares issued upon exercise
of Rights to be listed on the principal exchanges on which the
Shares of such class or series were traded prior to the Stock
Acquisition Date;
(iv) cause to be reserved and kept available out of its authorized
and unissued Shares, the number of Shares that, as provided in
this Agreement, will from time to time be sufficient to permit
the exercise in full of all outstanding Rights; and
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(v) pay when due and payable any and all federal and provincial
transfer taxes (for greater certainty, not including any income
taxes of the holder or exercising holder or any liability of the
Corporation to withhold tax) that may be payable in respect of
the original issuance or delivery of the Rights Certificates,
provided that the Corporation shall not be required to pay any
transfer tax or charge that 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
Shares in a name other than that of the holder of the Rights
being transferred or exercised.
3.2 ADJUSTMENTS TO EXERCISE PRICES; NUMBER OF RIGHTS
The Exercise Price, the number and kind of Shares subject to purchase upon
the exercise of each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 3.2.
(a) In the event the Corporation shall at any time after the Record Time
and prior to the Expiration Time:
(i) declare or pay a dividend on the Common Shares payable in Common
Shares (or other securities exchangeable for or convertible into
or giving a right to acquire Common Shares) other than pursuant
to any optional stock dividend program,
(ii) subdivide or change the outstanding Common Shares into a greater
number of Common Shares,
(iii) combine or change the outstanding Common Shares into a smaller
number of Common Shares, or
(iv) issue any Common Shares (or other securities exchangeable for or
convertible into or giving a right to acquire Common Shares) in
respect of, in lieu of or in exchange for existing Common
Shares, except as otherwise provided in this Section 3.2,
the Exercise Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or
other change, and the number and kind of Shares or other securities,
as the case may be, issuable on such date, shall be proportionately
adjusted so that the holder of any Right exercised after such time
shall be entitled to receive, upon payment of the applicable Exercise
Price then in effect, the aggregate number and kind of Shares or other
securities, as the case may be, that, if such Right had been exercised
immediately prior to such date and at a time when the Share transfer
books of the Corporation were open, he would have been entitled to
receive by virtue of such dividend,
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subdivision, combination or reclassification. If an event occurs that
would require an adjustment under both this Section 3.2 and Section
4.1, the adjustment provided for in this Section 3.2 shall be in
addition to, and shall be made prior to, any adjustment required
pursuant to this Section 4.1.
(b) In case the Corporation shall at any time after the Record Time and
prior to the Expiration Time fix a record date for the issuance of
rights, options or warrants to all holders of Common Shares entitling
them to subscribe for or purchase (for a period expiring within 45
calendar days after such record date) Common Shares (or shares having
the same rights, privileges and preferences as Common Shares
("Equivalent Common Shares")) or securities convertible into Common
Shares or Equivalent Common Shares at a price per Common Share or per
Equivalent Common Share (or having a conversion price per share, if a
security convertible into Common Shares or Equivalent Common Shares)
less than the Market Price per Common Share on such record date, the
Exercise Price in respect of the Rights to be in effect after such
record date shall be determined by multiplying the Exercise Price in
respect of the Rights in effect immediately prior to such record date
by a fraction:
(i) the numerator of which shall be the number of Common Shares
outstanding on such record date, plus the number of Common Shares
that the aggregate offering price of the total number of Common
Shares (and/or Equivalent Common Shares) so to be offered (and/or
the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such Market Price
per Common Share; and
(ii) the denominator of which shall be the number of Common Shares
outstanding on such record date, plus the number of additional
Common Shares and/or Equivalent Common Shares to be offered for
subscription or purchase (or into which the convertible
securities so to be offered are initially convertible).
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 the Rights. Such adjustment shall be
made successively whenever such a record date is fixed and, in the
event that such rights or warrants are not so issued, the Exercise
Price in respect of the Rights shall be adjusted to be the Exercise
Price that would then be in effect if such record date had not been
fixed.
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(c) In case the Corporation shall at any time after the Record Time and
prior to the Expiration Time fix a record date for a distribution to
all holders of Common Shares (including any such distribution made in
connection with a merger in which the Corporation is the continuing
corporation) of evidences of indebtedness, cash (other than a dividend
paid in the ordinary course or a dividend paid in Common Shares, but
including any dividend payable in securities other than Common
Shares), assets or subscription rights or warrants (excluding those
referred to in subsection 3.2(b)), the Exercise Price in respect of
the Rights to be in effect after such record date shall be determined
by multiplying the Exercise Price in respect of the Rights in effect
immediately prior to such record date by a fraction:
(i) the numerator of which shall be the Market Price per Common Share
on such record date, less the fair market value (as determined in
good faith by the Board of Directors, whose determination shall
be described in a statement filed with the Rights Agent and shall
be binding on the Rights Agent and the holders of the Rights) on
a per share basis, of the portion of the cash, assets or
evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to the Common Share;
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 distribution is not so made,
the Exercise Price in respect of the Rights shall be adjusted to be
the Exercise Price in respect of the Rights that would have been in
effect if such record date had not been fixed.
(d) Notwithstanding anything herein to the contrary, no adjustment in an
Exercise Price shall be required unless such adjustment would require
an increase or decrease of at least 1% in such Exercise Price;
provided, however, that any adjustments that by reason of this
subsection 3.2(d) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment. All calculations
under this Section 3.2 shall be made to the nearest cent or to the
nearest ten-thousandth of a Share. Notwithstanding the first sentence
of this subsection 3.2(d), any adjustment required by this Section 3.2
shall be made no later than the earlier of:
(i) three years from the date of the transaction that mandates such
adjustment; or
(ii) the Termination Time.
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(e) If, as a result of an adjustment made pursuant to Section 4.1, the
holder of any Right thereafter exercised shall become entitled to
receive any shares other than Common Shares, thereafter the number of
such other shares so receivable upon exercise of any Right and the
applicable Exercise Price thereof shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as is
practicable to the provisions with respect to the Common Shares
contained in subsections 3.2(a), 3.2(b), 3.2(c), 3.2(d), 3.2(e),
3.2(f), 3.2(g), and 3.2(h), and the provisions of this Agreement with
respect to the Common Shares shall apply on like terms to any such
other shares.
(f) All Rights originally issued by the Corporation subsequent to any
adjustment made to an Exercise Price hereunder shall evidence the
right to purchase, at the adjusted Exercise Price, the respective
number of Common Shares, as the case may be, purchasable from time to
time hereunder upon exercise of the Rights, all subject to further
adjustments as provided herein.
(g) Unless the Corporation shall have exercised its election as provided
in subsection 3.2(h), upon each adjustment of an Exercise Price as a
result of the calculations made in subsections 3.2(b) and 3.2(c, each
Right outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the adjusted
Exercise Price, that number of Common Shares (calculated to the
nearest one ten-thousandth), obtained by:
(i) multiplying:
(1) the number of such Shares covered by a Right immediately
prior to this adjustment; by
(2) the relevant Exercise Price in effect immediately prior to
such adjustment of the relevant Exercise Price; and
(ii) dividing the product so obtained by the relevant Exercise Price
in effect immediately after such adjustment of the relevant
Exercise Price.
(h) The Corporation may elect on or after the date of any adjustment of an
Exercise Price to adjust the number of Rights, in lieu of any
adjustment in the number of Shares purchasable upon the exercise of a
Right. Each of the Rights outstanding after the adjustment in the
number of Rights shall be exercisable for the number and kind of
Shares for which such a Right was exercisable immediately prior to
such adjustment. Each Right held of record prior to such adjustment of
the number of Rights shall become that number of Rights (calculated to
the nearest one
- 28 -
ten-thousandth) obtained by dividing the relevant Exercise Price in
effect immediately prior to adjustment of the relevant Exercise Price
by the relevant Exercise Price in effect immediately after adjustment
of the relevant Exercise Price. The Corporation shall make a public
announcement of its election to adjust the number of Rights, including
the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the date
on which the relevant Exercise Price is adjusted or any day
thereafter, but, if the Rights Certificates have been issued, shall be
at least 10 days later than the date of the public announcement. If
Rights Certificates have been issued, upon each adjustment of the
number of Rights pursuant to this subsection 3.2(h), the Corporation
shall, as promptly as is practicable, cause to be distributed to
holders of record of Rights Certificates on such record date, Rights
Certificates evidencing, subject to Section 6.5, the additional Rights
to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Corporation, shall cause to be
distributed to such holders of record in substitution and replacement
for the Rights Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the
Corporation, new Rights Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Rights
Certificates to be so distributed shall be issued, executed and
countersigned in the manner provided for herein and may bear, at the
option of the Corporation, the relevant adjusted Exercise Price and
shall be registered in the names of holders of record of Rights
Certificates on the record date specified in the public announcement.
(i) Irrespective of any adjustment or change in an Exercise Price or the
number of Shares issuable upon the exercise of the Rights, the rights
Certificates theretofore and thereafter issued may continue to express
the relevant Exercise Price per Share and the number of Shares that
were expressed in the initial Rights Certificates issued hereunder.
(j) In any case in which this Section 3.2 shall require that an adjustment
in an Exercise Price be made effective as of a record date for a
specified event, the Corporation may elect to defer, until the
occurrence of such event, the issuance to the holder of any Right
exercised after such record date of the number of Shares and other
securities of the Corporation, if any, issuable upon such exercise
over and above the number of Shares and other securities of the
Corporation, if any, issuable upon such exercise on the basis of the
relevant Exercise Price in effect prior to such adjustment; provided,
however, that the Corporation shall deliver to such holder a due xxxx
or other 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.
- 29 -
(k) Notwithstanding anything in this Section 3.2 to the contrary, the
Corporation shall be entitled to make such reductions in each Exercise
Price, in addition to those adjustments expressly required by this
Section 3.2, as and to the extent that in their good faith judgment
the Board of Directors shall determine to be advisable in order that
any:
(i) consolidation or subdivision of Shares;
(ii) issuance wholly for cash of any Shares at less than the
applicable Market Price;
(iii) issuance wholly for cash of any Common Shares or securities that
by their terms are convertible into or exchangeable for Shares;
(iv) stock dividends; or
(v) issuance of rights, options or warrants referred to in this
Section 3.2, hereafter made by the Corporation to holders of its
Shares,
shall not be taxable to such shareholders.
(l) The Corporation covenants and agrees that, after the
Separation Time, it will not, except as permitted by Section
6.1 or 6.7, take (or permit any Subsidiary of the
Corporation to take) any action, if at the time such action
is taken it is reasonably foreseeable that such action will
diminish substantially or otherwise eliminate the benefits
intended to be afforded by the Rights.
3.3 DATE ON WHICH EXERCISE IS EFFECTIVE
Each Person in whose name any certificate for Shares is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of the Shares represented thereby on, and such certificate shall be
dated, the date upon which the Rights Certificate evidencing such Rights was
duly surrendered (together with a duly completed Election to Exercise) and
payment of the relevant Exercise Price for such Rights (and any applicable
transfer taxes and other governmental charges payable by the exercising holder
hereunder) was made; provided, however, that if the date of such surrender and
payment is a date upon which the relevant Share transfer books of the
Corporation are closed, such Person shall be deemed to have become the holder of
record of such Shares on, and such certificate shall be dated, the next
succeeding Business Day on which the relevant Share transfer books of the
Corporation are open.
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ARTICLE 4
ADJUSTMENTS TO THE RIGHTS
IN THE EVENT OF CERTAIN TRANSACTIONS
4.1 FLIP-IN EVENT
(a) Subject to subsection 4.1(b), Section 4.2, subsections 6.1(b) and
6.1(c), in the event that prior to the Expiration Time a Flip-in Event shall
occur, each Right shall constitute, effective on and after the Stock Acquisition
Date, the right to purchase from the Corporation, upon payment of the relevant
Exercise Price and otherwise exercising such Right in accordance with the terms
hereof, that number of Common Shares having an aggregate Market Price on the
date of consummation or occurrence of such Flip-in Event equal to twice the
relevant Exercise Price for an amount in cash equal to the relevant Exercise
Price (such right to be appropriately adjusted in a manner analogous to the
applicable adjustments provided for in Section 3.2 upon each occurrence after
the Stock Acquisition Date of any event analogous to any of the events described
in Section 3.2).
(b) Notwithstanding anything in this Agreement to the contrary, upon the
occurrence of any Flip-in Event, any Rights that are Beneficially Owned by:
(i) an Acquiring Person (or any Affiliate or Associate of an
Acquiring Person or any Person acting jointly or in concert with
an Acquiring Person or any Affiliate or Associate of an Acquiring
Person), or
(ii) a transferee or other successor in title directly or indirectly
(a "Transferee") of Rights held by an Acquiring Person (or any
Affiliate or Associate of an Acquiring Person or any Person
acting jointly or in concert with an Acquiring Person or any
Affiliate or Associate of an Acquiring Person) who becomes a
Transferee concurrently with or subsequent to the Acquiring
Person becoming an Acquiring Person,
shall become null and void without any further action, and any holder of such
Rights (including any Transferee) shall not have any right whatsoever to
exercise such Rights under any provision of this Agreement and shall not have
thereafter any other rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise.
(c) In the event that there shall not be sufficient Shares authorized for
issuance to permit the exercise in full of the rights in accordance with this
Section 4.1, the Corporation shall take all such action as may be necessary to
authorize additional Shares for issuance upon the exercise of the Rights.
(d) Any Rights Certificate that represents Rights Beneficially Owned by a
Person described in either paragraphs 4.1(b)(i) or 4.1(b)(ii) of subsection
4.1(b) or transferred to any nominee of any such Person, and any Rights
Certificate issued upon transfer, exchange,
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replacement or adjustment of any other Rights Certificate referred to in this
sentence, shall contain the following legend:
"The Rights represented by this Rights Certificate were issued to a Person
who was an Acquiring Person or an Affiliate or an Associate of an Acquiring
Person or a Transferee (as such terms are defined in the Rights Agreement)
or acting jointly or in concert with any of them. This Rights Certificate
and the Rights represented hereby shall become void in the circumstances
specified in subsection 4.1(b) of the Rights Agreement"
provided that the Rights Agent shall not be under any responsibility to
ascertain the existence of facts that would require the imposition of such
legend but shall be required to impose such legend only if instructed to do so
by the Corporation or if a holder fails to certify upon transfer or exchange in
the space provided on the Rights Certificate that such holder is not an
Acquiring Person or an Affiliate or Associate thereof or acting jointly or in
concert with any of them.
(e) 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 4.1, including without limitation, all such
acts and things as may be required to satisfy the requirements of the Securities
Act (British Columbia) or comparable legislation in each of the other provinces
of Canada and the 1933 Securities Act or the 1934 Exchange Act, and the rules
and regulations thereunder in respect of the issue of Shares upon the exercise
of Rights in accordance with this Agreement.
4.2 EXCHANGE OPTION
(a) In the event that the Board of Directors, acting in good faith, shall
determine that conditions exist that would eliminate or otherwise materially
diminish in any respect the benefits intended to be afforded to the holders of
Rights pursuant to this Agreement, the Board of Directors may, at its option and
without seeking the approval of holders of Shares or Rights, at any time after a
Flip-in Event has occurred, authorize the Corporation to issue or deliver in
respect of each Right that is not void pursuant to subsection 4.1(b), either:
(i) in return for the applicable Exercise Price and the Right, debt
or equity securities or assets (or a combination thereof) having
a value equal to twice the applicable Exercise Price; or
(ii) in return for the Right, subject to any amounts that may be
required to be paid under applicable law, debt or equity
securities or assets (or a combination thereof) having a value
equal to the value of the Right,
in full and final settlement of all rights attaching to the Rights, where in
either case the value of such debt or equity securities or other assets (or a
combination thereof) and, in the case of clause , the value of the Right, shall
be determined by the Board of Directors, which
- 32 -
may rely upon the advice of a nationally or internationally recognized firm of
investment dealers or investment bankers selected by the Board of Directors.
(b) If the Board of Directors authorizes the exchange of debt or equity
securities or assets for Rights pursuant to subsection 4.2(a), the right to
exercise the Rights will terminate without any further action or notice and the
only right thereafter of a holder of Rights shall be to receive the debt or
equity securities or assets in accordance with the exchange formula authorized
by the Board of Directors. Within 10 Business Days after the Board of Directors
has authorized the exchange of debt or equity securities or assets for Rights
pursuant to subsection 4.2(a), the Corporation shall give notice of exchange to
the holders of such Rights by mailing such notice to all such holders at their
last addresses as they appear upon the register of Rights holders maintained by
the Rights Agent. Each such notice of exchange will state the method by which
the exchange of debt or equity securities or assets for Rights will be effected.
ARTICLE 5
THE RIGHTS AGENT
5.1 GENERAL
(a) The Corporation hereby appoints the Rights Agent to act as agent for
the Corporation and the holders of Rights in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Corporation may from time to time appoint one or more Co-Rights Agents as it may
deem necessary or desirable. In the event the Corporation appoints one or more
Co-Rights Agents, the respective duties of the Rights Agents and Co-Rights
Agents shall be as the Corporation may determine. 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 expense of defending against any claim of
liability, which right to indemnification will survive the termination of this
Agreement.
(b) The Rights Agent shall be protected and shall incur no liability for or
in respect of any action taken, suffered or omitted by it in connection with its
administration of this Agreement in reliance upon any certificate for Shares,
Rights Certificate, certificate for other securities of the Corporation,
instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement or other paper or
document believed by it to be genuine and to be signed, executed and where
necessary, verified or acknowledged, by the proper Person or Persons.
(c) The Corporation covenants that it will pay to the Rights Agent from
time to time reasonable remuneration for its services hereunder and will pay to
or reimburse the Rights Agent upon its request for all reasonable expenses,
disbursements and advances made or incurred by the Rights Agent in the
administration or execution of the trusts hereby created (including reasonable
compensation and disbursements of its legal counsel and all other advisers and
assistants not regularly in its employ) both before and after any default
hereunder until all of the duties of the Rights Agent hereunder have been fully
and finally performed.
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5.2 MERGER OR AMALGAMATION OR CHANGE OF NAME OF RIGHTS AGENT
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or amalgamated or with which it may be consolidated, or any
corporation resulting from any merger, amalgamation or consolidation to which
the Rights Agent or any successor Rights Agent is a party, or any corporation
succeeding to the shareholder or stockholder services business of the Rights
Agent or any successor Rights Agent, will be the successor to the Rights Agent
under this Agreement without the execution or filing of any paper or any further
act on the part of any of the parties hereto, provided that such corporation
would be eligible for appointment as a successor Rights Agent under the
provisions of Section 5.4 hereof. In case at the time such successor Rights
Agent succeeds to the agency created by this Agreement any of the Rights
Certificates have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of the predecessor Rights Agent and
deliver such rights Certificates so countersigned; and in case at that time any
of the rights Certificates have not been countersigned, any successor Rights
Agent may countersign such rights Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such rights Certificates will have the full force provided in the
Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent is changed and at such
time any of the Rights Certificates shall have been countersigned but not
delivered,the Rights Agent may adopt the countersignature under its prior name
and deliver Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, the Rights Agent
may countersign such Rights Certificates either in its prior name or in its
changed name; and in all such cases such Rights Certificates shall have the full
force provided in the Rights Certificates and in this Agreement.
5.3 DUTIES OF RIGHTS AGENT
The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the
Corporation and the holders of Rights Certificates, by their acceptance thereof,
shall be bound:
(a) the Rights Agent may consult with legal counsel (who may be legal
counsel for the Corporation) and the opinion of such counsel will be
full and complete authorization and protection to the Rights Agent as
to any action taken or omitted by it in good faith and in accordance
with such opinion;
(b) whenever in the performance of its duties under this Agreement the
Rights Agent deems it necessary or desirable that any fact or matter
be proved or established by the Corporation prior to taking or
suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate
signed by a Person believed by the Rights Agent to be the Chairman of
the Board, the President or any Vice-
- 34 -
President and by the Treasurer or any Assistant-Treasurer or the
Secretary or any Assistant-Secretary of the Corporation and delivered
to the Rights Agent; and such certificate will be full authorization
to the Rights Agent for any action taken or suffered in good faith by
it under the provisions of this Agreement in reliance upon such
certificate;
(c) the Rights Agent will be liable hereunder only for its own negligence,
bad faith or wilful misconduct;
(d) the Rights Agent will not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the
certificates for Shares or the Rights Certificates (except its
countersignature thereof) or be required to verify the same,but all
such statements and recitals are and will be deemed to have been made
by the Corporation only;
(e) the Rights Agent will not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof
(except the due authorization, execution and delivery hereof by the
Rights Agent) or in respect of the validity or execution of any Share
Certificate or Rights Certificate (except its countersignature
thereof); nor will it be responsible for any breach by the Corporation
of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor will it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void
pursuant to subsection 4.1(b)) or any adjustment required under the
provisions of Section 3.2 or responsible for the manner, method or
amount of any such adjustment or the ascertaining of the existence of
facts that would require any such adjustment (except with respect to
the exercise of Rights after receipt of the certificate contemplated
by Section 3.2 describing any such adjustment); nor will it by any act
hereunder be deemed to make any representation or warranty as to the
authorization of any Shares to be issued pursuant to this Agreement or
any Rights or as to whether any Shares will, when issued, be duly and
validly authorized, executed, issued and delivered as fully paid and
non-assessable;
(f) the Corporation 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 with respect to the performance of its duties hereunder
from any Person believed by the Rights Agent to be the Chairman of the
Board, the President, any Vice-President or the Secretary or any
Assistant-Secretary
- 35 -
or the Treasurer or any Assistant-Treasurer of the Corporation, and to
apply to such Persons for advice or instructions in connection with
its duties, and it shall not be liable for any action taken or
suffered by it in good faith in accordance with instructions of any
such Person;
(h) the Rights Agent and any shareholder or stockholder, director, officer
or employee of the Rights Agent may buy, sell or deal in Shares,
Rights or other securities of the Corporation or become pecuniarily
interested in any transaction in which the Corporation may be
interested, or contract with or lend money to the Corporation or
otherwise act as fully and freely as though it were not the Rights
Agent under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Corporation or for any
other legal entity; and
(i) the Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys or agents, and the Rights Agent will not be
answerable or accountable for any act, default, neglect or misconduct
of any such attorneys or agents or for any loss to the Corporation
resulting from any such act, default, neglect or misconduct, provided
reasonable care was exercised in the selection and continued
employment thereof.
5.4 CHANGE OF RIGHTS AGENT
The Rights Agent may resign and be discharged from its duties under this
Agreement upon 60 days' notice in writing (or such lesser notice as is
acceptable to the Corporation) mailed to the Corporation and to each transfer
agent of Shares by registered or certified mail, and to the holders of the
Rights in accordance with Section 6.9. The Corporation may remove the Rights
Agent upon 30 days' notice in writing, mailed to the Rights Agent and to each
transfer agent of the Shares by registered or certified mail, and to the holders
of the Rights in accordance with Section 6.9. If the Rights Agent should resign
or be removed or otherwise become incapable of acting, the Corporation will
appoint a successor to the Rights Agent. If the Corporation fails to make such
appointment within a period of 30 days after such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of any Rights (which holder shall,
with such notice, submit such holder's Rights Certificate for inspection by the
Corporation), then the holder of any rights may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Corporation or by such a court, shall be a
corporation incorporated under the laws of Canada or a province thereof
authorized to carry on the business of a trust company in the Province of
British Columbia. After appointment, the successor Rights Agent will be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall 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
- 36 -
Rights Agent and each transfer agent of the Shares, and mail a notice thereof in
writing to the holders of the Rights. Failure to give any notice provided for in
this Section 5.4, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be.
ARTICLE 6
MISCELLANEOUS
6.1 REDEMPTION AND WAIVER
(a) The Board of Directors may, at its option, at any time prior to the
occurrence of a Flip-in Event, elect to redeem all but not less than all of the
then outstanding Rights at a redemption price of $0.001 per Right, appropriately
adjusted in a manner analogous to the applicable adjustment provided for in
Section 3.2, if an event of the type analogous to any of the events described in
Section shall have occurred (such redemption price being herein referred to as
the "Redemption Price"). The redemption of the Rights by the Board of Directors
may be made effective at such time, on such basis and with such conditions as
the Board of Directors in its sole discretion may establish.
(b) The Board of Directors may, until the occurrence of a Flip-in Event
upon written notice delivered to the Rights Agent, determine to waive the
application of Section 4.1.
(c) Notwithstanding the provisions of subsection 6.1(b) hereof, the Board
of Directors of the Corporation may waive the application of Section 4.1 in
respect of any Flip-in Event, provided that both of the following conditions are
satisfied:
(i) the Board of Directors has determined, within 14 days of the date
on which the Board of Directors learns of such Flip-in Event,
that a Person became an Acquiring Person by inadvertence and
without any intention to become, or knowledge that it would
become, an Acquiring Person; and
(ii) such Person has, within 14 days after such determination or such
earlier or later period as the Board of Directors may determine,
reduced its Beneficial Ownership of Voting Shares such that at
the time of the granting of a waiver pursuant to this subsection
6.1(c) such Person is no longer an Acquiring Person;
and, in the event of any such waiver, for the purposes of this Agreement, such
Flip-in Event shall be deemed not to have occurred and the Separation Time shall
be deemed not to have occurred as a result of such Person having inadvertently
become an Acquiring Person.
(d) In the event that a Person makes a Permitted Bid that, within 120 days
after the date of the Permitted Bid, has been accepted by the holders of not
less than 90% of the then outstanding Common Shares, other than the Shares held
at the date of the Permitted Bid by or on behalf of the Offeror or an Affiliate
or Associate of the Offeror, then the Board of Directors
- 37 -
shall, immediately upon the consummation of such acquisition, without further
formality be deemed to have elected to redeem the Rights at the Redemption
Price.
(e) If the Board of Directors elects or is deemed to have elected to redeem
the Rights, the right to exercise the Rights will thereupon, without further
action and without notice, terminate, and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price.
(f) Within 10 days after the Board of Directors electing or having been
deemed to have elected to redeem the Rights, the Corporation shall give notice
of redemption to the holders of the then outstanding Rights by mailing such
notice to each such holder at 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 Shares. Any notice that is mailed in the
manner herein provided shall be deemed given, whether or not the holder receives
the notice. Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made. The Corporation may not redeem,
acquire or purchase for value any Rights at any time in any manner other than
that specifically set forth in this Section 6.1, and other than in connection
with the purchase of Shares prior to the Separation Time.
6.2 EXPIRATION
No Person shall have any rights pursuant to this Agreement or in respect of
any Right after the Expiration Time, except the Rights Agent as specified in
Section 5.1.
6.3 SHAREHOLDER REVIEW
At the first annual meeting of shareholders of the Corporation following
the fifth anniversary of the date of this Agreement, provided that a Flip-in
Event has not occurred prior to such time, the Board of Directors shall submit a
resolution to the holders of voting Shares of the Corporation for their
consideration and, if thought advisable, approval, ratifying the continued
existence of the Rights. If a majority of the votes cast on such resolution are
voted against the continued existence of the Rights then the Board of Directors
shall, immediately upon the confirmation by the Chairman of such shareholders'
meeting of the result of the vote on such resolution, without further formality
be deemed to have elected to redeem the Rights at the Redemption Price.
6.4 ISSUANCE OF NEW RIGHTS CERTIFICATE
Notwithstanding any of the provisions of this Agreement or of the Rights to
the contrary, the Corporation may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by the Board of Directors to
reflect any adjustment or change in the number or kind or class of shares
purchasable upon exercise of Rights made in accordance with the provisions of
this Agreement.
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6.5 FRACTIONAL RIGHTS AND FRACTIONAL SHARES
(a) The Corporation shall not be required to issue fractions of Rights or
to distribute Rights Certificates that evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Rights Certificates with regard to which such fractional Right would otherwise
be issuable, an amount in cash equal to the same fraction of the Market Price of
a whole Right.
(b) The Corporation shall not be required to issue fractions of Shares upon
exercise of the Rights or to distribute certificates that evidence fractional
Shares. In lieu of issuing fractional Shares, the Corporation shall pay to the
registered holders of Rights Certificates at the time such Rights are exercised
as herein provided, an amount in cash equal to the same fraction of the Market
Price of a whole Share.
6.6 SUPPLEMENTS AND AMENDMENTS
The Corporation may from time to time supplement or amend this Agreement
without the approval of any holders of Shares or Rights:
(a) to make any changes, which the Board of Directors acting in good faith
may deem necessary or desirable, including to give effect to any
reclassification of the Shares into other shares of the Corporation,
provided that no such supplement or amendment made on or after the
Stock Acquisition Date shall materially adversely affect the interests
of the holders of Rights generally and provided further that no such
supplement or amendment shall be made to the provisions of Article 5
except with the written concurrence of the Rights Agent to such
supplement or amendment; and
(b) in order to cure any ambiguity or to correct or supplement any
provision contained herein that may be inconsistent with any other
provisions herein or otherwise defective.
6.7 RIGHTS OF ACTION
Subject to the terms of this Agreement, all rights of action in respect of
this Agreement, other than rights of action vested solely in the Rights Agent,
are vested in the respective holders of the Rights; and any holder of any
Rights, without the consent of the Rights Agent or of the holder of any other
Rights, may, on such holder's own behalf and for such holder's own benefit and
the benefit of other holders of Rights, enforce, and may institute and maintain
any suit, action or proceeding against the Corporation to enforce, or otherwise
act in respect of, such holder's right to exercise such holder's Rights in the
manner provided in such holder's Rights Certificate and in this Agreement.
Without limiting the foregoing or any remedies available to the holders of
Rights it is specifically acknowledged that the holders of Rights would not have
an adequate remedy at law for any breach of this Agreement and will be
- 39 -
entitled to specific performance of the obligations under, and injunctive relief
against, actual or threatened violations of, the obligations of any Person
subject to this Agreement.
6.8 NOTICE OF PROPOSED ACTIONS
In case the Corporation shall propose after the Separation Time and prior
to the Expiration Time:
(a) to effect or permit (in cases where the Corporation's permission is
required) any Flip-in Event; or
(b) to effect the liquidation, dissolution or winding-up of the
Corporation or the sale of all or substantially all of the
Corporation's assets,
then, in each such case, the Corporation shall give to each holder of a Right,
in accordance with Section 6.9, a notice of such proposed action, which shall
specify the date on which such Flip-in Event, liquidation, dissolution or
winding-up is to take place, and such notice shall be so given at least 20
Business Days prior to the date of taking such proposed action.
6.9 NOTICES
Notices or demands authorized or required by this Agreement to be given or
made by the Rights Agent or by the holder of any Rights to or on the Corporation
shall be sufficiently given or made if delivered or sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Rights Agent) as follows:
Solucorp Industries Ltd.
000 Xxxx Xxxxx Xxxx
Xxxx Xxxxx, Xxx Xxxx 00000
X.X.X.
Attention: Xx. Xxx Xxxxxx
Any notice or demand authorized or required by this Agreement to be given or
made by the Corporation or by the holder of any Rights to or on the Rights Agent
shall be sufficiently given or made if delivered or sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Corporation) as follows:
CIBC Mellon Trust Company
P.O. Box 1900
Mall Level, 0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX
X0X 0X0
Attention: Manager, Corporate Trust Services
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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 registry books of the Rights Agent or, prior to the Separation Time, on
the registry books of the Corporation for the Common shares. Any notice that is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice.
6.10 COSTS OF ENFORCEMENT
The Corporation agrees that if the Corporation or any other Person the
securities of which are purchasable upon exercise of Rights fails to fulfil any
of its obligations pursuant to this Agreement, then the Corporation or such
Person will reimburse the holder of any Rights for the costs and expenses
(including legal fees) incurred by such holder in actions to enforce his rights
pursuant to any Rights or this Agreement.
6.11 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.
6.12 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; but this Agreement
shall be for the sole and exclusive benefit of the Corporation, the Rights Agent
and the holders of the Rights.
6.13 GOVERNING LAW
This Agreement and each Right issued hereunder shall be deemed to be a
contract made under the laws of the Province of British Columbia and for all
purposes shall be governed by and construed in accordance with the laws of such
province applicable to contracts to be made and performed entirely within such
province.
6.14 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 but one and the same instrument.
6.15 SEVERABILITY
If any section, subsection, clause, subclause, term or provision hereof or
the application thereof to any circumstance shall, in any jurisdiction and to
any extent, be invalid
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or unenforceable, such section, subsection, clause, subclause, term or provision
shall be ineffective as to such jurisdiction to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable the remaining
sections subsections, clauses, subclauses, terms and provisions hereof or the
application of such section, subsection, clause, subclause, term or provision to
circumstances other than those as to which it is held invalid or unenforceable.
6.16 EFFECTIVE DATE
This Agreement is in full force and effect in accordance with its terms
from the date hereof.
6.17 DETERMINATION AND ACTIONS BY THE BOARD OF DIRECTORS
The Board of Directors shall have the exclusive power and authority to
administer and amend this Agreement in accordance with the terms hereof and to
exercise all rights and powers specifically granted to the Board of Directors or
the Corporation, or as may be necessary or advisable in the administration of
this Agreement, including, without limitation, the right and power to:
(a) interpret the provisions of this Agreement; and
(b) make all determinations deemed necessary or advisable for the
administration of this Agreement (including a determination to
terminate or not to terminate the Rights or to amend the Agreement in
accordance with the terms hereof).
All such actions, calculations, interpretations and determinations (including,
for purposes of subsection 6.17(c) below, all omissions with respect to the
foregoing) that are done or made by the Board of Directors, in good faith,
shall:
(c) be final, conclusive and binding on the Corporation, the Rights Agent,
the holders of the Rights Certificates and all other parties; and
(d) not subject the Board of Directors to any liability to the holders of
the Rights Certificates.
6.18 SUCCESSOR CORPORATIONS
The Corporation shall not consummate or permit or suffer to occur any
consolidation, amalgamation, merger or transfer of the undertaking or assets of
the Corporation as an entirety or substantially as an entirety to another
corporation (the "Successor Corporation") unless the Successor Corporation
resulting from such consolidation, amalgamation, merger or transfer (if not the
Corporation) shall expressly assume, by supplemental agreement in form
satisfactory to the Rights Agent and executed and delivered to the Rights Agent,
the due and
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punctual performance and observance of each and every covenant and condition of
this Agreement to be performed and observed by the Corporation.
6.19 TIME OF THE ESSENCE
Time shall be of the essence in this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
SOLUCORP INDUSTRIES LTD. CIBP MELLON TRUST COMPANY
Per: /s/ NOT LEGIBLE Per: /s/ NOT LEGIBLE
--------------------------- -----------------------------
Authorized Signatory Authorized Signatory
Per: /s/ NOT LEGIBLE Per: /s/ NOT LEGIBLE
--------------------------- -----------------------------
Authorized Signatory Authorized Signatory
EXHIBIT "A"
(Form of Rights Certificate)
Certificate No. ___________________ _____________ Rights
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE CORPORATION, ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES (SPECIFIED
IN SUBSECTION 4.1(b) OF THE RIGHTS AGREEMENT), RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR TRANSFEREES OF AN ACQUIRING PERSON OR ITS AFFILIATES OR
ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY PERSON
ACTING JOINTLY OR IN CONCERT WITH ANY OF THEM MAY BECOME VOID WITHOUT ANY
FURTHER ACTION.
RIGHTS CERTIFICATE
This certifies that _______________________________ , or registered
assigns, is the registered holder of the number of Rights set forth above, each
of which entitles the registered holder thereof, subject to the terms,
provisions and conditions of the Shareholder Protection Rights Plan Agreement,
dated as of the 18th day of December, 1996 (the "Rights Agreement") between
Solucorp Industries Ltd., a corporation incorporated under the Company Act
(British Columbia) (the "Corporation") and CIBC Mellon Trust Company, a trust
company incorporated under the laws of Canada, as Rights Agent (the "Rights
Agent"), which term shall include any successor Rights Agent under the Rights
Agreement, to purchase from the Corporation at any time after the Separation
Time (as such term is defined in the Rights Agreement) and prior to the
Expiration Time (as such term is defined in the Rights Agreement), one fully
paid common share of the Corporation (a "Common Share") at the Exercise Price
referred to below, upon presentation and surrender of this Rights Certificate
with the Form of Election to Exercise duly executed and submitted to the Rights
Agent at its principal office in the City of Vancouver. The Exercise Price shall
initially be (Cdn.)$100 per Right and shall be subject to adjustment in certain
events as provided in the Rights Agreement.
In certain circumstances described in the Rights Agreement, each Right
evidenced hereby may entitle the registered holder thereof to purchase or
receive securities of an entity other than the Corporation, assets, debt
securities or shares in the capital stock of the Corporation other than Common
Shares and more or fewer than one Common Share (or a combination thereof), all
as provided in the Rights Agreement.
This Rights Certificate is subject to all the terms, provisions and
conditions of the Rights Agreement which terms and provisions are hereby
incorporated herein by reference and
- 2 -
made a part hereof and to which Rights Agreement reference is hereby made for a
full description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Rights Agent, the Corporation and the holders of
the Rights Certificates. Copies of the Rights Agreement are on file at the
registered office of the Corporation and are available upon written request.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at any of the offices of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or Rights Certificate of like
tenor and date evidencing an aggregate number of Rights equal to the aggregate
number of Rights evidenced by the Rights Certificate or Rights Certificates
surrendered. If this Rights Certificate is exercised in part, the registered
holder shall be entitled to receive, upon surrender hereof, another Rights
Certificate for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Corporation at a redemption price of
$.001 per Right, subject to adjustment in certain events, under certain
circumstances at its option.
No fractional Common Shares will be issued upon the exercise of any Right
or Rights evidenced hereby nor will Rights Certificates be issued for less than
one whole Right. After the Separation Time, in lieu of issuing fractional
Rights, a cash payment will be made as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Common Shares or of
any other securities which may at any time be issuable upon the exercise hereof,
nor shall anything contained in the Rights Agreement or herein be construed to
confer upon the holder hereof, as such, any of the rights of a shareholder of
the Corporation or any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting shareholders (except as provided in the Rights Agreement), or
to receive dividends or subscription rights, or otherwise, until the Rights
evidenced by this Rights Certificate shall have been exercised as provided in
the Rights Agreement.
- 3 -
This Rights Certificate is not valid or obligatory for any purpose until it
has been countersigned by the Rights Agent.
IN WITNESS WHEREOF SOLUCORP INDUSTRIES LTD. has caused this Rights
Certificate to be signed by its duly authorized officers as of the _____ day of
__________________, 19______.
SOLUCORP INDUSTRIES LTD.
Per: ______________________ Per: ______________________
Authorized Signatory Authorized Signatory
Countersigned: (By Rights Agent)
CIBC MELLON TRUST COMPANY
By: _______________________
Authorized Signatory
(Form of Election To Exercise)
ELECTION TO EXERCISE
TO: CIBC Mellon Trust Company
P.O. Box 1900
Mall Level, 0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, X.X.
X0X 0X0
The undersigned hereby irrevocably elects to exercise __________________________
whole Rights represented by the attached Rights Certificate to purchase the
Common Shares or other securities, if applicable, issuable upon the exercise of
such Rights and requests that certificates for such securities be issued in the
name of:
__________________________________________________________________
___________________________________________________________________
___________________________________________________________________
Address
___________________________________________________________________
Social Insurance, Social Security or Other
Taxpayer Identification Number
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new rights Certificate for the balance of such Rights shall be
registered in the name of and delivered to:
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
Address
___________________________________________________________________
Social Insurance, Social Security or Other
Taxpayer Identification Number
Dated: ___________________ ________________________________________
Signature
Signature Guaranteed: (Signature must correspond to name as written
upon the face of this Rights Certificate in
every particular, without alteration or
enlargement or any change whatsoever)
- 5 -
Signature must be guaranteed by a member firm of a recognized stock exchange in
Canada, a registered national securities exchange in the United States, a member
of the National Association of Securities Dealers, Inc., or a commercial bank or
trust company having an office or correspondent in Canada or the United States.
******************************************************************************
(To be completed if true)
The undersigned hereby represents, for the benefit of all holders of Rights and
Common Shares, that the Rights evidenced by this Rights Certificate are not,
and, to the knowledge of the undersigned, have never been, Beneficially Owned by
an Acquiring Person or an Affiliate or Associate thereof (as defined in the
Rights Agreement).
_________________________________________
Signature
******************************************************************************
NOTICE
In the event the certification set forth above in the Forms of Assignment and
Election is not completed, the Corporation will deem the Beneficial Owner of the
Rights evidenced by this Rights Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement). No Rights
Certificates shall be issued in exchange for a Rights Certificate owned or
deemed to have been owned by an Acquiring Person or an Affiliate or Associate
thereof.
