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EXHIBIT 1
SHAREHOLDER PROTECTION RIGHTS AGREEMENT
THIS AGREEMENT made as of November 16, ▇▇▇▇
▇ ▇ ▇ ▇ ▇ ▇ ▇:
SALIX PHARMACEUTICALS, LTD., a corporation
existing under the laws of the British Virgin Islands
(the "Corporation")
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MONTREAL TRUST COMPANY OF CANADA, a trust company
incorporated under the laws of Canada, as Rights Agent
(the "Rights Agent").
WHEREAS the Board of Directors has determined that it is advisable and
in the best interests of the Corporation to adopt a shareholder protection
rights plan (the "Rights Plan") to ensure, to the extent possible, that all
shareholders of the Corporation are treated fairly in connection with any
take-over offer for the Corporation;
AND WHEREAS in order to implement the Rights Plan the Board of Directors
has:
(a) authorized and declared a distribution of one (1) right (a
"Right") effective at the Record Time in respect of each Common
Share outstanding at that time;
(b) authorized the issuance of one (1) 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) authorized the issuance of Rights Certificates to holders of
Rights pursuant to the terms and subject to the conditions set
forth herein;
AND WHEREAS each Right entitles the holder thereof, after the Separation
Time, to purchase securities of the Corporation pursuant to the terms and
subject to the conditions set forth herein;
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AND WHEREAS the Corporation desires to appoint the Rights Agent to act on
behalf of the Corporation, and the Rights Agent is willing to so act, in
connection with the issuance, transfer, exchange and replacement of Rights
Certificates, the exercise of Rights and other matters referred to herein;
NOW THEREFORE in consideration of the premises and their respective
covenants and agreements set forth herein, the parties hereby agree as follows:
ARTICLE 1 -- INTERPRETATION
1.1 CERTAIN DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
indicated:
(a) "ACQUIRING PERSON" means any Person who is the Beneficial Owner of
20% or more of the outstanding Voting Shares, but shall not include:
(i) the Corporation or any Subsidiary of the Corporation;
(ii) any Person who becomes the Beneficial Owner of 20% or more of
the outstanding Voting Shares as a result of:
A. a Voting Share Reduction;
B. a Permitted Bid Acquisition;
C. an Exempt Acquisition; or
D. a Pro Rata Acquisition;
provided, however, that if a Person becomes the Beneficial
Owner of 20% or more of the outstanding Voting Shares by
reason of a Voting Share Reduction, a Permitted Bid
Acquisition, an Exempt Acquisition or a Pro Rata Acquisition,
and thereafter becomes the Beneficial Owner of a number of
additional Voting Shares exceeding 1% of the number of Voting
Shares outstanding (other than pursuant to a Voting Share
Reduction, a Permitted Bid Acquisition, 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 shall become an "Acquiring Person";
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(iii) for the period of 10 days after the Disqualification Date (as
defined below), any Person who becomes the Beneficial Owner of
20% or more of the outstanding Voting Shares as a result of
such Person becoming disqualified from relying on Clause
1.1(d)(vii) solely because such Person or the Beneficial Owner
of such Voting Shares is making or has announced an intention
to make a Take-over Bid, either alone or by acting jointly or
in concert with any other Person. For the purposes of this
definition, "DISQUALIFICATION DATE" means the first date of
public announcement of facts indicating that any Person is
making or has announced an intention to make a Take-over Bid;
(iv) an underwriter or member of a banking or selling group that
becomes the Beneficial Owner of 20% or more of the Voting
Shares in connection with a bona fide distribution to the
public of securities; or
(v) a Person (a "Grandfathered Person") who is the Beneficial
Owner of 20% or more of the outstanding Voting Shares of the
Corporation determined as at the date hereof, provided,
however, that this exception shall not be, and shall cease to
be, applicable to a Grandfathered Person in the event that
such Grandfathered Person shall, after the date hereof, become
the Beneficial Owner of additional Voting Shares of the
Corporation that increases its Beneficial Ownership of Voting
Shares by more than 1% of the number of Voting Shares
outstanding, other than through a Permitted Bid Acquisition or
a Pro Rata Acquisition.
(b) "AFFILIATE", when used to indicate a relationship with a specified
Person, means a Person that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under
common control with, such specified Person.
(c) "ASSOCIATE", when used to indicate a relationship with any Person,
means:
(i) any body corporate of which the Person beneficially owns,
directly or indirectly, voting securities carrying more than
10 per cent of the voting rights attached to all voting
securities of the body corporate for the time being
outstanding;
(ii) any partner, spouse or child of that Person;
(iii) any trust or estate in which the Person has a substantial
beneficial interest or as to which the Person serves as
trustee or in a similar capacity;
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(iv) any relative of the Person, where the relative has the same
home as the Person; or
(v) any relative of the spouse of the Person where the relative
has the same home as the Person.
(d) A Person is deemed the "BENEFICIAL OWNER" and to have "BENEFICIAL
OWNERSHIP" of, and to "BENEFICIALLY OWN":
(i) any securities as to which such Person or any of such Person's
Affiliates or Associates is the beneficial owner (and, for the
purposes of this Agreement, a "beneficial owner" of securities
shall include a Person who is the owner at law or in equity of
such securities);
(ii) any securities as to which such Person or any of such Person's
Affiliates or Associates has, directly or indirectly:
A. the right to become beneficial owner (whether such right
is exercisable immediately or after the passage of time
or upon the occurrence of a contingency or payment of
instalments or otherwise) pursuant to any agreement,
arrangement, pledge or understanding or otherwise,
whether or not in writing (other than (x) customary
agreements with and between underwriters and/or banking
group and/or selling group members with respect to a
bona fide distribution to the public of securities and
(y) pledges of securities in the ordinary course of
business that meet all of the conditions specified in
Rule 13d-3(d)(3) under the 1934 Exchange Act), or upon
the exercise of conversion rights, exchange rights,
rights (other than the Rights), warrants or options, or
otherwise; or
B. the right to vote (whether such right is exercisable
immediately or after the passage of time or upon the
occurrence of a contingency or payment of instalments or
otherwise) pursuant to any agreement, arrangement or
understanding or otherwise whether or not in writing
(other than (x) pledges of securities in the ordinary
course of business that meet all of the circumstances
specified in Rule 13-3(d)(3) under the 1934 Exchange Act
other than the condition in Rule 13d- 3(3)(3)(ii) and
(y) a pledge agreement 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); and
(iii) any securities which are beneficially owned by any other
Person with which such Person or any of such Person's
Affiliates is acting jointly or in concert
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(other than pursuant to (x) customary agreements with and
between underwriters and/or banking group and/or selling group
members with respect to a bona fide distribution to the public
of securities and (y) pledges of securities in the ordinary
course of business that meet all of the conditions specified
in Rule 13d-3(d)(3) under the 1934 Exchange Act);
provided, however, that a Person shall NOT be deemed the "Beneficial
Owner" or to have "Beneficial Ownership" of, or to "Beneficially
Own", any security:
(iv) solely because such security has been deposited or tendered
pursuant to a tender or exchange offer or Take-over Bid made
by such Person or any of such Person's Affiliates or
Associates until the earlier of such deposited or tendered
security being accepted unconditionally for payment or
exchange or being taken up and paid for;
(v) solely because such Person or any of such Person's Affiliates
or Associates has or shares the power to vote or direct the
voting of such security pursuant to a revocable proxy given in
response to a public proxy solicitation made pursuant to, and
in accordance with, the applicable rules and regulations under
the Corporations Act, the Securities Act and the 1934 Exchange
Act, except if such power (or the arrangements relating
thereto) is then reportable under Section 101 of the
Securities Act or under Item 6 of Schedule 13D under the 1934
Exchange Act;
(vi) solely because such Person or any of such Person's Affiliates
or Associates has or shares the power to vote or direct the
voting of such security in connection with, or in order to
participate in, a public proxy solicitation made or to be made
pursuant to, and in accordance with, the applicable rules and
regulations referred to in Clause 1.1(d)(v), except if such
power (or the arrangements relating thereto) is then
reportable under Section 101 of the Securities Act or under
Item 6 of Schedule 13D under the 1934 Exchange Act;
(vii) solely because such Person (hereinafter in this Clause
1.1(d)(vii) referred to as the "MANAGER"), being principally
engaged in the business of managing investment funds for other
Persons (which others, for greater certainty, may include and
be limited to one or more employee benefit plans or pension
plans) who are not Affiliates or Associates of the Manager and
who do not act jointly or in concert with the Manager as part
of the Manager's duties as agent for fully managed accounts,
holds or exercises voting or dispositive power over such
security and such voting or dispositive power over such
security is held in the ordinary course of such business in
the performance of
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the duties of the Manager for the account of the other Person;
provided, however, that:
A. such security shall be deemed, in such case, to be
Beneficially Owned by such other Persons; and
B. neither the Manager nor any Person acting jointly or in
concert with the Manager is then making a Take-over Bid
or has not then publicly announced an intention to make
a Take-over Bid, either alone or by acting jointly or in
concert with any other Person;
and provided further that, notwithstanding the foregoing, the
Board of Directors shall have the right to and may determine,
acting in good faith, that conditions exist which should
disentitle the Manager from relying on this Clause 1.1(d)(vii)
and, in such event, the Manager's Beneficial Ownership of
securities shall be determined without reference to this
Clause 1.1(d)(vii); or
(viii)solely because such Person (hereinafter in this Clause
1.1(d)(viii) referred to as the "TRUST COMPANY") holds or
exercises voting or dispositive power over such securities,
provided that:
A. the Trust Company is licensed to carry on the business
of a trust company under applicable law and, as such,
acts as trustee or administrator or in 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; and
B. the Trust Company is not then making a Take-over Bid or
has not then publicly announced an intention to make a
Take-over Bid, either alone or by acting jointly or in
concert with any other Person;
and provided further that, notwithstanding the foregoing, the
Board of Directors shall have the right to and may determine,
acting in good faith, that conditions exist which should
disentitle the Trust Company from relying on this Clause
1.1(d)(viii) and, in such event, the Trust Company's
Beneficial Ownership of securities shall be determined without
reference to this Clause 1.1(d)(viii); or
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(ix) solely because such Person is a client of the same Manager as
another Person on whose account the Manager holds or exercises
voting or dispositive power over such security, or solely
because such Person is 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; or
(x) solely because any such Person, any of such Person's
Affiliates or Associates or any other Person referred to in
paragraph (iii) of this definition has an agreement,
arrangement or understanding, whether or not in writing (but
other than of the nature otherwise referred to in this
Subsection 1.1(d)), with respect to one or more shareholder
proposals or a matter or matters to come before a particular
meeting of shareholders, including the election of directors.
For purposes of this Agreement, in determining the percentage of the
outstanding Voting Shares with respect to which a Person is or is
deemed to be the Beneficial Owner, all Voting Shares as to which
such Person is deemed the Beneficial Owner shall be deemed
outstanding.
(e) "BOARD OF DIRECTORS" means the board of directors of the
Corporation.
(f) "BUSINESS DAY" means any day other than a Saturday, Sunday or a day
on which chartered banks in the City of Toronto, Ontario or banks in
the City of Palo Alto, California (or, if the Corporation's
principal place of business ceases to be in Palo Alto, California,
such other city in which the principal place of business of the
Corporation is located) are authorized or obliged by law to close.
(g) "CANADIAN DOLLAR EQUIVALENT" of any amount which is expressed in
United States dollars means, on any date, the Canadian dollar
equivalent of such amount determined by multiplying such amount by
the U.S.-Canadian Exchange Rate in effect on such date.
(h) "CANADIAN-U.S. EXCHANGE RATE" means, on any date, the inverse of the
U.S.-Canadian Exchange Rate in effect on such date.
(i) "CLOSE OF BUSINESS" on any given date means the time on such date
(or, if such date is not a Business Day, the time on the next
succeeding Business Day) at which the office of the transfer agent
for the Common Shares in the City of Toronto (or, after the
Separation Time, the office of the Rights Agent in the City of
Toronto), is closed to the public.
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(j) "COMMON SHARES" means the common shares in the capital of the
Corporation and "COMMON SHARES", when used with reference to any
Person other than the Corporation, means the class or classes of
shares (or similar equity interest) with the greatest per share
voting power entitled to vote generally in the election of all
directors of such other Person or the equity securities or other
equity interest having power (whether or not exercised) to control
or direct the management of such other Person or, if such other
Person is a Subsidiary of another Person, the Person or Persons
which ultimately control such first-mentioned other Person.
(k) "COMPETING PERMITTED BID" means a Take-over Bid made while another
Permitted Bid is in existence and that satisfies all of the
provisions of a Permitted Bid except that the condition set forth in
subparagraph 1.1(bb)(ii) may provide that the Voting Shares may be
taken up or paid for on, and may not be withdrawn after, 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 then in
existence for the Voting Shares.
(l) "CONTROLLED" means, in determining whether a corporation is deemed
to be "CONTROLLED" by another Person or Persons, a situation where a
Person is controlled by another Person or Persons in any manner
whatsoever that results in control in fact by that other Person or
Persons, whether directly or indirectly, and whether through share
ownership, a trust, a contract or otherwise, including in the case
of control of a corporation where
(i) (A) 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 on behalf of the other Person or Persons; and
(B) the votes carried by such securities are entitled, if
exercised, to elect a majority of the board of directors
of such corporation; or
(ii) the corporation is otherwise controlled by such other Person
or Persons;
and "CONTROL" and "CONTROLLING" shall be interpreted accordingly.
(m) "CORPORATIONS ACT" means the International Business Companies Act
(Cap.291) of the British Virgin Islands, as amended, or such other
corporate legislation under which the Corporation may exist under or
be subject to from time to time, and the regulations made
thereunder, as now in effect or as the same may from time to time be
amended, re-enacted or replaced.
(n) "ELECTION TO EXERCISE" has the meaning attributed thereto in Clause
2.2(d)(i).
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(o) "EXEMPT ACQUISITION" means a share acquisition in respect of which
the Board of Directors has waived the application of Section 3.1
pursuant to the provisions of Subsection 5.1(d) or 5.1(e).
(p) "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. Until adjustment thereof in accordance with the terms
hereof, the Exercise Price shall be $60.
(q) "EXPIRATION TIME" means the earlier of (i) the Termination Time and
(ii) the Close of Business on the fifth anniversary of the date of
this Agreement.
(r) "EXPIRY DATE OF THE PERMITTED BID" means the date, which shall not
be less than 90 days following the date on which the proper
Take-over Bid documentation relating to such Permitted Bid is sent
to the shareholders of the Corporation, which is indicated in such
documentation as the date until which such Permitted Bid is open for
acceptance.
(s) "FLIP-IN EVENT" means a transaction or event in or pursuant to which
any Person becomes an Acquiring Person.
(t) "INDEPENDENT SHAREHOLDERS" means beneficial owners of Voting Shares,
other than (i) any Acquiring Person, (ii) any Offeror, (iii) any
Affiliate or Associate of any Acquiring Person or Offeror, (iv) any
Person acting jointly or in concert with any Acquiring Person or
Offeror or any Affiliate of any Acquiring Person or Offeror, in each
case in respect of Voting Shares beneficially owned by such persons.
(u) "MARKET PRICE" per security of any securities on any date of
determination means the average of the daily closing prices per
security of such securities (determined as described below) on each
of the 20 consecutive Trading Days through and including the Trading
Day immediately preceding such date; provided, however, that if an
event of a type analogous to any of the events described in Section
2.3 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 the Trading Day immediately preceding such date
of determination each such closing price so used shall be
appropriately adjusted in a manner analogous to the applicable
adjustment provided for in Section 2.3 in order to make it fully
comparable with the closing price on the Trading Day immediately
preceding such date of determination. The closing price per security
of any securities on any date shall be:
(i) the closing board lot sale price or, in case no such sale
takes place on such date, the average of the closing bid and
asked prices for each of such securities as reported by the
principal stock exchange or quotation system (as
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determined by the Board of Directors) on which such securities
are listed or admitted to trading;
(ii) if for any reason none of such prices is available on such day
or the securities are not listed or admitted to trading on a
stock exchange or quotation system, the last sale price, or in
case no sale takes place on such date, the average of the high
bid and low asked prices for each of 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
(iii) if for any reason none of such prices is available on such day
or the securities are not listed or admitted to trading on a
stock exchange or quotation system or quoted by any such
reporting system, the average of the closing bid and asked
prices as furnished by a professional market maker making a
market in the securities selected by the Board of Directors;
provided, however, that if for any reason none of such prices is
available on such day, the closing price per security of such
securities on such date means the fair value per security 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 security of
such securities. The Market Price shall be expressed in Canadian
dollars and, if initially determined in respect of any day forming
part of the 20 consecutive Trading Day period in question in United
States dollars, such amount shall be translated into Canadian
dollars on such date at the Canadian Dollar Equivalent thereof.
Notwithstanding the foregoing, where the Board is 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 determine the
Market Price of securities, such determination to be based upon 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.
(v) "1934 EXCHANGE ACT" means the Securities Exchange Act of 1934 of the
United States, as amended, and the rules and regulations thereunder
as now in effect or as the same may from time to time be amended,
re-enacted or replaced.
(w) "1933 SECURITIES ACT" means the Securities Act of 1933 of the United
States, as amended and the rules and regulations thereunder as now
in effect or as the same may from time to time be amended,
re-enacted or replaced.
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(x) "OFFER TO ACQUIRE" includes:
(i) an offer to purchase or a solicitation of an offer to sell
Voting Shares, or a public announcement of an intention to
make such an offer or solicitation; and
(ii) an acceptance of an offer to sell Voting Shares, whether or
not such offer to sell has been solicited;
or any combination thereof, and the Person accepting an offer to
sell shall be deemed to be making an Offer to Acquire to the Person
that made the offer to sell.
(y) "OFFEROR" means a Person who has publicly announced an intention to
make, or who has made, a Take-over Bid, including a Permitted Bid.
(z) "OFFEROR'S SECURITIES" means the aggregate of the Voting Shares
Beneficially Owned on the date of a Take-over Bid by an Offeror.
(aa) "OFFICER'S CERTIFICATE" of a Person shall mean a certificate signed
by the Chairman of the board of directors, the President or any Vice
President and by the Secretary, the Treasurer, and Assistant
Secretary or an Assistant Treasurer of such Person.
(bb) "PERMITTED BID" means a Take-over Bid made in compliance with, and
not on a basis which is exempt from or otherwise not subject to, the
provisions of Sections 95 through 98, inclusive, and Section 100 of
the Securities Act and, if applicable, Sections 10, 13(d) and 14 of
the 1934 Exchange Act and the rules and regulations thereunder (or
in each case such comparable or successor laws or regulations as
shall then be in effect, or if all such provisions shall be repealed
and there shall be no comparable or successor laws then in effect,
pursuant to Sections 95 through 98, inclusive, and Section 100 of
the Securities Act as in effect on the date of this Agreement) and
in compliance with all other applicable laws (including the
securities laws and regulations of all other relevant jurisdictions)
and which is also made in compliance with the following additional
provisions and conditions:
(i) the Take-over Bid shall be made for all of the Common Shares
to all holders of record of Common Shares wherever resident or
registered on the books of the Corporation;
(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 date which is not less than 90 days
following the date of the Take-over Bid and only if at such
date more than
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50% of the Voting Shares held by Independent Shareholders
shall have been deposited or tendered pursuant to the
Take-over Bid and not withdrawn;
(iii) unless the Take-over Bid is withdrawn in accordance with
applicable law, the Take-over Bid contains an irrevocable and
unqualified provision that Voting Shares may be deposited
pursuant to such Take-over Bid at any time during the period
of time described in Clause 1.1(bb)(ii) and that any Voting
Shares deposited pursuant to the Take-over Bid may be
withdrawn until taken up and paid for;
(iv) the Take-over Bid contains an irrevocable and unqualified
provision that in the event that the deposit condition set
forth in Clause 1.1(bb)(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; and
(v) the Offeror shall make arrangements reasonably required by the
Board of Directors of the Corporation to allow for the deposit
in acceptance of such Take-over Bid of shares issued on
exercise of options held by employees of the Corporation and
its subsidiaries;
and the Board of Directors acting in good faith determines, prior to
the expiry of the Take-over Bid, that the Take-over Bid complies
with the provisions of this Subsection 1.1(bb).
For purposes of this Agreement, if a Permitted Bid ceases to be a
Permitted Bid because it ceases to meet any or all of the
requirements mentioned above at any time, any acquisition of Voting
Shares made pursuant to such Permitted Bid, including any
acquisition of Voting Shares theretofore made, shall cease to be a
Permitted Bid Acquisition.
(cc) "PERMITTED BID ACQUISITION" means an acquisition of Common Shares or
Voting Shares made pursuant to a Permitted Bid or a Competing
Permitted Bid made after the Board of Directors, acting in good
faith, has determined, that the Take-over Bid complies with the
provisions of Subsection 1.1(bb).
(dd) "PERSON" includes any individual, firm, partnership, association,
trust, trustee, executor, administrator, legal personal
representative, government, governmental body or authority, group
(as such term is used in Rule 13d-5 under the 1934 Exchange Act, as
in effect on the date of this Agreement), corporation or other
incorporated or unincorporated organization.
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(ee) "PRO RATA ACQUISITION" means an acquisition by a Person of Voting
Shares pursuant to (w) any dividend reinvestment plan or share
purchase plan of the Corporation, (x) a stock dividend, a stock
split or other event pursuant to which such Person becomes the
Beneficial Owner of Voting Shares on the same pro rata basis as all
other holders of Voting Shares of the same class or series, (y) the
exercise (including the grant) of rights granted to such Person to
purchase Voting Shares distributed to all holders of Voting Shares
pursuant to a bona fide rights offering which complies with the
requirements of Policy 6.2 of the Ontario Securities Commission or
is made pursuant to a prospectus or (z) a distribution to the public
of Voting Shares, or securities convertible into or exchangeable for
Voting Shares, made pursuant to a prospectus or by way of a private
placement completed in accordance with applicable securities
legislation; provided, however, in the case of an acquisition
referred to in Subclauses (y) or (z), such acquisitions are made for
not more than such number of Voting Shares or of such securities as
is necessary for such Person to maintain the percentage of Voting
Shares it held immediately prior to the announcement of such rights
offering or distribution to the public or private placement, as the
case may be.
(ff) "RECORD TIME" means the Close of Business on November 16, 1998.
(gg) "REDEMPTION PRICE" has the meaning attributed thereto in Subsection
5.1(a).
(hh) "REGULAR PERIODIC CASH DIVIDEND" means cash dividends paid at
regular intervals in any fiscal year of the Corporation to the
extent that such cash dividends do not, in the aggregate, exceed in
any fiscal year the greatest of:
(i) 200% of the aggregate amount of cash dividends declared
payable by the Corporation on its Common Shares in its
immediately preceding fiscal year;
(ii) 300% of the arithmetic mean of the aggregate amounts of cash
dividends declared payable by the Corporation on its Common
Shares in its three immediately preceding fiscal years; and
(iii) 100% of the aggregate consolidated net income of the
Corporation, before extraordinary items, for its immediately
preceding fiscal year.
(ii) "RIGHTS CERTIFICATE" means the certificates representing the Rights
after the Separation Time which shall be substantially in the form
attached hereto as Exhibit A.
(jj) "RIGHTS REGISTER" has the meaning attributed thereto in Subsection
5.1(a).
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(kk) "SECURITIES ACT" means the Securities Act, R.S.O. 1990, c. S.5, as
amended, and the regulations made thereunder, as now in effect or as
the same may from time to time be amended, re-enacted or replaced.
(ll) "SEPARATION TIME" means the Close of Business on the tenth day after
the earlier of:
(i) the Stock Acquisition Date; and
(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, so long as such Take-over Bid
continues to satisfy the requirements of a Permitted Bid or a
Competing Permitted Bid);
or such earlier or later date as may from time to time be determined
by the Board of Directors, provided that:
(A) if any such Take-over Bid expires, is cancelled, is
terminated or is otherwise withdrawn prior to the
Separation Time, such offer shall be deemed, for the
purposes of this Subsection 1.1(kk), never to have been
made; and
(B) if the Board of Directors determines pursuant to
Subsection 5.1(d) or (e) to waive the application of
Section 3.1 to a Flip-in Event, the Separation Time in
respect of such Flip-in Event shall be deemed never to
have occurred.
(mm) "SPECIAL MEETING" means a special meeting of the holders of Voting
Shares called by the Board of Directors for the purpose of:
(i) ratifying the distribution and continued existence of the
Rights in accordance with Subsection 5.4(f); or
(ii) approving an amendment, variation or rescission of any of the
provisions of this Agreement pursuant to Subsections 5.4(b),
5.4(c) or 5.4(e).
(nn) "STOCK ACQUISITION DATE" means the first date of public announcement
(which for purposes of this definition includes, without limitation,
a report filed pursuant to Section 101 of the Securities Act or
Section 13(d) of the 1934 Exchange Act) of facts indicating that a
Person has become an Acquiring Person.
(oo) "SUBSIDIARY" means a corporation which, in respect of another
corporation, is:
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(i) controlled by:
A. that other; or
B. that other and one or more corporations each of which is
controlled by that other; or
C. two or more corporations each of which is controlled by
that other; or
(ii) a Subsidiary of a corporation that is that other's Subsidiary;
(pp) "TAKE-OVER BID" means an Offer to Acquire Voting Shares or other
securities which (assuming the Voting Shares or other securities
subject to the Offer to Acquire are acquired at the date of the
Offer to Acquire by the Person making the Offer to Acquire),
together with the Offeror's Securities, would constitute in the
aggregate 20% or more of the outstanding Voting Shares at the date
of the Offer to Acquire (including all Voting Shares that may be
acquired upon exercise of all rights of conversion, exchange or
purchase attaching to the other securities.
(qq) "TERMINATION TIME" means the time at which the right to exercise
Rights shall terminate pursuant to Subsections 3.2(b) or 5.1(c).
(rr) "TRADING DAY", when used with respect to any securities, means any
day on which the principal securities exchange or quotation system
(as determined by the Board of Directors) on which such securities
are listed or admitted to trading or quotation is open for the
transaction of business or, if the securities are not listed or
admitted to trading or quotation on any Canadian or United States
securities exchange, a Business Day.
(ss) "U.S.-CANADIAN EXCHANGE RATE" means, on any date:
(i) if on such date the Bank of Canada sets an average noon spot
rate of exchange for the conversion of one United States
dollar into Canadian dollars, such rate; and
(ii) in any other case, the rate for such date for the conversion
of one United States dollar into Canadian dollars calculated
in such manner as may be determined by the Board of Directors
from time to time acting in good faith.
(tt) "U.S. DOLLAR EQUIVALENT" of any amount which is expressed in
Canadian dollars means, on any date, the United States dollar
equivalent of such amount determined
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by multiplying such amount by the Canadian-U.S. Exchange Rate in
effect on such date.
(uu) "VOTING SHARES" means the Common Shares of the Corporation and any
other shares of capital stock or voting interests of the Corporation
entitled to vote generally in the election of directors and "VOTING
SHARES", when used with reference to any Person other than the
Corporation, means common shares of such other Person and any other
shares of capital stock or voting interests of such other Person
entitled to vote generally in the election of the directors of such
other Person. For purposes of this Agreement, the percentage of
Voting Shares Beneficially Owned by any Person shall be, and be
deemed to be, the product determined by the formula:
A
---
100 X B
where
A = the aggregate number of votes for the election of all
directors generally attaching (or which would be attached) to
the Voting Shares Beneficially Owned by such Person; and
B = the aggregate number of votes for the election of all
directors generally attaching to all outstanding Voting
Shares.
Where any Person is deemed to Beneficially Own unissued Voting
Shares, such Voting Shares shall be deemed to be outstanding for the
purpose of both A and B above.
(vv) "VOTING SHARE REDUCTION" means an acquisition or redemption by the
Corporation of Voting Shares which, by reducing the number of Voting
Shares outstanding, increases the proportionate number of Voting
Shares Beneficially Owned by any Person to 20% or more of the Common
Shares or Voting Shares then outstanding.
1.2 ACTING JOINTLY OR IN CONCERT
For the purposes of this Agreement, whether Persons are acting jointly or
in concert is a question of fact in each circumstance. Notwithstanding the
foregoing, a Person shall be deemed to be acting jointly or in concert with
another Person if such Person is presumed to be acting jointly or in concert
with such other Person for purposes of Section 91 of the Securities Act.
Notwithstanding the foregoing, and for greater certainty, the phrase,
"acting jointly or in concert", wherever used in this Agreement, shall not
include conduct:
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(a) unrelated to Voting Shares of the Corporation; or
(b) consisting solely of:
(i) voting or directing the vote of securities of the Corporation
pursuant to a revocable proxy given in response to a public
proxy solicitation;
(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; or
(iii) having an agreement, arrangement or understanding with respect
to a shareholder proposal or a matter or matters to come
before a particular meeting of shareholders, including the
election of directors.
1.3 CURRENCY
All sums of money which are referred to in this Agreement are expressed in
lawful money of Canada, unless otherwise specified.
1.4 NUMBER AND GENDER
Wherever the context so requires, terms used herein importing the singular
number only shall include the plural and vice versa and words importing any one
gender shall include all others.
1.5 SECTIONS AND HEADINGS
The division of this Agreement into Articles, Sections, Subsections,
Clauses and Subclauses and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement. The terms "this Agreement", "hereof", "hereunder" and similar
expressions refer to this Agreement and not to any particular Article, Section
or other portion hereof and include any agreement or instrument supplemental or
ancillary hereto. Unless something in the subject matter or context is
inconsistent therewith, references herein to Articles, Sections, Subsections,
Clauses and Subclauses are to Articles, Sections, Subsections, Clauses and
Subclauses of this Agreement.
1.6 STATUTORY REFERENCES
Unless the context otherwise requires, any reference herein to a specific
Section, Subsection, Clause or Rule of any act or regulation shall be deemed to
refer to the same as it may be renumbered, amended, re-enacted or replaced or,
if repealed and there shall be no replacement therefor, to the same as it is in
effect on the date of this Agreement.
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ARTICLE 2 -- THE RIGHTS
2.1 THE RIGHTS; LEGEND ON COMMON SHARE CERTIFICATES
(a) Certificates representing Common Shares that are issued and
outstanding at the later of the Record Time shall evidence one
Right for each Common Share evidenced thereby, notwithstanding the
absence of the legend referred to below, until the earlier of (i)
the Separation Time and (ii) the Expiration Time. Certificates for
Common Shares issued after the later of (i) the Record Time and (ii)
the date on which all regulatory approvals for this Agreement have
been received but prior to the earlier of (i) the Separation Time
and (ii) the Expiration Time shall also evidence one Right for each
Common Share represented thereby.
(b) All such certificates for Common Shares shall have impressed on,
printed on, written on or otherwise affixed to them the following
legend:
"Until the Separation Time (as defined in the Rights Agreement
referred to below), this certificate also evidences and
entitles the holder hereof to certain Rights as set forth in a
Shareholder Protection Rights Agreement made as of November 4,
1998 (the "Rights Agreement"), between Salix Pharmaceuticals,
Ltd. (the "Corporation") and Montreal Trust Company of Canada
(the "Rights Agent"), the terms of which are incorporated
herein by this reference and a copy of which is on file at the
principal office of the Corporation. Under certain
circumstances, as set forth in the Rights Agreement, such
Rights may be amended or redeemed, may expire, may become void
(if, in certain cases, they are "Beneficially Owned" by an
"Acquiring Person", as such terms are defined in the Rights
Agreement, or a transferee thereof), or may be evidenced by
separate certificates and may no longer be evidenced by this
certificate. The Corporation will mail, or arrange for the
mailing of, a copy of the Rights Agreement to the holder of
this certificate without charge promptly after the receipt of
a written request therefor."
Certificates representing Common Shares issued and outstanding at
the Record Time shall also evidence one Right for each Common Share
evidenced thereby, notwithstanding the absence of the foregoing
legend, until the Close of Business on the earlier of the Separation
Time and the Expiration Time.
2.2 INITIAL EXERCISE PRICE; EXERCISE OF RIGHTS; DETACHMENT OF RIGHTS
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(a) Subject to adjustment as herein set forth, each Right will entitle
the holder thereof, after the Separation Time and prior to the
Expiration Time, to purchase one Common Share for the Exercise
Price, or the U.S. Dollar Equivalent of the Exercise Price as at the
Business Day immediately preceding the Separation Time (which
Exercise Price and number of Common Shares are subject to adjustment
as set forth below). Notwithstanding any other provision of this
Agreement, any Rights held by the Corporation or any of its
Subsidiaries shall be void.
(b) Until the Separation Time, (i) the Rights shall not be exercisable
and no Right may be exercised and (ii) for administrative purposes,
each Right will be evidenced by the certificate for the associated
Common Share registered in the name of the holder thereof (which
certificate shall be deemed to represent a Rights Certificate) and
will be transferable only together with, and will be transferred by
a transfer of, such associated Common Share.
(c) After the Separation Time and prior to the Expiration Time, the
Rights may be exercised and the registration and transfer of the
Rights shall be separate from and independent of Common Shares.
Promptly following the Separation Time, the Rights Agent will mail
to each holder of record of Common Shares as of the Separation Time
(other than an Acquiring Person and, in respect of any Rights
Beneficially Owned by such Acquiring Person which are not held of
record by such Acquiring Person, the holder of record of such
Rights), at such holder's address as shown on the records of the
Corporation (the Corporation hereby agreeing to furnish copies of
such records to the Rights Agent for this purpose):
(i) a 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 or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock
exchange or quotation system on which the Rights may from time
to time be listed or traded, or to conform to usage; and
(ii) a disclosure statement prepared by the Corporation describing
the Rights.
(d) Rights may be exercised in whole or in part on any Business Day
after the Separation Time and prior to the Expiration Time by
submitting to the Rights Agent at its principal office in the City
of Toronto or any other office of the Rights Agent designated for
that purpose from time to time by the Corporation:
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(i) the Rights Certificate evidencing such Rights, with an
Election to Exercise (an "ELECTION TO EXERCISE") substantially
in the form attached to the Rights Certificate appropriately
completed and duly executed by the holder or his executors or
administrators or other legal personal representatives or his
or their attorney duly appointed by an instrument in writing
in form and executed in a manner satisfactory to the Rights
Agent; and
(ii) payment by certified cheque, bank draft or money order payable
to the order of the Corporation, of a sum equal to the
Exercise Price multiplied by the number of Rights being
exercised and a sum sufficient to cover any transfer tax or
charge which may be payable in respect of any transfer
involved in the transfer or delivery of Rights Certificates or
the issuance or delivery of certificates for Common Shares in
a name other than that of the holder of the Rights being
exercised.
(e) Upon receipt of a Rights Certificate, with an Election to Exercise
appropriately completed and duly executed, which does not indicate
that such Right is void (or which is not otherwise void) as provided
by Subsection 3.1(b), accompanied by payment as set forth in Clause
2.2(d)(ii), the Rights Agent (unless otherwise instructed by the
Corporation) will thereupon promptly:
(i) requisition from the transfer agent of the Common Shares
certificates for the number of Common Shares to be purchased
(the Corporation hereby irrevocably agreeing to authorize such
transfer agent to comply with all such requisitions);
(ii) after receipt of such Common Share certificates, deliver such
certificates to, or to the order of, the registered holder of
such Rights Certificate, registered in such name or names as
may be designated by such holder;
(iii) when appropriate, requisition from the Corporation the amount
of cash, if any, to be paid in lieu of issuing fractional
Common Shares;
(iv) after receipt of such cash, deliver such cash to, or to the
order of, the registered holder of the Rights Certificate; and
(v) tender to the Corporation all payments received on exercise of
the Rights.
(f) If the holder of any Rights exercises less than all the Rights
evidenced by such holder's Rights Certificate, a new Rights
Certificate evidencing the Rights remaining unexercised will be
issued by the Rights Agent to such holder or to such holder's duly
authorized assigns.
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(g) The Corporation covenants and agrees that it will:
(i) take all such action as may be necessary and within its power
to ensure that all Common Shares delivered upon exercise of
Rights shall, at the time of delivery of the certificates for
such Common Shares (subject to payment of the Exercise Price
and subject further to the provisions of Subsection 3.1(b)),
be duly and validly authorized, executed, issued and delivered
as fully paid and non-assessable;
(ii) take all such action as may reasonably be considered to be
necessary and within its power to comply with any applicable
requirements of the Corporations Act, the Securities Act and
the securities legislation of each of the other provinces and
territories of Canada, the 1933 Securities Act and the 1934
Exchange Act, and the rules and regulations thereunder or any
other applicable law, rule or regulation, in connection with
the issuance and delivery of the Rights Certificates and the
issuance of any Common Shares upon exercise of Rights;
(iii) use reasonable efforts to cause all Common Shares issued upon
exercise of Rights to be listed upon issuance on the stock
exchange(s) or quotation system(s) where the Common Shares may
be listed at that time;
(iv) pay when due and payable, any and all Canadian and United
States federal, provincial and state taxes (not in the nature
of income or withholding taxes) and charges which may be
payable in respect of the original issuance or delivery of the
Rights Certificates or certificates for Common Shares issued
upon exercise of 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 of Rights or the issuance
or delivery of certificates for Common Shares issued upon
exercise of Rights in a name other than that of the holder of
the Rights being exercised; and
(v) cause to be reserved and kept available out of its authorized
and unissued Shares the number of Shares that, as provided in
this Agreement, will from time to time be sufficient to permit
the exercise in full of all outstanding Rights.
2.3 ADJUSTMENTS TO EXERCISE PRICE; NUMBER OF RIGHTS
(a) The Exercise Price, the number and kind of securities subject to
purchase upon exercise of each Right and the number of Rights
outstanding are subject to adjustment from time to time as provided
in this Section 2.3.
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(b) In the event that the Corporation at any time after the Record Time
and prior to the Expiration Time:
(i) declares or pays a dividend on the Common Shares payable in
Common Shares (or other securities exchangeable for or
convertible into or giving a right to acquire Common Shares)
other than pursuant to any dividend reinvestment plan;
(ii) subdivides or changes the then outstanding Common Shares into
a greater number of Common Shares;
(iii) consolidates or changes the then outstanding Common Shares
into a smaller number of Common Shares; or
(iv) issues any Common Shares (or other securities exchangeable for
or convertible into or giving a right to acquire Common
Shares) in respect of, in lieu of, or in exchange for existing
Common Shares, except as otherwise provided in this Section
2.3,
then
A. the Exercise Price shall be adjusted so that 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 (the "ADJUSTMENT 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 (assuming the
exercise of all such exchange or conversion rights, if
any); and
B. in a case to which clause (ii) or (iii) applies or if
clause (i) or (iv) applies to an issue of securities
made after the Separation Time, the number of Rights
outstanding shall be adjusted so that each Right held
prior to such adjustment will become that number of
Rights equal to the Adjustment 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 will have exactly one Right
associated with it.
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
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to in the preceding paragraph, each such Common Share so issued
shall automatically have one new Right associated with it, which
Right shall be evidenced by the certificate representing such share.
(c) In the event that the Corporation at any time after the Record Time
and prior to the Expiration Time fixes a record date for the making
of a distribution to substantially all holders of Common Shares of
rights or warrants entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or purchase
Common Shares (or securities convertible into or exchangeable for or
carrying a right to purchase or subscribe for Common Shares) at a
price per Common Share (or, in the case of 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 per share (including the price required to be paid to
purchase such convertible or exchangeable security or right)) less
than 90 percent of the Market Price per Common Share on such record
date, the Exercise Price shall be adjusted. The Exercise Price in
effect after such record date will equal the Exercise Price in
effect immediately prior to such record date multiplied by a
fraction, of which the numerator shall be the number of Common
Shares outstanding on such record date plus the number of Common
Shares which 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 of which the denominator 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 to be so offered are initially convertible, exchangeable
or exercisable). In case such subscription price may be paid in a
consideration part or all of which will be in a form other than
cash, the value of such consideration shall be as determined by the
Board of Directors. To the extent that such rights or warrants are
not exercised prior to the expiration thereof, the Exercise Price
shall be readjusted on the expiration thereof to the Exercise Price
which would then be in effect based on the number of Common Shares
(or securities convertible into or exchangeable for Common Shares)
actually issued upon the exercise of such rights. For purposes of
this Agreement, the granting of the right to purchase Common Shares
(whether from treasury shares or otherwise) pursuant to any dividend
reinvestment plan and/or any share purchase plan providing for the
reinvestment of dividends or interest payable on securities of the
Corporation and/or the investment of periodic optional payments
and/or employee benefit, stock option or similar plans (so long as
such right to purchase is in no case evidenced by the delivery of
rights or warrants by the Corporation) shall not be deemed to
constitute an issue of rights or warrants by the Corporation;
provided, however, that, in the case of any dividend reinvestment
plan or share purchase plan, the right to purchase Common Shares is
at a price per share
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of not less than 90 percent of the current market price per share
(determined in accordance with such plans) of the Common Shares.
(d) In the event that the Corporation at any time after the Record Time
and prior to the Expiration Time fixes a record date for the making
of a distribution to substantially all holders of Common Shares of
evidences of indebtedness or assets (other than a Regular Periodic
Cash Dividend or a dividend paid in Common Shares but including any
dividend payable in securities other than a dividend or distribution
referred to in Subsection 2.3(b)(i) or 2.3(b)(iv)) or rights or
warrants entitling them to subscribe for or purchase Common Shares
(or securities convertible into or exchangeable for or carrying a
right to purchase or subscribe for Common Shares) at a price per
Common Share (or, in the case of 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 per
share (including the price required to be paid to purchase such
convertible or exchangeable security or right)) less than 90 percent
of the Market Price per Common Share on such record date (excluding
rights or warrants referred to in Subsection 2.3(c)), the Exercise
Price in effect after such record date shall be equal to the
Exercise Price in effect immediately prior to such record date less
the fair market value (as determined by the Board of Directors) of
the portion of the assets, evidences of indebtedness, rights or
warrants so to be distributed applicable to a Common Share.
(e) Each adjustment made pursuant to this Section 2.3 shall be made as
of:
(i) the record or effective date for the applicable dividend,
subdivision, change, consolidation or issuance, in the case of
an adjustment made pursuant to Subsection 2.3(b); and
(ii) the record date for the applicable dividend or distribution,
in the case of an adjustment made pursuant to Subsection
2.3(c) or (d).
(f) In the event that the Corporation shall at any time after the Record
Time and prior to the Separation Time issue any shares of capital
stock (other than Common Shares), or rights or warrants to subscribe
for or purchase any such capital stock, or securities convertible
into or exchangeable for any such capital stock, in a transaction
referred to in Clauses 2.3(b)(i) or (iv), if the Board of Directors
determines that the adjustments contemplated by Subsections 2.3(b),
(c) and (d) in connection with such transaction will not
appropriately protect the interests of the holders of Rights, the
Corporation 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(b), (c) and (d), such adjustments, rather than the adjustments
contemplated by Subsections 2.3(b), (c) and (d), shall be made. The
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Corporation and the Rights Agent shall amend this Agreement as
appropriate to provide for such adjustments.
(g) Notwithstanding anything herein to the contrary, no adjustment of
the Exercise Price shall be required unless such adjustment would
require an increase or decrease of at least one per cent in such
Exercise Price; provided, however, that any adjustments which by
reason of this Subsection 2.3(g) are not required to be made shall
be carried forward and taken into account in any subsequent
adjustment. All adjustments made pursuant to this Section 2.3 shall
be made to the nearest cent or to the nearest one ten-thousandth of
a Common Share or a Right, as the case may be.
(h) All Rights originally issued by the Corporation subsequent to any
adjustment made to an Exercise Price hereunder shall evidence the
right to purchase, at the adjusted Exercise Price, the number of
Common Shares purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(i) Unless the Corporation shall have exercised its election, as
provided in Subsection 2.3(j), upon each adjustment of an Exercise
Price as a result of the calculations made in Subsections 2.3(c) and
(d), each Right outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to purchase, at the
adjusted Exercise Price, that number of Common Shares obtained by:
(i) multiplying (A) the number of Common Shares covered by a Right
immediately prior to this adjustment, by (B) the relevant
Exercise Price in effect immediately prior to such adjustment
of the relevant Exercise Price; and
(ii) dividing the product so obtained by the relevant Exercise
Price in effect immediately after such adjustment of the
relevant Exercise Price.
(j) The Corporation may elect prior to or after the date of any
adjustment of an Exercise Price to adjust the number of Rights, in
lieu of any adjustment in the number of Common Shares purchasable
upon the exercise of a Right. Each of the Rights outstanding after
the adjustment in the number of Rights shall be exercisable for the
number of Common Shares for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become the
number of Rights obtained by dividing the relevant Exercise Price in
effect immediately prior to adjustment of the relevant Exercise
Price by the relevant Exercise Price in effect immediately after
adjustment of the relevant Exercise Price. The Corporation shall
make a public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if known
at the time, the amount of the adjustment to be made. This record
date
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may be the date on which the relevant Exercise Price is adjusted or
any day thereafter, but, if the Rights Certificates have been
issued, shall be at least 10 calendar days later than the date of
the public announcement. If Rights Certificates have been issued,
upon each adjustment of the number of Rights pursuant to this
Subsection 2.3(j), the Corporation shall, as promptly as
practicable, cause to be distributed to holders of record of Rights
on such record date, Rights Certificates evidencing, subject to
Section 5.5, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the
Corporation, shall cause to be distributed to such holders of record
in substitution and replacement for the Rights Certificates held by
such holders prior to the date of adjustment, and upon surrender
thereof, if required by the Corporation, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled
after such adjustment. Rights Certificates so to be distributed
shall be issued, executed and countersigned in the manner provided
for herein and may bear, at the option of the Corporation, the
relevant adjusted Exercise Price and shall be registered in the
names of holders of record of Rights Certificates on the record date
specified in the public announcement.
(k) Irrespective of any adjustment or change in the Exercise Price or
the number of securities issuable upon 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 so issuable which were expressed in the initial Rights
Certificates issued hereunder.
(l) In any case in which this Section 2.3 shall require that an
adjustment in an Exercise Price be made effective as of a record
date for a specified event, the Corporation may elect to defer until
the occurrence of such event the issuance to the holder of any Right
exercised after such record date of the number of 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 relevant Exercise Price in effect prior to such
adjustment; provided, however, that the Corporation shall deliver to
such holder a due ▇▇▇▇ or other appropriate instrument evidencing
such holder's right to receive such additional Common Shares
(fractional or otherwise) or other securities upon the occurrence of
the event requiring such adjustment.
(m) Notwithstanding anything in this Section 2.3 to the contrary, the
Corporation shall be entitled to make such reductions in the
Exercise Price, in addition to those adjustments expressly required
by this Section 2.3, as and to the extent that in its good faith
judgment the Board of Directors shall determine to be advisable in
order that any (i) subdivision or consolidation of the Common
Shares, (ii) issuance wholly for cash of any Common Shares at less
than the applicable Market Price, (iii) issuance wholly for cash of
any Common Shares or securities that by their terms are exchangeable
for or convertible into or give a right to acquire Common Shares,
(iv)
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stock dividends or (v) issuance of rights, options or warrants
referred to in this Section 2.3, hereafter made by the Corporation
to holders of its Common Shares, subject to applicable taxation
laws, shall not be taxable to such shareholders.
(n) The Corporation covenants and agrees that, after the Separation
Time, it will not, except as permitted by Section 5.1 or 5.4, take
(or permit any Subsidiary of the Corporation to take) any action if
at the time such action is taken it is reasonably foreseeable that
such action will diminish substantially or otherwise eliminate the
benefits intended to be afforded by the Rights.
(o) If an event occurs which would require an adjustment under both this
Section 2.3 and Section 3.1, the adjustment provided for in this
Section 2.3 shall be in addition to and shall be made prior to, any
adjustment required pursuant to Section 3.1.
(p) Whenever an adjustment to the Exercise Price or a change in the
securities purchasable upon exercise of the Rights is made pursuant
to this Section 2.3, the Corporation shall promptly:
(i) file with the Rights Agent and with the transfer agent for the
Common Shares a certificate specifying the particulars of such
adjustment or change; and
(ii) cause notice of the particulars of such adjustment or change
to be given to the holders of the Rights.
Failure to file such certificate or to cause such notice to be given
as aforesaid, or any defect therein, shall not affect the validity
of any such adjustment or change.
2.4 DATE ON WHICH EXERCISE IS EFFECTIVE
Each Person in whose name any certificate for Common Shares is issued
upon the exercise of Rights shall for all purposes be deemed to have become the
holder of record of the Common Shares represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered (together with an appropriately
completed and duly executed Election to Exercise) and payment of the Exercise
Price for such Rights (and any applicable transfer taxes or charges payable by
such Person hereunder) was made in accordance with Subsection 2.2(d); provided,
however, that if the date of such surrender and payment is a date upon which the
Common Share transfer books of the Corporation are closed, such Person shall be
deemed to have become the holder of record of such shares on, and such
certificate shall be dated, the next succeeding Business Day on which the Common
Share transfer books of the Corporation are open.
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2.5 EXECUTION, AUTHENTICATION, DELIVERY AND DATING OF RIGHTS CERTIFICATES
(a) The Rights Certificates shall be executed on behalf of the
Corporation by its Chief Executive Officer and its Chief
Financial Officer. The signature of these officers on the Rights
Certificates may be manual or facsimile. Rights Certificates
bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Corporation shall
bind the Corporation, notwithstanding that such individuals or
any of them have ceased to hold such offices prior to the
countersignature and delivery of such Rights Certificates.
(b) Promptly following the Separation Time, the Corporation will
notify the Rights Agent of such Separation Time and will deliver
Rights Certificates executed by the Corporation to the Rights
Agent for countersignature and a disclosure statement describing
the Rights, and the Rights Agent will manually countersign such
Rights Certificates and deliver such Rights Certificates and
statement to the holders of the Rights pursuant to Subsection
2.2(c). No Rights Certificate shall be valid for any purpose
until countersigned by the Rights Agent as aforesaid.
(c) Each Rights Certificate shall be dated the date of
countersignature thereof.
2.6 REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE
(a) After the Separation Time, the Corporation will cause to be kept
a register (the "RIGHTS REGISTER") in which, subject to such
reasonable regulations as it may prescribe, the Corporation will
provide for the registration and transfer of Rights. The Rights
Agent is hereby appointed "Rights Registrar" for the purpose of
maintaining the Rights Register for the Corporation and
registering Rights and transfers and exchanges of Rights as
herein provided. In the event that the Rights Agent shall cease
to be the Rights Registrar, the Rights Agent will have the right
to examine the Rights Register at all reasonable times.
(b) After the Separation Time and prior to the Expiration Time, upon
surrender for registration of transfer or exchange of any Rights
Certificate, and subject to the provisions of Subsection 2.6(d)
and 3.1(b), the Corporation will execute, and the Rights Agent
will countersign, deliver and register, in the name of the
holder or the designated transferee or transferees, as required
pursuant to the holder's instructions, one or more new Rights
Certificates evidencing the same aggregate number of Rights as
did the Rights Certificates so surrendered.
(c) All Rights issued upon any registration of transfer or exchange
of Rights Certificates shall be the valid obligations of the
Corporation, and such Rights shall be entitled to the same
benefits under this Agreement as the Rights surrendered upon
such registration of transfer or exchange.
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(d) Every Rights Certificate surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to the
Corporation or the Rights Agent, as the case may be, duly
executed by the holder thereof or such holder's attorney duly
authorized in writing. As a condition to the issuance of any new
Rights Certificate under this Section 2.6, the Corporation may
require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses
of the Rights Agent) connected therewith.
2.7 MUTILATED, DESTROYED, LOST AND STOLEN RIGHTS CERTIFICATES
(a) If any mutilated Rights Certificate is surrendered to the Rights
Agent prior to the Expiration Time, the Corporation shall
execute and the Rights Agent shall countersign and deliver in
exchange therefor a new Rights Certificate evidencing the same
number of Rights as did the Rights Certificate so surrendered.
(b) If there shall be delivered to the Corporation and the Rights
Agent prior to the Expiration Time (i) evidence to their
satisfaction of the destruction, loss or theft of any Rights
Certificate and (ii) such security or indemnity as may be
required by them to save each of them and any of their agents
harmless, then, in the absence of notice to the Corporation or
the Rights Agent that such Rights Certificate has been acquired
by a bona fide purchaser, the Corporation shall execute and upon
its request the Rights Agent shall countersign and deliver, in
lieu of any such destroyed, lost or stolen Rights Certificate, a
new Rights Certificate evidencing the same number of Rights as
did the Rights Certificate so destroyed, lost or stolen.
(c) As a condition to the issuance of any new Rights Certificate
under this Section 2.7, the Corporation may require the payment
of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Rights Agent)
connected therewith.
(d) Every new Rights Certificate issued pursuant to this Section 2.7
in lieu of any destroyed, lost or stolen Rights Certificate
shall evidence a contractual obligation of the Corporation,
whether or not the destroyed, lost or stolen Rights Certificate
shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Agreement equally and
proportionately with any and all other Rights duly issued
hereunder.
2.8 PERSONS DEEMED OWNERS
Prior to due presentment of a Rights Certificate (or, prior to the
Separation Time, the associated Common Share certificate) for registration of
transfer, the Corporation and any agent of the Corporation or, if so authorized
by the Corporation, the Rights Agent may deem and treat the
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person in whose name such Rights Certificate (or, prior to the Separation Time,
such Common Share certificate) is registered as the absolute owner thereof and
of the Rights evidenced thereby for all purposes whatsoever. As used in this
Agreement, unless the context otherwise requires, the term "holder" of any
Rights means the registered holder of such Rights (or, prior to the Separation
Time, the associated Common Shares).
2.9 DELIVERY AND CANCELLATION OF CERTIFICATES
All Rights Certificates surrendered upon exercise or for redemption, or
for registration of transfer or exchange shall, if surrendered to any person
other than the Rights Agent, be delivered to the Rights Agent and, in any case,
shall be promptly cancelled by the Rights Agent. The Corporation may at any time
deliver to the Rights Agent for cancellation any Rights Certificates previously
countersigned and delivered hereunder which the Corporation may have acquired in
any manner whatsoever, and all Rights Certificates so delivered shall be
promptly cancelled by the Rights Agent. No Rights Certificate shall be
countersigned in lieu of or in exchange for any Rights Certificates cancelled as
provided in this Section 2.9, except as expressly permitted by this Agreement.
The Rights Agent shall destroy all cancelled Rights Certificates and deliver a
certificate of destruction to the Corporation.
2.10 AGREEMENT OF RIGHTS HOLDERS
Every holder of Rights, by accepting such Rights, consents and agrees
with the Corporation and the Rights Agent and with every other holder of Rights
that:
(a) such holder shall be bound by and subject to the provisions of
this Agreement, as amended from time to time in accordance with
the terms hereof, in respect of all Rights held;
(b) prior to the Separation Time, each Right will be transferable
only together with, and will be transferred by a transfer of,
the associated Common Share;
(c) after the Separation Time, the Rights will be transferable only
on the Rights Register as provided herein;
(d) prior to due presentment of a Rights Certificate (or, prior to
the Separation Time, the associated Common Share certificate)
for registration of transfer, the Corporation and any agent of
the Corporation or, if so authorized by the Corporation, the
Rights Agent may deem and treat the person in whose name the
Rights Certificate (or, prior to the Separation Time, the
associated Common Share certificate) is registered as the
absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on such
Rights Certificate or the associated Common Share certificate
made by anyone other than the Corporation or the Rights
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Agent) for all purposes whatsoever, and neither the Corporation
nor the Rights Agent shall be affected by any notice to the
contrary;
(e) such holder is not entitled to receive any fractional Rights or
fractional Common Shares upon the exercise of Rights;
(f) without the approval of any holder of Rights and upon the sole
authority of the Board of Directors, this Agreement may be
supplemented or amended from time to time as provided herein;
and
(g) notwithstanding anything in this Agreement to the contrary,
neither the Corporation nor the Rights Agent shall have any
liability to any holder of a Right or any other Person as a
result of its inability to perform any of its obligations under
this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by a
governmental authority, prohibiting or otherwise restraining
performance of such obligations.
ARTICLE 3 -- ADJUSTMENTS TO THE RIGHTS
3.1 FLIP-IN EVENT
(a) Subject to Section 3.1(b) and Subsections 5.1(d) and 5.1(e), and
except as provided below, if prior to the Expiration Time a
Flip-in Event shall occur, each Right shall constitute,
effective at the Close of Business on the 10th day after the
Stock Acquisition Date, the right to purchase from the
Corporation, upon exercise thereof in accordance with the terms
hereof, that number of Common Shares having an aggregate Market
Price on the date of consummation or occurrence of such Flip-in
Event equal to twice the Exercise Price for an amount in cash
equal to the Exercise Price (such Right to be appropriately
adjusted in a manner analogous to the applicable adjustment
provided for in Section 2.3 in the event that, after such date
of consummation or occurrence, or event, an event of a type
analogous to any of the events described in Section 2.3 shall
have occurred with respect to such Common Shares).
(b) Notwithstanding anything to the contrary in this Agreement, upon
the occurrence of any Flip-in Event, any Rights that are or were
Beneficially Owned on or after the earlier of the Separation
Time or the Stock Acquisition Date by:
(i) (A) an Acquiring Person;
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(B) any Affiliate or Associate of an Acquiring
Person;
(C) any Person acting jointly or in concert with an
Acquiring Person or any of its Affiliates;
(D) any other Person whose securities are deemed to
be Beneficially Owned by an Acquiring Person
(each such Person being herein referred to as the
"INELIGIBLE SHAREHOLDER"); or
(ii) a transferee, direct or indirect, of an Ineligible
Shareholder who becomes a transferee in a transfer,
whether or not for consideration, that the Board of
Directors has determined is part of a plan, arrangement
or scheme of an Ineligible Shareholder that has the
purpose or effect of avoiding Clause 3.1(b)(i),
shall become null and void without any further action, and any
holder of such Rights (including a transferee of, or other
successor to, such Rights, whether directly or indirectly) shall
thereafter have no right to exercise such Rights under any
provision of this Agreement and shall not have thereafter any
right whatsoever with respect to such Rights, whether under any
provision of this Agreement or otherwise. The holder of any
Rights represented by a Rights Certificate which is submitted to
the Rights Agent upon exercise or for registration of transfer
or exchange which does not contain the necessary certifications
set forth in the Rights Certificate establishing that such
Rights are not void under this Subsection 3.1(b), shall be
deemed to be an Acquiring Person or other Ineligible Shareholder
for the purposes of this Subsection 3.1(b) and such Rights shall
become null and void.
(c) Any Rights Certificates that represent Rights Beneficially Owned
by a Person described in either Clause (i) or (ii) of Subsection
3.1(b) or transferred to any nominee of any such Person, and any
Rights Certificate issued upon transfer, exchange, replacement
or adjustment of any other Rights Certificate referred to in
this sentence, shall contain the following legend:
"The Rights represented by this Rights Certificate were
issued to a Person who was an Acquiring Person or an
Affiliate or an Associate of an Acquiring Person or
other Ineligible Shareholder (as such terms are defined
in the Rights Agreement), including a Person, or an
Affiliate or Associate of a Person, who was acting
jointly or in concert with any of them or any other
Person whose securities are deemed to be Beneficially
Owned by such Acquiring Person. This Rights Certificate
and the Rights represented hereby shall become
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void in the circumstances specified in Subsection 3.1(b)
of the Rights Agreement."
Provided, however, that the Rights Agent shall not be under any
responsibility to ascertain the existence of facts that would
require the imposition of such legend but shall impose such
legend only if instructed to do so by the Corporation in writing
of 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.
(d) From and after the Separation Time, the Corporation shall do all
such acts and things as shall be necessary and within its power
to ensure compliance with the provisions of this Section 3.1
including, without limitation, all such acts and things as may
be required to satisfy the requirements of the Corporations Act
and the Securities Act and any other applicable laws in respect
of the issue of Common Shares upon the exercise of Rights in
accordance with this Agreement.
3.2 EXCHANGE OPTION
(a) In the event that the Board of Directors determines 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
the holders of Common Shares or Rights, at any time after a
Flip-in Event has occurred, authorize the Corporation to issue
or deliver in respect of each Right which is not void pursuant
to Subsection 3.1(b), either:
(i) in return for the Exercise Price and the Right, cash,
debt or equity securities or other assets (or a
combination thereof) having a cash value equal to twice
the Exercise Price; or
(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 or equity securities or
other assets (or a combination thereof) having a cash
value equal to the Exercise Price,
in full and final settlement of all rights attaching to the
Rights, where in either case the value of such debt or equity
securities or other assets shall be determined by the Board of
Directors who may rely upon the advice of a nationally
recognized investment dealer or investment banker selected by
the Board of Directors. To the extent that the Board of
Directors determines that some action need be taken pursuant to
this Section 3.2, the Board of Directors may suspend the
exercisability of the Rights for a period of up to 90 days
following the date of the occurrence of the relevant Flip-in
Event in order to decide the appropriate form of distribution to
be
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made and to determine the value thereof. 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.
(b) If the Board of Directors authorizes the exchange of debt or
equity securities or other assets (or a combination thereof) for
Rights pursuant to Subsection 3.2(a), 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 debt or equity securities or other
assets (or a combination thereof) in accordance with the
exchange formula authorized by the Board of Directors. Within 10
Business Days after the Board of Directors has authorized the
exchange of debt or equity securities or other assets (or a
combination thereof) for Rights pursuant to Subsection 3.2(a),
the Corporation shall give notice of such exchange to the
holders of such Rights. Each such notice of exchange will state
the method by which the exchange of debt or equity securities or
other assets (or a combination thereof) for Rights will be
effected.
(c) 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, 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
security.
3.3 FIDUCIARY DUTIES OF THE BOARD OF DIRECTORS OF THE CORPORATION
For clarification it is understood that nothing contained in this
Article 3 shall be considered to affect the obligations of the members of the
Board of Directors to exercise their fiduciary duties. Without limiting the
generality of the foregoing, nothing contained herein shall be construed to
suggest or imply that the Board of Directors shall not be entitled to recommend
that holders of the Voting Shares of the Corporation reject or accept any
Take-over Bid or take any other action (including, without limitation, the
commencement, prosecution, defence or settlement of any litigation and the
submission of additional or alternative Take-over Bids or other proposals to the
Special Meeting) with respect to any Take-over Bid that the Board of Directors
believes is necessary or appropriate in the exercise of the fiduciary duties of
its members.
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ARTICLE 4 -- THE RIGHTS AGENT
4.1 GENERAL
(a) The Corporation hereby appoints the Rights Agent to act as agent
for the Corporation and the holders of Rights in accordance with
the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Corporation may from time to time
appoint such Co-Rights Agents as it may deem necessary or
desirable subject to the prior approval of the Rights Agent. In
the event the Corporation appoints one or more Co-Rights Agents,
the respective duties of the Rights Agents and Co-Rights Agents
shall be as the Corporation may determine with the approval of
the Rights Agent. The Corporation agrees to pay to the Rights
Agent reasonable compensation for all services rendered by it
hereunder (as per the attached Fee Schedule) and, from time to
time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise
and performance of its duties hereunder (including the fees and
disbursements of any expert or advisor retained by the Rights
Agent with the approval of the Corporation). The Corporation
also agrees to indemnify the Rights Agent, its officers,
directors and employees for, and to hold them harmless against,
any loss, liability, or expense, incurred without negligence,
bad faith or wilful misconduct on the part of the Rights Agent,
for anything done or omitted by the Rights Agent in connection
with the acceptance and administration of this Agreement,
including the costs and expenses of defending against any claim
of liability, which right to indemnification will survive the
termination of this Agreement or the resignation or removal of
the Rights Agent. The Corporation shall inform the Rights Agent
in a reasonably timely manner of events which may materially
affect the administration of this Agreement by the Rights Agent
and at any time, upon request, shall provide to the Rights Agent
an incumbency certificate with respect to the then current
directors of the Corporation.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it
in connection with its administration of this Agreement in
reliance upon any certificate for Common Shares, Rights
Certificate, certificate for other securities of the
Corporation, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, 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.
4.2 MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or amalgamated or with which it may
be consolidated, or any corporation
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resulting from any merger, amalgamation or consolidation to
which the Rights Agent or any successor Rights Agent is a party,
or any corporation succeeding to the shareholder or stockholder
services business of the Rights Agent or any successor Rights
Agent, will be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided
that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 4.4
hereof. In case at the time such successor Rights Agent succeeds
to the agency created by this Agreement any of the Rights
Certificates have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights
Certificates have not been countersigned, any successor Rights
Agent may countersign such Rights Certificates either in the
name of the predecessor Rights Agent or in the name of the
successor Rights Agent; and in all such cases such Rights
Certificates will have the full force provided in the Rights
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent is changed and
at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights
Certificates so countersigned; and in case at that time any of
the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in
its prior name or in its changed name; and in all such cases
such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.
4.3 DUTIES OF RIGHTS AGENT
The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the
Corporation and the holders of Rights Certificates, by their acceptance thereof,
shall be bound:
(a) The Rights Agent may retain and consult with legal counsel (who
may be legal counsel for the Corporation), and the opinion of
such counsel will be full and complete authorization and
protection to the Rights Agent as to any action taken or omitted
by it in good faith and in accordance with such opinion; the
Rights Agent may also, with the approval of the Corporation
(where such approval may reasonably be obtained and such
approval not to be unreasonably withheld), consult with such
other experts as the Rights Agent shall consider necessary or
appropriate to properly carry out the duties and obligations
imposed under this Agreement and the Rights Agent shall be
entitled to rely in good faith on the advice of any such expert;
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(b) Whenever in the performance of its duties under this Agreement
the Rights Agent deems it necessary or desirable that any fact
or matter be proved or established by the Corporation prior to
taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and
established by a certificate signed by a person reasonably
believed by the Rights Agent to be a senior officer of the
Corporation and delivered to the Rights Agent; and such
certificate will be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate;
(c) The Rights Agent will be liable hereunder only for its own
negligence, bad faith or wilful misconduct;
(d) The Rights Agent will not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement
or in the certificates for Common Shares or the Rights
Certificates (except its countersignature thereof) or be
required to verify the same, but all such statements and
recitals are and will be deemed to have been made by the
Corporation only;
(e) The Rights Agent will not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery
hereof (except the due authorization, execution and delivery
hereof by the Rights Agent) or in respect of the validity or
execution of any Common Share certificate or Rights Certificate
(except its countersignature thereof); nor will it be
responsible for any breach by the Corporation of any covenant or
condition contained in this Agreement or in any Rights
Certificate; nor will it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void
pursuant to Subsection 3.1(b)) or any adjustment required under
the provisions of Section 2.3 or responsible for the manner,
method or amount of any such adjustment or the ascertaining of
the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights after receipt of
the certificate contemplated by Subsection 2.3(p) hereof
describing any such adjustment); nor will it by any act
hereunder be deemed to make any representation or warranty as to
the authorization of any Common Shares to be issued pursuant to
this Agreement or any Rights or as to whether any Common Shares
will, when issued, be duly and validly authorized, executed,
issued and delivered and fully paid and non-assessable;
(f) The Corporation agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement;
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(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties
hereunder from any Person designated in writing by the
Corporation, and to apply to such persons for advice or
instructions in connection with its duties and it shall not be
liable for any action taken or suffered by it in good faith in
accordance with instructions of any such person;
(h) The Rights Agent and any shareholder or stockholder, director,
officer or employee of the Rights Agent may buy, sell or deal in
Common Shares, Rights or other securities of the Corporation or
become pecuniarily interested in any transaction in which the
Corporation may be interested, or contract with or lend money to
the Corporation or otherwise act as fully and freely as though
it were not Rights Agent under this Agreement. Nothing herein
shall preclude the Rights Agent from acting in any other
capacity for the Corporation or for any other legal entity; and
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys or agents, and the Rights
Agent will not be answerable or accountable for any act,
default, neglect or misconduct of any such attorneys or agents
or for any loss to the Corporation resulting from any such act,
default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
4.4 CHANGE OF RIGHTS AGENT
The Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice (or such lesser notice as is acceptable to the
Corporation) in writing mailed to the Corporation and to the transfer agent of
Common Shares by registered or certified mail, and to the holders of the Rights
in accordance with Section 5.8. The Corporation may remove the Rights Agent upon
30 days' notice in writing, mailed to the Rights Agent and to the transfer agent
of the Common Shares by registered or certified mail, and to the holders of the
Rights in accordance with Section 5.8. If the Rights Agent should resign or be
removed or otherwise become incapable of acting, the Corporation will appoint a
successor to the Rights Agent. If the Corporation fails to make such appointment
within a period of 30 days after such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of any Rights (which holder shall, with such
notice, submit such holder's Rights Certificate for inspection by the
Corporation), then the resigning Rights Agent or the holder of any Rights may
apply to any court of competent jurisdiction for the appointment of a new Rights
Agent at the Corporation's expense. Any successor Rights Agent, whether
appointed by the Corporation or by such a court, shall be a corporation
incorporated under the laws of Canada or a province thereof. After appointment,
the successor Rights Agent will be vested with the same powers, rights, duties
and responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent upon receipt of all outstanding fees and expenses
owing by the Corporation to the predecessor Rights Agent under this Agreement,
any property at the time held by it hereunder, and execute and deliver any
further
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assurance, conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment, the Corporation will file notice thereof
in writing with the predecessor Rights Agent and each transfer agent of the
Common Shares, and mail a notice thereof in writing to the holders of the
Rights. Failure to give any notice provided for in this Section 4.4, however, or
any defect therein, shall not affect the legality or validity of the resignation
or removal of the Rights Agent or the appointment of the successor Rights Agent,
as the case may be.
ARTICLE 5 -- MISCELLANEOUS
5.1 REDEMPTION AND WAIVER
(a) The Board of Directors may, at its option, at any time prior to
the occurrence of a Flip-in Event, elect to redeem all but not
less than all of the then outstanding Rights at a redemption
price of $0.0001 per Right appropriately adjusted in a manner
analogous to the applicable adjustment provided for in Section
2.3 in the event that 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.
(b) If an Offeror successfully completes a Permitted Bid by having
taken up and paid for not less than 50 per cent of the Voting
Shares held by Independent Shareholders pursuant to Permitted
Bid Acquisitions, the Board of Directors shall, without further
formality, be deemed to have elected to redeem the Rights at the
Redemption Price on the Expiry Date of the Permitted Bid.
(c) If the Board of Directors elects to or is deemed to have elected
to redeem the Rights, the right to exercise the Rights will
thereupon without further action and without notice terminate
and the only right thereafter of the holder of a Right shall be
to receive the Redemption Price. Within 10 days of the Board of
Directors electing or being deemed to have elected to redeem the
Rights, the Corporation shall give notice of such redemption to
the holders of the then outstanding Rights. Each such notice of
redemption shall state the method by which the payment of the
Redemption Price shall be made.
(d) The Board of Directors may until the occurrence of a Flip-in
Event determine, upon prior written notice delivered to the
Rights Agent, to waive the application of Section 3.1 to any
particular Flip-in Event (which for greater certainty shall not
include the circumstances described in Subsection 5.1(e));
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(d), subject to as provided below the Board of
Directors shall be
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deemed to have waived the application of Section 3.1 to any
other Flip-in Event occurring by reason of any Take-over Bid
which is made by means of a take-over bid circular (i) prior to
the granting of such waiver, (ii) thereafter and prior to the
expiry of any Take-over Bid (as the same may be extended from
time to time) outstanding at the time of the granting of such
waiver or (iii) thereafter and prior to the expiry of any
Take-over Bid in respect of which a waiver is, or is deemed to
have been, granted under this Subsection 5.1(d); provided
further that if the first waiver pursuant to this Subsection
5.1(d) is in respect of any bid which would have been a
Permitted Bid but for the absence of one or more of the elements
of a Permitted Bid set out in subclauses 1.1(bb) (i), (ii),
(iii) or (iv) (the "Waived Conditions"), any such second or
further waiver which is deemed to occur by reason of Subsection
5.1(d) shall only be deemed to occur if each such second or
further Take-over Bid would also be a Permitted Bid but for the
Waived Conditions.
(e) The Board of Directors may prior to the Close of Business on the
tenth day following the Stock Acquisition Date determine, upon
prior written notice delivered to the Rights Agent, to waive or
to agree to waive the application of Section 3.1 to the Flip-in
Event giving rise to the Stock Acquisition Date, provided that
the Acquiring Person has (i) reduced its Beneficial Ownership of
Voting Shares or (ii) has entered into a contractual arrangement
with the Corporation, acceptable to the Board of Directors, to
do so within 30 days of the date on which such contractual
arrangement is entered into (the expiry of which period is
herein referred to as the "DISPOSITION DATE"), such that at the
time the waiver becomes effective pursuant to this Subsection
5.1(e) such Person is no longer an Acquiring Person. In the
event of such a waiver becoming effective, for the purposes of
this Agreement, such Flip-in Event shall be deemed not to have
occurred. Without limiting the generality of the foregoing, if
the Person remains an Acquiring Person at the close of business
on the Disposition Date, the Disposition Date shall be deemed to
be the date of occurrence of a further Stock Acquisition Date
and Section 3.1 shall apply thereto.
(f) Where a Take-over Bid, or other events giving rise to a
Separation Time, is withdrawn or otherwise terminated after the
Separation Time has occurred and prior to the occurrence of a
Flip-in Event, or in any other circumstances 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.
Without restricting the rights of the Board of Directors to
elect to redeem the Rights pursuant to section 5.1(a) rather
than pursuant to section 5.1(f), upon the Rights being redeemed
pursuant to this section 5.1(f), all of 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 events giving rise to the
Separation Time shall be deemed not to have occurred.
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(g) The Corporation shall give prompt written notice to the Rights
Agent of any waiver of the application of Section 3.1 made by
the Board of Directors under this Section 5.1.
5.2 EXPIRATION
No Person shall have any rights pursuant to this Agreement or in respect
of any Right after the Expiration Time, except the Rights Agent as specified in
Subsection 4.1(a) hereof.
5.3 ISSUANCE OF NEW RIGHTS CERTIFICATES
Notwithstanding any of the provisions of this Agreement or of the Rights
to the contrary, the Corporation may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by the Board of
Directors to reflect any adjustment or change in the number or kind or class of
shares purchasable upon exercise of Rights made in accordance with the
provisions of this Agreement.
5.4 SUPPLEMENTS AND AMENDMENTS
(a) Without the approval of any holders of Voting Shares or Rights,
the Corporation may make amendments to this Agreement to correct
any clerical or typographical error or which are required to
maintain the validity of the Agreement as a result of any change
in any applicable legislation or regulations thereunder or which
are made to cure any ambiguity, defect or inconsistency, or
which are to make changes which do not adversely affect the
interests of holders of Rights (excluding the interests of any
Acquiring Person or other persons identified in section 3.1(b)
hereof), or which are to shorten or lengthen any time period
under the Rights Agreement; provided, however, that no amendment
to adjust the time period governing redemption shall be made.
The Corporation may, prior to the date of the shareholders'
meeting referred to in Section 5.4(f), supplement or amend this
Agreement without the approval of any holders of Rights or
Voting Shares in order to make any changes which the Board of
Directors acting in good faith may deem necessary or desirable.
Notwithstanding anything in this Section 5.4 to the contrary, no
supplement or amendment shall be made to the provisions of
Article 4 except with the written concurrence of the Rights
Agent to such change, supplement or amendment.
(b) Subject to subsection 5.4(a), the Corporation may, with the
prior consent of the holders of Voting Shares obtained as set
forth below, at any time before the Separation Time, amend, vary
or rescind any of the provisions of this Agreement and the
Rights (whether or not such action would materially adversely
affect the interests of the holders of Rights generally). Such
consent shall be deemed to have been given if the action
requiring such approval is approved by the affirmative vote of a
majority of the votes cast by Independent Shareholders
represented in person or by proxy at the Special Meeting.
(c) The Corporation may, with the prior consent of the holders of
Rights obtained as set forth below, at any time after the Stock
Acquisition Date amend, vary or rescind any of the provisions of
this Agreement and the Rights (whether or not such action would
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materially adversely affect the interests of the holders of
Rights generally), provided that no such amendment, variation or
deletion shall be made to the provisions of Article 4 except
with the written concurrence of the Rights Agent thereto. Such
consent shall be deemed to have been given if such amendment,
variation or deletion is authorized by the affirmative votes of
the holders of Rights present or represented at and entitled to
vote at a meeting of the holders and representing 50% plus one
of the votes cast in respect thereof.
(d) Any approval of the holders of Rights shall be deemed to have
been given if the action requiring such approval is authorized
by the affirmative votes of the holders of Rights present or
represented and entitled to vote at a meeting of the holders of
Rights and representing a majority of the votes cast in respect
thereof. For purposes hereof, each outstanding Right (other than
Rights which are void pursuant to the provisions hereof) shall
be entitled to one vote, and the procedures for the calling,
holding and conduct of the meeting shall be those, as nearly as
may be, which are provided in the Corporation's by-laws and the
Corporations Act with respect to meetings of shareholders of the
Corporation.
(e) Any amendments made by the Corporation to this Agreement
pursuant to Subsection 5.4(a) which are required to maintain the
validity of this Agreement as a result of any change in any
applicable legislation or regulation thereunder shall:
(i) if made before the Separation Time, be submitted to the
shareholders of the Corporation at the next meeting of
shareholders and the shareholders may, by the majority
referred to in subsection 5.4(b) confirm or reject such
amendment;
(ii) if made after the Separation Time, be submitted to the
holders of Rights at a meeting to be called for on a
date not later than immediately following the next
meeting of shareholders of the Corporation and the
holders of Rights may, by resolution passed by the
majority referred to in Subsection 5.4(d) confirm or
reject such amendment.
Any such amendment shall be effective from the date of
the resolution of the Board of Directors adopting such
amendment, until it is confirmed or rejected or until it
ceases to be effective (as described in the next
sentence) and, where such amendment is confirmed, it
continues in effect in the form so confirmed. If such
amendment is rejected by the shareholders or the holders
of Rights or is not submitted to the shareholders or
holders of Rights as required, then such amendment shall
cease to be effective from and after the termination of
the meeting at which it was rejected or to which it
should have been but was not submitted or from and after
the date of the meeting of holders of Rights that should
have been but was not held, and no subsequent resolution
of the
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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.
(f) The Board of Directors shall call and hold a Special Meeting of
holders of Voting Shares to consider and, if thought
appropriate, ratify the distribution and the continued existence
of the Rights. The Special Meeting shall be held on a date fixed
by the Board of Directors, which date shall be no later than May
26, 1999 (or such later date as The Toronto Stock Exchange may
approve. The Board of Directors shall fix a record date for
determining the holders of Voting Shares entitled to receive
notice of the Special Meeting in accordance with all applicable
laws and the articles and by-laws of the Corporation. Unless a
majority of the votes cast by the Independent Shareholders on
such resolution are voted in favour of the continued existence
of the Rights, then the Board of Directors shall immediately
upon the confirmation by the Chairman of such shareholders'
meeting of the result of the vote on such resolution, without
further formality, be deemed to have elected to redeem the
Rights at the Redemption Price.
(g) The Corporation shall be required to provide the Rights Agent
with notice in writing of any such amendment, recession or
variation to this Agreement as referred to in this Section 5.4
within five days of effecting such amendment, recession or
variation.
(h) Any supplement or amendment to this Agreement pursuant to
Section 5.4(b) through (g) shall be subject to the receipt of
any requisite approval or consent from any governmental or
regulatory authority having jurisdiction over the Corporation,
including without limitation an requisite approval of stock
exchanges on which the Shares are listed (which supplement or
amendment shall be effective upon receipt of such approval
(whether or not such approval is subject to one or more
conditions which must be satisfied)).
5.5 FRACTIONAL RIGHTS AND FRACTIONAL SHARES
(a) The Corporation shall not be required to issue fractions of
Rights or to distribute Rights Certificates which evidence
fractional Rights. After the Separation Time, there shall be
paid to the registered holders of the Rights Certificates with
regard to which fractional Rights would otherwise be issuable,
an amount in cash equal to the same fraction of the Market Price
of a whole Right in lieu of such fractional Rights. The Rights
Agent shall have no obligation to make any payments in lieu of
fractional Rights unless the Corporation shall have provided the
Rights Agent with the necessary funds to pay in full all amounts
payable in accordance with Section 2.2 (e).
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(b) The Corporation shall not be required to issue fractional Common
Shares upon exercise of the Rights or to distribute certificates
which evidence fractional Common Shares. In lieu of issuing
fractional Common Shares, the Corporation shall pay to the
registered holder of Rights Certificates at the time such Rights
are exercised as herein provided, an amount in cash equal to the
same fraction of the Market Price of one Common Share. The
Rights Agent shall have no obligation to make any payments in
lieu of fractional Common Shares unless the Corporation shall
have provided the Rights Agent with the necessary funds to pay
in full all amounts payable in accordance with Section 2.2 (e).
5.6 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 such holder's Rights to which
such Person is entitled, in the manner provided in such holders Rights
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of, the obligations of any Person subject to this Agreement.
5.7 HOLDER OF RIGHTS DEEMED NOT A SHAREHOLDER
No holder, as such, of any Rights shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of Common Shares or any other
securities which may at any time be issuable on the exercise of such Rights, nor
shall anything contained herein or in any Rights Certificate be construed to
confer upon the holder of any Rights as such, any of the rights of a shareholder
of the Corporation or any right to vote for the election of directors or upon
any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders, or to receive dividends or subscription
rights or otherwise.
5.8 NOTICES
Notices or demands authorized or required by this Agreement to be given
or made by the Rights Agent or by the holder of any Rights to or on the
Corporation shall be sufficiently given or made if delivered personally or if
delivered or sent by registered or certified mail, postage prepaid, or by
facsimile transmission addressed (until another address is filed in writing with
the Rights Agent) as follows:
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SALIX PHARMACEUTICALS, LTD.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
U.S.A.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President and Chief Executive Officer
Any such notice or demand shall be deemed to have been received, if delivered
personally, on the date of delivery (if such date is a Business Day, failing
which it shall be deemed delivered on the next Business Day), if sent by
facsimile, on the next Business Day following transmission or if sent by
registered or certified mail, on the fifth Business Day after the mailing
thereof, except in the case of interruption of regular mail service, in which
case such notice shall be sent by facsimile or personally delivered.
Any notice or demand authorized or required by this Agreement to be
given or made by the Corporation or by the holder of any Rights to or on the
Rights Agent shall be sufficiently given or made if delivered personally or if
delivered or sent by registered or certified mail, postage prepaid, or by
facsimile transmission addressed as follows:
MONTREAL TRUST COMPANY OF CANADA
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: Senior Manager, Client Services
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any such notice or demand shall be deemed to have been received, if delivered
personally, on the date of delivery (if such date is a Business Day, failing
which it shall be deemed delivered on the next Business Day), if sent by
facsimile, on the next Business Day following transmission or if sent by
registered or certified mail, on the fifth Business Day after the mailing
thereof, except in the case of interruption of regular mail service, in which
case such notice shall be sent by facsimile or personally delivered.
Notices or demands authorized or required by this Agreement to be given
or made by the Corporation or the Rights Agent to or on the holder of any Rights
shall be sufficiently given or made if delivered or sent by first-class mail,
postage prepaid, addressed to such holder at the address of such holder as it
appears on the Rights Register or, prior to the Separation Time, on the
registers of the Corporation for the Common Shares. Any notice which is mailed
in the manner herein provided shall be deemed given on the fifth Business Day
after the date of mailing thereof, whether or not the
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holder receives the notice. In the event of any interruption of mail service,
such notice required or permitted to be given hereunder will be deemed to be
sufficiently given by advertisement of such notice in a newspaper of general
circulation in the City of Toronto.
5.9 COSTS OF ENFORCEMENT
The Corporation agrees that if the Corporation or any other Person the
securities of which are purchasable upon exercise of Rights fails to fulfil any
of its obligations pursuant to this Agreement, then the Corporation or such
Person will reimburse the holder of any Rights for the costs and expenses
(including legal fees) incurred by such holder in actions to enforce his rights
pursuant to any Rights or this Agreement.
5.10 REGULATORY APPROVALS
Any obligation of the Corporation or action or event contemplated by
this Agreement, or any amendment to this Agreement, shall be subject to the
receipt of any requisite approval or consent from any governmental or regulatory
authority.
5.11 DECLARATION AS TO NON-CANADIAN AND NON-U.S. HOLDERS
If in the opinion of the Board of Directors (who may rely upon the
advice of counsel) any action or event contemplated by this Agreement would
require compliance with the securities laws or comparable legislation of a
jurisdiction outside Canada and the United States of America, the Board of
Directors acting in good faith may take such actions as it may deem appropriate
to ensure that such compliance is not required, including without limitation
establishing procedures for the issuance to a Canadian resident fiduciary of
Rights, or securities issuable on exercise of Rights, the holding thereof in
trust for the Persons entitled thereto (but reserving to the fiduciary or to the
fiduciary and the Corporation, as the Corporation may determine, absolute
discretion with respect thereto) and the sale thereof and remittance of the
proceeds of such sale, if any, to the Persons entitled thereto. In no event
shall the Corporation or the Rights Agent be required to issue or deliver Rights
or securities issuable on exercise of Rights to Persons who are citizens,
residents or nationals of any jurisdiction other than Canada and any province or
territory thereof and the United States of America in which such issue or
delivery would be unlawful without registration of the relevant Persons or
securities for such purposes.
5.12 SUCCESSORS
All the covenants and provisions of this Agreement by or for the benefit
of the Corporation or the Rights Agent shall bind and inure to the benefit of
their respective successors and assigns hereunder.
5.13 BENEFITS OF THIS AGREEMENT
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Nothing in this Agreement shall be construed to give to any Person other
than the Corporation, the Rights Agent and the holders of the Rights any legal
or equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Corporation, the Rights Agent
and the holders of the Rights.
5.14 GOVERNING LAW
This Agreement and each Right issued hereunder shall be deemed to be a
contract made under the laws of the Province of Ontario and for all purposes
shall be governed by and construed in accordance with the laws of such
jurisdiction applicable to contracts to be made and performed entirely within
such province.
5.15 LANGUAGE
Les parties aux presentes ont exige que la presente convention ainsi que
tous les documents et avis qui s'y rattachent et/ou qui en decoulent soient
rediges en langue anglaise. The parties hereto have required that this Agreement
and all documents and notices related thereto and/or resulting therefrom be
drawn up in English.
5.16 COUNTERPARTS
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
5.17 SEVERABILITY
If any Section, Subsection, paragraph, subparagraph, term or provision
hereof or the application thereof to any circumstance shall, in any jurisdiction
and to any extent, be invalid or unenforceable, such Section, Subsection,
paragraph, subparagraph, term or provision shall be ineffective as to such
jurisdiction to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable the remaining Sections, Subsections,
paragraphs, subparagraphs, terms and provisions hereof or the application of
such Section, Subsection, paragraph, subparagraph, term or provision to
circumstances other than those as to which it is held invalid or unenforceable.
5.18 EFFECTIVE DATE
This Agreement is effective from the date hereof.
5.19 TIME OF THE ESSENCE
Time shall be of the essence hereof.
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5.20 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 in accordance with the terms hereof and to
exercise all rights and powers specifically granted hereunder 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 (i) interpret the provisions of this Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not to redeem the Rights or to
amend the Agreement, in accordance with the terms hereof). All such actions,
calculations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
of Directors in good faith, shall (x) be final, conclusive and binding on the
Corporation, the Rights Agent, the holders of the Rights, and all other parties
and (y) not subject the Board of Directors to any liability to the holders of
the Rights, or any other parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
SALIX PHARMACEUTICALS, LTD.
Per: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------
▇▇▇▇▇ ▇▇▇▇▇
Chief Financial Officer
Authorized Signing Officer
MONTREAL TRUST COMPANY OF CANADA
Per: /s/ ▇▇▇ ▇▇▇▇▇
-------------------------------
Per: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
49
EXHIBIT A
[FORM OF RIGHTS CERTIFICATE]
Certificate No._____________________ ___________ Rights
UNTIL THE SEPARATION TIME (AS DEFINED IN THE RIGHTS AGREEMENT REFERRED TO
BELOW), THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO
CERTAIN RIGHTS AS SET FORTH IN A SHAREHOLDER PROTECTION RIGHTS AGREEMENT
MADE AS OF NOVEMBER 4, 1998 (THE "RIGHTS AGREEMENT"), BETWEEN SALIX
PHARMACEUTICALS, LTD. (THE "CORPORATION") AND MONTREAL TRUST COMPANY OF
CANADA , AS RIGHTS AGENT, THE TERMS OF WHICH ARE INCORPORATED HEREIN BY
THIS REFERENCE AND A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF
THE CORPORATION. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS
AGREEMENT, SUCH RIGHTS MAY BE AMENDED OR REDEEMED, MAY EXPIRE, MAY BECOME
VOID (IF, IN CERTAIN CASES, THEY ARE "BENEFICIALLY OWNED" BY AN "ACQUIRING
PERSON" OR AN "INELIGIBLE SHAREHOLDER", AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT, OR A TRANSFEREE THEREOF), OR MAY BE EVIDENCED BY
SEPARATE CERTIFICATES AND MAY NO LONGER BE EVIDENCED BY THIS CERTIFICATE.
THE CORPORATION WILL MAIL, OR ARRANGE FOR THE MAILING OF, A COPY OF THE
RIGHTS AGREEMENT TO THE HOLDER OF THIS CERTIFICATE WITHOUT CHARGE PROMPTLY
AFTER THE RECEIPT OF A WRITTEN REQUEST THEREFOR.
RIGHTS CERTIFICATE
This certifies that _________________ is the registered holder of the number of
Rights set forth above, each of which entitles the registered holder thereof,
subject to the terms, provisions and conditions of the Shareholder Protection
Rights Agreement made as of November 4, 1998 (the "Rights Agreement") as amended
between SALIX PHARMACEUTICALS, LTD., a corporation incorporated under the laws
of British Virgin Islands (the "Corporation") and Montreal Trust Company of
Canada, a trust company incorporated under the laws of Canada, as Rights Agent
(the "Rights Agent", which term shall include any successor Rights Agent under
the Rights Agreement), to purchase from the Corporation, at any time after the
Separation Time and prior to the Expiration Time (as such terms are defined in
the Rights Agreement), one fully paid common share of the Corporation (a "Common
Share") at the Exercise Price referred to below, upon presentation and surrender
of this Rights Certificate, together with the Form of Election to Exercise
appropriately completed and duly executed, to the Rights Agent at its principal
office in the City of Toronto (or such other locations as the Corporation and
the Rights Agent may from time to time determine). Until adjustment thereof in
certain events as provided in the Rights Agreement, the
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Exercise Price shall be $60 per Right (payable by bank draft, certified cheque
or money order payable to the order of the Corporation).
In certain circumstances described in the Rights Agreement, each Right
evidenced hereby may entitle the registered holder thereof to purchase or
receive assets, debt securities or shares in the capital of the Corporation
other than Common Shares, or more or less than one Common Share (or a
combination thereof), all as provided in the Rights Agreement.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Rights Agent, the Corporation and the holders of the Rights Certificates. Copies
of the Rights Agreement are on file at the principal office of the Corporation
and are available upon written request.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the principal office of the Rights Agent in the City of Toronto (or
such other locations as the Corporation and the Rights Agent may from time to
time determine), may be exchanged for another Rights Certificate or Rights
Certificates of like tenor evidencing an aggregate number of Rights equal to the
aggregate number of Rights evidenced by the Rights Certificate or Rights
Certificates surrendered. If this Rights Certificate shall be exercised in part,
the registered holder shall be entitled to receive, upon surrender hereof,
another Rights Certificate or Rights Certificates for the number of whole Rights
not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate (i) may be redeemed by the Corporation at a redemption price
of $0.0001 per Right, subject to adjustment in certain events, or (ii) may be
exchanged, at the option of the Corporation, for cash, debt or equity securities
or other assets (or a combination thereof).
No fractional Common Shares will be issued upon the exercise of any
Right or Rights evidenced hereby, but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of Common Shares or
any other securities which may at any time be issuable upon the exercise hereof,
nor shall anything contained in the Rights Agreement or herein be construed to
confer upon the holder hereof, as such, any of the rights of a shareholder of
the Corporation or any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of any meeting or other
actions affecting shareholders (except as provided in the Rights Agreement), or
to receive dividends or subscription rights or otherwise, until the Rights
evidenced by this Rights Certificate shall have been exercised as provided in
the Rights Agreement.
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This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the signature of the proper officers of the Corporation.
Date:
-------------------------------
SALIX PHARMACEUTICALS, LTD.
Per:
-------------------------------
Chief Executive Officer
Per:
-------------------------------
Chief Financial Officer
Countersigned:
MONTREAL TRUST COMPANY OF CANADA
Per:
-------------------------------
Authorized Signature
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[Continued on Reverse Side]
FORM OF ELECTION TO EXERCISE
TO: SALIX PHARMACEUTICALS, LTD.
The undersigned hereby irrevocably elects to exercise _____________whole Rights
represented by this 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 and delivered to:
--------------------------------------
Name
--------------------------------------
Address
--------------------------------------
City and Province/State/Country
--------------------------------------
Social Insurance No. or other taxpayer
identification number
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
--------------------------------------
Name
--------------------------------------
Address
--------------------------------------
City and Province/State/Country
--------------------------------------
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Social Insurance Number or other
taxpayer identification number
Date:
----------------------------------
----------------------------------------
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)
--------------------------------------
Signature Guaranteed
(THE FOLLOWING IS TO BE COMPLETED ONLY IF TRUE)
The undersigned hereby represents, for the benefit of the Corporation
and 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 (i) an Acquiring Person, (ii) any Affiliate or
Associate of an Acquiring Person, (iii) any other Person acting jointly or in
concert with an Acquiring Person or any Affiliate of an Acquiring Person, or
(iv) any other Person whose securities are deemed to be Beneficially Owned by an
Acquiring Person. Capitalized terms shall have the meanings ascribed thereto in
the Rights Agreement.
Date:
----------------------------------
----------------------------------------
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)
--------------------------------------
Signature Guaranteed
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NOTE: Signature must be guaranteed by a major Canadian trust company, Canadian
chartered bank, or a member of the Securities Transfer Agents Medallion Program
(STAMP).
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55
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
--------------------------------------------------------------------------------
(Please print name and address of transferee)
_________ {insert number} of the Rights represented by this Rights Certificate,
together with all right, title and interest therein.
Date:
----------------------------------
----------------------------------------
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)
--------------------------------------
Signature Guaranteed
(THE FOLLOWING IS TO BE COMPLETED ONLY IF TRUE)
The undersigned hereby represents, for the benefit of the Corporation
and 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 (i) an Acquiring Person, (ii) any Affiliate or
Associate of an Acquiring Person, (iii) any other Person acting jointly or in
concert with an Acquiring Person or any Affiliate of an Acquiring Person, or
(iv) any other Person whose securities are deemed to be Beneficially Owned by an
Acquiring Person. Capitalized terms shall have the meanings ascribed thereto in
the Rights Agreement.
Date:
----------------------------------
----------------------------------------
Signature
(Signature must correspond to name as
written upon the face of this Rights
Certificate in every particular,
without
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alteration or enlargement or any
change whatsoever)
--------------------------------------
Signature Guaranteed
NOTE: Signature must be guaranteed by a major Canadian trust company, Canadian
chartered bank, or a member of the Securities Transfer Agents Medallion Program
(STAMP).
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NOTICE
In the event that the certifications set forth above in the Forms of
Election to Exercise and Assignment are not completed, the Corporation
shall deem the Beneficial Owner of the Rights represented by this Rights
Certificate to be an Acquiring Person or other Ineligible Shareholder and,
accordingly, such Rights shall be null and void. Capitalized terms shall
have the meanings ascribed thereto in the Rights Agreement.
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