SHAREHOLDER RIGHTS PLAN AGREEMENT POLYMET MINING CORP. (the "Corporation") AND PACIFIC CORPORATE TRUST COMPANY (the "Rights Agent") December 4, 2003
Β
(the
"Corporation")
AND
PACIFIC
CORPORATE TRUST COMPANY
(the
"Rights Agent")
December
4, 2003
Β
Β
Β
Β
Β
Β
Β
TABLE
OF CONTENTS
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ARTICLE
1 INTERPRETATION
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2
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1.1
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Definitions:
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2
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1.2
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Currency:
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16
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1.3
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Headings
and References:
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16
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1.4
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Calculation
of Number and Percentage of Beneficial Ownership of Outstanding Voting
Shares:
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17
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1.5
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Acting
Jointly or in Concert:
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17
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1.6
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Generally
Accepted Accounting Principles:
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18
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ARTICLE
2 THE RIGHTS
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18
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2.1
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Legend
on Common Share Certificates:
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18
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2.2
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Initial
Exercise Price: Exercise of Rifts: Detachment of Rifts:
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19
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2.3
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Adjustments
to Exercise Price: Number of Rights:
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22
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2.4
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Date
on Which Exercise is Effective:
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27
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2.5
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Execution.
Authentication. Delivery and Dating of Rifts Certificates:
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27
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2.6
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Registration.
Transfer and Exchange:
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28
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2.7
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Mutilated.
Destroyed. Lost and Stolen Rights Certificates:
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28
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2.8
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Persons
Deemed Owners:
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29
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2.9
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Delivery
and Cancellation of Certificates:
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29
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2.10
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Agreement
of Rights Holders:
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30
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2.11
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Rights
Certificate Holder Not Deemed a Shareholder:
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30
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ARTICLE
3 ADJUSTMENTS TO THE RIGHTS
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31
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3.1
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Flip-in
Event:
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31
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3.2
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Exchange
Option:
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32
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ARTICLE
4 THE RIGHTS AGENT
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34
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4.1
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General:
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34
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4.2
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Merger
or Amalgamation or Chance of Name of Rights Agent:
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34
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4.3
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Duties
of Rights Agent:
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35
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4.4
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Change
of Rights Agent:
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37
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Β
Β
Β
Β
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ARTICLE
5 MISCELLANEOUS
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37
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5.1
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Redemption
and Waiver:
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37
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5.2
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Expiration:
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39
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5.3
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Issue
of New Rights Certificates:
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39
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5.4
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Supplements
and Amendments:
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39
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5.5
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Fractional
Rights and Fractional Common Shares:
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41
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5.6
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Rights
of Action:
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41
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5.7
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Regulatory
Approvals:
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42
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5.8
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Declaration
as to Non-Canadian holders:
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42
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5.9
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Notices:
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42
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5.10
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Costs
of Enforcement:
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43
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5.11
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Successors:
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44
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5.12
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Benefits
of this Agreement:
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44
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5.13
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Governing
Law:
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44
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5.14
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Severability:
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44
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5.15
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Effective
Date:
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44
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5.16
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Confirmation:
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44
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5.17
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Determinations
and Actions by the Board of Directors:
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45
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5.18
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Counterparts:
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46
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SCHEDULE
A - FORM OF RIGHTS CERTIFICATE
Β
-ii-
Β
THIS
SHAREHOLDER RIGHTS PLAN AGREEMENT made as of December 4,
2003.
BETWEEN:
| Β | Β |
POLYMET
MINING CORP.,
a
corporation incorporated pursuant to the laws of British Columbia
and
having its registered office at 0000-000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxxx,
X.X. X0X 0X0
|
(the
"Corporation")
OF
THE
FIRST PART
AND:
| Β | Β |
PACIFIC
CORPORATE TRUST COMPANY,
a
trust company under the laws of British Columbia and having an office
at
00xx
Xxxxx, 000 Xxxx Xxxxxx, Xxxxxxxxx, X.X., X0X
0X0
|
(the
"Rights
Agent")
OF
THE
SECOND PART
WHEREAS:
A.Β Β The
Board
of Directors of the Corporation have determined that it is in the best interests
of the Corporation to adopt a shareholder rights plan to ensure, to the extent
possible, that all shareholders of the Corporation are treated fairly in
connection with any take-over bid for the Corporation.
B.Β Β In
order
to implement the adoption of a shareholder rights plan as established by this
Agreement the Board of Directors of the Corporation has:
| Β |
(1)
|
authorized
the issuance, effective at 12:01 a.m. (Vancouver time) on the Effective
Date, of one Right in respect of each Common Share outstanding as
of 12:01
a.m. (Vancouver time) on the Effective Date (the "Record
Time");
and
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| Β |
(2)
|
authorized
the issue of one Right in respect of each Common Share issued after
the
Record Time and prior to the earlier of the Separation Time and the
Expiration Time.
|
C.Β Β Each
Right entitles the holder thereof, after the Separation Time, to purchase
securities of the Corporation pursuant to the terms and subject to the
conditions set forth in this Agreement.
Β
Β
Β
D.Β Β The
Corporation wishes to appoint the Rights Agent to act on behalf of the
Corporation and the holders of Rights, and the Rights Agent is willing to so
act, in connection with the issuance, transfer, exchange and replacement of
Rights Certificates, the exercise of Rights and other matters referred to in
this Agreement.
E.Β Β The
Board
of Directors of the Corporation proposes that this Agreement be in place for
a
period of ten years.
NOW
THEREFORE, in consideration of the premises and respective agreements set forth
herein, the parties hereto agree as follows:
ARTICLE
1
INTERPRETATION
Β
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1.1
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Β |
Definitions:
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In
this
Agreement, the following words and terms will, unless the context otherwise
requires, have the following meanings:
| Β |
(a)
|
"Acquiring
Person"
means any Person who is or becomes the Beneficial Owner of 20% or
more of
the outstanding Voting Shares, provided that the term "Acquiring
Person"
will not include:
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(i)
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the
Corporation or any Subsidiary of the
Corporation;
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(ii)
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any
Person who becomes the Beneficial Owner of 20% or more of the outstanding
Voting Shares as a result of one or any combination
of:
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(A)
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a
Voting Share Reduction;
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(B)
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Permitted
Bid Acquisitions;
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(C)
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an
Exempt Acquisition; or
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(D)
|
a
Pro Rata Acquisition,
|
provided
that if a Person becomes the Beneficial Owner of 20% or more of the outstanding
Voting Shares by reason of one or any combination of a Voting Share Reduction,
Permitted Bid Acquisitions, an Exempt Acquisition or a Pro Rata Acquisition
and
thereafter such Person becomes the Beneficial Owner of any additional Voting
Shares (other than pursuant to a Voting Share Reduction, Permitted Bid
Acquisitions, an Exempt Acquisition or a Pro Rata Acquisition), then as of
the
date that such Person becomes the Beneficial Owner of such additional Voting
Shares, such Person will become an "Acquiring Person";
Β
-2-
Β
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(iii)
|
for
a period of ten days after the Disqualification Date (as defined
below),
any person who becomes the Beneficial Owner of 20% or more of the
outstanding Voting Shares as a result of such Person becoming disqualified
from relying on Section 1.1(f)(viii) solely because such Person or
the
Beneficial Owner of such Voting Shares has participated in, proposes
or
intends to make or is participating in a Take-Over Bid or any plan
or
proposal relating thereto or resulting therefrom, either alone or
by
acting jointly or in concert with any other Person. For the purposes
of
this definition, "Disqualification Date" means the first date of
public
announcement of facts indicating that any Person has participated
in, has
made, proposes or intends to make or is participating in a Take-Over
Bid
or any plans or proposals relating thereto or resulting therefrom,
including, without limitation, a report filed pursuant to Section
111 of
the Securities
Act
(British Columbia), Section 101 of the Securities
Act
(Ontario), or Section 176 of the Securities
Act
(Alberta);
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| Β |
(iv)
|
an
underwriter or member of a banking or selling group that becomes
the
Beneficial Owner of 20% or more of the outstanding Voting Shares
in
connection with a bona fide distribution to the public of securities
pursuant to an underwriting agreement with the Corporation;
or
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| Β |
(v)
|
a
Grandfathered Person, provided that this exception will not be, and
will
cease to be, applicable to a Grandfathered Person in the event that
such
Grandfathered Person, after the Record Time, becomes the Beneficial
Owner
of any additional Voting Shares that increases its Beneficial Ownership
of
Voting Shares by more than 5% of the number of Voting Shares outstanding
from time to time, other than through a Voting Share Reduction, a
Permitted Bid Acquisition, an Exempt Acquisition, a Pro Rata Acquisition
or through the exercise of existing rights to acquire additional
Voting
Shares from the Corporation where such rights were owned by the
Grandfathered Person at the Record
Time.
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| Β |
(b)
|
"Affiliate"
means, when used to indicate a relationship with a specified Person,
a
Person that, directly, or indirectly through one or more intermediaries
or
otherwise, controls, or is controlled by, or is under common control
with,
such specified Person.
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(c)
|
"Agreement"
means this shareholder rights plan agreement dated as of December
4, 2003
between the Corporation and the Rights Agent, as amended, modified
or
supplemented from time to time.
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Β
-3-
Β
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(d)
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"annual
cash dividend"
means cash dividends paid at regular intervals in any financial year
of
the Corporation to the extent that such cash dividends do not exceed,
in
the aggregate, the greatest of:
|
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(i)
|
200%
of the aggregate amount of cash dividends declared payable by the
Corporation on its Common Shares in its immediately preceding financial
year;
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(ii)
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300%
of the arithmetic average of the aggregate amount of cash dividends
declared payable by the Corporation on its Common Shares in its three
immediately preceding financial years;
and
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(iii)
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100%
of the aggregate consolidated net income of the Corporation, before
extraordinary items, for its immediately preceding financial
year.
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(e)
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"Associate"
means, when used to indicate a relationship with a specified
Person:
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| Β |
(i)
|
a
corporation of which that Person owns, at law or in equity, shares
or
securities currently convertible into shares carrying more than 10%
of the
Voting Rights exercisable with respect to the election of directors
under
all circumstances or by reason of the occurrence of an event that
has
occurred and is continuing, or a currently exercisable option or
right to
purchase such shares or such convertible securities and with whom
that
Person is acting jointly or in
concert;
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(ii)
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a
partner of that Person acting on behalf of the partnership of which
they
are partners;
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| Β |
(iii)
|
a
trust or estate in which that Person has a beneficial interest and
with
whom that Person is acting jointly or in concert or in which that
Person
has a beneficial interest of 50% or more or in respect of which that
Person serves as a trustee or in a similar capacity provided, however,
that a Person shall not be an associate of a trust by reason only
of the
fact that such Person serves as a trustee or any 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 any province
thereof or if the ordinary business of such Person includes 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; and
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(iv)
|
a
spouse of that Person, any person of the same or opposite sex with
whom
that person is living in a conjugal relationship outside marriage,
a child
of that Person or a relative of that Person if that relative has
the same
residence as that Person.
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Β
-4-
Β
| Β |
(f)
|
"Beneficial
Owner":
a
Person shall be deemed the "Beneficial Owner", and to have "Beneficial
Ownership" of, and to "Beneficially
Own":
|
| Β |
(i)
|
any
securities as to which such Person or any of such Person's Affiliates
is
the direct or indirect owner at law or in equity and for the purposes
of
this Clause 1.1(f)(i), but without limiting the generality of the
foregoing, a Person shall be deemed to be an owner at law or in equity
of
all securities:
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| Β |
(A)
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owned
by a partnership of which the Person is a
partner;
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| Β |
(B)
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owned
by a trust in which the Person has a beneficial interest and which
is
acting jointly or in concert with that Person or in which the Person
has a
beneficial interest of 50% or more;
|
| Β |
(C)
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owned
jointly or in common with others;
and
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| Β |
(D)
|
of
which the Person may be deemed to be the beneficial owner (whether
or not
of record) pursuant to the provisions of the Company
Act
(British Columbia), or the Securities
Act
(British Columbia), the Securities
Act
(Ontario), the Securities
Act
(Alberta), or pursuant to Rule 13d-3 or 13d-5 under the Exchange
Act of
1934 (or pursuant to any comparable or successor laws, regulations
or
rules enacted in relation to the provisions of the Company
Act
(British Columbia), the Securities
Act
(British Columbia), the Securities
Act
(Ontario), the Securities
Act
(Alberta) or pursuant to Rule 13d-3 or 13d-5 as in effect on the
date of
this Agreement);
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| Β |
(ii)
|
any
securities as to which such Person or any of such Person's Affiliates
or
Associates has, directly or
indirectly:
|
| Β |
(A)
|
the
right to acquire (whether such right is exercisable immediately or
after
the lapse or passage of time and whether or not on condition or the
happening of any contingency or otherwise) pursuant to any agreement,
arrangement, pledge or understanding, whether or not in writing (other
than (x) customary agreements with and between underwriters and/or
banking
group members and/or selling group members with respect to a bona
fide
public offering of securities; (y) pledges of securities in the ordinary
course of business that meet all the conditions specified in Rule
13d-3(d)(3) under the Exchange Act of 1934 (except for the condition
in
Rule 13d-3(d)(3)(ii)); and (z) pledge agreements with a registered
securities dealer relating to the extension of credit for purchases
of
securities on margin in the ordinary course of the dealer's business),
or
upon the exercise of any conversion right, exchange right, share
purchase
right (other than the Rights), warrant or option, or otherwise;
or
|
Β
-5-
Β
| Β |
(B)
|
the
right to vote such securities (whether such right is exercisable
immediately or after the lapse or passage of time and whether or
not on
condition or the happening of any contingency or otherwise) pursuant
to
any agreement, arrangement, pledge (other than (x) pledges of securities
in the ordinary course of business that meet all the conditions specified
in Rule 13d-3(d)(3) under the Exchange Act of 1934 (except for the
condition in Rule 13d-3(d)(3)(ii)); and (y) pledge agreements with
a
registered securities dealer relating to the extension of credit
for
purchases of securities on margin in the ordinary course of the dealer's
business) or understanding (whether or not in writing) or
otherwise;
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| Β |
(iii)
|
any
securities which are Beneficially Owned within the meaning of Clauses
1.1(f)(i) or (ii) 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 (other than (x) customary
agreements with and between underwriters and/or banking group members
and/or selling group members with respect to a bona fide public offering
of securities, (y) pledges of securities in the ordinary course of
business that meet all the conditions specified in Rule 13d-3(d)(3)
under
the Exchange Act of 1934 (except for the condition in Rule
13d-3(d)(3)(ii)) and (z) pledge agreements with a registered securities
dealer relating to the extension of credit for purchases of securities
on
margin in the ordinary course of the dealer's business) with respect
to or
for the purpose of acting jointly or in concert in acquiring, holding,
voting or disposing of any Voting Shares of any class;
and
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| Β |
(iv)
|
any
securities which are directly or indirectly owned at law or in equity
by
an Associate of such Person;
|
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:
| Β |
(v)
|
where
such security has been deposited or tendered pursuant to any Take-Over
Bid
made by such Person, made by any of such Person's Affiliates or Associates
or made by any other Person referred to in Clause 1.1(f)(iii), until
such
deposited or tendered security has been taken up or paid for, whichever
shall first occur;
|
Β
-6-
Β
| Β |
(vi)
|
where
such Person, any of such Person's Affiliates or Associates or any
other
Person referred to in Clause 1.1(f)(iii), has or shares the power
to vote
or direct the voting of such security pursuant to a revocable proxy
given
in response to a public proxy solicitation or where such Person has
an
agreement, arrangement or understanding with respect to a shareholder
proposal or proposals or a matter or matters to come before a meeting
of
shareholders, including the election of
directors;
|
| Β |
(vii)
|
where
such Person, any of such Person's Affiliates or Associates or any
other
Person referred to in Clause 1.1(f)(iii), 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 or where such Person has
an
agreement, arrangement or understanding with respect to a shareholder
proposal or proposals or a matter or matters to come before a meeting
of
shareholders, including the election of
directors;
|
| Β |
(viii)
|
where
such Person, any of such Person's Affiliates or Associates or any
other
Person referred to in Clause 1.1(f)(iii), holds or exercises voting
or
dispositive power over such security provided
that:
|
| Β |
A.
|
the
ordinary business of any such Person (the "Investment
Manager")
includes the management of investment funds for others (which others,
for
greater certainty, may include or be limited to one or more employee
benefit plans or pension plans) and such voting or dispositive 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 account of another Person (a "Client");
|
| Β |
B.
|
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 (each an "Estate
Account")
or in relation to other accounts (each an "Other
Account")
and holds such voting or dispositive power over such security in
the
ordinary course of such duties for the estate of any such deceased
or
incompetent Person or for such other
accounts;
|
Β
-7-
Β
| Β |
C.
|
such
Person is established by statute for purposes that include, and a
substantial portion of the ordinary business or activity of such
Person
(the "Statutory
Body")
is, the management of investment funds for employee benefit plans,
pension
plans, insurance plans or various public bodies;
or
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| Β |
D.
|
such
Person (the "Administrator")
is the administrator or trustee of one or more pension funds or plans
registered under the laws of Canada or any Province thereof or the
laws of
the United States of America or any State
thereof;
|
provided,
in any of the above cases, that the Investment Manager, the Trust Company,
the
Statutory Body or the Administrator, as the case may be, is not then making
or
proposing to make a Take-Over Bid, other than an Offer to Acquire Voting Shares
or other securities by means of a distribution by the Corporation or by means
of
ordinary market transactions (including prearranged trades) executed through
the
facilities of a stock exchange or organized over-the-counter market, alone
or by
acting jointly or in concert with any other Person; or
| Β |
(ix)
|
where
such Person is a Client of the same Investment Manager as another
Person
on whose account the Investment Manager holds or exercises voting
or
dispositive power over such security, or by reason of such Person
being an
Estate Account or an Other Account of the same Trust Company as another
Person on whose account the Trust Company holds or exercises voting
or
dispositive power over such
security.
|
| Β |
(g)
|
"Board
of Directors"
means the board of directors from time to time of the Corporation
or any
duly constituted and empowered committee
thereof.
|
| Β |
(h)
|
"Business
Day"
means any day other than a Saturday, Sunday or a day on which banking
institutions in Vancouver are authorized or obligated by law to
close.
|
| Β |
(i)
|
"Canadian
Dollar Equivalent"
means, for any amount which is expressed in United States dollars
on any
date, the Canadian dollar equivalent of such amount determined by
reference to the U.S.-Canadian Exchange Rate on such
date.
|
| Β |
(j)
|
"Canadian-U.S.
Exchange Rate"
means, on any date, the inverse of the U.S.-Canadian Exchange
Rate.
|
| Β |
(k)
|
"close
of business"
means, on any given date, the time on such date (or, if such date
is not a
Business Day, the time on the next succeeding Business Day) at which
the
principal transfer office in Vancouver, British Columbia of the transfer
agent for the Common Shares of the Corporation (or, after the Separation
Time, the principal transfer office in Vancouver of the Rights Agent)
closes to the public.
|
Β
-8-
Β
| Β |
(l)
|
"Common
Shares"
means the common shares without par value in the capital of the
Corporation as presently constituted, as such shares may be subdivided,
consolidated, reclassified or otherwise changed from time to
time.
|
| Β |
(m)
|
"Company
Act"
means the Company
Act
(British Columbia) and the regulations thereunder, as now in effect
or as
the same may from time to time be amended, re-enacted or
replaced.
|
| Β |
(n)
|
"Competing
Permitted Bid"
means a Take-Over Bid made while a Permitted Bid is in existence
and that
satisfies all of the provisions of a Permitted Bid except that the
condition set forth in Section 1.1(am)(ii) may provide that the Voting
Shares that are the subject of the Take-Over Bid may be taken up
or paid
for on a date which is not earlier than the later of 21 days after
the
date of the Take-Over Bid or the earliest date on which Voting Shares
may
be taken up or paid for under any other Permitted Bid that is in
existence
for the Voting Shares.
|
| Β |
(o)
|
"controlled":
a
corporation shall be deemed to be "controlled" by another Person
or two or
more Persons if:
|
| Β |
(i)
|
securities
entitled to vote in the election of directors carrying more than
50% of
the votes for the election of directors are held, directly or indirectly,
by or for the benefit of the other Person or Persons;
and
|
| Β |
(ii)
|
the
votes carried by such securities are entitled, if exercised, to elect
a
majority of the Board of Directors of such
corporation.
|
| Β |
(p)
|
"Co-Rights
Agents"
means a Co-Rights Agent appointed pursuant to Subsection
4.1(a).
|
| Β |
(q)
|
"Corporation"
means Polymet Mining Corp.
|
| Β |
(r)
|
"Disposition
Date"
has the meaning ascribed thereto in Subsection
5.1(h).
|
| Β |
(s)
|
"Dividend
Reinvestment Acquisition"
shall mean an acquisition of Voting Shares pursuant to a Dividend
Reinvestment Plan.
|
| Β |
(t)
|
"Dividend
Reinvestment Plan"
means a regular dividend reinvestment or other plan of the Corporation
made available by the Corporation to holders of its securities where
such
plan permits the holder to direct that some or all
of:
|
| Β |
(i)
|
dividends
paid in respect of Common Shares;
|
| Β |
(ii)
|
proceeds
of redemption of shares of the
Corporation;
|
Β
-9-
Β
| Β |
(iii)
|
interest
paid on evidence of indebtedness of the Corporation;
or
|
| Β |
(iv)
|
optional
cash payments;
|
be
applied to the purchase from the Corporation of Common Shares.
| Β |
(u)
|
"Effective
Date"
means December 4, 2003.
|
| Β |
(v)
|
"Election
to Exercise"
means an election to exercise Rights substantially in the form attached
to
the Rights Certificate.
|
| Β |
(w)
|
"Exchange
Act of 1934"
means the Securities
Exchange Act of 1934
(United States of America), as amended, and the rules and regulations
thereunder, as now in effect or as the same may from time to time
be
amended, re-enacted or repealed.
|
| Β |
(x)
|
"Exempt
Acquisition"
means a share acquisition in respect of which the Board of Directors
has
waived the application of Section 3.1 pursuant to the provisions
of
Sections 5.1(a) or (h).
|
| Β |
(y)
|
"Exercise
Price"
means, as of any date, the price at which a holder of a Right may
purchase
the securities issuable upon exercise of one whole Right which, until
adjusted in accordance with the terms hereof, will be
$50.
|
| Β |
(z)
|
"Expansion
Factor"
shall have the meaning ascribed thereto in Section
2.3(a)(1).
|
| (aa) |
"Expiration
Time"
means the close of business on that date which is the earlier of
the date
of termination of this Agreement pursuant to Section 5.16 or, if
this
Agreement is confirmed pursuant to Section 5.16, the close of business
on
the tenth anniversary of the Effective
Date.
|
| Β |
(ab)
|
βFeasibility
Studyβ
has the meaning set out in Section 1.2 of National Instrument
43-101.
|
| Β |
(ac)
|
"Flip-in
Event"
means a transaction or event in or pursuant to which a Person becomes
an
Acquiring Person.
|
| Β |
(ad)
|
"Grandfathered
Person"
means a Person who is the Beneficial Owner of 20% or more of the
outstanding Voting Shares of the Corporation determined as at the
Record
Time.
|
| Β |
(ae)
|
"holder"
shall have the meaning ascribed thereto in Section
2.8.
|
| Β |
(af)
|
"Independent
Shareholders"
means holders of outstanding Voting Shares, other
than:
|
| Β |
(i)
|
any
Acquiring Person;
|
| Β |
(ii)
|
any
Offeror;
|
Β
-10-
Β
| Β |
(iii)
|
any
Affiliate or Associate of any Acquiring Person or
Offeror;
|
| Β |
(iv)
|
any
Person acting jointly or in concert with any Acquiring Person or
Offeror,
or with any Affiliate or Associate of any Acquiring Person or Offeror;
and
|
| Β |
(v)
|
any
employee benefit plan, deferred profit-sharing plan, stock participation
plan and any other similar plan or trust for the benefit of employees
of
the Corporation unless the beneficiaries of the plan or trust direct
the
manner in which the Voting Shares are to be voted or direct whether
the
Voting Shares are to be tendered to a Take-Over
Bid.
|
| Β |
(ag)
|
"Market
Price"
per share of any securities on any date means the average daily Closing
Price per Share of such securities on each of the 20 consecutive
Trading
Days through and including the Trading Day immediately preceding
such date
provided, however, that if an event of a type analogous to any of
the
events described in Section 2.3 hereof shall have caused the closing
prices used to determine the Market Price on any Trading Day not
to be
fully comparable with the closing price on such date (or, if such
date is
not a Trading Day, on the immediately preceding Trading Day), each
such
closing price so used shall be appropriately adjusted in a manner
analogous to the applicable adjustment provided for in Section 2.3
hereof
in order to make it fully comparable with the closing price on such
date
or, if such date is not a Trading Day, on the immediately preceding
Trading Day. The closing price per share ("Closing
Price per Share")
of any securities on any date shall
be:
|
| Β |
(i)
|
the
closing board lot sale price or, in case no sale takes place on such
date,
the average of the closing bid and asked prices per security, as
reported
by the principal Canadian stock exchange (as determined by the Board
of
Directors) on which such securities are listed and posted for
trading;
|
| Β |
(ii)
|
if
for any reason none of such prices is available on such day or the
securities are not listed or posted for trading on a Canadian stock
exchange, the last sale price or, in case no such sale takes place
on such
date, the average of the closing bid and asked prices for each of
such
securities as reported by the principal United Stated securities
exchange
(as determined by the Board of Directors) on which such securities
are
listed or remitted to trading;
|
| Β |
(iii)
|
if
for any reason none of such prices is available on such date or the
securities are not listed or remitted to trading on a Canadian stock
exchange or a United States securities exchange, the last sale price
or,
in case no sale takes place on such date, the average of the high
bid and
low ask prices for each of such securities in the over the counter
market,
as quoted by any reporting system then in use (as determined by the
Board
of Directors); or
|
Β
-11-
Β
| Β |
(iv)
|
if
for any reason none of such prices is available on such date or the
securities are not listed or remitted to trading on a Canadian stock
exchange or a United States securities exchange or quoted by any
such
reporting system, the average of the closing bid and ask prices as
furnished by a professional marketmaker making a market in the securities
selected by the Board of Directors;
|
provided,
however, that if for any reason none of such prices is available on such day,
the Closing Price per Share of such securities on such a date means the fair
value per share of such securities on such date as determined by the Board
of
Directors, after consultation with a nationally 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 date following part of the 20 consecutive trading
day period in question in United States dollars, such amount shall be translated
into Canadian dollars at such date at the Canadian dollar equivalent
thereof.
Notwithstanding
the foregoing, where the Board of Directors is satisfied that the Market Price
of securities as determined herein was affected by an anticipated or actual
Take-Over Bid or by improper manipulation, the Board of Directors may, acting
in
good faith, determine the Market Price of securities, such determination to
be
based on a finding as to the price at which a holder of securities of that
class
could reasonably have expected to dispose of his securities immediately prior
to
the relevant date excluding any change in price reasonably attributable to
the
anticipated or actual Take-Over Bid or to the improper
manipulation.
| Β |
(ah)
|
"Nominee"
has the meaning ascribed thereto in Subsection
2.2(c).
|
| Β |
(ai)
|
βNorthmet
Propertyβ
means those patented mineral claims covering 4,162 acres in the Mesabi
Range District, St. Louis County, Minnesota leased by the Corporation,
together with the associated improvements and other assets subject
to the
agreement between the Corporation and Cleveland Cliffs
Inc.
|
| Β |
(aj)
|
"Offer
to Acquire"
includes:
|
| Β |
(i)
|
an
offer to purchase or a solicitation of an offer to sell Voting Shares;
and
|
| Β |
(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.
Β
-12-
Β
| Β |
(ak)
|
"Offeror"
means a Person who has announced an intention to make, or who has
made, a
Take-Over Bid.
|
| Β |
(al)
|
"Offeror's
Securities"
means the aggregate of all Voting Shares Beneficially Owned by the
Offeror
on the date of an Offer to Acquire.
|
| Β |
(am)
|
"Permitted
Bid"
means a Take-Over Bid made by an Offeror by way of a takeover bid
circular
which also complies with the following additional
provisions:
|
| Β |
(i)
|
the
Take-Over Bid is made for all outstanding Voting Shares and to all
holders
of Voting Shares as registered on the books of the Corporation, other
than
the Offeror. The Take-Over Bid shall expressly state that Common
Shares
issued on the exercise of share purchase warrants, options and other
securities convertible into Common Shares shall, subject to compliance
with the procedures applicable generally to the tendering of Voting
Shares
of the Take-Over Bid, be eligible to be tendered under the Take-Over
Bid;
|
| Β |
(ii)
|
the
Take-Over Bid contains, and the take-up and payment for securities
tendered or deposited is subject to, an irrevocable and unqualified
provision that no Voting Shares will be taken up or paid for pursuant
to
the Take-Over Bid prior to the close of business on the Permitted
Bid
Expiry Date 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;
|
| Β |
(iii)
|
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 Section 1.1(am)(ii) and that
any
Voting Shares deposited pursuant to the Take-Over Bid may be withdrawn
until taken up and paid for; and
|
| Β |
(iv)
|
the
Take-Over Bid contains an irrevocable and unqualified provision that
in
the event that the deposit condition set forth in Section 1.1(am)(ii)
is
satisfied the Offeror will make a public announcement of that fact
and the
Take-Over Bid will remain open for deposits and tenders of Voting
Shares
for not less than ten Business Days from the date of such public
announcement.
|
| Β |
(an)
|
"Permitted
Bid Acquisition"
means an acquisition of Voting Shares made pursuant to a Permitted
Bid or
a Competing Permitted Bid.
|
| Β |
(ao)
|
βPermitted
Bid Expiry Dateβ
means the earliest of the following
dates:
|
Β
-13-
Β
| Β |
(i)
|
75
days following the date of the Take-Over Bid, upon the earlier to
occur
of: (A) the completion of a Feasibility Study on the Northmet Property
and
(B) five years from the Effective
Date;
|
| Β |
(ii)
|
35
days following the date of the Take-Over Bid, upon the earlier to
occur of
(A) seven years from the Effective Date and (B) the date on which
the
Corporation abandons or sells all of its interest in the Northmet
Property.
|
| Β |
(ap)
|
"Person"
includes an individual, body corporate, partnership, syndicate or
other
form of unincorporated association, a government and its agencies
or
instrumentalities, any entity or group (as such term is used in Rule
13d-5
under the Exchange Act of 1934 as in effect on the date hereof) whether
or
not having legal personality and any of the foregoing acting in any
derivative, representative or fiduciary
capacity.
|
| Β |
(aq)
|
"Pro-Rata
Acquisition"
means an acquisition by a Person of Voting Shares pursuant
to:
|
| Β |
(i)
|
a
Dividend Reinvestment Acquisition;
|
| Β |
(ii)
|
a
stock dividend, stock split or other event in respect of securities
of the
Corporation pursuant to which such Person becomes a beneficial owner
of
Voting Shares on the same pro-rata basis as all other holders of
securities;
|
| Β |
(iii)
|
the
exercise by the Person of only those rights to purchase Voting Shares
distributed to that Person in the course of a distribution to all
holders
of securities of the Corporation pursuant to a bona fide rights offering
or pursuant to a prospectus; or
|
| Β |
(iv)
|
a
distribution to the public of Voting Shares, or securities convertible
into or exchangeable for Voting Shares (and the conversion or exchange
of
such convertible or exchangeable securities), made pursuant to a
prospectus or by way of a private placement, provided that the Person
does
not thereby acquire a greater percentage of such Voting Shares, or
securities convertible into or exchangeable for Voting Shares, so
offered
than the Person's percentage of Voting Shares beneficially owned
immediately prior to such
acquisition.
|
| Β |
(ar)
|
"Record
Time"
means 12:01 a.m. (Vancouver time) on December 4,
2003.
|
| Β |
(as)
|
"Redemption
Price"
has the meaning ascribed thereto in Section
5.1(b).
|
| Β |
(at)
|
"Right"
means a right to purchase Common Shares on and subject to the terms
and
conditions of this Agreement.
|
Β
-14-
Β
| Β |
(au)
|
"Rights
Agent"
means Pacific Corporate Trust Company and any successor rights agent
hereunder.
|
| Β |
(av)
|
"Rights
Certificate"
means a certificate representing Rights in substantially the form
of
Schedule A attached hereto.
|
| Β |
(aw)
|
"Rights
Register"
shall have the meaning ascribed thereto in Section
2.6(a).
|
| Β |
(ax)
|
(i)
|
βSecurities
Act (Alberta)β
means the Securities
Act,
XX, 0000, c.S-61, as amended, and the regulations
thereunder;
|
| Β |
(ii)
|
"Securities
Act (British Columbia)β
means the Securities Act, RSBC 1996, c.418, as amended, and the
Securities
Rules
thereunder,
|
| Β | Β |
(iii)
|
"Securities
Act (Ontario)"
means the Securities
Act,
R.S.O. 1990, c.s.5, as amended, and the regulations thereunder;
and
|
| Β |
(ay)
|
"Separation
Time"
means the close of business on the tenth Business Day after the earlier
of:
|
| Β |
(i)
|
the
Share Acquisition Date; and
|
| Β |
(ii)
|
the
date of the commencement of or first public announcement of the intent
of
any Person (other than the Corporation or any Subsidiary of the
Corporation) to commence a Take-Over Bid (other than a Permitted
Bid or a
Competing Permitted Bid), or such earlier or later time as may be
determined by the Board of Directors, provided that, if any Take-Over
Bid
referred to in this clause (ii) expires, is cancelled, terminated
or
otherwise withdrawn prior to the Separation Time, such Take-Over
Bid shall
be deemed, for the purposes of this definition, never to have been
made.
|
| Β |
(az)
|
"Share
Acquisition Date"
means the first date of a public announcement or disclosure (which,
for
purposes of this definition, shall include, without limitation, a
report
filed pursuant to Section 101 of the Securities Act (Ontario), Section
111
of the Securities Act (British Columbia), and Section 141 of the
Securities Act (Alberta)) by the Corporation or an Acquiring Person
that a
Person has become an Acquiring
Person.
|
| Β |
(ba)
|
"Subsidiary":
a
corporation shall be deemed to be a subsidiary of another corporation
if:
|
| (i) |
it
is controlled by:
|
| Β |
(A)
|
that
other; or
|
Β
-15-
Β
| Β |
(B)
|
that
other and one or more corporations, each of which is controlled by
that
other; or
|
| Β |
(C)
|
two
or more corporations, each of which is controlled by that other;
or
|
| Β |
(ii)
|
it
is a Subsidiary of a corporation that is that other's
Subsidiary.
|
| Β |
(bb)
|
"Take-Over
Bid"
means an Offer to Acquire Voting Shares, or securities convertible
into
Voting Shares if, assuming that the Voting Shares or convertible
securities subject to the Offer to Acquire are acquired and are
Beneficially Owned at the date of such Offer to Acquire by the Person
making such Offer to Acquire, such Voting Shares (including Voting
Shares
that may be acquired upon conversion of securities, convertible into
Voting Shares) together with the Offeror's Securities, constitute
in the
aggregate 20% or more of the outstanding Voting Shares at the date
of the
Offer to Acquire.
|
| Β |
(bc)
|
"Trading
Day"
means, when used with respect to any securities, a day on which the
principal Canadian stock exchange on which such securities are listed
or
posted for trading is open for the transaction of business or, if
the
securities are not listed or posted for trading on any Canadian stock
exchange, a Business Day.
|
| Β |
(bd)
|
"U.S.-Canadian
Exchange Rate"
means, on any date:
|
| Β |
(i)
|
if
on such date the Bank of Canada sets an average noon spot rate of
exchange
for the conversion of one United States dollar into Canadian dollars,
such
rate; and
|
| Β |
(ii)
|
in
any other case, the rate for such date for the conversion of one
United
States dollar into Canadian dollars calculated in the manner determined
by
the Board of Directors from time to
time.
|
| Β |
(be)
|
"U.S.
Dollar Equivalent"
means, for any amount which is expressed in Canadian dollars on any
date,
the United States dollar equivalent of such amount determined by
reference
to the Canadian-U.S. Exchange Rate on such
date.
|
| Β |
(bf)
|
"Voting
Shares"
means the Common Shares and any other shares of the Corporation entitled
to vote generally and at all times for the election of directors
of the
Corporation.
|
| Β |
(bg)
|
"Voting
Share Reduction"
means an acquisition or redemption by the Corporation of outstanding
Voting Shares which, by reducing the number of Voting Shares outstanding,
increases the percentage of Voting Shares Beneficially Owned by a
Person
to 20% or more of the Voting Shares then
outstanding.
|
Β
Β
-16-
Β
|
1.2
|
Β |
Currency:
|
All
sums
of money which are referred to in this Agreement are expressed in lawful money
of Canada, unless otherwise specified.
Β
|
1.3
|
Β |
Headings
and References:
|
The
headings of the articles, sections and subsections of this Agreement and the
table of contents are inserted for convenience of reference only and shall
not
affect the construction or interpretation of this Agreement. All references
to
articles, sections, subsections and paragraphs are to articles, sections,
subsections and paragraphs of this Agreement. The words "hereto", "herein",
"hereof', "hereunder", "this Agreement", "the Rights Agreement" and similar
expressions refer to this Agreement including the schedule attached hereto
as a
whole, as the same may be amended, modified or supplemented at any time or
from
time to time.
Β
|
1.4
|
Β |
Calculation
of Number and Percentage of Beneficial Ownership of Outstanding Voting
Shares:
|
For
purposes of this Agreement, the percentage of Voting Shares of any class
Beneficially Owned by any Person, will be and be deemed to be the product
(expressed as a percentage) determined by the formula:
100
x
A/B
where:
| Β |
A
|
=
|
the
number of votes for the election of all directors generally attaching
to
the Voting Shares of the particular class Beneficially Owned by such
Person; and
|
| Β |
B
|
=
|
the
number of votes for the election of all directors generally attaching
to
all outstanding Voting Shares of the particular class.
|
Where
any
Person is deemed to Beneficially Own unissued Voting Shares such Voting Shares
will be deemed to be outstanding for the purpose of calculating the percentage
of Voting Shares of the particular class Beneficially Owned by such
Person.
Β
|
1.5
|
Β |
Acting
Jointly or in Concert:
|
For
purposes of this Agreement, whether Persons are acting jointly or in concert
is
a question of fact in each circumstance, however, a Person shall be deemed
to be
acting jointly or in concert with another Person if such Person would be deemed
to be acting jointly or in concert with such other Person for purposes of
Section 91(1) of the Securities Act (Ontario), Section 96(1) of the Securities
Act (British Columbia), and Section 131.1(1) of the Securities Act (Alberta)
(other than by virtue of the inclusion of the word "associate" in Section 91(1)
of the Securities Act (Ontario), Section 96(1) of the Securities Act (British
Columbia), and Section 131.1(1) of the Securities Act (Alberta) as it exists
on
the date hereof). Notwithstanding the foregoing and for greater certainty,
the
phrase "acting jointly or in concert", wherever used in this Agreement, shall
not include conduct:
Β
-17-
Β
| Β |
(a)
|
unrelated
to the Corporation; or
|
| Β |
(b)
|
pertaining
to:
|
| Β |
(i)
|
voting
or directing the vote of securities of the Corporation pursuant to
a
revocable proxy given in response to a public proxy
solicitation;
|
| Β |
(ii)
|
voting
or directing the vote of securities of the Corporation in connection
with
or in order to participate in a public proxy solicitation made or
to be
made;
|
| Β |
(iii)
|
having
an agreement, arrangement or understanding with respect to a particular
shareholder proposal or a particular matter to come before a meeting
of
shareholders, including the election of
directors.
|
Β
|
1.6
|
Β |
Generally
Accepted Accounting Principles:
|
Wherever
in this Agreement reference is made to generally accepted accounting principles,
such reference shall be deemed to be the recommendations at the relevant time
of
the Canadian Institute of Chartered Accountants, or any successor institute,
applicable on a consolidated basis (unless otherwise specifically provided
herein to be applicable on an unconsolidated basis) as of the date on which
a
calculation is made or required to be made in accordance with generally accepted
accounting principles. Where the character or amount of an asset or liability
or
item of revenue or expense is required to be determined, or any consolidation
or
other accounting computation is required to be made for the purpose of this
Agreement or any document, such determination or calculation shall, to the
extent applicable and except as otherwise specified herein or as otherwise
agreed in writing by the parties, be made in accordance with generally accepted
accounting principles applied on a consistent basis.
ARTICLE
2
THE
RIGHTS
Β
|
2.1
|
Β |
Legend
on Common Share Certificates:
|
Certificates
representing Common Shares which are issued after the Record Time but prior
to
the earlier of the Separation Time and the Expiration Time, will evidence one
Right for each Common Share represented thereby and shall have impressed,
printed or written thereon or otherwise affixed thereto the following
legend:
"Until
the Separation Time (as such term is defined in the Shareholder Rights Agreement
referred to below), this certificate also evidences and entitles the holder
hereof to certain rights as set forth in the shareholder rights agreement (the
"Shareholder Rights Agreement") dated as of December 4, 2003 between Polymet
Mining Corp. (the "Corporation") and Pacific Corporate Trust Company, as Rights
Agent, the terms of which are hereby incorporated herein by reference and a
copy
of which is on file and may be inspected during normal business hours at the
principal executive office of the Corporation. Under certain circumstances
as
set forth in the Shareholder Rights Agreement, such Rights may be amended,
redeemed or exchanged, may expire, may lapse, may become void (if, in certain
circumstances, they are "Beneficially Owned" by a person who is or becomes
an
"Acquiring Person", as such terms are defined in the Shareholder Rights
Agreement, or a transferee thereof) or may be evidenced by separate certificates
and may no longer be evidenced by this certificate. The Corporation will mail
or
arrange for the mailing of a copy of the Shareholder Rights Agreement to the
holder of this certificate without charge as soon as practicable after the
receipt of a written request therefor."
Β
-18-
Β
Certificates
representing Common Shares that are issued and outstanding at the Record Time
will also evidence one Right for each one Common Share evidenced thereby,
notwithstanding the absence of the foregoing legend, until the close of business
on the earlier of the Separation Time and the Expiration Time.
Β
|
2.2
|
Β |
Initial
Exercise Price; Exercise of Rights; Detachment of
Rights:
|
| Β |
(a)
|
Exercise
Terms:
Subject to adjustment as herein set forth, each Right will entitle
the
holder thereof, from and after the Separation Time and prior to the
Expiration Time, to purchase one Common Share for the Exercise Price.
Notwithstanding any other provision of this Agreement, any Rights
held by
the Corporation or any of its Subsidiaries will be
void.
|
| Β |
(b)
|
No
Exercise Prior to Separation Time:
Until the Separation Time:
|
| Β |
(i)
|
the
Rights will not be exercisable and no Right may be exercised;
and
|
| Β |
(ii)
|
each
Right shall be evidenced by the certificate for the associated Common
Share registered in the name of the holder thereof (which certificate
shall also be deemed to represent a Rights Certificate) and shall
be
transferable only together with, and shall be transferred by a transfer
of, such associated Common Share.
|
| Β |
(c)
|
Exercise
After Separation Time:
From and after the Separation Time and prior to the Expiration
Time:
|
| Β |
(i)
|
the
Rights are exercisable; and
|
| Β |
(ii)
|
the
registration and transfer of Rights will be separate from and independent
of Common Shares.
|
Β
-19-
Β
Promptly
following the Separation Time, the Corporation will prepare and the Rights
Agent
will mail to each holder of record of Common Shares as of the Separation Time
(other than an Acquiring Person and, in respect of any Rights Beneficially
Owned
by such Acquiring Person which are not held of record by such Acquiring Person,
the holder of such Rights (a "Nominee")),
at
such holder's address as shown by the records of the Corporation (the
Corporation hereby agreeing to furnish copies of such records to the Rights
Agent for this purpose):
| Β |
(iii)
|
a
Rights Certificate appropriately completed, representing the number
of
Rights held by such holder at the Separation Time and having such
marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Corporation may deem appropriate and as are
not
inconsistent with the provisions of this Agreement, or as may be
required
to comply with any law, rule or regulation or with any rule or regulation
of any self-regulatory organization, stock exchange or "system" on
which
the Rights may from time to time be listed or traded, or to conform
to
usage; and
|
| Β |
(iv)
|
a
disclosure statement describing the
Rights;
|
provided
that a Nominee shall be sent the materials provided for in (iii) and (iv) in
respect of all Common Shares of the Corporation held of record by it which
are
not Beneficially Owned by an Acquiring Person.
| Β |
(d)
|
Manner
of Exercise:
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:
|
| Β |
(I)
|
the
Rights Certificate evidencing such
Right;
|
| Β |
(ii)
|
an
election to exercise such Rights (an "Election
to Exercise")
substantially in the form attached to the Rights Certificate appropriately
completed and executed by the holder or his executors or administrators
or
other personal representatives or his or their legal attorney duly
appointed by instrument in writing in form and executed in a manner
satisfactory to the Rights Agent;
and
|
| Β |
(iii)
|
payment
by certified cheque, banker's draft or money order payable to the
order of
the Corporation, in a sum equal to the Exercise Price multiplied
by the
number of Rights being exercised and a sum sufficient to cover any
transfer tax or charge which may be payable in respect of any transfer
involved and the transfer or delivery of Rights Certificates or the
issuance or delivery of certificates of Common Shares in a name other
than
that of the holder of the Rights being
exercised.
|
Β
-20-
Β
| Β |
(e)
|
Issue
of Common Shares:
Upon receipt of a Rights Certificate, together with a completed Election
to Exercise executed in accordance with Subsection 2.2(d)(ii) which
does
not indicate that such Right is null and void as provided by Subsection
3.1(b), and payment as set forth in Section 2.2(d)(iii), the Rights
Agent
(unless otherwise instructed by the Corporation in the event that
the
Corporation is of the opinion that the Rights cannot be exercised
in
accordance with this Agreement) will thereupon
promptly:
|
| Β |
(i)
|
requisition
from the transfer agent certificates representing the number of Common
Shares to be purchased (the Corporation hereby irrevocably authorizing
its
transfer agent to comply with all such
requisitions);
|
| Β |
(ii)
|
when
appropriate, requisition from the Corporation the amount of cash
to be
paid in lieu of issuing fractional Common
Shares;
|
| Β |
(iii)
|
after
receipt of the certificates referred to in Section 2.2(e)(i), deliver
the
same to or upon the order of the registered holder of such Rights
Certificates, registered in such name or names as may be designated
by
such holder; and
|
| Β |
(iv)
|
when
appropriate, after receipt, deliver the cash referred to in clause
2.2(e)(ii) to or to the order of the registered holder of such Rights
Certificate.
|
| Β |
(f)
|
Partial
Exercise:
In case the holder of any Rights shall exercise less than all of
the
Rights evidenced by the Rights Certificate of such holder, a new
Rights
Certificate evidencing the Rights remaining unexercised (subject
to the
provisions of Subsection 5.5(a)) will be issued by the Rights Agent
to
such holder or to such holder's authorized
assigns.
|
| Β |
(g)
|
Covenants:
The Corporation covenants and agrees
to:
|
| Β |
(i)
|
take
all such action as may be necessary on its part and within its powers
to
ensure that all Common Shares delivered upon exercise of Rights shall,
at
the time of delivery of the certificates evidencing such Common Shares
(subject to payment of the Exercise Price), be validly authorized,
executed, issued and delivered and be fully paid and
non-assessable;
|
| Β |
(ii)
|
take
all such action as may be necessary and within its power to comply
with
any applicable requirements of the Company Act, the Securities Act
(Ontario), the Securities Act (British Columbia), and the Securities
Act
(Alberta), and the securities laws or comparable legislation of each
of
the other provinces and territories of Canada, and any other applicable
law, rule or regulation thereof, in connection with the issue and
delivery
of the Rights Certificates and the issuance of the Common Shares
upon
exercise of Rights;
|
Β
-21-
Β
| Β |
(iii)
|
use
reasonable efforts to cause all Common Shares issued upon exercise
of
Rights to be listed upon the stock exchanges upon which the Common
Shares
were traded immediately prior to the Share Acquisition
Date;
|
| Β |
(iv)
|
cause
to be reserved and kept available out of the authorized and unissued
Common Shares, the number of Common Shares that, as provided in this
Agreement, will from time to time be sufficient to permit the exercise
in
full of all outstanding Rights;
|
| Β |
(v)
|
pay
when due and payable, if applicable, any and all federal, provincial
and
municipal transfer taxes and charges (not including any income or
capital
taxes of the holder or exercising holder or any liability of the
Corporation to withhold tax) which may be payable in respect of the
original issuance or delivery of the Rights Certificates, or certificates
for the Common Shares to be issued upon exercise of any Rights, provided
that the Corporation shall not be required to pay any transfer tax
or
charge which may be payable in respect of any transfer involved in
the
transfer or delivery of Rights Certificates or the issuance or delivery
of
certificates for Common Shares in a name other than that of the holder
of
the Rights being transferred or exercised;
and
|
| Β |
(vi)
|
after
the Separation Time, except as permitted by Section 5.1, not take
(or
permit any subsidiary to take) any action if at the time such action
is
taken it is reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits intended to be
afforded
by the Rights.
|
| Β |
(h)
|
Authorized
Capital:
If the number of Common Shares which are not issued or reserved for
issue
is insufficient to permit the exercise in full of the Rights in accordance
with this Section 2.2, then each Right, when such Right is aggregated
with
a sufficient number of Rights to acquire a whole number of Common
Shares,
will entitle the holder thereof, after the Separation Time, to purchase
that number of Common Shares at the Exercise Price per Common Share
equal
to the quotient determined by dividing the difference between the
number
of authorized Common Shares and the number of Common Shares then
issued or
allotted or reserved for issuance by the Corporation, by the number
of
Rights then outstanding.
|
Β
Β
-22-
Β
|
2.3
|
Β |
Adjustments
to Exercise Price; Number of
Rights:
|
The
Exercise Price, the number and kind of securities subject to purchase upon
exercise of each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 2.3.
(a)Β Share
Reorganization:Β If
the
Corporation shall at any time after the date of this Agreement:
| Β |
(i)
|
declare
or pay a dividend on Common Shares payable in Common Shares (or other
securities exchangeable for or convertible into or giving a right
to
acquire Common Shares or other securities of the Corporation) other
than
pursuant to any optional stock dividend
program;
|
| Β |
(ii)
|
subdivide
or change the then outstanding Common Shares into a greater number
of
Common Shares;
|
| Β |
(iii)
|
consolidate
or change the then outstanding Common Shares into a smaller number
of
Common Shares; or
|
| Β |
(iv)
|
issue
any Common Shares for other securities exchangeable for or convertible
into or giving a right to acquire Common Shares or other securities
of the
Corporation or in respect of, in lieu of or in exchange for existing
Common Shares, except as otherwise provided in this Section
2.3,
|
the
Exercise Price and the number of Rights outstanding, or, if the payment or
effective date therefor shall occur after the Separation Time, the securities
purchasable upon exercise of Rights shall be adjusted as of the payment or
effective date in the manner set forth below.
If
the
Exercise Price and number of Rights outstanding are to be adjusted:
| Β |
(1)
|
the
Exercise Price in effect after such adjustment will be equal to the
Exercise Price in effect immediately prior to such adjustment divided
by
the number of Common Shares (or other capital stock) (the "Expansion
Factor")
that a holder of one Common Share immediately prior to such dividend,
subdivision, change, consolidation or issuance would hold thereafter
as a
result thereof; and
|
| Β |
(2)
|
each
Right held prior to such adjustment will become that number of Rights
as
results from the application of the Expansion
Factor,
|
and
the
adjusted number of Rights will be deemed to be distributed among the Common
Shares with respect to which the original Rights were associated (if they remain
outstanding) and the shares issued in respect of such dividend, subdivision,
change, consolidation or issuance, so that each such Common Share (or other
capital stock) will have exactly one Right associated with it in effect
following the payment or effective date of the event referred to in Clause
2.3(a)(i), (ii), (iii) or (iv), as the case may be.
Β
-23-
Β
For
greater certainty, if the securities purchasable upon exercise of Rights are
to
be adjusted, the securities purchasable upon exercise of each Right after such
adjustment will be the securities that a holder of the securities purchasable
upon exercise of one Right immediately prior to such dividend, subdivision,
change, consolidation or issuance would hold thereafter as a result of such
dividend, subdivision, change, consolidation or issuance.
If,
after
the Record Time and prior to the Expiration Time, the Corporation shall issue
any shares of capital stock other than Common Shares in a transaction of a
type
described in Clause 2.3(a)(i) or (iv), shares of such capital stock shall be
treated herein as nearly equivalent to Common Shares as may be practicable
and
appropriate under the circumstances and the Corporation and the Rights Agent
agree to amend this Agreement in order to effect such treatment.
In
the
event the Corporation shall at any time after the Record Time and prior to
the
Separation Time issue any Common Shares otherwise than in a transaction referred
to in this Subsection 2.3(a), each such Common Share so issued shall
automatically have one new Right associated with it, which Right shall be
evidenced by the certificate representing such associated Common
Share.
| Β |
(b)
|
RightsΒ Offering:
If
the Corporation shall at any time after the Record Time and prior
to the
Separation Time fix a record date for the issuance of rights, options
or
warrants to all holders of Common Shares entitling them (for a period
expiring within 21 calendar days after such record date) to subscribe
for
or purchase Common Shares (or securities convertible into or exchangeable
for or carrying a right to purchase Common Shares) at a price per
Common
Share (or, if a security convertible into or exchangeable for or
carrying
a right to purchase or subscribe for Common Shares, having a conversion,
exchange or exercise price, including the price required to be paid
to
purchase such convertible or exchangeable security or right per share)
less than the Market Price per Common Share on such record date,
the
Exercise Price to be in effect after such record date shall be determined
by multiplying the Exercise Price in effect immediately prior to
such
record date by a fraction:
|
| Β |
(i)
|
the
numerator of which shall be the number of Common Shares outstanding
on
such record date, plus the number of Common Shares that the aggregate
offering price of the total number of Common Shares so to be offered
(and/or the aggregate initial conversion, exchange or exercise price
of
the convertible or exchangeable securities or rights so to be offered,
including the price required to be paid to purchase such convertible
or
exchangeable securities or rights) would purchase at such Market
Price per
Common Share; and
|
Β
-24-
Β
| Β |
(ii)
|
the
denominator of which shall be the number of Common Shares outstanding
on
such record date, plus the number of additional Common Shares to
be
offered for subscription or purchase (or into which the convertible
or
exchangeable securities or rights so to be offered are initially
convertible, exchangeable or
exercisable).
|
In
case
such subscription price may be paid by delivery of consideration, part or all
of
which may be in a form other than cash, the value of such consideration shall
be
as determined in good faith by the Board of Directors, whose determination
shall
be described in a statement filed with the Rights Agent and shall be binding
on
the Rights Agent and the holders of Rights. Such adjustment shall be made
successively whenever such a record date is fixed, and in the event that such
rights, options or warrants are not so issued, or if issued, are not exercised
prior to the expiration thereof, the Exercise Price shall be readjusted to
the
Exercise Price which would then be in effect if such record date had not been
fixed, or to the Exercise Price which would be in effect based upon the number
of Common Shares (or securities convertible into, or exchangeable or exercisable
for Common Shares) actually issued upon the exercise of such rights, options
or
warrants, as the case may be.
For
purposes of this Agreement, the granting of the right to purchase Common Shares
(whether from treasury or otherwise) pursuant to the Dividend Reinvestment
Plan
or any employee benefit stock option or similar plans shall be deemed not to
constitute an issue of rights, options or warrants by the Corporation; provided,
however, that, in all such cases, the right to purchase Common Shares is at
a
price per share of not less than 95% of the current market price per share
(determined as provided in such plans) of the Common Shares.
| Β |
(c)
|
SpecialΒ Distribution:
If
the Corporation shall at any time after the Record Time and prior
to the
Separation Time fix a record date for the making of a distribution
to all
holders of Common Shares (including any such distribution made in
connection with a merger or amalgamation) of evidences of indebtedness,
cash (other than an annual cash dividend or a dividend paid in Common
Shares, but including any dividend payable in securities other than
Common
Shares), assets or rights, options or warrants (excluding those referred
to in Subsection 2.3(b)), the Exercise Price to be in effect after
such
record date shall be determined by multiplying the Exercise Price
in
effect immediately prior to such record date by a
fraction:
|
| Β |
(i)
|
the
numerator of which shall be the Market Price per Common Share on
such
record date, less the fair market value (as determined in good faith
by
the Board of Directors, whose determination shall be described in
a
statement filed with the Rights Agent and shall be binding on the
Rights
Agent and the holders of Rights), on a per share basis, of the portion
of
the cash, assets, evidences of indebtedness, rights, options or warrants
so to be distributed; and
|
Β
-25-
Β
| Β |
(ii)
|
the
denominator of which shall be such Market Price per Common
Share.
|
Such
adjustments shall be made successively whenever such a record date is fixed,
and
in the event that such a distribution is not so made, the Exercise Price shall
be adjusted to be the Exercise Price which would have been in effect if such
record date had not been fixed.
| Β |
(d)
|
MinimumΒ Adjustments:
Notwithstanding anything herein to the contrary, no adjustment in
the
Exercise Price shall be required unless such adjustment would require
an
increase or decrease of at least one per cent in the Exercise Price;
provided, however, that any adjustments which by reason of this Subsection
2.3(d) are not required to be made shall be carried forward and taken
into
account in many subsequent adjustment. All calculations under Section
2.3
shall be made to the nearest cent or to the nearest tenthousandth
of a
share. Notwithstanding the first sentence of this Subsection 2.3(d),
any
adjustment required by Section 2.3 shall be made no later than the
earlier
of:
|
| Β |
(i)
|
three
years from the date of the transaction which gives rise to such
adjustment; or
|
| Β |
(ii)
|
the
Expiration Date.
|
| Β |
(e)
|
DiscretionaryΒ Adjustment:
If
the Corporation shall at any time after the Record Time and prior
to the
Separation Time issue any shares of capital stock (other than Common
Shares), or rights, options or warrants to subscribe for or purchase
any
such capital stock, or securities convertible into or exchangeable
for any
such capital stock, in a transaction referred to in Clause 2.3(a)(i)
or
(iv), if the Board of Directors acting in good faith determines that
the
adjustments contemplated by Subsections 2.3(a), (b) and (c) in connection
with such transaction will not appropriately protect the interests
of the
holders of Rights, the Board of Directors may determine what other
adjustments to the Exercise Price, number of Rights and/or securities
purchasable upon exercise of Rights would be appropriate and,
notwithstanding Subsections 2.3(a), (b)and (c), such adjustments,
rather
than the adjustments contemplated by Subsections 2.3(a), (b)and (c),
shall
be made. The Corporation and the Rights Agent shall have authority
without
the approval of the holders of the Common Shares or the holders of
Rights
to amend this Agreement as appropriate to provide for such
adjustments.
|
| Β |
(f)
|
Benefit
of Adjustments:
Each Right originally issued by the Corporation subsequent to any
adjustment made to the Exercise Price hereunder shall evidence the
right
to purchase, at the adjusted Exercise Price, the number of Common
Shares
purchasable from time to time hereunder upon exercise of a Right
immediately prior to such issue, all subject to further adjustment
as
provided herein.
|
Β
-26-
Β
| Β |
(g)
|
No
Change of Certificates:
Irrespective of any adjustment or change in the Exercise Price or the
number of Common Shares issuable upon the exercise of the Rights,
the
Rights Certificates theretofore and thereafter issued may continue
to
express the Exercise Price per Common Share and the number of Common
Shares which were expressed in the initial Rights Certificates issued
hereunder.
|
| Β |
(h)
|
Timing
of Issuance:
In
any case in which this Section 2.3 shall require that an adjustment
in the
Exercise Price be made effective as of a record date for a specified
event, the Corporation may elect to defer until the occurrence of
such
event the issuance to the holder of any Right exercised after such
record
date the number of Common Shares and other securities of the Corporation,
if any, issuable upon such exercise over and above the number of
Common
Shares and other securities of the Corporation, if any, issuable
upon such
exercise on the basis of the Exercise Price in effect prior to such
adjustment;
|
| Β |
(i)
|
Adjustments
Regarding Tax:
Notwithstanding anything contained in this Section 2.3 to the contrary,
the Corporation shall be entitled to make such reductions in the
Exercise
Price, in addition to those adjustments expressly required by this
Section
2.3, as and to the extent that in their good faith judgment the Board
of
Directors shall determine to be advisable, in order that
any:
|
| Β |
(i)
|
consolidation
or subdivision of Common Shares;
|
| Β |
(ii)
|
issuance
(wholly or in part for cash) of Common Shares or securities that
by their
terms are convertible into or exchangeable for Common
Shares;
|
| Β |
(iii)
|
stock
dividends; or
|
| Β |
(iv)
|
issuance
of rights, options or warrants referred to in this Section
2.3,
|
hereafter
made by the Corporation to holders of its Common Shares, shall not be taxable
to
such shareholders.
Β
|
2.4
|
Β |
Date
on Which Exercise is Effective:
|
Each
Person in whose name any certificate for Common Shares or other securities,
if
applicable, is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the Common Shares or other
securities, if applicable, represented thereon, and such certificate shall
be
dated the date upon which the Rights Certificate evidencing such Rights was
duly
surrendered in accordance with Subsection 2.2(d) (together with a duly completed
Election to Exercise) and payment of the Exercise Price for such Rights (and
any
applicable transfer taxes and other governmental charges payable by the
exercising holder hereunder) was made; provided, however, that if the date
of
such surrender and payment is a date upon which the transfer books of the Common
Shares of the Corporation are closed, such Person shall be deemed to have become
the holder of record of such Common Shares on, and such certificate shall be
dated, the next succeeding Business Day on which the transfer books of the
Common Shares are open.
Β
Β
-27-
Β
|
2.5
|
Β |
Execution,
Authentication, Delivery and Dating of Rights
Certificates:
|
| Β |
(a)
|
Execution:
The Rights Certificates shall be executed on behalf of the Corporation,
under its corporate seal reproduced thereon, by any one of its Chairman,
President, Chief Executive Officer or a Vice-President or Secretary.
The
signature of any of these officers on the Rights Certificates may
be
manual or facsimile.
|
| Β |
(b)
|
Valid
Signatures:
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.
|
| Β |
(c)
|
Delivery:
Promptly after the Corporation learns of the Separation Time, the
Corporation shall notify the Rights Agent of such Separation Time
and
shall deliver Rights Certificates executed by the Corporation to
the
Rights Agent for countersignature, and the Rights Agent shall countersign
(manually or by facsimile signature in a manner satisfactory to the
Corporation) and send such Rights Certificates to the holders of
the
Rights pursuant to Subsection 2.2(c) hereof. No Rights Certificate
shall
be valid for any purpose until countersigned by the Rights Agent
in the
manner described above.
|
| Β |
(d)
|
Date:
Each Rights Certificate shall be dated the date of countersignature
thereof.
|
Β
|
2.6
|
Β |
Registration,
Transfer and Exchange:
|
| Β |
(a)
|
Maintaining
of Register:
The Corporation shall cause to be kept a register (the "Rights Register")
in which, subject to such reasonable regulations as it may prescribe,
the
Corporation shall provide for the registration and transfer of Rights.
The
Rights Agent is hereby appointed registrar for the Rights ("Rights
Registrar") for the purpose of maintaining the Rights Register for
the
Corporation and registering Rights and transfers of Rights as herein
provided and the Rights Agent hereby accepts such appointment. If
the
Rights Agent shall cease to be the Rights Registrar, the Rights Agent
shall have the right to examine such register at all reasonable times.
After the Separation Time and prior to the Expiration Time, upon
surrender
for registration of transfer or exchange of any Rights Certificate,
and
subject to the provisions of Subsection 2.6(c) below, the Corporation
shall execute, and the Rights Agent shall 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 Certificate so surrendered.
|
Β
-28-
Β
| Β |
(b)
|
Effect
of Transfer or Exchange:
All Rights issued upon any registration of a 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.
|
| Β |
(c)
|
Transfer
or Exchange of Rights:
Every Rights Certificate surrendered for registration of transfer
or
exchange shall have the form of assignment thereon completed and
executed,
or be accompanied by a written instrument of transfer in form satisfactory
to the Corporation or the Rights Agent, as the case may be, executed
by
the holder thereof or the attorney of such holder duly authorized
in
writing. As a condition to the issue of any new Rights Certificate
under
this Section 2.6, the Corporation may require the payment of an amount
sufficient to cover any tax or other governmental charge that may
be
imposed in relation thereto and other expenses, including the reasonable
fees and expenses of its Rights Agent, connected
therewith.
|
| Β |
(d)
|
No
Transfer or Exchange After Termination:
The Corporation shall not be required to register the transfer or
exchange
of any Rights after the Rights have been terminated under Section
5.1(e)
hereof.
|
Β
|
2.7
|
Β |
Mutilated,
Destroyed, Lost and Stolen Rights
Certificates:
|
| Β |
(a)
|
Mutilation:
If
there shall be delivered to the Corporation and the Rights Agent
prior to
the Expiration Time, evidence to their satisfaction of the mutilation
or
defacing of any Rights Certificate, the Corporation shall execute
and the
Rights Agent shall countersign and deliver a new Rights Certificate
upon
surrender and cancellation of the mutilated or defaced Rights
Certificate.
|
| Β |
(b)
|
Destruction,
Loss:
If
there shall be delivered to the Corporation and the Rights Agent
prior to
the Expiration Time:
|
| Β |
(i)
|
evidence
to their satisfaction of the destruction, loss or theft of any Rights
Certificate; and
|
| Β |
(ii)
|
such
security or indemnity as may be required by them to save each of
them and
their respective 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 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.
|
| Β |
(c)
|
Taxes:
As a condition to the issue of any new Rights Certificate under this
Section 2.7, the Corporation may require the payment of an amount
sufficient to cover any tax or other governmental charge that may
be
imposed in relation thereto and any other expenses, including the
reasonable fees and expenses of the Rights Agent, connected
therewith.
|
Β
-29-
Β
| Β |
(d)
|
Original
Obligation:
Every new Rights Certificate issued pursuant to this Section 2.7
in lieu
of any mutilated, destroyed, lost or stolen Rights Certificate shall
evidence an original additional contractual obligation of the Corporation,
whether or not the mutilated, 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 issued hereunder.
|
Β
|
2.8
|
Β |
Persons
Deemed Owners:
|
The
Corporation, the Rights Agent and any agent of the Corporation or the Rights
Agent may deem and treat the person in whose name such Rights Certificate (or,
prior to the Separation Time, the associated Common Share certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby
for
all purposes whatsoever. As used in this Agreement, unless the context otherwise
requires, the term "holder" of any Right shall mean the registered holder of
such Right (or, prior to the Separation Time of the associated Common
Share).
Β
|
2.9
|
Β |
Delivery
and Cancellation of
Certificates:
|
All
Rights Certificates surrendered upon exercise or for redemption, registration
of
transfer or exchange shall, if surrendered to any person other than the Rights
Agent, be delivered to the Rights Agent and, in any case, shall be promptly
cancelled by the Rights Agent. The Corporation may at any time deliver to the
Rights Agent for cancellation any Rights Certificates previously countersigned
and delivered hereunder which the Corporation may have acquired in any manner
whatsoever, and all Rights Certificates so delivered shall be promptly cancelled
by the Rights Agent. No Rights Certificates shall be countersigned in lieu
of or
in exchange for any Rights Certificates cancelled as provided in this Section
2.9, except as expressly permitted by this Agreement. The Rights Agent shall
destroy all cancelled Rights Certificates and deliver a certificate of
destruction to the Corporation.
Β
|
2.10
|
Β |
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 that:
| Β |
(a)
|
such
holder is bound by and subject to the provisions of this Agreement,
as
amended from time to time in accordance with the terms hereof, in
respect
of all Rights held;
|
| Β |
(b)
|
prior
to the Separation Time, each Right shall be transferable only together
with, and shall be transferred by a transfer of, the associated Common
Share certificate representing such
Right;
|
| Β |
(c)
|
after
the Separation Time, the Rights Certificates shall be transferable
only on
the Rights Register as provided
herein;
|
Β
-30-
Β
| Β |
(d)
|
prior
to due presentment of a Rights Certificate (or, prior to the Separation
Time, the certificate evidencing the associated Common Shares 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 certificate evidencing the associated Common Shares 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 certificate evidencing the associated Common
Shares 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;
|
| Β |
(e)
|
such
holder has waived all rights to receive any fractional Right or any
fractional Common Share or other securities upon exercise of a Right
(except as provided herein); and
|
| Β |
(f)
|
that,
subject to the provisions of Section 5.4, without the approval of
any
holder of Rights or Voting Shares and upon the sole authority of
the Board
of Directors, acting in good faith, this Agreement may be supplemented
or
amended from time to time to cure any ambiguity or to correct or
supplement any provision contained herein which may be inconsistent
with
the intent of this Agreement or is otherwise defective, as provided
herein.
|
Β
|
2.11
|
Β |
Rights
Certificate Holder Not Deemed a
Shareholder:
|
No
holder, as such, of any Rights or Rights Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose whatsoever the holder of any
Common Share or any other share or security of the Corporation which may at
any
time be issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Rights Certificate be construed or deemed
or
confer upon the holder of any Right or Rights Certificate, as such, any right,
title, benefit or privilege of a holder of Common Shares or any other shares
or
securities of the Corporation or any right to vote at any meeting of
shareholders of the Corporation whether for the election of directors or
otherwise or upon any matter submitted to the holders of Common Shares or any
other shares of the Corporation at any meeting thereof, or to give or withhold
consent to any action of the Corporation, or to receive notice of any meeting
or
other action affecting any holder of Common Shares or any other shares of the
Corporation except as expressly provided herein, or to receive dividends,
distributions or subscription rights, or otherwise, until the Rights or Rights
evidenced by the Rights Certificates shall have been duly exercised in
accordance with the terms and the provisions hereof.
Β
-31-
Β
ARTICLE
3
ADJUSTMENTS
TO THE RIGHTS
Β
|
3.1
|
Β |
Flip-in
Event:
|
| Β |
(a)
|
Flip-In:
Subject to the provisions of Sections 3.1(b), 3.2 and Section 5.1,
if
prior to the Expiration Time a Flip-in Event shall occur, each Right
shall
constitute, effective at the close of business on the tenth Trading
Day
after the Share Acquisition Date, the right to purchase from the
Corporation, upon exercise thereof in accordance with the terms hereof,
that number of Common Shares as have an aggregate Market Price on
the date
of consummation or occurrence of such Flip-in Event equal to twice
the
Exercise Price for an amount in cash equal to the Exercise Price
(such
right to be appropriately adjusted in a manner analogous to the applicable
adjustment provided for in Section 2.3 hereof in the event that,
after
such date of consummation or occurrence, an event of a type analogous
to
any of the events described in Section 2.3 hereof shall have
occurred).
|
| Β |
(b)
|
Certain
Rights Void:
Notwithstanding anything in this Agreement to the contrary, upon
the
occurrence of any Flip-in Event, any Rights that are or were Beneficially
Owned on or after the earlier of the Separation Time and the Share
Acquisition Date by:
|
| Β |
(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
|
| Β |
(ii)
|
a
transferee of Rights, directly or indirectly, of an Acquiring Person
(or
any Affiliate or Associate of an Acquiring Person or any Person acting
jointly or in concert with an Acquiring Person or an Affiliate or
Associate of an Acquiring Person), where such transferee becomes
a
transferee concurrently with or subsequent to the Acquiring Person
becoming such in a transfer that the Board of Directors has determined
is
part of a plan, arrangement or scheme of an Acquiring Person (or
any
affiliate or associate of an Acquiring Person or any person acting
jointly
or in concert with an Acquiring Person or any affiliate or associate
of an
Acquiring Person), that has the purpose or effect of avoiding Section
3.1(b)(i),
|
shall
become null and void without any further action and any holder of such Rights,
including transferees, shall thereafter have no right to exercise such Rights
under any provision of this Agreement and further shall thereafter not have
any
other rights whatsoever with respect to such Rights, whether under any provision
of this Agreement or otherwise.
| Β |
(c)
|
Compliance
with Laws:
From and after the Separation Time, the Corporation shall do all
acts and
things as shall be necessary and within its power to ensure compliance
with the provisions of this Section 3.1, including without limitation,
all
such acts and things that may be required to satisfy the requirements
of
the Securities
Act
(British Columbia) and the securities laws or comparable legislation
of
each of the Provinces of Canada in respect of the issue of Common
Shares
on the exercise of Rights in accordance with this
Agreement.
|
Β
-32-
Β
| Β |
(d)
|
Legend:
Any Rights Certificate that represents Rights Beneficially Owned
by a
Person described in either Section 3.1(b)(i) or (ii) or transferred
to any
Nominee of any such Person, and any Rights Certificate issued upon
the
transfer, exchange or replacement of any other Rights Certificate
referred
to in this sentence shall contain and be deemed to contain the following
legend:
|
"The
Rights represented by this Rights Certificate were issued to a Person who was
an
Acquiring Person or an Affiliate or an Associate of an Acquiring Person (as
such
terms are defined in the Shareholder Rights Agreement) or a Person who was
acting jointly or in concert with an Acquiring Person or an Affiliate or
Associate of an Acquiring Person. This Rights Certificate and the Rights
represented hereby shall become void in the circumstances specified in
Subsection 3.1(b) of the Shareholder Rights Agreement."
provided,
however, that the Rights Agent shall not be under any responsibility to
ascertain the existence of facts that would require the imposition of such
legend but shall 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 a Person
described in such legend.
Β
|
3.2
|
Β |
Exchange
Option:
|
| Β |
(a)
|
Optional
Exchange:
In
the event that the Board of Directors acting in good faith shall
determine
that conditions exist which 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 Common
Shares
or Rights at any time after a Flip-in Event has occurred, authorize
the
Corporation to issue and deliver in respect of each Right which is
not
void pursuant to Section 3.1(b)
either:
|
| Β |
(i)
|
in
return for the Exercise Price and Right, cash, debt, equity or other
securities or other property or assets (or a combination thereof)
having a
value equal to twice the Exercise Price;
or
|
| Β |
(ii)
|
in
return for the Right and without further charge, subject to any amounts
that may be required to be paid under applicable law, cash, debt,
equity
or other securities or other property or assets (or a combination
thereof), having a value equal to the Exercise
Price;
|
Β
-33-
Β
in
full
and final settlement of all rights attaching to the Rights; provided that the
value of any such debt, equity or other securities or other property or assets
shall be determined by the Board of Directors who may rely for that purpose
on
the advice of a nationally recognized Canadian firm of investment dealers or
investment bankers selected by the Board of Directors. To the extent that the
Board of Directors determines in good faith that any action need be taken
pursuant to this Section 3.2, the Board of Directors may suspend the
exercisability of the Rights for a period up to 60 days following the date
of
the occurrence of the relevant Flip-in Event in order to determine the
appropriate form and value of cash, debt, equity or other securities or other
property or assets (or a combination thereof) to be issued or delivered on
such
exchange for Rights. In the event of any such suspension, the Corporation shall
notify the Rights Agent and issue as promptly as practicable a public
announcement stating that the exercisability of the Rights has been temporarily
suspended.
| Β |
(b)
|
Termination
of Right to Exercise:
If the Board of Directors authorizes and directs the exchange of
cash,
debt, equity or other securities or other property or assets (or
a
combination thereof) for Rights pursuant to Subsection 3.2(a) hereof,
then
without any further action or notice the right to exercise the Rights
will
terminate and the only right thereafter of a holder of Rights shall
be to
receive such cash, debt, equity or other securities or other property
or
assets (or a combination thereof) in accordance with the determination
of
the Board of Directors made pursuant to Section 3.2(a). Within 10
Business
Days of the Board of Directors authorizing and directing any such
exchange, the Corporation shall give notice of such exchange to the
holders of such Rights in accordance with Section 5.9. Each such
notice of
exchange shall state the method by which the exchange of cash, debt,
equity or other securities or other property or assets (or a combination
thereof) for Rights will be
effected.
|
| Β |
(c)
|
Additional
Securities:
If there shall not be sufficient securities authorized but unissued
to
permit the exchange in full of Rights pursuant to this Section 3.2,
the
Corporation will take all such action as may be necessary to authorize
additional securities for issuance upon the exchange of Rights provided
however, that the Corporation shall not be required to issue fractions
of
securities or to distribute certificates evidencing fractional securities.
In lieu of issuing such fractional securities, subject to Section
5.5(b),
there shall be paid to the registered holders of Rights to whom such
fractional securities would otherwise be issuable, an amount in cash
equal
to the same fraction of the market price of a whole such
security.
|
Β
-34-
Β
ARTICLE
4
THE
RIGHTS AGENT
Β
|
4.1
|
Β |
General:
|
| Β |
(a)
|
Appointment
of Rights Agent:
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 such event, the respective
duties of the Rights Agent and any Co-Rights Agent shall be as the
Corporation may determine. The Corporation agrees to pay to the Rights
Agent reasonable compensation for all services rendered by it hereunder
and, from time to time on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise and
performance of its duties hereunder. 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 performance
of
this Agreement, including the costs and expenses of defending against
any
claim of liability, which right to indemnification shall survive
the
termination of this Agreement.
|
| Β |
(b)
|
Protection
of Rights Agent:
The Rights Agent shall be protected from, and shall incur no liability
for
or in respect of, any action taken, suffered or omitted by it in
connection with its performance of this Agreement in reliance upon
any
certificate for Common Shares, or any 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.
|
Β
|
4.2
|
Β |
Merger
or Amalgamation or Change of Name of Rights
Agent:
|
| Β |
(a)
|
Merger:
Any corporation into which the Rights Agent or any successor Rights
Agent
may be merged or amalgamated with or into, or any corporation succeeding
to the shareholder services business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further
act
on the part of any of the parties hereto, provided that such corporation
would be eligible for appointment as a successor Rights Agent under
the
provisions of Section 4.4 hereof. In case at the time such successor
Rights Agent succeeds to the agency created by this Agreement any
of the
Rights Certificates have been countersigned but not delivered, any
such
successor Rights Agent may adopt the countersignature of the predecessor
Rights Agent and deliver such Rights Certificates so countersigned,
and in
case at that time any of the Rights Certificates have not been
countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor Rights Agent or
in the
name of the successor Rights Agent, and in all such cases such Rights
Certificates shall have the full force and effect provided in the
Rights
Certificates and in this Agreement.
|
Β
-35-
Β
| Β |
(b)
|
Chance
of Name:
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.
|
Β
|
4.3
|
Β |
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:
| Β |
(a)
|
Legal
Counsel:
The Rights Agent may consult with legal counsel (who may be legal
counsel
for the Corporation), and the opinion of such counsel shall be full
and
complete authorization and protection to the Rights Agent as to any
action
taken or omitted to be taken by it in good faith and in accordance
with
such opinion.
|
| Β |
(b)
|
Satisfactory
Proof:
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
or
omitting to take 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, the
President, the Chief Executive Officer or any Vice-President and
by the
Chief Financial Officer, the Treasurer, any Assistant Treasurer,
the
Secretary or any Assistant Secretary of the Corporation and delivered
to
the Rights Agent and such certificate shall be full authorization
to the
Rights Agent for any action taken, omitted or suffered in good faith
by it
under the provisions of this Agreement in reliance upon such
certificate.
|
| Β |
(c)
|
Bad
Faith:
The Rights Agent shall be liable hereunder only for its own negligence,
bad faith or wilful misconduct.
|
| Β |
(d)
|
Recitals:
The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in
the
certificates representing Common Shares or the Rights Certificates
(except
its countersignature thereof) or be required to verify the same,
but all
such statements and recitals are and will be deemed to have been
made only
by the Corporation.
|
Β
-36-
Β
| Β |
(e)
|
No
Responsibility:
The Rights Agent shall not be under any responsibility in respect
of the
validity of this Agreement or the execution and delivery hereof (except
the authorization, execution and delivery hereof by the Rights Agent)
or
in respect of the validity or execution of any certificate representing
Common Shares 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, any change in the exercisability of the Rights (including
the
Rights becoming void pursuant to Section 2.11 or Subsection 3.2(b)
hereof)
or any adjustment required under the provisions of Section 2.3 hereof
or
for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights after receipt
of
the certificate contemplated by Section 2.3 hereof describing any
such
adjustment) nor will it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation
of any
Common Shares to be issued pursuant to this Agreement or any Rights
or as
to whether any Common Shares shall, when issued, be duly and validly
authorized, executed, issued and delivered and be fully paid and
non-assessable.
|
| Β |
(f)
|
Performance
By Corporation:
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.
|
| Β |
(g)
|
Persons
To Give Instructions:
The Rights Agent is hereby authorized to rely upon 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, the President,
the Chief Executive Officer, any Vice-President, the Secretary, any
Assistant Secretary, the Chief Financial Officer, 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, omitted or suffered by it in good faith
in
accordance with the instructions of any such
person.
|
| Β |
(h)
|
Ability
To Deal:
The Rights Agent and any shareholder, director, officer or employee
of the
Rights Agent may buy, sell or deal in Common Shares, Rights or other
securities of the Corporation or become pecuniarily interested in
any
transaction in which the Corporation may be interested, or contract
with
or lend money to the Corporation or otherwise act as fully and freely
as
though it were not 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.
|
| Β |
(i)
|
No
Liability:
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 shall 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, omission, default, neglect or misconduct, provided
reasonable care was exercised in the selection and continued employment
thereof.
|
Β
Β
-37-
Β
|
4.4
|
Β |
Change
of Rights Agent:
|
The
Rights Agent may resign and be discharged from its duties under this Agreement
upon 90 days' notice (or such lesser notice as is acceptable to the Corporation)
in writing delivered or mailed to the Corporation and to each transfer agent
of
Common Shares by first class or registered mail. The Corporation may remove
the
Rights Agent upon 60 days' notice in writing, mailed or delivered to the Rights
Agent and to each transfer agent of Common Shares by first class or registered
mail. If the Rights Agent should resign or be removed or otherwise become
incapable of acting, the Corporation shall appoint a successor to the Rights
Agent. If the Corporation fails to make such appointment within a period of
60
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 the
Rights Certificate of such holder 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 trust company incorporated
under the laws of Canada or a province thereof authorized to carry on the
business of a trust company as principal or through an agent in the Provinces
of
Ontario and British Columbia. After appointment, the successor Rights Agent
shall 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;
provided that 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 shall file notice thereof in writing with the predecessor Rights
Agent and the transfer agent of the Common Shares, and mail a notice thereof
in
writing to the holders of the Rights. Failure to give any notice provided for
in
this Section 4.4, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be.
ARTICLE
5
MISCELLANEOUS
Β
|
5.1
|
Β |
Redemption
and Waiver:
|
| Β |
(a)
|
The
Board of Directors acting in good faith may, until the occurrence
of a
Flip-in Event, upon prior written notice delivered to the Rights
Agent,
determine to waive the application of Section 3.1 to such particular
Flip-in Event (which for greater certainty shall not include the
circumstances described in Subsection 5.1(h)); provided that if the
Board
of Directors waives the application of Section 3.1 to a particular
Flip-in
Event pursuant to this Subsection 5.1(a), the Board of Directors
shall be
deemed to have waived the application of Section 3.1 to any other
Flip-in
Event which may arise in respect of any Take-Over Bid then in effect
or
made prior to the public announcement of the completion or termination
of
the transaction in respect of which the Board of Directors waived
the
application of Section 3.1.
|
Β
-38-
Β
| Β |
(b)
|
The
Board of Directors acting in good faith may, at its option, at any
time
prior to the provisions of Section 3.1 becoming applicable as a result
of
the occurrence of a Flip-in Event, elect to redeem all but not less
than
all of the outstanding Rights at a redemption price of $0.0001 per
Right
appropriately adjusted in a manner analogous to the applicable adjustment
provided for in Section 2.3 if an event of the type analogous to
any of
the events described in Section 2.3 shall have occurred (such redemption
price being herein referred to as the "Redemption
Price").
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.
|
| Β |
(c)
|
In
the event that prior to the occurrence of a Flip-in Event a Person
acquires, pursuant to a Permitted Bid or a Competing Permitted Bid,
not
less than 90% of the outstanding Common Shares other than Common
Shares
Beneficially Owned at the date of the Permitted Bid or the Competing
Permitted Bid by such Person, then the Board of Directors of the
Corporation shall immediately upon the consummation of such acquisition
without further formality be deemed to have elected to redeem the
Rights
at the Redemption Price.
|
| Β |
(d)
|
Where
a Take-Over Bid that is not a Permitted Bid Acquisition is withdrawn
or
otherwise terminated after the Separation Time has occurred and prior
to
the occurrence of a Flip-in Event, the Board of Directors may elect
to
redeem all the outstanding Rights at the Redemption
Price.
|
| Β |
(e)
|
If
the Board of Directors is deemed under Subsection 5.1(c) to have
elected,
or elects under either of Subsection 5.1(b) or (d), to redeem the
Rights,
the right to exercise the Rights will thereupon, without further
action
and without notice, terminate and the only right thereafter of the
holders
of Rights shall be to receive the Redemption
Price.
|
| Β |
(f)
|
Within
10 days after the Board of Directors is deemed under Subsection 5.1(c)
to
have elected, or elects under Subsection 5.1(b) or (d), to redeem
the
Rights, the Corporation shall give notice of redemption to the holders
of
the then outstanding Rights by mailing such notice to each such holder
at
his last address as it appears upon the registry books of the Rights
Agent
or, prior to the Separation Time, on the registry books of the transfer
agent for the Common Shares. Any notice which 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.
|
| Β |
(g)
|
Upon
the Rights being redeemed pursuant to Subsection 5.1(d), all the
provisions of this Agreement shall continue to apply as if the Separation
Time had not occurred and Rights Certificates representing the number
of
Rights held by each holder of record of Common Shares as of the Separation
Time had not been mailed to each such holder and for all purposes
of this
Agreement the Separation Time shall be deemed not to have
occurred.
|
Β
-39-
Β
| Β |
(h)
|
The
Board of Directors may waive the application of Section 3.1 in respect
of
the occurrence of any Flip-in Event if the Board of Directors has
determined within ten Trading Days following a Share Acquisition
Date that
a Person became an Acquiring Person by inadvertence and without any
intention to become, or knowledge that it would become, an Acquiring
Person under this Agreement and, in the event that such a waiver
is
granted by the Board of Directors, such Share Acquisition Date shall
be
deemed not to have occurred. Any such waiver pursuant to this Subsection
5.1(b) must be on the condition that such Person, within 14 days
after the
foregoing determination by the Board of Directors or such earlier
or later
date as the Board of Directors may determine (the "Disposition
Date"),
has reduced its Beneficial Ownership of Voting Shares such that the
Person
is no longer an Acquiring Person. If the Person remains an Acquiring
Person at the close of business on the Disposition Date, the Disposition
Date shall be deemed to be the date of occurrence of a further Share
Acquisition Date and Section 3.1 shall apply
thereto.
|
Β
|
5.2
|
Β |
Expiration:
|
No
Person
shall have any rights pursuant to this Agreement or any Right after the
Expiration Time, except as provided in Section 4.1 hereof.
Β
|
5.3
|
Β |
Issue
of New Rights Certificates:
|
Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary, the
Corporation may, at its option, issue new Rights Certificates evidencing Rights
in such form as may be approved by the Board of Directors to reflect any
adjustment or change in the number or kind of securities purchasable upon
exercise of Rights made in accordance with the provisions of this
Agreement.
Β
|
5.4
|
Β |
Supplements
and Amendments:
|
| Β |
(a)
|
The
Corporation may make amendments to this Agreement to correct any
clerical
or typographical error or which are required to maintain the validity
of
this Agreement as a result of any change in any applicable legislation
or
regulations thereunder. The Corporation may, prior to the date of
the
shareholders' meeting referred to in Section 5.16, supplement or
amend
this Agreement without the approval of any holders of Rights or Voting
Shares in order to make any changes which the Board of Directors
acting in
good faith may deem necessary or desirable. Notwithstanding anything
in
this Section 5.4 to the contrary, no such supplement or amendment
shall be
made to the provisions of Article 4 except with the written concurrence
of
the Rights Agent to such supplement or
amendment.
|
Β
-40-
Β
| Β |
(b)
|
Subject
to the Section 5.4(a), the Corporation may, with the prior consent
of the
holders of Voting Shares obtained as set forth below, at any time
prior to
the Separation Time, amend, vary or rescind any of the provisions
of this
Agreement and the Rights (whether or not such action would materially
adversely affect the interests of the holders of Rights generally).
Such
consent shall be deemed to have been given if the action requiring
such
approval is authorized by the affirmative vote of a majority of the
votes
cast by Independent Shareholders present or represented at and entitled
to
be voted at a meeting of the holders of Voting Shares duly called
and held
in compliance with applicable laws and the constating documents of
the
Corporation.
|
| Β |
(c)
|
The
Corporation may, with the prior consent of the holders of Rights,
at any
time on or after the Share Acquisition Date, vary or delete any of
the
provisions of this Agreement and the Rights (whether or not such
action
would materially adversely affect the interests of the holders of
Rights
generally), provided that no such amendment, variation or deletion
shall
be made to the provisions of Article 4 except with the written concurrence
of the Rights Agent thereto. Such consent shall be deemed to have
been
given if such amendment, variation or deletion is authorized by the
affirmative votes of the holders of Rights present or represented
at and
entitled to be voted at a meeting of the holders and representing
50% plus
one of the votes cast in respect
thereof.
|
| Β |
(d)
|
Any
approval of the holders of Rights shall be deemed to have been given
if
the action requiring such approval is authorized by the affirmative
votes
of the holders of Rights present or represented at and entitled to
be
voted at a meeting of the holders of Rights and representing a majority
of
the votes cast in respect thereof. For the purposes hereof, each
outstanding Right (other than Rights which are void pursuant to the
provisions hereof) shall be entitled to one vote, and the procedures
for
the calling, holding and conduct of the meeting shall be those, as
nearly
as may be, which are provided in the Corporation's constating documents
and the Company Act with respect to meetings of shareholders of the
corporation.
|
| Β |
(e)
|
Any
amendments made by the Corporation to this Agreement pursuant to
Subsection 5.4(a) which are required to maintain the validity of
this
Agreement as a result of any change in any applicable legislation
or
regulation thereunder shall:
|
| Β |
(i)
|
if
made before the Separation Time, he submitted to the shareholders
of the
Corporation at the next meeting of shareholders and the shareholders
may,
by the majority referred to in Subsection 5.4(b), confirm or reject
such
amendment;
|
| Β |
(ii)
|
if
made after the Separation Time, be submitted to the holders of Rights
at a
meeting to be called for on a date not later than immediately following
the next meeting of shareholders of the Corporation and the holders
of
Rights may, by resolution passed by the majority referred to in Subsection
5.4(c), confirm or reject such
amendment.
|
Β
-41-
Β
Any
such
amendment shall be effective from the date of the resolution of the Board of
Directors adopting such amendment, until it is confirmed or rejected or until
it
ceases to be effective (as described in the next sentence) and, where such
amendment is confirmed, it continues in effect in the form so confirmed. If
such
amendment is rejected by the shareholders or the holders of Rights or is not
submitted to the shareholders or holders of Rights as required, then such
amendment shall cease to be effective from and after the termination of the
meeting at which it was rejected or to which it should have been but was not
submitted or from and after the date of the meeting of holders of Rights that
should have been but was not held, and no subsequent resolution of the Board
of
Directors to amend this Agreement to substantially the same effect shall be
effective until confirmed by the shareholders or holders of Rights as the case
may be.
Β
|
5.5
|
Β |
Fractional
Rights and Fractional Common
Shares:
|
| Β |
(a)
|
No
Fractional Rights:
The Corporation shall not be required to issue fractions of Rights
or to
distribute Right Certificates which evidence fractional Rights. After
the
Separation Time, in lieu of issuing fractional Rights the Corporation
shall pay to the holders of record of the Right Certificates, at
the time
such fractional Rights would otherwise be issuable, an amount in
cash
equal to the same fraction of the Market Price of one whole Right
that the
fraction of a Right that would otherwise be issuable is of one whole
Right.
|
| Β |
(b)
|
No
Fractional Common Shares:
The Corporation shall not be required to issue fractions of Common
Shares
upon exercise of the Rights or to distribute certificates which evidence
fractional Common Shares. In lieu of issuing fractional Common Shares,
the
Corporation shall pay to the holders of record of Right Certificates
at
the time such Rights are exercised as herein provided, an amount
in cash
equal to the same fraction of the Market Price of one Common Share
that
the fraction of a Common Share that would otherwise be issuable upon
the
exercise of such Right is of a whole Common
Share.
|
Β
|
5.6
|
Β |
Rights
of Action:
|
Subject
to the terms of this Agreement, 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 the Rights of such holder in the manner provided
in the Rights Certificate of such holder 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 shall be entitled to specific
performance of the obligations under, and injunctive relief against actual
or
threatened violations of the obligations of any Person subject to, this
Agreement.
Β
Β
-42-
Β
|
5.7
|
Β |
Regulatory
Approvals:
|
Any
obligation of the Corporation or action or event contemplated by this Agreement
shall be subject to the receipt of any requisite approval or consent from any
governmental or regulatory authority, and without limiting the generality of
the
foregoing, necessary approvals of the TSX Venture Exchange and other exchanges
will be obtained, such as to the issuance of Common Shares upon the exercise
of
Rights under Section 2.2(d) and the issuance of convertible debt, equity or
other securities or other property or assets under section 3.2. Notwithstanding
anything to the contrary in this Agreement, no supplement or amendment to this
Agreement or to the terms of the Rights may be made without the prior consent
of
the TSX Venture Exchange.
Β
|
5.8
|
Β |
Declaration
as to Non-Canadian holders:
|
If
in the
opinion of the Board of Directors (who may rely upon the advice of counsel)
any
action or event contemplated by this Agreement would require compliance by
the
Corporation with the securities laws or comparable legislation of a jurisdiction
outside Canada, the Board of Directors acting in good faith shall take such
actions as it may deem appropriate to ensure such compliance. In no event shall
the Corporation or the Rights Agent be required to issue or deliver Rights,
or
securities issuable on exercise of Rights to persons who are citizens, residents
or nationals of any jurisdiction other than Canada, in which such issue or
delivery would be unlawful without registration of the relevant persons or
securities for such purposes.
Β
|
5.9
|
Β |
Notices:
|
| Β |
(a)
|
Notices
or demands authorized or required by this Agreement to be given or
made by
the Rights Agent or by the holder of any Rights to or on the Corporation
shall be sufficiently given or made if delivered, sent by registered
or
certified mail, postage prepaid (until another address is filed in
writing
with the Rights Agent), or sent by facsimile or other form of recorded
electronic communication, charges prepaid and confirmed in writing,
as
follows:
|
0000
-
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx,
X.X. X0X 0X0
Attention:
Xxxxxxx Xxxxxx
Telecopier
No.: (000) 000-0000
Β
-43-
Β
With
a
copy to:
VECTOR
Corporate Finance Lawyers
Barristers
and Solicitors
0000-000
Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx,
X.X. X0X 0X0
Attention:
Xxxxxx X. Xxxxx
Telecopier
No.: (000) 000-0000
| Β |
(b)
|
Notices
or demands authorized or required by this Agreement to be given or
made by
the Corporation or by the holder of any Rights to or on the Rights
Agent
shall be sufficiently given or made if delivered, sent by registered
or
certified mail, postage prepaid (until another address is filed in
writing
with the Corporation), or sent by facsimile or other form of recorded
electronic communication, charges prepaid and confirmed in writing,
as
follows:
|
Pacific
Corporate Trust Company
00xx
Xxxxx, 000 Xxxx Xxxxxx,
Xxxxxxxxx,
X.X. X0XΒ 0X0
Attention:
Manager, Client Services
Telecopier
No.: (000) 000-0000
| Β |
(c)
|
Notices
or demands authorized or required by this Agreement to be given or
made by
the Corporation or the Rights Agent to or on the holder of any Rights
shall be sufficiently given or made if delivered or sent by first
class
mail, postage prepaid, addressed to such holder as it appears upon
the
register of the Rights Agent or, prior to the Separation Time, on
the
register of the Corporation for its Common Shares. Any notice which
is
mailed or sent in the manner herein provided shall be deemed given,
whether or not the holder receives the
notice.
|
| Β |
(d)
|
Any
notice given or made in accordance with this Section 5.9 shall be
deemed
to have been given and to have been received on the day of delivery,
if so
delivered, on the third Business Day (excluding each day during which
there exists any general interruption of postal service due to strike,
lockout or other cause) following the mailing thereof, if so mailed,
and
on the day of telegraphing, telecopying or sending of the same by
other
means of recorded electronic communication (provided such sending
is
during the normal business hours of the addressee on a Business Day
and if
not, on the first Business Day thereafter). Each of the Corporation
and
the Rights Agent may from time to time change its address for notice
to
the other given in the manner
aforesaid.
|
Β
Β
-44-
Β
|
5.
10
|
Β |
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
shall 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.
Β
|
5.11
|
Β |
Successors:
|
All
of
the covenants and provisions of this Agreement by or for the benefit of the
Corporation or the Rights Agent shall bind their respective successors and
assigns and shall enure to the benefit of their respective successors and
permitted assigns hereunder.
Β
|
5.12
|
Β |
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 Rights any legal or equitable
right, remedy or claim under this Agreement and this Agreement shall be for
the
sole and exclusive benefit of the Corporation, the Rights Agent and the holders
of Rights.
Β
|
5.13
|
Β |
Governing
Law:
|
This
Agreement and each Right issued hereunder shall be deemed to be a contract
made
under the laws of British Columbia and for all purposes shall be governed by
and
construed in accordance with such laws.
Β
|
5.14
|
Β |
Severability:
|
If
any
term or provision hereof or the application thereof in any circumstance shall,
in any jurisdiction and to any extent, be invalid or unenforceable, such 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 terms and provisions hereof or the application of such term or
provision in circumstances other than those as to which it is held invalid
or
unenforceable.
Β
|
5.15
|
Β |
Effective
Date:
|
This
Agreement is effective and in full force and effect in accordance with its
terms
from and after the Effective Date, subject to confirmation pursuant to section
5.16.
Β
|
5.16
|
Β |
Confirmation:
|
The
Corporation shall request the confirmation of this Agreement at a general
meeting of holders of Voting Shares to be held no later than six months from
the
date of this Agreement. If the Agreement is not confirmed at such meeting by
a
majority of the votes cast by holders of Voting Shares who vote in respect
of
the confirmation of this Agreement, this Agreement and all outstanding Rights
shall terminate and be void and of no further force and effect on and from
the
close of business on the date of termination of such meeting; provided, that
termination shall not occur if a Flip-in Event has occurred (other than a
Flip-in Event which has been waived pursuant to Section 5.1(a) or (h) hereof)
prior to the date upon which this Agreement would otherwise terminate pursuant
to this Section 5.16.
Β
Β
-45-
Β
|
5.17
|
Β |
Determinations
and Actions by the Board of
Directors:
|
The
Board
of Directors shall have the exclusive power and authority to administer and
amend this Agreement and to exercise all rights and powers specifically granted
to the Board of Directors or the Corporation, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power to (a) interpret the provisions of this
Agreement and (b) make all determinations deemed necessary or advisable for
the
administration of this Agreement (including a determination to terminate or
redeem or not to terminate or redeem the Rights or to amend the Agreement).
All
such actions, calculations, interpretations and determinations (including,
for
purposes of the balance of this sentence, all omissions with respect to the
foregoing) which are done or made by the Board of Directors shall be final,
conclusive and binding on the Corporation, the Rights Agent, the holders of
Rights and all other parties and shall not subject the Board of Directors to
any
liability to the holders of Rights.
Β
-46-
Β
|
5.18
|
Β |
Counterparts:
|
This
Agreement may be executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute one and the same instrument.
IN
WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed.
Β
| Β |
c/s
By:Β
_____________________________(signature)
______________________(name
- please print)
Authorized
Signatory
PACIFIC
CORPORATE TRUST COMPANY
By:Β
_____________________________(signature)
______________________(name
- please print)
Authorized
Signatory
_____________________________(signature)
______________________(name
- please print)
Authorized
Signatory
|
This
is
page 7
to that
certain Shareholder Rights Plan Agreement between
POLYMET MINING CORP. and
PACIFIC CORPORATE TRUST COMPANY dated
as
of the 4th
day of
December, 2003.
Β
-47-
Β
SCHEDULE
A TO THE SHAREHOLDER RIGHTS AGREEMENT
DATED
AS OF DECEMBER 4, 2003 BETWEEN
POLYMET
MINING CORP. AND
PACIFIC
CORPORATE TRUST COMPANY
Β
[Form
of Rights Certificate]
Certificate
No. ___________Β Β Rights
THE
RIGHTS ARE SUBJECT TO REDEMPTION OR MANDATORY EXCHANGE, AT THE OPTION OF
POLYMET
MINING CORP.,
ON THE
TERMS SET FORTH IN THE SHAREHOLDER RIGHTS AGREEMENT. RIGHTS BENEFICIALLY OWNED
BY ACQUIRING PERSONS (AS SUCH TERMS ARE DEFINED IN THE SHAREHOLDER RIGHTS
AGREEMENT) OR CERTAIN TRANSFEREES THEREOF ARE VOID.
Rights
Certificate
This
certifies that ___________________, or registered assigns, is the holder of
record of the number of Rights set forth above, each one of which entitles
the
holder of record thereof, subject to the terms, provisions and conditions of
the
Shareholder Rights Agreement (the "Shareholder
Rights Agreement"),
dated
as of December 4, 2003, between POLYMET MINING CORP. (the "Corporation"),
a
corporation incorporated under the Company
Act
(British
Columbia), and PACIFIC CORPORATE TRUST COMPANY, a trust company incorporated
under the laws of British Columbia, as Rights Agent under the Shareholder Rights
Agreement, to purchase from the Corporation at any time after the Separation
Time and prior to the Expiration Time (as such terms are defined in the
Shareholder Rights Agreement), one common share of the Corporation (a
"Common
Share")
(subject to adjustment as provided in the Shareholder Rights Agreement) at
the
Exercise Price referred to below, upon presentation and surrender of this Rights
Certificate with a completed and executed Form of Election to Exercise at the
principal office of the Rights Agent in Vancouver, Canada. The Exercise Price
shall initially be $50 (Cdn.) per Common Share and shall be subject to
adjustment in certain events as provided in the Shareholder Rights
Agreement.
In
certain circumstances described in the Shareholder Rights Agreement, the Rights
evidenced hereby may entitle the holder of record thereof to purchase shares
of
an entity other than the Corporation or to purchase or receive in exchange
for
such Rights assets, securities or shares of the Corporation other than Common
Shares or more or less than one Common Share, or some combination of the
foregoing, all as provided in the Shareholder Rights Agreement.
This
Rights Certificate is subject to all of the terms, provisions and conditions
of
the Shareholder Rights Agreement which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
reference is hereby made for a full description of the rights, limitations
of
rights, obligations, duties and immunities thereunder of the Rights Agent,
the
Corporation and the holders of the Rights Certificates. A copy of the
Shareholder Rights Agreement is on file at the principal executive office of
the
Corporation and is available upon written request.
Β
Β
Β
This
Rights Certificate, with or without other Rights Certificates, upon surrender
at
the offices of the Rights Agent designated for such purpose, may be exchanged
for another Rights Certificate or Rights Certificates of like tenor and date
evidencing the aggregate number of Rights equal to the aggregate number of
Rights evidenced by the Rights Certificate or Rights Certificates so
surrendered. If this Rights Certificate shall be exercised in part, the holder
of record shall be entitled to receive, upon surrender hereof, another Rights
Certificate or Rights Certificates for the number of whole Rights not
exercised.
Subject
to the provision of the Shareholder Rights Agreement, the Rights evidenced
by
this Certificate may be redeemed by the Corporation at a redemption price of
$0.0001 per Right, subject to adjustment in certain events, under certain
circumstances at the option of the Corporation.
Subject
to the provisions of the Shareholder Rights Agreement, the Rights evidenced
by
this Certificate may be terminated or amended by the Corporation at its option
without the consent of holders of Rights.
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 factional Rights a cash
payment will be made as provided in the Shareholder 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 on the exercise hereof,
nor
shall anything contained in the Shareholder Rights Agreement or herein be
construed to confer upon the holder hereof, as such, any of the rights of a
shareholder of the Corporation or any right to vote for the election of
directors or upon any matter submitted to shareholders of the Corporation at
any
meeting, to give or withhold consent to any corporate action, to receive notice
of meetings or other actions affecting shareholders of the Corporation (except
as provided in the Shareholder Rights Agreement), to receive dividends or
subscription rights or otherwise, until the Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Shareholder Rights
Agreement.
This
Rights Certificate shall not be valid or obligatory for any purpose until it
shall have been countersigned by the Rights Agent.
Β
-2-
Β
WITNESS
the facsimile signature of the proper officers of the Corporation.
Β
| Β |
POLYMET
MINING CORP.
c/s
Β
By:Β
_____________________________(signature)
______________________(name
- please print)
Authorized
Signatory
|
Β
Countersigned
by and on behalf of the Rights Agent,
PACIFIC
CORPORATE TRUST COMPANY
Β
By:Β
_____________________________(signature)
______________________(name
- please print)
Authorized
Signatory
Β
Β
-3-
Β
[Form
of Reverse Side of Rights Certificate]
POLYMET
MINING CORP. - FORM OF ASSIGNMENT
(To
be
executed by the holder of record if such
holder
desires to transfer the Rights.)
FOR
VALUE
RECEIVED _______________________________________Β Β Β Β hereby
sells, assigns and transfers unto
______________________________________________________________________________________________
______________________________________________________________________________________________
(Please
print name and address of transferee)
this
Rights Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint _______________ as
attorney, to transfer the within Rights Certificate on the books of the
Corporation with full power of substitution.
Dated:
_____________________ [month,
day, year]
Signature
Guaranteed:
___________________________________________
Signature
(Signature
must correspond to name as written upon the face of this Rights Certificate
in
every particular, without alteration or enlargement or any change
whatsoever.)
The
signature of the person executing this power must be guaranteed by a participant
of a recognized Medallion Guarantee Program, for example, a bank, credit union,
brokerage house or by a member of a recognized stock exchange.Β
CERTIFICATION
(To
be
completed if true)
The
undersigned hereby represents, warrants and certifies, 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 of an
Acquiring Person or any Person acting jointly or in concert with an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Shareholder Rights Agreement).
Signature
Guaranteed:
Β
___________________________________________
Signature
(Signature
must correspond to name as written upon the face of this Rights Certificate
in
every particular, without alteration or enlargement or any change
whatsoever.)
Β
Β
Β
NOTICE
In
the event the certification set forth above is not completed in connection
with
a purported assignment, 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 of an Acquiring Person or any Person acting jointly
or in
concert with an Acquiring Person or an Affiliate or Associate of an Acquiring
Person (as defined in the Shareholder Rights Agreement) and accordingly will
deem the Rights evidenced by this Rights Certificate to be void and not
transferable or exercisable.
Β
-2-
Β
FORM
OF ELECTION TO EXERCISE
(To
be
executed if the holder desires to exercise the Rights Certificate)
| TO: |
Pacific
Corporate Trust Company
|
00xx
Xxxxx, 000 Xxxx Xxxxxx,
Xxxxxxxxx,
X.X. X0XΒ 0X0
The
undersigned hereby irrevocably elects to exercise _____________________ whole
Rights represented by the attached Rights Certificate to purchase the Common
Shares issuable upon the exercise of such Rights and requests that certificates
for such Common Shares be issued in the name of:
Address:
Β
Social
Insurance or Other Taxpayer Identification Number:
Β
Β
If
such
number of Rights shall not be all the whole Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such whole Rights
shall
be registered in the name of and delivered to:
Full
Address, including postal code:
Β
Social
Insurance or Other Taxpayer Identification Number:
Β
Β
Dated:
_____________ [month,
day, year]
Signature
Guaranteed:
Β
___________________________________________
Signature
(Signature
must correspond to name as written upon the face of this Rights Certificate
in
every particular, without alteration or enlargement or any change
whatsoever.)
The
signature of the person executing this power must be guaranteed by a participant
of a recognized Medallion Guarantee Program, for example, a bank, credit union,
brokerage house or by a member of a recognized stock exchange.Β
Β
Β
Β
CERTIFICATION
(To
be
completed if true)
The
undersigned hereby represents, warrants and certifies for the benefit of all
holders of Rights and Common Shares, that the Rights evidenced by this Right
Certificate are not, and, to the knowledge of the undersigned, have never been,
Beneficially Owned by an Acquiring Person or an Affiliate or Associate of an
Acquiring Person or any Person acting jointly or in concert with an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Shareholder Rights Agreement).
___________________________________________
Signature
Β
NOTICE
In
the event the certification set forth above is not completed in connection
with
a purported assignment, 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 of an Acquiring Person or any Person acting jointly
or in
concert with an Acquiring Person or an Affiliate or Associate of an Acquiring
Person (as defined in the Shareholder Rights Agreement) and accordingly will
deem the Rights evidenced by this Rights Certificate to be void and not
transferable or exercisable.
Β
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