SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) FEBRUARY 25, 1998
ROYAL OAK MINES INC.
(Exact name of registrant as specified in its charter)
ONTARIO, CANADA 1-4350 98-0160821
(State or Other (Commission File Number) (IRS Employer
Jurisdiction Identification
of Incorporation) No.)
C/O ROYAL OAK MINES (USA) INC., 5501 LAKEVIEW DRIVE, 98033
KIRKLAND, WA
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (425) 822-8992
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ITEM 5. OTHER EVENTS
On February 10, 1998, the Board of Directors of Royal Oak Mines Inc., an
Ontario, Canada corporation (the "Corporation") authorized, subject to obtaining
certain regulatory approvals, the issuance of one common share purchase right (a
"Right") for each outstanding common share, without nominal or par value (the
"Common Shares"), of the Corporation. The Rights will be issued to the current
shareholders of record as at 5:00 p.m. (Toronto time) on February 25, 1998 (the
"Record Time") of the Corporation. In addition, one Right will be issued with
each Common Share issued after the Record Time and prior to the earlier of the
Separation Time (as discussed below) and the redemption or expiration of the
Rights. Each Right entitles the registered holder to purchase from the
Corporation one Common Share at a price of Cdn$20 per share (the "Exercise
Price"), subject to adjustment. The description and terms of the Rights are set
forth in a Shareholder Rights Plan Agreement (the "Rights Plan Agreement")
between the Corporation and Montreal Trust Company of Canada (the "Rights
Agent").
TRADING OF RIGHTS
Rights issued prior to the Separation Time will be evidenced, with respect
to any Common Share certificate outstanding as of the Record Time, by such share
certificate. The Rights Plan Agreement provides that, until the Separation Time,
the Rights will be transferable only together with, and will be transferred by,
a transfer of the associated Common Shares. Until the Separation Time or earlier
redemption or expiration of the Rights, new share certificates issued after the
Record Time upon the transfer of existing Common Shares or the issuance of
additional Common Shares will contain a legend incorporating the Rights Plan
Agreement by reference.
SEPARATION TIME
The Rights will separate and trade separately from the Common Shares after
the Separation Time. Following the Separation Time, separate certificates
evidencing the Rights ("Rights Certificates") will be mailed to holders of
record of Common Shares as of the close of business on the Separation Time, and
each separate Rights Certificate alone will evidence the Rights.
The "Separation Time" is the close of business on the eighth (8th) trading
day following the earlier of: (i) the date of the first public announcement made
by the Corporation or an Acquiring Person (as defined below) that a person has
become an Acquiring Person (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 or Competing Permitted Bid (each as
defined below)), or such later date as determined by the Board of Directors. A
"Take-over Bid" means an offer to acquire voting shares of the Corporation or
securities convertible into or exchangeable for or carrying a right to purchase
voting shares of the Corporation where the securities subject to the offer and
the securities owned by the offeror would constitute in the aggregate twenty
percent (20%) or more of the outstanding voting shares of the Corporation at the
date of such offer.
If any Take-over Bid triggering the Separation Time expires or is
cancelled, terminated or otherwise withdrawn prior to the Separation Time or if
the Board of Directors determines to waive application of the Rights Plan to any
such Take-over Bid, then such bid shall be deemed, for the purposes of
determining the Separation Time, never to have been made.
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EXERCISE PRICE OF RIGHTS
The Rights are not exercisable until the Separation Date. After the
Separation Time and prior to the occurrence of a Flip-in Event, each Right
entitles the registered holder to purchase from the Corporation one Common Share
at an Exercise Price of $20.00 per Common Share, subject to certain
anti-dilution adjustments as set out in the Rights Plan Agreement, and subject
to adjustment upon occurrence of a "Flip-in Event." Until a Right is exercised,
the holder thereof, as such, will have no rights as a stockholder of the
Corporation, including, without limitation, the right to vote or to receive
dividends.
The Exercise Price payable, and the number of Common Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Common
Shares, (ii) upon the grant to holders of the Common Shares of certain rights or
warrants to subscribe for or purchase Common Shares at a price, or securities
convertible into Common Shares with a conversion price, less than ninety percent
(90%) of the then-current market price of the Common Shares or (iii) upon the
distribution to holders of the Common Shares of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Common Shares) or of subscription
rights or warrants (other than those referred to above). The number of
outstanding Rights and the number of Common Shares issuable upon exercise of
each Right are also subject to adjustment in the event of a stock split of the
Common Shares or a stock dividend on the Common Shares payable in Common Shares
or subdivisions, consolidations or combinations of the Common Shares occurring,
in any such case, prior to the Separation Date. With certain exceptions, no
adjustment in the Exercise Price will be required until cumulative adjustments
require an adjustment of at least 1% in such Exercise Price.
No fractional Common Shares will be issued and in lieu thereof, an
adjustment in cash will be made based on the market price of the Common Shares
on the last trading day prior to the date of exercise.
FLIP-IN EVENT
A "Flip-in Event" is triggered in the event that a transaction occurs
pursuant to which a person becomes an Acquiring Person. Upon the occurrence of a
Flip-in Event, each Right (except for Rights Beneficially Owned by the Acquiring
Person and certain other persons specified below) shall thereafter constitute
the right to purchase from the Corporation upon exercise thereof in accordance
with the terms of the Rights Plan Agreement that number of Common Shares of the
Corporation having an aggregate market price on the date of the consummation or
occurrence of such Flip-in Event equal to twice the Exercise Price for an amount
in cash equal to the Exercise Price.
The Rights Plan Agreement provides that Rights that are beneficially owned
by: (i) an Acquiring Person or any affiliate or associate of an Acquiring
Person, or any Person acting jointly or in concert with an Acquiring Person, or
any affiliate or associate of such Acquiring Person; or (ii) a transferee or
other successor in title of Rights of an Acquiring Person (or of an affiliate or
associate of an Acquiring Person or of any person acting jointly or in concert
with an Acquiring Person or any associate or affiliate of an Acquiring Person)
who becomes a transferee or successor in title concurrently with or subsequent
to the Acquiring Person becoming an Acquiring Person; shall become null and void
without any further action and any holder of such Rights (including transferees
or successors in title) shall not have any right whatsoever to exercise such
Rights under any provision of the Rights Plan Agreement.
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ACQUIRING PERSON
An Acquiring Person is a person who Beneficially Owns twenty percent (20%)
or more of the voting shares of the Corporation. An Acquiring Person does not,
however, include the Corporation or any subsidiary of the Corporation, or any
person who becomes the Beneficial Owner of twenty percent (20%) or more of the
outstanding voting shares of the Corporation as a result of Permitted Bids,
Competing Permitted Bids and certain other exempt transactions.
PERMITTED BIDS AND COMPETING PERMITTED BIDS
A "Permitted Bid" is a Take-over Bid made by take-over bid circular in
compliance with the following additional provisions:
(1) the bid must be made to all holders of record of
Common Shares;
(2) the bid must be open for a minimum of 60 days following the date of
the bid and no shares may be taken up prior to such time;
(3) take-up and payment for shares may not occur unless the bid is
accepted by persons holding more than fifty percent (50%) of the
outstanding Common Shares exclusive of shares held by the person
responsible for triggering the Flip-in Event or any person who has
announced an intention to make, or who has made, a take-over bid
for the shares of the Corporation and the respective affiliates and
associates of such persons and persons acting jointly or in concert
with such persons;
(4) shares may be deposited into or withdrawn from the bid at any time
prior to the take-up date; and
(5) if the bid is accepted by the requisite percentage specified in (3)
above, the bidder must extend the bid for a period of 10 business
days to allow other shareholders to tender into the bid should they
so wish and must make a public announcement to such effect.
A "Competing Permitted Bid" is a Take-over Bid that satisfies all of the
criteria of a Permitted Bid except that since it is made after a Permitted Bid
has been made, the minimum deposit period and the time period for the take-up of
and payment for shares tendered under a Competing Permitted Bid is not 60 days,
but is instead the greater of 21 days (the minimum permitted by law) and the
60th day after the date on which the Permitted Bid then in existence was made.
Neither a Permitted Bid nor a Competing Permitted Bid need be approved by
the Board of Directors and may be taken directly to the shareholders of the
Corporation. Acquisitions of Common Shares made pursuant to a Permitted Bid or a
Competing Permitted Bid do not give rise to a Flip-in-Event.
REDEMPTION AND WAIVER
The Board of Directors may, at any time prior to the occurrence of a
Flip-in Event, and subject to shareholder approval, elect to redeem all but not
less than all of the Rights at a redemption price of $0.0001 per Right (the
"Redemption Price"), appropriately adjusted in certain events. Rights will be
deemed to automatically be redeemed at the Redemption Price where a person who
has made a Permitted Bid, a Competing Permitted Bid or a take-over bid otherwise
exempted by the Board, takes up and pays for the
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Corporation's shares under the terms of the bid. If the Board of Directors
elects or is deemed to have elected to redeem the Rights, the right to exercise
the Rights will terminate and each Right will, after redemption, be null and
void and the only right thereafter of the holders of Rights shall be to receive
the Redemption Price. Under the Rights Plan, the Board of Directors has
discretion to waive application of the Rights Plan to a take-over bid, subject
to an automatic waiver with respect to all other take-over bids made while the
waived take-over bid is outstanding. The Board of Directors of the Corporation
may also waive the application of the Rights Plan to a Flip-in Event which
occurs through inadvertence, subject to the "inadvertent" Acquiring Person
reducing its holding of the Corporation's shares within an agreed upon time.
Other waivers of the Plan will require shareholder approval.
AMENDMENTS TO THE RIGHTS PLAN AGREEMENT
The Rights Plan Agreement provides that prior to ratification by
shareholders, the Board of Directors may in its sole discretion supplement or
amend the Rights Plan Agreement. Once the Rights Plan Agreement has been
ratified by the shareholders, however, any amendments or supplements to the
terms of the Rights Plan Agreement (other than for clerical errors or to
maintain the Plan's validity as a result of changes in legislation) will require
prior shareholder approval. Changes arising from changes in applicable
legislation will require subsequent shareholder ratification.
TERM
The term of the Rights Plan Agreement ends on the date of the
Corporation's Annual Meeting of Shareholders to be held in 2002 at which time
the Rights expire unless they are terminated, redeemed or exchanged earlier by
the Board of Directors.
SHAREHOLDER RATIFICATION OF THE RIGHTS PLAN
The Toronto Stock Exchange requires that the Rights Plan be ratified by
shareholders within six (6) months of the date of adoption of the Rights Plan.
The above summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Plan
Agreement, a copy of which, including the form of Right Certificate, is attached
hereto as Exhibit 1 and is incorporated herein by reference. The Corporation's
press release relating to the Rights Plan Agreement is also attached hereto as
Exhibit 2 and incorporated herein by reference.
ITEM 7. EXHIBITS.
1. Shareholder Rights Plan Agreement, dated as of February 25, 1998, by
and between Royal Oak Mines Inc. and Montreal Trust Company of Canada.
2. Press Release dated February 25, 1998.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ROYAL OAK MINES INC.
Date: March 2, 1998 By: /s/ William J.V. Sheridan
Name: William J.V. Sheridan
Title: Secretary
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EXHIBIT LIST
Exhibit Number
1. Shareholder Rights Plan Agreement, dated as of February 25, 1998, by and
between Royal Oak Mines Inc. and Montreal Trust Company of Canada.
2. Press Release dated February 25, 1998.
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Exhibit 1
ROYAL OAK MINES INC.
AND
MONTREAL TRUST COMPANY OF CANADA
AS RIGHTS AGENT
SHAREHOLDER RIGHTS PLAN AGREEMENT
Dated as of February 25, 1998
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TABLE OF CONTENTS
ARTICLE 1 --INTERPRETATION........................................1
1.1 CERTAIN DEFINITIONS...........................................1
1.2 CURRENCY.....................................................11
1.3 HEADINGS.....................................................11
1.4 NUMBER AND GENDER............................................11
1.5 ACTING JOINTLY OR IN CONCERT.................................11
1.6 STATUTORY REFERENCES.........................................11
ARTICLE 2 - THE RIGHTS...........................................12
2.1 LEGEND ON COMMON SHARE CERTIFICATES..........................12
2.2 INITIAL EXERCISE PRICE; EXERCISE OF RIGHTS; DETACHMENT OF
RIGHTS.......................................................12
2.3 ADJUSTMENTS TO EXERCISE PRICE; NUMBER OF RIGHTS..............15
2.4 DATE ON WHICH EXERCISE IS EFFECTIVE..........................19
2.5 EXECUTION, AUTHENTICATION, DELIVERY AND DATING OF RIGHTS
CERTIFICATES.................................................20
2.6 REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE..........20
2.7 MUTILATED, DESTROYED, LOST AND STOLEN RIGHT CERTIFICATES.....21
2.8 PERSONS DEEMED OWNERS........................................21
2.9 DELIVERY AND CANCELLATION OF RIGHTS CERTIFICATES.............21
2.10 AGREEMENT OF RIGHTS HOLDERS.................................22
2.11 RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER..........22
ARTICLE 3--ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN
TRANSACTIONS.....................................................23
3.1 FLIP-IN EVENT................................................23
ARTICLE 4--THE RIGHTS AGENT......................................23
4.1 GENERAL.....................................................23
4.2 MERGER OR AMALGAMATION OR CHANGE OF NAME OF RIGHTS AGENT....24
4.3 DUTIES OF RIGHTS AGENT......................................25
4.4 CHANGE OF RIGHTS AGENT......................................26
ARTICLE 5--MISCELLANEOUS.........................................27
5.1 REDEMPTION AND WAIVER.......................................27
5.2 EXPIRATION..................................................29
5.3 ISSUANCE OF NEW RIGHT CERTIFICATES..........................29
5.4 SUPPLEMENTS AND AMENDMENTS..................................29
5.5 FRACTIONAL RIGHTS AND FRACTIONAL SHARES.....................30
5.6 RIGHTS OF ACTION............................................31
5.7 NOTICE OF PROPOSED ACTIONS..................................31
5.8 NOTICES.....................................................31
5.9 SUCCESSORS..................................................32
5.10 BENEFITS OF THIS AGREEMENT..................................32
5.11 GOVERNING LAW...............................................32
5.12 SEVERABILITY................................................32
5.13 EFFECTIVE DATE..............................................32
5.14 DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS........33
5.15 RIGHTS OF BOARD, CORPORATION AND OFFEROR....................33
5.16 REGULATORY APPROVALS........................................33
5.17 DECLARATION AS TO NON-CANADIAN HOLDERS......................33
5.18 TIME OF THE ESSENCE.........................................33
5.19 EXECUTION IN COUNTERPARTS...................................34
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SHAREHOLDER RIGHTS PLAN AGREEMENT
THIS AGREEMENT dated as of the 25th day of February, 1998 between Royal
Oak Mines Inc. (the "Corporation"), a corporation amalgamated under the Business
Corporations Act (Ontario) 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 hereunder.
WHEREAS the Board of Directors has determined that in order to maximize
shareholder value it is advisable and in the best interests of the Corporation
to adopt a shareholder rights plan (the "Rights Plan");
AND WHEREAS in order to implement the adoption of the Rights Plan
the Board of Directors has
(a) authorized the issuance of one Right effective the Record Time in
respect of each Common Share outstanding at the Record Time; and
(b) authorized the issuance of one Right in respect of each Common Share
issued after the Record Time and prior to the earlier of the
Separation Time and the Expiration Time;
AND WHEREAS each Right entitles the holder thereof, after the Separation
Time, to purchase securities of the Corporation (or, in certain cases, of
certain other entities) pursuant to the terms and subject to the conditions set
forth herein;
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 foregoing premises and the respective
covenants and agreements set forth herein the parties hereby agree as follows:
ARTICLE 1 --INTERPRETATION
1.1 CERTAIN DEFINITIONS
For purposes of the Agreement, the following terms have the meanings
indicated:
(a) "1933 SECURITIES ACT" means the Securities Act of 1933 of the United
States, as amended, and the rules and regulations thereunder, and any
comparable or successor laws or regulations thereto.
(b) "1934 EXCHANGE ACT" means the Securities Exchange Act of 1934 of the
United States, as amended, and the rules and regulations thereunder,
and any comparable or successor laws or regulations thereto.
(c) "ACQUIRING PERSON" means, any Person who is the Beneficial Owner of
twenty percent (20%) or more of the outstanding Voting Shares of the
Corporation; provided, however, that the term "Acquiring Person"
shall not include:
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(i) the Corporation or any Subsidiary of the Corporation;
(ii) any Person who becomes the Beneficial Owner of twenty percent
(20%) or more of the outstanding Voting Shares of the
Corporation as a result of (A) Corporate Acquisitions, (B)
Permitted Bid Acquisitions, (C) Corporate Distributions or (D)
Exempt Acquisitions; provided, however, that if a Person shall
become the Beneficial Owner of twenty percent (20%) or more of
the Voting Shares of the Corporation then outstanding by reason
of one or more or any combination of the operation of a
Corporate Acquisition, Permitted Bid Acquisition, Corporate
Distribution or Exempt Acquisition and, after such Corporate
Acquisition, Permitted Bid Acquisition, Corporate Distribution
or Exempt Acquisition, becomes the Beneficial Owner of an
additional one percent (1%) or more of the outstanding Voting
Shares of the Corporation other than pursuant to Corporate
Acquisitions, Permitted Bid Acquisitions, Corporate
Distributions or Exempt Acquisitions, then as of the date of
such acquisition, such Person shall become an "Acquiring
Person";
(iii)for a period of ten (10) days after the Disqualification Date
(as hereinafter defined), any Person who becomes the Beneficial
Owner of twenty percent (20%) or more of the outstanding Voting
Shares of the Corporation as a result of such Person becoming
disqualified from relying on Clause 1.1 (g) (vii) hereof solely
because such Person makes or announces an intention to make a
Take-over Bid in respect of securities of the Corporation alone
or by acting jointly or in concert with any other Person (the
first date of public announcement (which, for the purposes of
this definition, shall include, without limitation, a report
filed pursuant to section 101 of the Securities Act (Ontario))
by such Person or the Corporation of the intent to commence such
a Take-over Bid being herein referred to as the
"Disqualification Date"); and
(iv) an underwriter or member of a banking or selling group which
acquires Voting Shares of the Corporation from the Corporation
in connection with a bona fide distribution to the public of
securities of the Corporation.
(d) "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.
(e) "AGREEMENT" means this agreement as amended, modified or supplemented
from time to time.
(f) "ASSOCIATE" when used to indicate a relationship with a
specified Person, means any relative of such specified Person
who has the same residence as such specified Person, a spouse
of that Person, any person of the same or opposite sex with
whom such specified Person is living in a conjugal
relationship outside marriage, or any relative of such spouse
or other Person who has the same residence as such specified
Person.
(g) a Person shall be deemed the "BENEFICIAL OWNER", and to have
"BENEFICIAL OWNERSHIP" of, and to "BENEFICIALLY OWN":
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(i) any securities as to which such Person or any Affiliate or
Associate of such Person is or may be deemed to be the owner at
law or in equity;
(ii) any securities as to which such Person or any Affiliate or
Associate of such Person has the right to acquire (whether such
right is exercisable immediately or within a period of 75 days
thereafter or upon the occurrence of a contingency or otherwise)
pursuant to any agreement, arrangement, pledge or understanding,
whether or not in writing (other than customary agreements with
and between underwriters or banking group or selling group
members with respect to a public offering of securities and
other than bona fide pledges of securities) or upon the exercise
of any conversion right, exchange right, share purchase right
(other than a Right), warrant or option or otherwise; and
(iii)any securities which are Beneficially Owned within the meaning
of the foregoing provisions of this Subsection 1.1(g) by any
other Person with whom such Person is acting jointly or in
concert;
provided, however, that a Person shall not be deemed the "BENEFICIAL
OWNER", or to have "BENEFICIAL OWNERSHIP" of, or to "BENEFICIALLY
OWN", any security solely because:
(iv) such security has been deposited or tendered pursuant to any
Take-over Bid made by such Person or made by any Affiliate or
Associate of such Person or made by any other Person acting
jointly or in concert with such Person, unless such deposited or
tendered security has been taken up or paid for, whichever shall
first occur; or
(v) such Person or any Affiliate or Associate of such Person
or any other Person acting jointly or in concert with
such Person has or shares the power to vote or direct the
voting of such security pursuant to a revocable proxy
given in response to a public proxy solicitation or any
such Person has an agreement, arrangement or
understanding with respect to a particular shareholder
proposal or proposals or a particular matter or matters
to come before a meeting of shareholders, including the
election of directors; or
(vi) such Person or any Affiliate or Associate of such Person or any
other Person acting jointly or in concert with such Person has
or shares the power to vote or direct the voting of such
security in connection with or in order to participate in a
public proxy solicitation; or
(vii)(A) such Person or any Affiliate or Associate of such Person or
any other Person acting jointly or in concert with such Person,
holds or exercises dispositive power over such security;
provided that the ordinary business of any such Person (the
"Fund Manager") includes the management of investment funds for
others and such dispositive power over such security is held by
the Fund Manager in the ordinary course of such business in the
performance of such Fund Manager's duties for the account of any
other Person (a "Client"), (B) such Person (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 a similar capacity in relation to the estates of deceased or
incompetent Persons or in relation to other accounts and holds
or exercises dispositive power over such security in the
ordinary course of such duties for the estate of any such
deceased or incompetent
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Person (each an "Estate Account") or for such other accounts
(each an "Other Account"), (C) the ordinary business of any such
Person includes acting as an agent of the Crown in the
management of public assets (the "Crown Agent"), or (D) the
Person, any of such Person's Affiliates or Associates or any
other Person acting jointly or in concert with such Person holds
or exercises dispositive power over such security, provided that
the Person exercising such dispositive power is the
administrator or the trustee of one or more pension funds or
plans (each a "Pension Fund") registered under the laws of
Canada or any province thereof or the United States or any state
thereof (the "Independent Person") and holds such securities
solely for the purposes of its activities as an Independent
Person, and further provided that such Person:
(a) does not hold or exercise dispositive power over more than
thirty percent (30%) of the Voting Shares of the
Corporation;
(b) holds such Voting Shares of the Corporation for investment
purposes; and
(c) is not acting jointly or in concert with any other Person;
provided, however, that in any of the foregoing cases no one of
the Fund Manager, the Trust Company, the Crown Agent or the
Independent Person makes or proposes to make a Take-over Bid in
respect of securities of the Corporation alone or by acting
jointly or in concert with any other Person (other than by means
of ordinary market transactions (including prearranged trades)
executed through the facilities of a stock exchange or organized
over-the-counter market); or
(viii) such Person is a Client of the same Fund Manager as another
Person on whose account the Fund Manager holds or exercises
dispositive power over such security, or 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 dispositive power over such security, or such Person
is a Pension Fund with the same Independent Person as another
Pension Fund;
(ix) such Person is a Client of a Fund Manager and such security is
owned at law or in equity by the Fund Manager, or such Person is
an Estate Account or an Other Account of a Trust Company and
such security is owned at law or in equity by the Trust Company,
or such Person is a Pension Fund and such security is owned at
law or in equity by the Independent Person of the Pension Fund;
or
(x) such Person is the registered holder of securities as a result
of carrying on the business of, or acting as a nominee of a
securities depository.
For purposes of this Agreement, the percentage of Voting Shares
Beneficially Owned by any Person, shall be and be deemed to be the
product of one hundred (100) and the number of which the numerator is
the number of votes for the election of all directors generally
attaching to the Voting Shares Beneficially Owned by such Person and
the denominator of which is the number of votes for the election of
all directors generally attaching to all outstanding Voting Shares.
Where any Person is deemed to Beneficially Own unissued Voting
Shares, such Voting Shares shall be
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deemed to be issued and outstanding for the purpose of calculating
the percentage of Voting Shares Beneficially Owned by such Person.
(h) "BOARD OF DIRECTORS" means, at any time, the duly constituted board
of directors of the Corporation.
(i) "BUSINESS CORPORATIONS ACT (ONTARIO)" means the Business Corporations
Act, R.S.O. 1990, c.B.16, as amended, and the regulations thereunder,
and any comparable or successor laws or regulations thereto.
(j) "BUSINESS DAY" means any day other than a Saturday, a Sunday or a day
on which banking institutions in Toronto or New York are authorized
or obligated by law to close.
(k) "CANADIAN DOLLAR EQUIVALENT" means any amount which is expressed in
United States dollars shall mean on any day the Canadian dollar
equivalent of such amount determined by reference to the U.S.
Canadian Exchange Rate on such date.
(l) "CLOSE OF BUSINESS" on any given date means the time on such date
(or, if such date is not a Business Day, the time on the next
succeeding Business Day) at which the offices of the transfer agent
for the Common Shares (or, after the Separation Time, the offices of
the Rights Agent) is closed to the public in the city in which such
transfer agent or Rights Agent has an office for the purposes of this
Agreement.
(m) "COMMON SHARES", when used with reference to the Corporation,
means the common shares in the capital of the Corporation and,
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 Person.
(n) "COMPETING PERMITTED BID" means a Take-over Bid which: (i) is
made after a Permitted Bid has been made and prior to the
expiry of the Permitted Bid; (ii) satisfies all the components
of the definition of a Permitted Bid, except that the
requirements set out in Clause (ii) of the definition of a
Permitted Bid shall be satisfied if the Take-over Bid shall
contain, and the take up and payment for securities tendered
or deposited thereunder shall be subject to, an irrevocable
and unqualified condition that no Voting Shares shall be taken
up or paid for pursuant to the Competing Permitted Bid prior
to the close of business on the date that is no earlier than
the later of: (A) the sixtieth (60th) day after the date on
which the Permitted Bid which preceded the Competing Permitted
Bid was made; and (B) twenty-one (21) days after the date of
the Take-over Bid constituting the Competing Permitted Bid;
and only if at that date, more than fifty percent (50%) of the
then outstanding Voting Shares held by Independent
Shareholders have been deposited to the Competing Permitted
Bid and not withdrawn.
(o) "CONTROLLED": a corporation is "controlled" by another Person or two
or more Persons if:
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(i) securities entitled to vote in the election of directors
carrying more than fifty percent (50%) of the votes for the
election of directors are held, directly or indirectly, by or
for the benefit of the other Person or Persons; and
(ii) the votes carried by such securities are entitled, if exercised,
to elect a majority of the board of directors of such
corporation;
and "CONTROLS", "CONTROLLING" AND "UNDER COMMON CONTROL WITH"
shall be interpreted accordingly.
(p) "CORPORATE ACQUISITION" means an acquisition by the Corporation or a
Subsidiary of the Corporation or the redemption by the Corporation of
Voting Shares of the Corporation which by reducing the number of
Voting Shares of the Corporation outstanding increases the
proportionate number of Voting Shares Beneficially Owned by any
Person.
(q) "CORPORATE DISTRIBUTION" means an acquisition of Voting Shares of the
Corporation as a result of:
(i) a stock dividend or a stock split or other event pursuant to
which a person receives or acquires Voting Shares on the same
pro rata basis as all other holders of the same class of Voting
Shares;
(ii) any dividend reinvestment plan or other plan made available by
the Corporation to holders of all of its Voting Shares (other
than holders resident in any jurisdiction where participation in
such plan is restricted or impractical to the Corporation as a
result of applicable law);
(iii)the receipt and/or exercise of rights issued by the Corporation
to purchase Voting Shares distributed to all the holders of a
series or class of Voting Shares of the Corporation to subscribe
for or purchase Voting Shares of the Corporation, (other than
holders resident in any jurisdiction where the distribution or
exercise of such rights is restricted or impractical as a result
of applicable law), provided that such rights are acquired
directly from the Corporation and not from any other Person; or
(iii)a distribution of Voting Shares, or securities convertible into,
exchangeable for or carrying the right to acquire Voting Shares
(and the conversion or exchange of such convertible or
exchangeable securities or the exercise of the right to acquire
Voting Shares carried by such securities), made pursuant to a
prospectus or by way of a private placement.
(r) "DISQUALIFICATION DATE" has the meaning ascribed thereto in Clause
1.1 (c)(iii).
(s) "EFFECTIVE DATE" has the meaning ascribed thereto in Section 5.13.
(t) "ELECTION TO EXERCISE" has the meaning ascribed thereto in Subsection
2.2(d).
(u) "EXEMPT ACQUISITION" means an acquisition of Voting Shares of the
Corporation, in respect of which the Board of Directors has waived
the application of Section 3.1 hereof pursuant to the provisions of
Subsections 5.1 (b), (c) or (d) hereof or which was made on or prior
to the Record Time.
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(v) "EXERCISE PRICE" means, as of any date, the price at which a holder
may purchase the securities issuable upon exercise of one whole
Right. Until adjustment thereof in accordance with the terms hereof,
the Exercise Price shall be $20.00.
(w) "EXPIRATION TIME" means the earlier of: (i) the Termination Time, and
(ii) the close of business on the date of the Corporation's annual
meeting of Shareholders in 2002.
(x) "FLIP-IN EVENT" means a transaction in or pursuant to which any
Person becomes an Acquiring Person.
(y) "INDEPENDENT SHAREHOLDERS" means holders of Voting Shares of
the Corporation, but shall not include: (i) any Acquiring
Person; (ii) any Offeror (including an Offeror who has
announced an intention to make or who makes a Permitted Bid or
Competing Permitted Bid); (iii) any Affiliate or Associate of
such Acquiring Person or Offeror; (iv) any Person acting
jointly or in concert with such Acquiring Person or Offeror; or
(v) any employee benefit plan, stock purchase plan, deferred
profit sharing plan or any similar plan or trust for the
benefit of employees of the Corporation or a Subsidiary of the
Corporation, unless the beneficiaries of any such plan or trust
direct the manner in which the Voting Shares are to be voted or
direct whether the Voting Shares are to be tendered to a
Take-over Bid.
(z) "MARKET PRICE" per share of any securities on any date of
determination means the average of the daily closing prices
per share of such securities (determined as described below)
on each of the twenty (20) consecutive Trading Days through
and including the Trading Day immediately preceding such date;
provided, however, that if an event of a type analogous to any
of the events described in Section 2.3 hereof shall have
caused the closing prices used to determine the Market Price
on any Trading Days not to be fully comparable with the
closing price on such date of determination or, if the date of
determination is not a Trading Day, on the immediately
preceding Trading Day, each such closing price so used shall
be appropriately adjusted in a manner analogous to the
applicable adjustment provided for in Section 2.3 hereof in
order to make it fully comparable with the closing price on
such date of determination or, if the date of determination is
not a Trading Day, on the immediately preceding Trading Day.
The closing price per share of any securities on any date
shall be (i) the closing board lot sale price or, if such
price is not available, the average of the closing bid and
asked prices, for each share as reported by The Toronto Stock
Exchange; or (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 The Toronto Stock Exchange, the closing
board lot sale price or, if such price is not available, the
average of the closing bid and asked prices, for each share as
reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to
trading on the principal national securities exchange in the
United States on which the securities are listed or admitted
to trading; 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 The Toronto Stock Exchange or a
national securities exchange in the United States, the last
quoted price, or if not so quoted, the average of the high bid
and low asked prices for each share of such securities in the
over-the-counter market, as reported by The Canadian Dealing
Network Inc. or such other comparable system then in use; or
(iv) if on any such date the securities are not quoted by any
such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a
market in the securities selected in good faith by the Board
of Directors; provided, however, that if on any such date the
securities are not traded on any stock exchange or in the
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over-the-counter market, the closing price per share of such
securities on such date shall mean the fair value per share of such
securities on such date as determined in good faith by the Board of
Directors, after consultation with a nationally or internationally
recognized investment dealer or investment banker.
The Market Price shall be expressed in Canadian dollars and if
initially determined in respect of any day forming part of the twenty
(20) consecutive trading day period in United States dollars, such
amount shall be translated into Canadian dollars at the Canadian
Dollar Equivalent thereof. Notwithstanding the foregoing, where the
Board of Directors is satisfied that the Market Price of securities
as determined herein was affected by an anticipated or actual
Take-over Bid or by improper manipulation, the Board of Directors
may, acting in good faith, determine the Market Price of securities,
such determination to be based on a finding as to the price of 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.
(aa) "OFFER TO ACQUIRE" shall include:
(i) an offer to purchase, a public announcement of an intention to
make an offer to purchase, or a solicitation of an offer to
sell, Voting Shares of the Corporation; and
(ii)an acceptance of an offer to sell Voting Shares of the
Corporation, 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.
(bb) "OFFEROR" means a Person who has announced an intention to make, or
who makes, a Take-over Bid.
(cc) "OFFEROR'S SECURITIES" means Voting Shares of the Corporation
Beneficially Owned by an Offeror, any Affiliate or Associate of such
Offeror, any Person acting jointly or in concert with the Offeror or
with any Affiliate of the Offeror and any Affiliates or Associates of
such Person so acting jointly or in concert.
(dd) "PERMITTED BID" means a Take-over Bid made by an Offeror which is
made by means of a Take-over Bid circular and which also complies
with the following additional provisions:
(i) the Take-over Bid shall be made to all holders of record of
Voting Shares wherever resident as registered on the books of
the Corporation, other than the Offeror;
(ii) the Take-over Bid shall contain, and the take up and payment for
securities tendered or deposited thereunder shall be subject to,
an irrevocable and unqualified condition that no Voting Shares
shall be taken up or paid for pursuant to the Take-over Bid
prior to the close of business on the date which is not less
than sixty (60) days following the date of the Take-over Bid,
and only if at such date, more than fifty percent (50%) of the
then outstanding Voting Shares held by Independent Shareholders
shall have been deposited to the Take-over Bid and not
withdrawn;
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(iii)the Take-over Bid shall contain an irrevocable and unqualified
provision that, unless the Take-over Bid is withdrawn in
accordance with applicable law, Voting Shares of the Corporation
may be deposited pursuant to such Take-over Bid at any time
during the period of time described in Clause (ii) of this
Subsection 1.1 (dd) and that any Voting Shares deposited
pursuant to the Take-over Bid may be withdrawn at any time until
taken up and paid for; and
(iv) the Take-over Bid shall contain an irrevocable and unqualified
provision that if, on the date on which Voting Shares may be
taken up and paid for, more than fifty percent (50%) of the then
outstanding Voting Shares held by Independent Shareholders have
been deposited to the Take-over Bid and not withdrawn, (A) the
Offeror will make a public announcement of that fact on the date
the Take-over Bid would otherwise expire; and (B) the Take-over
Bid will be extended for a period of not less than ten (10)
Business Days from the date it would otherwise expire.
(ee) "PERMITTED BID ACQUISITIONS" means share acquisitions made pursuant
to a Permitted Bid or a Competing Permitted Bid.
(ff) "PERSON" means any individual, firm, partnership, association, trust,
trustee, executor, administrator, legal or personal representative,
government, governmental body, entity or authority, group, body
corporate, corporation, unincorporated organization or association,
syndicate, joint venture or any other entity, whether or not having
legal personality, and any of the foregoing in any derivative,
representative or fiduciary capacity, and pronouns have a similar
extended meaning.
(gg) "RECORD TIME" means 5:00 p.m. (Toronto time) on February 25,
1998.
(hh) "REDEMPTION PRICE" has the meaning ascribed thereto in
Subsection 5.1 (a).
(ii) "REGULAR PERIODIC CASH DIVIDENDS" means cash dividends paid at
regular intervals in any fiscal year of the Corporation to the extent
that such cash dividends do not exceed, in the aggregate, the
greatest of
(i) two hundred percent (200%) of the aggregate amount of cash
dividends declared payable by the Corporation on its Common
Shares in its immediately preceding fiscal year;
(ii) three hundred percent (300%) of the arithmetic average of the
aggregate amounts of cash dividends declared payable by the
Corporation on its Common Shares in its three immediately
preceding financial years; and
(iii)one hundred percent (100%) of the aggregate consolidated net
income of the Corporation, before extraordinary items, for its
immediately preceding fiscal year.
(jj) "RIGHT" means a right issued pursuant to this Agreement.
(kk) "RIGHTS CERTIFICATE" has the meaning ascribed thereto in
Section 2.2(c).
(ll) "RIGHTS REGISTER" has the meaning ascribed thereto in
Subsection 2.6(a).
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(mm) "SECURITIES ACT (ONTARIO)" means the Securities Act, R.S.O.
1990, c. S.5. as amended, and the regulations, rules,
policies, and notices thereunder, and any comparable or
successor laws, regulations, rules, policies or notices
thereto.
(nn) "SEPARATION TIME" means the close of business on the eighth (8th)
Trading 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 or Competing Permitted Bid) or such later date
as may be determined by the Board of Directors provided that, if any
Take-over Bid referred to in Clause (ii) of this Subsection 1.1(nn)
expires, is cancelled, terminated or otherwise withdrawn prior to the
Separation Time, such Take-over Bid shall be deemed, for the purposes
of this Subsection 1.1(nn), never to have been made and provided
further that if the Board of Directors determines pursuant to
Subsections 5.1(b), (c) or (d) hereof to waive the application of
Section 3.1 hereof to a Flip-in Event, the Separation Time in respect
of such Flip-in Event shall be deemed never to have occurred.
(oo) "STOCK ACQUISITION DATE" means the first date of public announcement
(which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to section 101 of the Securities
Act (Ontario) or Section 13(d) of the 1934 Exchange Act) by the
Corporation or an Offeror or Acquiring Person of facts indicating
that a Person has become an Acquiring Person.
(pp) "SUBSIDIARY": a corporation shall be deemed to be a Subsidiary
of another corporation if:
(i) it is controlled by:
(A) that other; or
(B) that other and one or more corporations each of which is
controlled by that other; or
(C) two or more corporations each of which is controlled by
that other; or
(ii) it is a Subsidiary of a corporation that is that other's
Subsidiary.
(qq) "TAKE-OVER BID" means an Offer to Acquire Voting Shares of the
Corporation or securities convertible into or exchangeable for or
carrying a right to purchase Voting Shares of the Corporation where
the Voting Shares of the Corporation subject to the Offer to Acquire,
together with the Voting Shares of the Corporation into which the
securities subject to the Offer to Acquire are convertible,
exchangeable or exercisable, and the Offeror's Securities, constitute
in the aggregate twenty percent (20%) or more of the outstanding
Voting Shares of the Corporation at the date of the Offer to Acquire.
(rr) "TERMINATION TIME" means the time at which the right to exercise
Rights shall terminate pursuant to Subsection 5.1(f) hereof.
(ss) "TRADING DAY", when used with respect to any securities, means a day
on which the principal Canadian stock exchange or American stock
exchange or market on
<PAGE>
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which such securities are listed or admitted to trading is open for
the transaction of business or, if the securities are not listed or
admitted to trading on any Canadian stock exchange or American stock
exchange or market, a Business Day.
(tt) "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 which is
calculated in the manner which shall be determined by the Board
of Directors from time to time acting in good faith.
(uu) "VOTING SHARES" means, with respect to any Person, the Common Shares
of such Person and any other shares of capital stock or voting
interests of such Person entitled to vote generally in the election
of all directors.
1.2 CURRENCY
All sums of money which are referred to in this Agreement are expressed in
lawful money of Canada, unless otherwise specified.
1.3 HEADINGS
The division of this Agreement into Articles, Sections, Subsections,
Clauses and Subclauses and the insertion of headings, subheadings and a table of
contents are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement.
1.4 NUMBER AND GENDER
Wherever the context so requires, terms used herein importing the singular
number only shall include the plural and vice-versa and words importing only one
gender shall include all others.
1.5 ACTING JOINTLY OR IN CONCERT
For the purposes of this Agreement, a Person shall be deemed to be acting
jointly or in concert with every Person who is a party to an agreement,
commitment or understanding, whether formal or informal, with the first Person
or any Associate or Affiliate of such Person for the purpose of acquiring or
making an Offer to Acquire Voting Shares of the Corporation.
1.6 STATUTORY REFERENCES
Unless the context otherwise requires or except as expressly provided
herein, any reference herein to a specific part, section, subsection, clause or
Rule of any statute or regulation shall be deemed to refer to the same as it may
be 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.
<PAGE>
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ARTICLE 2 - THE RIGHTS
2.1 LEGEND ON COMMON SHARE CERTIFICATES
(a) Certificates issued for Common Shares after the Record Time but prior
to the close of business on the earlier of the Separation Time and
the Expiration Time shall evidence one Right for each Common Share
represented thereby and shall have impressed on, printed on, written
on or otherwise affixed to them, a legend in substantially the
following form:
UNTIL THE SEPARATION TIME (AS DEFINED IN THE RIGHTS PLAN REFERRED TO
BELOW), THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER
HEREOF TO CERTAIN RIGHTS AS SET FORTH IN A SHAREHOLDER RIGHTS PLAN
AGREEMENT, DATED AS OF FEBRUARY 25, 1998 (THE "RIGHTS PLAN"), BETWEEN
ROYAL OAK MINES INC. (THE "CORPORATION") AND MONTREAL TRUST COMPANY
OF CANADA, AS RIGHTS AGENT (THE "RIGHTS AGENT"), THE TERMS OF WHICH
ARE HEREBY INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH MAY
BE INSPECTED DURING NORMAL BUSINESS HOURS AT THE PRINCIPAL EXECUTIVE
OFFICE OF THE CORPORATION. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH
IN THE RIGHTS PLAN, SUCH RIGHTS MAY BE AMENDED OR REDEEMED, MAY
EXPIRE, MAY BECOME NULL AND VOID (IF, IN CERTAIN CASES, THEY ARE
ISSUED TO OR "BENEFICIALLY OWNED" BY ANY PERSON WHO IS, WAS OR
BECOMES AN "ACQUIRING PERSON", AS SUCH TERMS ARE DEFINED IN THE
RIGHTS PLAN, WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR
ANY SUBSEQUENT HOLDER) OR MAY BE EVIDENCED BY SEPARATE CERTIFICATES
AND MAY NO LONGER BE EVIDENCED BY THIS CERTIFICATE. THE CORPORATION
WILL MAIL OR ARRANGE FOR THE MAILING OF A COPY OF THE RIGHTS PLAN TO
THE HOLDER OF THIS CERTIFICATE WITHOUT CHARGE UPON RECEIPT OF A
WRITTEN REQUEST THEREFOR.
(b) Certificates representing Common Shares that are issued and
outstanding at the Record Time shall evidence one Right for each
Common Share evidenced thereby notwithstanding the absence of the
foregoing legend until the earlier of the Separation Time and the
Expiration Time.
2.2 INITIAL EXERCISE PRICE; EXERCISE OF RIGHTS; DETACHMENT OF RIGHTS
(a) RIGHT TO ENTITLE HOLDER TO PURCHASE ONE COMMON SHARE PRIOR TO
ADJUSTMENT. Subject to adjustment as herein set forth, each
Right will entitle the holder thereof, from and after the
Separation Time and prior to the Expiration Time, to purchase,
for the Exercise Price as at the Business Day immediately
preceding the date of exercise of the Right, one Common Share
of the Corporation (which 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 and any of its Subsidiaries shall be void.
(b) RIGHTS NOT EXERCISABLE UNTIL SEPARATION TIME. Until the Separation
Time, (i) the Rights shall not be exercisable and no Right may be
exercised, and (ii) for
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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 also be deemed to be a
Rights Certificate) and will be transferable only together with, and
will be transferred by a transfer of, such associated Common Share.
(c) DELIVERY OF RIGHTS CERTIFICATE AND DISCLOSURE STATEMENT. From and
after the Separation Time and prior to the Expiration Time: (i) the
Rights shall be exercisable, and (ii) the registration and transfer
of the Rights shall be separate from, and independent of, Common
Shares.
Promptly following the Separation Time, the Corporation will prepare
and the Rights Agent will mail to each holder of record of Rights as
of the Separation Time (other than an Acquiring Person and other than
in respect of any Rights Beneficially Owned by such Acquiring Person
which are not held by such Acquiring Person, the holder of record of
such Rights) at such holder's address as shown by the records of the
Corporation (the Corporation hereby agreeing to furnish copies of
such records to the Rights Agent for this purpose), (A) a certificate
(a "Rights Certificate") in substantially the form of Exhibit A
hereto appropriately completed, representing the number of Rights
held by such holder at the Separation Time and having such marks of
identification or designation and such legends, summaries or
endorsements printed thereon as the Corporation may deem appropriate
and as are not inconsistent with the provisions of this Agreement, or
as may be required to comply with any law, rule, regulation or
judicial or administrative order or with any rule or regulation made
pursuant thereto or with any rule or regulation of any
self-regulatory organization, stock exchange or quotation system on
which the Rights may from time to time be listed or traded, or to
conform to usage, and (B) a disclosure statement describing the
Rights, provided that a nominee shall be sent the materials provided
for in (A) and (B) in respect of all Common Shares held of record by
it which are not Beneficially Owned by an Acquiring Person. In order
for the Corporation to determine whether any Person is holding Common
Shares which are Beneficially Owned by another Person, the
Corporation may require such first mentioned Person to furnish it
with such information and documentation as the Corporation considers
advisable.
(d) EXERCISE OF RIGHTS. Rights may be exercised in whole or in
part on any Business Day after the Separation Time and prior
to the Expiration Time by submitting to the Rights Agent the
Rights Certificate evidencing such Rights together with an
election to exercise such Rights (an "Election to Exercise")
substantially in the form attached to the Rights Certificate
duly completed, accompanied by payment in cash, by certified
cheque, banker's draft or money order payable to the order of
the Corporation, of a sum equal to the Exercise Price
multiplied by the number of Rights being exercised and a sum
sufficient to cover any transfer tax or 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, all of the above to
be received before the Expiration Time by the Rights Agent at
its principal office in any of the cities listed on the Rights
Certificate.
(e) DUTIES OF RIGHTS AGENT UPON RECEIPT OF ELECTION TO EXERCISE. Upon
receipt of a Rights Certificate, which is accompanied by a completed
Election to Exercise that does not indicate that such Right is null
and void as provided by Subsection 3.1(b) hereof, and payment as set
forth in Subsection 2.2(d) above, the
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Rights Agent (unless otherwise instructed by the Corporation) will
thereupon promptly:
(i) requisition from the transfer agent for the Common Shares
certificates representing the number of Common Shares to be
purchased (the Corporation hereby irrevocably authorizing its
transfer agent to comply with all such requisitions);
(ii) when appropriate, requisition from the Corporation the amount of
cash to be paid in lieu of issuing fractional Common Shares;
(iii)after receipt of such certificates, deliver the same to or upon
the order of the registered holder of such Rights Certificate,
registered in such name or names as may be designated by such
registered holder;
(iv) when appropriate, after receipt, deliver such cash (less any
amounts required to be withheld) 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) PARTIAL EXERCISE OF RIGHTS. In case the holder of any Rights shall
exercise less than all of the Rights evidenced by such holder's
Rights Certificate, a new Rights Certificate evidencing the Rights
remaining unexercised will be issued by the Rights Agent to such
holder or to such holder's duly authorized assigns.
(g) DUTIES OF THE CORPORATION. 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 or other securities delivered upon
exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Exercise
Price), be duly and validly authorized, executed, issued and
delivered and fully paid and non-assessable;
(ii) take all such action as may be necessary and within its power to
ensure compliance with the provisions of Section 3.1 hereof
including, without limitation, all such action to comply with
any applicable requirements of the Business Corporations Act
(Ontario), the Securities Act (Ontario) and any applicable
comparable securities legislation of any other applicable
jurisdiction, 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 principal
stock exchanges on which the Common Shares were traded prior to
the Stock Acquisition Date;
(iv) cause to be reserved and kept available out of its authorized
and unissued Common Shares, the number of Common Shares that, as
provided in this Agreement, will from time to time be sufficient
to permit the exercise in full of all outstanding Rights;
(v) pay when due and payable any and all Canadian and, if
applicable, United States, federal, provincial and state
transfer taxes and charges (but for
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greater certainty, not including any income or capital taxes of
the holder or exercising holder or any liability of the
Corporation to withhold tax) which may be payable in respect of
the original issuance or delivery of the Rights Certificates,
provided that the Corporation shall not be required to pay any
transfer tax or charge which may be payable in respect of any
transfer involved in the transfer or delivery of Rights
Certificates or the issuance or delivery of certificates for
shares or other securities in a name other than that of the
registered holder of the Rights being transferred or exercised;
and
(vi) after the Separation Time, except as permitted by Sections 5.1
or 5.4 hereof, not take (or permit any Subsidiary to take) any
action if at the time such action is taken it is reasonably
foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the
Rights.
2.3 ADJUSTMENTS TO EXERCISE PRICE; NUMBER OF RIGHTS
The Exercise Price, the number and kind of Common Shares or other
securities subject to purchase upon exercise of each Right and the number of
Rights outstanding are subject to adjustment from time to time as provided in
this Section 2.3.
(a) ADJUSTMENT TO EXERCISE PRICE UPON CHANGES TO SHARE CAPITAL. In the
event the Corporation shall at any time after the Record Time:
(i) declare or pay a dividend on the Common Shares payable in
Common Shares (or other securities exchangeable for or
convertible into or giving a right to acquire Common
Shares or other securities) other than the issue of
Common Shares or such exchangeable or convertible
securities to holders of Common Shares in lieu of but not
in an amount which exceeds the value of regular periodic
cash dividends;
(ii)subdivide or change the outstanding Common Shares into a
greater number of Common Shares;
(iii) combine or change the outstanding Common Shares into a smaller
number of Common Shares or;
(iv)issue any Common Shares (or other securities exchangeable for or
convertible into or giving a right to acquire Common Shares or
other securities) in respect of, in lieu of or in exchange for
existing Common Shares, except as otherwise provided in this
Section 2.3;
the Exercise Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of Common Shares or other
securities, as the case may be, issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive, upon payment of the
Exercise Price then in effect, the aggregate number and kind of
Common Shares or other securities, as the case may be, which, if such
Right had been exercised immediately prior to such date and at a time
when the share transfer books of the Corporation were open, such
holder would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an
adjustment under both this Section 2.3 and
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Section 3.1 hereof, the adjustment provided for in this Section 3.1
shall be in addition to, and shall be made prior to, any adjustment
required pursuant to Section 3.1 hereof.
(b) ADJUSTMENT TO EXERCISE PRICE UPON ISSUE OF RIGHTS, OPTIONS AND
WARRANTS. In case the Corporation shall at any time after the
Record Time fix a record date for the issuance of rights,
options or warrants to all holders of Common Shares entitling
them (for a period expiring within forty-five (45) calendar
days after such record date) to subscribe for or purchase
Common Shares (or shares having the same rights, privileges
and preferences as Common Shares ("equivalent common shares"))
or securities convertible into or exchangeable for or carrying
a right to purchase Common Shares or equivalent common shares
at a price per Common Share or per equivalent common share (or
having a conversion price or exchange price or exercise price
per share, if a security convertible into or exchangeable for
or carrying a right to purchase Common Shares or equivalent
common shares) less than ninety percent (90%) of the Market
Price per Common Share on such record date, the Exercise Price
to be in effect after such record date shall be determined by
multiplying the Exercise Price in effect immediately prior to
such record date by a fraction, the numerator of which shall
be the number of Common Shares outstanding on such record
date, plus the number of Common Shares that the aggregate
offering price of the total number of Common Shares and/or
equivalent common shares so to be offered (and/or the
aggregate initial conversion, exchange or exercise price of
the convertible or exchangeable securities or rights so to be
offered, including the price required to be paid to purchase
such convertible or exchangeable securities or rights so to be
offered) would purchase at such Market Price per Common Share,
and the denominator of which shall be the number of Common
Shares outstanding on such record date, plus the number of
additional Common Shares and/or equivalent common shares to be
offered for subscription or purchase (or into which the
convertible or exchangeable securities are initially
convertible, exchangeable or exercisable). In case such
subscription price may be paid by delivery of consideration,
part or all of which may be in a form other than cash, the
value of such consideration shall be as determined in good
faith by the Board of Directors, whose determination shall be
described in a certificate filed with the Rights Agent and
shall be binding on the Rights Agent and the holders of the
Rights. Such adjustment shall be made successively whenever
such a record date is fixed, and in the event that such rights
or warrants are not so issued, the Exercise Price shall be
adjusted to be the Exercise Price which would then be in
effect if such record date had not been fixed.
For purposes of this Agreement, the granting of the right to purchase
Common Shares (or equivalent common shares) (whether from treasury
shares or otherwise) pursuant to any dividend or interest
reinvestment plan and/or any Common 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
or any 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) shall not be deemed to constitute an issue of
rights, options or warrants by the Corporation; provided, however,
that, in all such cases, the right to purchase Common Shares (or
equivalent common shares) is at a price per share of not less than
ninety percent (90%) of the current market price per share
(determined as provided in such plans) of the Common Shares.
(c) ADJUSTMENT TO EXERCISE PRICE UPON CORPORATE DISTRIBUTIONS. In case
the Corporation shall at anytime after the Record Time fix a record
date for a
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distribution to all holders of Common Shares (including any such
distribution made in connection with a merger, amalgamation,
arrangement, plan, compromise or reorganization in which the
Corporation is the continuing or successor corporation) of evidences
of indebtedness, cash (other than a regular periodic cash dividend or
a regular periodic cash dividend paid in Common Shares, but including
any dividend payable in securities other than Common Shares), assets
or subscription rights, options or warrants (excluding those referred
to in Subsection 2.3(b) above), at a price per Common Share that is
less than ninety percent (90%) of the Market Price per Common Share
on the second Trading Day immediately preceding such record date, the
Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately
prior to such record date by a fraction, the numerator of which shall
be the Market Price per Common Share on such record date, less the
fair market value (as determined in good faith by the Board of
Directors, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent
and the holders of the Rights) of the portion of the cash, assets or
evidences of indebtedness so to be distributed or of such
subscription rights, options or warrants applicable to a Common Share
and the denominator of which shall be such Market Price per Common
Share. Such adjustments shall be made successively whenever such a
record date is fixed, and in the event that such distribution is not
so made, the Exercise Price shall be adjusted to be the Exercise
Price which would have been in effect if such record date had not
been fixed.
(d) DE MINIMIS THRESHOLD FOR ADJUSTMENT TO EXERCISE PRICE.
Notwithstanding anything herein to the contrary, no adjustment
in the Exercise Price shall be required unless such adjustment
would require an increase or decrease of at least one percent
(1%) in the Exercise Price; provided, however, that any
adjustments which by reason of this Subsection 2.3(d) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under
this Section 2.3 shall be made to the nearest cent or to the
nearest one-hundredth of a Common Share or other share, as the
case may be. Notwithstanding the first sentence of this
Subsection 2.3(d), any adjustment required by this Section 2.3
shall be made no later than the earlier of: (i) three (3)
years from the date of the transaction which mandates such
adjustment; and (ii) the Expiration Time.
(e) CORPORATION MAY PROVIDE FOR ALTERNATE MEANS OF ADJUSTMENT.
Subject to the prior consent of the holders of Voting Shares
or Rights obtained as set forth in Subsections 5.4(b) or
5.4(c) hereof, as applicable, in the event the Corporation
shall at any time after the Record 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(a)(i) or 2.3(a)(iv) or Subsections 2.3(b) or 2.3(c) above,
if the Board of Directors acting in good faith determines that
the adjustments contemplated by Subsections 2.3(a), (b) and
(c) above in connection with such transaction will not
appropriately protect the interests of the holders of Rights,
the Corporation shall be entitled to determine what other
adjustments to the Exercise Price, number of Rights and/or
securities purchasable upon exercise of Rights would be
appropriate and, notwithstanding Subsections 2.3(a), (b) and
(c) above, such adjustments, rather than the adjustments
contemplated by Subsections 2.3(a), (b) and (c) above, shall
be made. The Corporation and the Rights Agent shall amend this
Agreement as appropriate to provide for such adjustments.
<PAGE>
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(f) ADJUSTMENT TO RIGHTS EXERCISABLE INTO SHARES OTHER THAN COMMON
SHARES. If as a result of an adjustment made pursuant to
Section 3.1 hereof, the holder of any Right thereafter
exercised shall become entitled to receive any shares other
than Common Shares, thereafter the number of such other shares
so receivable upon exercise of any Right and the Exercise
Price thereof shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the Common Shares contained
in this Section 2.3, and the provisions of this Agreement with
respect to the Common Shares shall apply on like terms to any
such other shares.
(g) RIGHTS TO EVIDENCE RIGHT TO PURCHASE COMMON SHARES AT ADJUSTED
EXERCISE PRICE. Each Right originally issued by the Corporation
subsequent to any adjustment made to the Exercise Price hereunder
shall evidence the right to purchase, at the adjusted Exercise Price,
the number of Common Shares purchasable from time to time hereunder
upon exercise of such Right, all subject to further adjustment as
provided herein.
(h) ADJUSTMENT TO NUMBER OF COMMON SHARES PURCHASABLE UPON
ADJUSTMENT TO EXERCISE PRICE. Unless the Corporation shall
have exercised its election as provided in Subsection 2.3(i)
below, upon each adjustment of the Exercise Price as a result
of the calculations made in Subsections 2.3 (b) and (c) above,
each Right outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to purchase, at
the adjusted Exercise Price, that number of Common Shares
(calculated to the nearest one ten-thousandth) obtained by:
(i) multiplying (A) the number of shares purchasable upon
exercise of a Right immediately prior to this adjustment by
(B) the Exercise Price in effect immediately prior to such
adjustment of the Exercise Price; and (ii) dividing the
product so obtained by the Exercise Price in effect
immediately after such adjustment of the Exercise Price.
(i) ELECTION TO ADJUST NUMBER OF RIGHTS UPON ADJUSTMENT TO
EXERCISE PRICE. The Corporation shall be entitled to elect on
or after the date of any adjustment of the 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 that
number of Rights (calculated to the nearest one ten
thousandth) obtained by dividing the Exercise Price in effect
immediately prior to adjustment of the Exercise Price by the
Exercise Price in effect immediately after adjustment of the
Exercise Price. The Corporation shall make a public
announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known
at the time, the amount of the adjustment to be made. This
record date may be the date on which the Exercise Price is
adjusted or any day thereafter, but, if Rights Certificates
have been issued, shall be at least ten (10) days later than
the date of the public announcement. If Rights Certificates
have been issued, upon each adjustment of the number of Rights
pursuant to this Subsection 2.3(i), the Corporation shall, as
promptly as practicable, cause to be distributed to holders of
record of Rights Certificates on such record date Rights
Certificates evidencing, subject to Section 5.5 hereof, 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, new
<PAGE>
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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 adjusted Exercise Price and shall be registered in the names of
the holders of record of Rights Certificates on the record date for
the adjustment specified in the public announcement.
(j) RIGHTS CERTIFICATES MAY CONTAIN EXERCISE PRICE BEFORE
ADJUSTMENT. Irrespective of any adjustment or change in the
Exercise Price or the number of Common Shares issuable upon
the exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to express the
Exercise Price per share and the number of Common Shares which
were expressed in the initial Rights Certificates issued
hereunder.
(k) CORPORATION MAY IN CERTAIN CASES DEFER ISSUES OF SECURITIES.
In any case in which this Section 2.3 shall require that an
adjustment in the Exercise Price be made effective as of a
record date for a specified event, the Corporation may elect
to defer until the occurrence of such event the issuance to
the holder of any Right exercised after such record date of
the number of Common Shares and other securities of the
Corporation, if any, issuable upon such exercise over and
above the number of Common Shares and other securities of the
Corporation, if any, issuable upon such exercise on the basis
of the Exercise Price in effect prior to such adjustment;
provided, however, that the Corporation shall deliver to such
holder an 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.
(l) CORPORATION HAS DISCRETION TO REDUCE EXERCISE PRICE FOR TAX
REASONS. 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 their good faith judgement, the Board of
Directors shall determine to be advisable in order that any:
(i) consolidation or subdivision of the Common Shares; (ii)
issuance of any Common Shares at less than the Market Price;
(iii) issuance of securities convertible into or exchangeable
for Common Shares; (iv) 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, shall not be taxable to such shareholders.
2.4 DATE ON WHICH EXERCISE IS EFFECTIVE
Each person in whose name any certificate for Common Shares is issued upon
the exercise of Rights, shall for all purposes be deemed to have become the
holder of record of the Common Shares represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered (together with a duly completed
Election to Exercise) and payment of the Exercise Price for such Rights (and any
applicable transfer taxes and other governmental charges payable by the
exercising holder hereunder) was made, provided, however, that if the date of
such surrender and payment is a date upon which the Common Share transfer books
of the Corporation are closed, such person shall be deemed to have become the
record holder of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the Common Share transfer books of the
Corporation are open.
<PAGE>
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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 any of the Chairman, the President, the Chief
Financial Officer, or any Vice President, together with any
other of such Persons or together with any one of its
Secretary or Treasurer. The signature of any of these
officers on the Rights Certificates may be manual or
facsimile. Rights Certificates bearing the manual or facsimile
signatures of individuals who were at any time the proper
officers of the Corporation shall bind the Corporation,
notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the countersignature and
delivery of such Rights Certificates.
(b) Promptly after the Corporation learns of the Separation Time,
the Corporation will notify the Rights Agent of such
Separation Time and will deliver Rights Certificates executed
by the Corporation to the Rights Agent for countersignature,
and the Rights Agent shall manually countersign and send such
Rights Certificates to the holders of the Rights pursuant to
Subsection 2.2(c) hereof. No Rights Certificate shall be valid
for any purpose until countersigned by the Rights Agent as
aforesaid.
(c) Each Rights Certificate shall be dated the date of countersignature
thereof.
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 the "Rights
Registrar" for the purpose of maintaining the Rights Register
for the Corporation and registering Rights and transfers of
Rights as herein provided. In the event that the Rights Agent
shall cease to be the Rights Registrar, the Rights Agent will
have the right to examine the Rights Register at all
reasonable times.
After the Separation Time and prior to the Expiration Time, upon
surrender for registration of transfer or exchange of any Rights
Certificate and subject to the provisions of Subsection 2.6(c) below
and the other provisions of this Agreement, the Corporation will
execute and the Rights Agent will manually countersign and deliver,
in the name of the holder or the designated transferee or transferees
as required pursuant to the holder's instructions, one or more new
Rights Certificates evidencing the same aggregate number of Rights as
did the Rights Certificates so surrendered.
(b) All Rights issued upon any registration of transfer or exchange of
Rights Certificates shall be the valid obligations of the
Corporation, and such Rights shall be entitled to the same benefits
under this Agreement as the Rights surrendered upon such registration
of transfer or exchange.
(c) Every Rights Certificate surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied
by a written instrument of transfer 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
or the Rights Agent may require the payment of a sum
sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto
<PAGE>
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and the Corporation may require payment of a sum sufficient to cover
any other expenses (including the fees and expenses of the Rights
Agent) in connection therewith.
2.7 MUTILATED, DESTROYED, LOST AND STOLEN RIGHT CERTIFICATES
(a) If any mutilated Rights Certificate is surrendered to the Rights
Agent prior to the Expiration Time, the Corporation shall execute and
the Rights Agent shall manually countersign and deliver in exchange
therefor a new Rights Certificate evidencing the same number of
Rights as did the Rights Certificate so surrendered.
(b) If there shall be delivered to the Corporation and the Rights
Agent prior to the Expiration Time: (i) evidence to their
reasonable satisfaction of the destruction, loss or theft of
any Rights Certificate; and (ii) such indemnity or other
security 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 or the Rights Agent may require the
payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and the Corporation
may require payment of a sum sufficient to cover any other expenses
(including the fees and expenses of the Rights Agent) in connection
therewith.
(d) Every new Rights Certificate issued pursuant to this Section
2.7 in lieu of any destroyed, lost or stolen Rights
Certificate shall evidence an original additional contractual
obligation of the Corporation, whether or not the destroyed
lost or stolen Rights Certificate shall be at any time
enforceable by anyone, and the holder thereof shall be
entitled to all the benefits of this Agreement equally and
proportionately with any and all other holders of Rights duly
issued by the Corporation.
2.8 PERSONS DEEMED OWNERS
Prior to due presentment of a Rights Certificate (or, prior to the
Separation Time, the associated Common Share certificate) for registration of
transfer, the Corporation, the Rights Agent and any agent of the Corporation or
the Rights Agent shall be entitled to deem and treat the person in whose name a
Rights Certificate (or, prior to the Separation Time, the associated Common
Share certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby for all purposes whatsoever. As used in this Agreement, unless
the context otherwise requires, the term "holder" of any Rights shall mean the
registered holder of such Rights (or, prior to the Separation Time, the
associated Common Shares).
2.9 DELIVERY AND CANCELLATION OF RIGHTS CERTIFICATES
All Rights Certificates surrendered upon exercise or for redemption,
registration of transfer or exchange shall, if surrendered to any person other
than the Rights Agent, be delivered to the Rights Agent and, in any case, shall
be promptly cancelled by the Rights Agent. The Corporation may at any time
deliver to the Rights Agent for cancellation any Rights Certificates previously
countersigned and delivered hereunder which the Corporation may have acquired in
any manner
<PAGE>
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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 the same, consents and agrees with
the Corporation and the Rights Agent and with every other holder of Rights:
(i) to be bound by and subject to the provisions of this Agreement, as
amended or supplemented from time to time in accordance with the
terms hereof, in respect of all Rights held;
(ii) that prior to the Separation Time each Right will be transferable
only together with, and will be transferred by a transfer of, the
associated Common Share certificate representing such Right;
(iii)that after the Separation Time, the Rights Certificates will be
transferable only on the Rights Register as provided herein;
(iv) that prior to due presentment of a Rights Certificate (or, prior to
the Separation Time, the associated Common Share certificate) for
registration of transfer, the Corporation, the Rights Agent and any
agent of the Corporation or the Rights Agent shall be entitled to
deem and treat the person in whose name the Rights Certificate (or
prior to the Separation Time, the associated Common Share
certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership
or writing on such Rights Certificate or the associated Common Share
certificate made by anyone other than the Corporation or the Rights
Agent) for all purposes whatsoever, and neither the Corporation nor
the Rights Agent shall be affected by any notice to the contrary;
(v) that such holder of Rights has waived his or her right to receive any
fractional Rights or any fractional Common Shares upon exercise of
Rights except as provided herein; and
(vi) that without the approval of any holder of Rights and upon the sole
authority of the Board of Directors acting in good faith this
Agreement may be supplemented or amended from time to time pursuant
to and as provided herein.
2.11 RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER
No holder, as such, of any Rights or Rights Certificate shall be entitled
to vote, receive dividends or be deemed for any purpose whatsoever the holder of
any Common Share or any other share or security of the Corporation which may at
any time be issuable on the exercise of the Rights represented thereby, nor
shall anything contained herein or in any Rights Certificate be construed or
deemed to confer upon the holder of any Right or Rights Certificate, as such,
any of the rights, titles, benefits or privileges of a holder of Common Shares
or any other shares or securities of the Corporation or any right to vote at any
meeting of shareholders of the Corporation whether for the election of directors
or otherwise or upon any matter submitted to holders of shares of the
Corporation at any meeting thereof, or to give or withhold consent to any action
of the Corporation, or to receive notice of any meeting or other action
affecting any holder of Common
<PAGE>
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Shares or any other shares or securities of the Corporation except as expressly
provided herein, or to receive dividends, distributions or subscription rights,
or otherwise, until the Right or Rights evidenced by Rights Certificates shall
have been duly exercised in accordance with the terms and provisions hereof.
ARTICLE 3--ADJUSTMENTS TO THE RIGHTS
IN THE EVENT OF CERTAIN TRANSACTIONS
3.1 FLIP-IN EVENT
(a) Subject to Subsection 3.1(b), and Subsections 5.1(b), 5.1(c)
and 5.1(d) hereof, in the event that prior to the Expiration
Time a Flip-in Event shall occur, the Corporation shall take
such action as may be necessary to ensure and provide within
eight (8) Trading Days of such occurrence, or such longer
period as may be required to satisfy all applicable
requirements of the Securities Act (Ontario), and the
securities legislation of each other province of Canada and,
if applicable, of the United States of America that, except as
provided below, each Right shall thereafter constitute the
right to purchase from the Corporation upon exercise thereof
in accordance with the terms hereof that number of Common
Shares of the Corporation having an aggregate Market Price on
the date of the consummation or occurrence of such Flip-in
Event equal to twice the Exercise Price for an amount in cash
equal to the Exercise Price (such Right to be appropriately
adjusted in a manner analogous to the applicable adjustment
provided for in Section 2.3 hereof in the event that after
such date of consummation or occurrence an event of a type
analogous to any of the events described in Section 2.3 hereof
shall have occurred with respect to such Common Shares).
(b) Notwithstanding anything in this Agreement to the contrary,
upon the occurrence of any Flip-in Event, any Rights that are
or were Beneficially Owned on or after the earlier of the
Separation Time, and the Stock Acquisition Date by: (i) an
Acquiring Person (or any Affiliate or Associate of an
Acquiring Person or any Person acting jointly or in concert
with an Acquiring Person or any Affiliate or Associate of such
Acquiring Person); or (ii) a transferee or other successor in
title directly or indirectly of Rights held by an Acquiring
Person (or of any Affiliate or Associate of an Acquiring
Person or of any Person acting jointly or in concert with an
Acquiring Person or any Associate or Affiliate of an Acquiring
Person) who becomes a transferee or successor in title
concurrently with or subsequent to the Acquiring Person
becoming an Acquiring Person; shall become null and void
without any further action, and any holder of such Rights
(including transferees or successors in title) shall not have
any rights whatsoever to exercise such Rights under any
provision of this Agreement and shall not have thereafter any
other rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise.
ARTICLE 4--THE RIGHTS AGENT
4.1 GENERAL
(a) The Corporation hereby appoints the Rights Agent to act as agent for
the Corporation 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. In the event the Corporation appoints one or
more co-Rights Agents, the respective duties of the
<PAGE>
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Rights Agents and co-Rights Agents shall be as the Corporation may
determine. The Corporation agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder
and, from time to time, on demand of the Rights Agent, its reasonable
expenses and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its
duties hereunder. The Corporation also agrees to indemnify the Rights
Agent for, and to hold it harmless against, any loss, liability, or
expense incurred that is not the result of negligence, bad faith or
wilful misconduct on the part of the Rights Agent, its officers or
employees, 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.
(b) The Rights Agent shall be protected from and shall incur no
liability for or in respect of any action taken, suffered or
omitted by it in connection with its administration of this
Agreement in reliance upon any certificate for Common Shares
or any Rights Certificate or certificate for other securities
of the Corporation, instrument of assignment or transfer,
power of attorney, endorsement, affidavit, letter, notice,
direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed,
executed and, where necessary, verified or acknowledged, by
the proper Person or Persons.
4.2 MERGER OR AMALGAMATION OR CHANGE OF NAME OF RIGHTS AGENT
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or amalgamated or with which it may
be consolidated, or any corporation resulting from any merger,
amalgamation, statutory arrangement or consolidation to which
the Rights Agent or any successor Rights Agent is a party, or
any corporation succeeding to the shareholder or stockholder
services business of the Rights Agent or any successor Rights
Agent, will be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided
that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 4.4
hereof. In case at the time such successor Rights Agent
succeeds to the agency created by this Agreement any of the
Rights Certificates have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature
of the predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of
the Rights Certificates have not been countersigned, any
successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all
such cases such Rights Certificates will have the full force
provided in the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent is changed
and at such time any of the Rights Certificates shall have
been countersigned but not delivered, the Rights Agent may
adopt the countersignature under its prior name and deliver
Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights
Certificates either in its prior name or in its changed name;
and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this
Agreement.
<PAGE>
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4.3 DUTIES OF RIGHTS AGENT
The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, to all of which the
Corporation and the holders of Rights Certificates, by their acceptance thereof,
shall be bound.
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Corporation) and the opinion of such counsel will be
full and complete authorization and protection to the Rights Agent as
to any action taken or omitted to be taken by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent deems it necessary or desirable that any fact
or matter be proved or established by the Corporation prior to
taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively
proven and established by a certificate signed by a person
believed by the Rights Agent to be the Chairman, the
President, the Chief Financial Officer, or any Vice-President,
the Treasurer or the Secretary of the Corporation and
delivered to the Rights Agent; and such certificate will be
full authorization to the Rights Agent for any action taken or
suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent will be liable hereunder only for events which are
the result of its own negligence, bad faith or wilful misconduct and
that of its officers, employees and other representatives.
(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) hereof) or
any adjustment required under the provisions of Section 2.3
hereof or responsible for the manner, method or amount of any
such adjustment or the ascertaining of the existence of facts
that would require any such adjustment (except with respect to
the exercise of Rights after receipt of the certificate
contemplated by Section 2.3 hereof describing any such
adjustment); nor will it by any act hereunder be deemed to
make any representation or warranty as to the authorization of
any Common Shares to be issued pursuant to this Agreement or
any Rights or as to whether any Common Shares will, when
issued, be duly and validly authorized, executed, issued and
delivered or 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
<PAGE>
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Agent for the carrying out or performing by the Rights Agent of the
provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties
hereunder from any person believed by the Rights Agent to be
the Chairman, the President, the Chief Financial Officer, any
Vice-President, the Treasurer or the Secretary of the
Corporation and to apply to such persons for advice or
instructions in connection with its duties, and it shall not
be liable for any action taken or suffered by it in good faith
in accordance with instructions of any such person.
(h) The Rights Agent and any shareholder or stockholder, director,
officer or employee of the Rights Agent may buy, sell or deal
in 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.
(i) The Corporation agrees that it shall pay the Rights Agent for the
services provided hereunder in accordance with the tariff of fees as
agreed to in writing by the Corporation and the Rights Agent and
shall reimburse the Rights Agent for all costs and expenses,
including legal fees incurred in the carrying out of duties
hereunder.
4.4 CHANGE OF RIGHTS AGENT
The Rights Agent may resign and be discharged from its duties under
this Agreement upon ninety (90) days' notice (or such lesser notice as is
acceptable to the Corporation) in writing mailed to the Corporation and to each
transfer agent of Voting Shares of the Corporation by registered or certified
mail, and to the holders of the Rights in accordance with Section 5.8 hereof.
The Corporation may remove the Rights Agent upon thirty (30) days' notice in
writing, mailed to the Rights Agent and to each transfer agent of the Voting
Shares of the Corporation by registered or certified mail and to the holders of
the Rights in accordance with Section 5.8 hereof. 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 sixty (60) days after such removal or after
it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of any Rights (which
holder shall, with such notice, submit such holder's Rights Certificate for
inspection by the Corporation), then the holder of any Rights may apply to any
court of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Corporation or by such a court,
shall be a corporation incorporated under the laws of Canada or a province
thereof authorized to carry on the business of a trust company in the Province
of Ontario. After appointment, the successor Rights Agent will be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment. the Corporation will file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Voting Shares of the Corporation, and mail a notice thereof in
writing to the holders of the Rights. The cost of giving any notice required
under this Section 4.4 shall be borne solely by the Corporation. 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
<PAGE>
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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) Subject to the prior consent of the holders of Voting Shares
or the holders of Rights obtained as set forth in Subsections
5.4(b) or 5.4(c) hereof, as applicable, the Board of Directors
acting in good faith may, at any time prior to the occurrence
of a Flip-in Event as to which the application of Section 3.1
has not been waived pursuant to this Section 5.1, 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 hereof in the event
that an event of the type described in Section 2.3 hereof
shall have occurred (such redemption price being herein
referred to as the "Redemption Price").
(b) Subject to the prior consent of the holders of Voting Shares
obtained as set forth in Subsection 5.4(b) hereof, the Board
of Directors acting in good faith may, prior to the occurrence
of a Flip-in Event as to which the application of Section 3.1
has not been waived pursuant to this Section 5.1, and upon
prior written notice to the Rights Agent, determine to waive
the application of Section 3.1 hereof to a Flip-in Event which
may occur by reason of an acquisition of Voting Shares made
otherwise than pursuant to a Take-over Bid made by means of a
take-over bid circular to all holders of record of Voting
Shares (which for greater certainty shall not include the
circumstances described in Subsection 5.1(h) below). In the
event that the Board of Directors proposes such a waiver, the
Board of Directors shall extend the Separation Time to a date
subsequent to and not more than ten (10) Business Days
following the meeting of shareholders called to approve such
waiver.
(c) The Board of Directors acting in good faith may, prior to the
occurrence of a Flip-in Event as to which the application of
Section 3.1 has not been waived pursuant to this Section 5.1,
and upon prior written notice delivered to the Rights Agent,
determine to waive the application of Section 3.1 hereof to a
Flip-in Event which may occur by reason of a Take-over Bid
made by means of a take-over bid circular to all holders of
Voting Shares (which for greater certainty shall not include
the circumstances described in Subsection 5.1(h) below);
provided that if the Board of Directors waives the application
of Section 3.1 hereof to a particular Flip-in Event pursuant
to this Subsection 5.1(c), the Board of Directors shall be
deemed to have waived the application of Section 3.1 hereof to
any other Flip-in Event occurring by reason of any Take-over
Bid made by means of a take-over bid circular to all holders
of record of Voting Shares prior to the expiry of any
Take-over Bid (as the same may be extended from time to time)
in respect of which a waiver is, or is deemed to have been,
granted pursuant to this Subsection 5.1(c).
(d) Notwithstanding the provisions of Subsections 5.1(b) and (c) hereof,
the Board of Directors may, prior to the close of business on the
eighth (8th) 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 hereof to a Flip-in
Event, provided that both of the following conditions are satisfied:
<PAGE>
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(i) the Board of Directors has determined that a Person became an
Acquiring Person by inadvertence and without any intention to
become, or knowledge that Person would become, an Acquiring
Person; and
(ii) such Acquiring Person has reduced its Beneficial Ownership of
Voting Shares (or has entered into a contractual arrangement
with the Corporation, acceptable to the Board of Directors, to
do so within thirty (30) days of the date on which such
contractual arrangement is entered into) such that at the time
the waiver becomes effective pursuant to this Subsection 5.1(d),
such Person is no longer an Acquiring Person;
and in the event of such a waiver, for the purposes of this
Agreement, the Flip-in Event shall be deemed never to have occurred,
and the Separation Time shall be deemed not to have occurred as a
result of such Person having inadvertently become an Acquiring
Person.
(e) The Board of Directors shall, without further formality, be
deemed to have elected to redeem the Rights at the Redemption
Price on the date that a Person who has made a Permitted Bid,
a Competing Permitted Bid or an Exempt Acquisition under
Subsection 5.1(c) above, takes up and pays for Voting Shares
pursuant to the terms and conditions of such Permitted Bid,
Competing Permitted Bid or Exempt Acquisition, as the case may
be.
(f) If the Board of Directors elects or is deemed to have elected
to redeem the Rights and, in circumstances in which Subsection
5.1(a) is applicable, such redemption is approved by the
holders of Voting Shares or the holders of Rights in
accordance with Subsection 5.4(b) or (c), as the case may be,
the right to exercise the Rights will thereupon, without
further action and without notice, terminate and each Right
will after redemption be null and void and the only right
thereafter of the holders of Rights shall be to receive the
Redemption Price.
(g) Within ten (10) days after the Board of Directors electing or
having been deemed to have elected to redeem the Rights or, if
Subsection 5.1(a) applies, within ten (10) Business Days after
the holders of Voting Shares or the holders of Rights have
approved the redemption of Rights in accordance with
Subsection 5.4(b) or (c) hereof, as the case may be, the
Corporation shall give notice of redemption to the holders of
the then outstanding Rights by mailing such notice to all such
holders at their last address as they appear upon the Rights
Register or, prior to the Separation Time, on the registry
books of the Transfer Agent for the Common Shares. Any notice
which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each
such notice of redemption will state the method by which the
payment of the Redemption Price will be made. The Corporation
may not redeem, acquire or purchase for value any Rights at
any time in any manner other than that specifically set forth
in this Section 5.1 and other than in connection with the
purchase of Common Shares prior to the Separation Time.
(h) Where a Take-over Bid that is not a Permitted Bid Acquisition
is withdrawn or otherwise terminated after the Separation
Time has occurred and prior to the occurrence of a Flip-in
Event, the Board of Directors may elect to redeem all the
outstanding Rights at the Redemption Price. Upon the Rights
being redeemed pursuant to this Subsection 5.1(h), all the
provisions of this Agreement shall continue to apply as if
the Separation Time had not occurred and Rights Certificates
representing the number of Rights held by each holder of
record of Common
<PAGE>
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Shares as of the Separation Time had not been mailed to each such
holder and for all purposes of this Agreement the Separation Time
shall be deemed not to have occurred.
5.2 EXPIRATION
No person shall have any rights whatsoever pursuant to or arising out of
this Agreement or in respect of any Right after the Expiration Time, except the
Rights Agent as specified in Subsection 4.1(a) hereof.
5.3 ISSUANCE OF NEW RIGHT 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 its 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) The Corporation may from time to time supplement or amend this
Agreement without the approval of any holders of Rights or
Voting Shares to correct any clerical or typographical error
or to maintain the validity of the Agreement as a result of a
change in any applicable legislation or regulations
thereunder. The Corporation, at or prior to the meeting of the
shareholders, or any adjournment or postponement thereof, to
be held for shareholders of the Corporation to consider and if
deemed advisable, to adopt a resolution approving, ratifying
and confirming this Agreement and the Rights issued pursuant
thereto, may supplement or amend this Agreement without the
approval of any holders of Rights or Voting Shares in order to
make 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
hereof except with the written concurrence of the Rights Agent to
such supplement or amendment.
(b) Subject to Subsection 5.4(a), the Corporation may, with the
prior consent of the holders of the Voting Shares obtained as
set forth below, at any time prior to the Separation Time,
amend, vary or rescind any of the provisions of this Agreement
and the Rights (whether or not such action would materially
adversely affect the interests of the holders of Rights
generally). Such consent shall be deemed to have been given if
provided by the holders of Voting Shares at a meeting of the
holders of Voting Shares, which meeting shall be called and
held in compliance with applicable laws and regulatory
requirements and the requirements in the articles and by-laws
of the Corporation. Subject to compliance with any
requirements imposed by the foregoing, consent shall be given
if the proposed amendment, variation or revision is approved
by the affirmative vote of a majority of the votes cast by
Independent Shareholders present in person or represented by
proxy and entitled to be voted at a meeting of the holders of
Voting Shares.
(c) Subject to Subsection 5.4(a), the Corporation may, with the prior
consent of the holders of Rights obtained as set forth below, at any
time after the Separation Time and before the Expiration Time, amend,
vary or rescind any of the provisions of
<PAGE>
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this Agreement and the Rights (whether or not such action would
materially adversely affect the interests of the holders of Rights
generally). 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 in person
or represented by proxy and entitled to be voted at a meeting of the
holders of Rights and representing a majority of the votes cast in
respect thereof. For the purposes hereof, each outstanding Right
(other than Rights which are void pursuant to the provisions hereof)
shall be entitled to one vote, and the procedures for the calling,
holding and conduct of the meeting shall be those, as nearly as may
be, which are provided in the Corporation's by-laws and the Business
Corporations Act (Ontario) with respect to a meeting of shareholders
of the Corporation.
(d) Any supplements or amendments made by the Corporation to this
Agreement pursuant to Subsection 5.4(a) above which are required to
maintain the validity of this Agreement as a result of any change in
any applicable legislation or regulations 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; and
(ii) if made after the Separation Time, be submitted to the holders
of Rights at a meeting to be called for on a date not later than
immediately following the next meeting of shareholders of the
Corporation and the holders of Rights may, by resolution passed
by the majority referred to in Subsection 5.4(c), confirm or
reject such amendment.
A supplement or amendment shall be effective from the date of the
resolution of the Board of Directors adopting such supplement or amendment until
it is confirmed or rejected or until it ceases to be effective (as described in
the next sentence) and, where such supplement or amendment is confirmed, it
continues in effect in the form so confirmed. If such supplement or 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 supplement or amendment
shall cease to be effective from and after the termination of the meeting at
which it was rejected or to which it should have been but was not submitted or
from and after the date of the meeting of holders of Rights that should have
been but was not held, and no subsequent resolution of the Board of Directors to
amend, vary or delete any provision of this Agreement to substantially the same
effect shall be effective until confirmed by the shareholders or holders of
Rights, as the case may be.
5.5 FRACTIONAL RIGHTS AND FRACTIONAL SHARES
(a) The Corporation shall not be required to issue fractions of Rights or
to distribute Rights Certificates which evidence fractional Rights.
Any such fractional Right shall be null and void and the Corporation
will not have any obligation or liability in respect thereof.
(b) The Corporation shall not be required to issue fractions of
Common Shares or other securities upon exercise of the
Rights or to distribute certificates which evidence
fractional Common Shares or other securities. In lieu of
issuing fractional Common Shares or other securities, the
Corporation shall pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein
provided, an
<PAGE>
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amount in cash equal to the same fraction of the Market Price of
one Common Share.
5.6 RIGHTS OF ACTION
Subject to the terms of this Agreement, all rights of action in respect of
this Agreement, other than rights of action vested solely in the Rights Agent,
are vested in the respective registered holders of the Rights; and any
registered holder of any Rights, without the consent of the Rights Agent or of
the registered holder of any other Rights, may, on such holder's own behalf and
for such holder's own benefit and the benefit of other holders of Rights
enforce, and may institute and maintain any suit, action or proceeding against
the Corporation to enforce such holder's right to exercise such holder's Rights
in the manner provided in such holder's Rights Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under, and
injunctive relief against, actual or threatened violations of the obligations of
any Person subject to this Agreement.
5.7 NOTICE OF PROPOSED ACTIONS
In case the Corporation shall propose after the Separation Time and prior
to the Expiration Time to effect or permit (in cases where the Corporation's
permission is required) any Flip-in Event or to effect the liquidation,
dissolution or winding-up of the Corporation or the sale of substantially all of
the Corporation's assets, then, in each such case, the Corporation shall give to
each holder of a Right, in accordance with Section 5.8 hereof, a notice of such
proposed action, which shall specify the date on which such Flip-in Event,
liquidation, dissolution, winding-up or sale is to take place, and such notice
shall be so given at least twenty (20) Business Days prior to the date of taking
of such proposed action.
5.8 NOTICES
Notices or demands authorized or required by this Agreement to be given or
made by the Rights Agent or by the holder of any Rights to or on the Corporation
shall be sufficiently given or made if delivered or sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Rights Agent) or sent by facsimile (in the case of facsimile, an original copy
of the notice or demand sent by first class mail, postage prepaid, to the
Corporation following the giving of the notice or demand by facsimile), or other
form of recorded electronic communication, charges prepaid and confirmed in
writing, as follows:
Royal Oak Mines Inc.
5501 Lakeview Drive
Kirkland, Washington 98033
Attention: Chief Executive Officer and President
Any notice or demand authorized or required by this Agreement to be given
or made by the Corporation or by the holder of any Rights to or on the Rights
Agent shall be sufficiently given or made if delivered or sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Corporation) or sent by facsimile (in the case of facsimile, an original
copy of the notice or demand sent by first class mail, postage prepaid, to the
Rights Agent following the giving of the notice or demand by facsimile), or
other form of recorded electronic communication, charges prepaid and confirmed
in writing, as follows:
<PAGE>
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Montreal Trust Company of Canada
510 Burrard Street
Vancouver, British Columbia V6C 3B9
Attention: Manager, Client Services Department
Notices or demands authorized or required by this Agreement to be given or
made by the Corporation or the Rights Agent to or on the holder of any Rights
shall be sufficiently given or made if delivered or sent by first-class mail,
postage prepaid, addressed to such holder at the address of such holder as it
appears upon the Rights Register or, prior to the Separation Time, on the
registry books of the transfer agent for the Common Shares. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice.
5.9 SUCCESSORS
All the covenants and provisions of this Agreement by or for the benefit
of the Corporation or the Rights Agent shall bind and enure to the benefit of
their respective successors and assigns hereunder.
5.10 BENEFITS OF THIS AGREEMENT
Nothing in this Agreement shall be construed to give to any Person other
than the Corporation, the Rights Agent and the holders of the Rights any legal
or equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Corporation, the Rights Agent
and the holders of the Rights.
5.11 GOVERNING LAW
This Agreement and each Right issued hereunder shall be deemed to be a
contract made under the laws of the Province of Ontario and for all purposes
shall be governed by and construed in accordance with the laws of such province
applicable to contracts to be made and performed entirely within such province.
5.12 SEVERABILITY
If any Section, Subsection, Clause, Subclause, term or provision hereof or
the application thereof to any circumstances or any right hereunder shall, in
any jurisdiction and to any extent, be invalid or unenforceable, such Section,
Subsection, Clause, Subclause, term or provision or such right shall be
ineffective only in such jurisdiction and to the extent of such invalidity or
unenforceability in such jurisdiction without invalidating or rendering
unenforceable or ineffective the remaining Sections, Subsections, Clauses,
Subclauses, terms and provisions hereof or rights hereunder in such jurisdiction
or the application of such Section, Subsection, Clause, Subclause, term or
provision or rights hereunder in any other jurisdiction or to circumstances
other than those as to which it is specifically held invalid or unenforceable.
5.13 EFFECTIVE DATE
This Agreement is effective and in full force and effect in accordance
with its terms as of the date hereof (the "Effective Date"). If the Rights Plan
is not ratified by resolution passed by a majority of the votes cast by
Independent Shareholders present or represented by proxy at a meeting of
shareholders of the Corporation to be held within six months of the Effective
Date, then, without further formality, this Agreement and all outstanding Rights
shall terminate and be
<PAGE>
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void and be of no further force and effect on and from the earlier of: (i) the
close of such meeting of shareholders; and (ii) 5:00 p.m. (Toronto time) on the
date which is six (6) months after the Effective Date.
5.14 DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS
The Board of Directors shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board of Directors or to the Corporation as may be necessary or
advisable in the administration of this Agreement.
All such actions, calculations and determinations (including all omissions
with respect to the foregoing) which are done or made by the Board of Directors,
in good faith, shall not subject the Board of Directors or any director of the
Corporation to any liability to the holders of the Rights.
5.15 RIGHTS OF BOARD, CORPORATION AND OFFEROR
Without limiting the generality of the foregoing, nothing contained herein
shall be construed to suggest or imply that the Board of Directors shall not be
entitled to recommend that holders of Voting Shares reject or accept an
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
Shareholders of the Corporation) with respect to any Take-over Bid or otherwise
that the Board of Directors believes is necessary or appropriate in the exercise
of its fiduciary duties.
5.16 REGULATORY APPROVALS
Any obligation of the Corporation or action or event contemplated by this
Agreement shall be subject to the prior receipt of any requisite approval or
consent from any governmental or regulatory authority including, without
limiting the generality of the foregoing, any necessary approval of any
securities regulatory authority, The Toronto Stock Exchange or any other stock
exchange.
5.17 DECLARATION AS TO NON-CANADIAN HOLDERS
If in the opinion of the Board of Directors (who may rely upon the advice
of counsel) any action or event contemplated by this Agreement would require
compliance with the securities laws or comparable legislation of a jurisdiction
outside Canada, the Board of Directors acting in good faith may take such
actions as it may deem appropriate to ensure such compliance. In no event shall
the Corporation or the Rights Agent be required to issue or deliver Rights or
securities issuable on exercise of Rights to Persons who are citizens, residents
or nationals of any jurisdiction other than Canada or the United States in which
such issue or delivery would be unlawful without registration of the relevant
Persons or securities for such purposes.
5.18 TIME OF THE ESSENCE
Time shall be of the essence in this Agreement.
<PAGE>
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5.19 EXECUTION IN COUNTERPARTS
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
ROYAL OAK MINES INC.
By: /s/ William J.V. Sheridan
MONTREAL TRUST COMPANY OF CANADA
By: /s/ Darlene Rodgers
By: /s/ Joseph M. McKay
<PAGE>
EXHIBIT A
[FORM OF RIGHTS CERTIFICATE]
Certificate No. Rights
---------- ----------
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
CORPORATION, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING
PERSON, ANY PERSON ACTING JOINTLY OR IN CONCERT WITH AN ACQUIRING
PERSON OR THEIR RESPECTIVE ASSOCIATES AND AFFILIATES (AS SUCH TERMS
ARE DEFINED IN THE RIGHTS AGREEMENT) AND THEIR RESPECTIVE TRANSFEREES
SHALL BECOME VOID WITHOUT ANY FURTHER ACTION.
RIGHTS CERTIFICATE
This certifies that _______________________________ or registered assigns,
is the registered holder of the number of Rights set forth above, each of which
entitles the registered holder thereof, subject to the terms, provisions and
conditions of the Shareholder Rights Plan Agreement dated as of the 25th day of
February, 1998 (the "Rights Agreement") between Royal Oak Mines Inc., a
corporation amalgamated under the Business Corporations Act (Ontario) (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 and non-assessable Common Share of the Corporation (a "Common Share")
at the Exercise Price referred to below, upon presentation and surrender of this
Rights Certificate together with the Form of Election to Exercise duly executed
and submitted to the Rights Agent at its principal office in any of the cities
of Vancouver and Toronto. The Exercise Price shall initially be $20.00
(Canadian) per Right and shall be subject to adjustment in certain events as
provided in the Rights Agreement.
In certain circumstances described in the Rights Agreement, each Right
evidenced hereby may entitle the registered holder thereof to purchase or
receive assets, debt securities or other equity securities of the Corporation
(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. Copies of the
Rights Agreement are on file at the registered head office of the Corporation
and are available upon written request.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at any of the offices of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or Rights Certificates of like
tenor and date evidencing an aggregate number of Rights entitling the holder to
purchase a like aggregate number of Common Shares as the Rights evidenced by the
Rights Certificate or Rights Certificates surrendered. If this Rights
Certificate shall be exercised in part, the registered holder shall be entitled
to receive, upon surrender hereof, another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.
<PAGE>
- 2 -
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Rights Certificate (i) may be, and under certain circumstances are required
to be, redeemed by the Corporation at a redemption price of $0.0001 per Right;
and (ii) may be exchanged at the option of the Corporation for cash, debt or
equity securities or other assets of the Corporation.
No fractional Common Shares will be issued upon the exercise of any Right
or Rights evidenced hereby.
No holder of this Rights Certificate, as such, shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of Common Shares or of
any other securities of the Corporation which may at any time be issuable upon
the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, any of the rights of a
shareholder of the Corporation or any right to vote for the election of
directors or upon any matter submitted to shareholders of the Corporation at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders of the
Corporation (except as expressly provided in the Rights Agreement), or to
receive dividends, distributions or subscription rights, or otherwise until the
Rights evidenced by this Rights Certificate shall have been exercised as
provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been manually countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Corporation.
Date:
ROYAL OAK MINES INC.
By: By:
President Secretary
Countersigned
MONTREAL TRUST COMPANY OF CANADA
Transfer Agent and Registrar
By:
Authorized Signature
<PAGE>
(To be attached to each Rights Certificate)
FORM OF ELECTION TO EXERCISE
TO: ROYAL OAK MINES INC.
The undersigned hereby irrevocably elects to exercise ____________________
whole Rights represented by the attached Rights Certificate to purchase the
Common Shares issuable upon the exercise of such Rights and requests that
certificates for such Shares be issued to:
-------------------------------------------
(Name)
-------------------------------------------
(Address)
-------------------------------------------
(City and State or Province)
-------------------------------------------
Social Insurance, Social Security or Other Taxpayer 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 State or Province)
-------------------------------------------
Social Insurance, Social Security or Other Taxpayer Number
Date
--------------------
Signature Guaranteed
---------------------------------------
Signature
(Signature must correspond to name as
written upon the face of this Rights
Certificate in every particular. without
alteration or enlargement or any change
whatsoever)
Signature must be guaranteed by a Canadian chartered bank, a Canadian trust
company or a member of a recognized stock exchange or a member of the
Transfer Association Medallion (Stamp) Program.
<PAGE>
[To be completed if true]
The undersigned hereby represents, for the benefit of all holders of
Rights and Common Shares, that the Rights evidenced by this Rights Certificate
are not, and, to the knowledge of the undersigned, have never been, Beneficially
Owned by an Acquiring Person or an Affiliate or Associate thereof or any Person
acting jointly or in concert with any of the foregoing (as defined in the Rights
Agreement).
----------------------------
Signature
NOTICE
In the event the certification set forth in the Form of Election to
Exercise is not completed, the Corporation will deem the Beneficial Owner of the
Rights evidenced by this Rights Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and
accordingly such Rights shall be null and void.
<PAGE>
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate)
FOR VALUE RECEIVED
-----------------------------------------------------------
hereby sells, assigns and transfers unto
-------------------------------------
- ------------------------------------------------------------------------------
(Please print name and address of transferee)
the Rights represented by this Rights Certificate, together with all right,
title and interest therein and does hereby irrevocably constitute and appoint
_______________ as attorney to transfer the within Rights on the books of the
Corporation, with full power of substitution.
Dated
----------------
Signature Guaranteed
---------------------------------------
Signature
(Signature must correspond to name as
written upon the face of this Rights
Certificate in every particular. without
alteration or enlargement or any change
whatsoever)
Signature must be guaranteed by a Canadian chartered bank, a Canadian
trust company or a member of a recognized stock exchange or a member of the
Transfer Association Medallion (Stamp) Program.
[To be completed if true]
The undersigned hereby represents, for the benefit of all holders of
Rights and Common Shares, that the Rights evidenced by this Rights Certificate
are not, and, to the knowledge of the undersigned, have never been, Beneficially
Owned by an Acquiring Person or an Affiliate or Associate thereof or any Person
acting jointly or in concert with any of the foregoing (as defined in the Rights
Agreement).
--------------------------------
Signature
NOTICE
In the event the certification set forth in the Form of Assignment is not
completed, the Corporation will deem the Beneficial Owner of the Rights
evidenced by this Rights Certificate to be an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement) and accordingly such
Rights shall be null and void.
Exhibit 2
[LETTERHEAD OF ROYAL OAK MINES]
PRESS RELEASE
FOR IMMEDIATE RELEASE FORM KIRKLAND
FEBRUARY 25, 1998
- --------------------------------------------------------------------------------
ROYAL OAK ADOPTS SHAREHOLDERS' RIGHTS PLAN
ROYAL OAK MINES INC. (TSE and AMEX: RYO) announced today the adoption by its
Board of Directors of a Shareholders' Rights Plan to ensure equal treatment of
the Company's shareholders upon an acquisition of control of the Company. The
Plan is also designed to provide the Company's Board of Directors with
sufficient time, should an offer for control of the Company be made, to maximize
shareholder values by developing alternative transactions, which may include the
solicitation of competing offers. The Plan was not adopted in response to, nor
is the Company aware of, any pending or threatened acquisition of control of the
Company.
In order to implement the Plan, the Company has authorized the issuance of one
Right in respect of each common share of the Company outstanding to holders of
record at 5:00 p.m. (Toronto Time) on February 25, 1998. The Rights will
initially trade with the common shares and be represented by the common share
certificates.
On the occurrence of certain triggering events, including the acquisition by a
person or group of 20% or more of the common shares, other than by way of a
transaction approved under the Plan or, in certain circumstances, by the Board
of Directors of the Company, the Rights will entitle holders (other than the
acquiring person or group) to acquire common shares of the Company at a 50%
discount to the market price.
The Rights are not triggered by a purchase of common shares made pursuant to a
"Permitted Bid" or a "Competing Permitted Bid." A Permitted Bid must, among
other things, be made to all shareholders by way of a take-over bid circular, be
open for acceptance for at least 60 days and be accepted by holders of more than
50% of the outstanding common shares, exclusive of those held by the acquiror. A
Competing Permitted Bid must satisfy the same criteria as a Permitted Bid,
except that the Competing Permitted Bid must remain open for acceptance for the
greater of 21 days and the 60th day after the date on which the Permitted Bid
then in existence was made.
<PAGE>
Royal Oak Mines
Page 2 of 2
Although the Plan is effective immediately, it will be submitted to the
Company's shareholders for confirmation at the 1998 shareholders' meeting.
Margaret K. Witte, President and Chief Executive Officer of Royal Oak, comment-
ing on the need to adopt a Shareholders' Rights Plan, said: "We are primarily
concerned about protecting the interests of our shreholders so that they re-
ceive fair value for their investment in the Company. The gold mining in-
dustry is facing a critical time due to the price of gold which is at an 18-
year low of under US$300 per ounce. We anticipate that there will be further
rationalization in the industry where undervalued companies with attractive
assets will be acquired by large gold producers that are in a strong financial
position. We also see companies of similar size merging when synergies can
create a larger and stronger company that will benefit from premium market
multiples. We believe that the underlying asset value and future potential of
our Kemess gold-copper mine are not fully recognized in the market value of the
Company. Accordingly, we believe that this is an appropriate time to adopt a
Shareholders' Rights Plan".
For further information, contact: or in Europe:
Mr. J. Graham Eacott Mr. David Williamson
Vice-President, Investor Relations David Williamson Associates
Royal Oak Mines Inc. International Investor Relations
5501 Lakeview Drive 15 St. Helen's Place, 3rd Floor
Kirkland, WA 98033-7314 London, England EC3A 6DE
Telephone: (425) 822-8992 Telephone: 011-44-171-628-3989
Facsimile: (425) 822-3552 Facsimile: 011-44-171-920-0563
Internet site: http//www.royal-oak-mines.com
