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EXHIBIT 2.1
PLAN OF ARRANGEMENT INCLUDING EXCHANGEABLE SHARE PROVISIONS
PLAN OF ARRANGEMENT
UNDER SECTION 192
OF THE CANADA BUSINESS CORPORATIONS ACT
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Plan of Arrangement, unless there is something in the subject
matter or context inconsistent therewith, the following terms shall have the
respective meanings set out below and grammatical variations of such terms shall
have corresponding meanings:
"AFFILIATE" has the meaning ascribed thereto in the CBCA.
"AMALCO" means the amalgamated corporation resulting from the
Amalgamation.
"AMALGAMATION" means the amalgamation of Pixstream and Holdco as
contemplated in the Arrangement.
"ARRANGEMENT" means the arrangement under section 192 of the CBCA on the
terms and subject to the conditions set out in this Plan of Arrangement,
subject to any amendments or variations thereto made in accordance with
the Merger Agreement or Article 6 hereof.
"ARRANGEMENT RESOLUTION" means the special resolution of the holders of
the Class A Shares, Class B Shares, Pixstream Options and Pixstream
Warrants approving the Arrangement.
"ARTICLES OF ARRANGEMENT" means the articles of arrangement of Pixstream
in respect of the Arrangement required by the CBCA to be sent to the
Director after the Final Order is made.
"ASSUMED OPTION" has the meaning ascribed thereto in section 2.2.
"BUSINESS DAY" means any day other than Saturday, Sunday or any day on
which commercial banks located in either the State of California or
Toronto, Canada are authorized or obligated to close.
"CANADIAN PLAN" means Pixstream's Key Employee Stock Option plan for
Pixstream employees other than employees located in the United Kingdom,
as such plan may be amended in accordance with the terms of the Merger
Agreement.
"CAPUTO SECONDARY SPECIAL WARRANTS" means 75,000 special warrants issued
by David Caputo pursuant to the Special Warrant Indenture which are
exercisable into 150,000
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currently issued and outstanding Class A Shares registered in the name
of David Caputo but subject to a deposit agreement among David Caputo,
CIBC Mellon Trust Company and others.
"CBCA" means the Canada Business Corporations Act R.S.C. 1985, c. C-44,
as amended.
"CERTIFICATE" means the certificate of arrangement giving effect to the
Arrangement, issued pursuant to subsection 192(7) of the CBCA after the
Articles of Arrangement have been filed.
"CIRCULAR" means the notice of the Pixstream Meeting and accompanying
management proxy circular sent to holders of Pixstream Common Shares,
Pixstream Options and Pixstream Warrants in connection with the
Pixstream Meeting.
"CISCO " means Cisco Systems, Inc., a corporation existing under the
laws of the State of California.
"CISCO COMMON SHARE" means a share of common stock, par value U.S.
$0.001, of Cisco.
"CISCO CONTROL TRANSACTION" has the meaning ascribed thereto in the
Exchangeable Share Provisions.
"CISCO EXCHANGECO" means 3801110 Canada Inc., a corporation existing
under the laws of Canada.
"CISCO NEWCO" means 3045848 Nova Scotia Company, an unlimited liability
company existing under the laws of the Province of Nova Scotia.
"CISCO PARTIES" means Cisco, Cisco Newco and Cisco Exchangeco,
collectively.
"CLASS A SHARES" means the Class A voting common shares in the capital
of Pixstream.
"CLASS B SHARES" means the Class B non-voting common shares in the
capital of Pixstream.
"COURT" means the Ontario Superior Court of Justice.
"CURRENT MARKET PRICE" has the meaning ascribed thereto in the
Exchangeable Share Provisions.
"DEPOSITARY" means Montreal Trust Company of Canada at its offices set
out in the Letter of Transmittal.
"DIRECTOR" means the Director appointed under section 260 of the CBCA.
"DISSENT PROCEDURES" has the meaning set out in section 3.1.
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"DISSENT RIGHTS" has the meaning set out in section 3.1.
"DISSENTING SHAREHOLDER" means a holder of Pixstream Common Shares who
dissents in respect of the Arrangement in strict compliance with the
Dissent Procedures.
"DIVIDEND AMOUNT" has the meaning ascribed thereto in section 5.1(a) and
section 5.2(a).
"EFFECTIVE CISCO PRICE" has the meaning ascribed thereto in section 2.2.
"EFFECTIVE DATE" means the date shown on the Certificate.
"EFFECTIVE TIME" means 12:01 a.m. (Toronto time) on the Effective Date.
"EXCHANGE RATIO" has the meaning ascribed thereto in section 2.2.
"EXCHANGEABLE SHARES" means the exchangeable shares in the capital of
Cisco Exchangeco.
"EXCHANGEABLE SHARE PROVISIONS" means the rights, privileges,
restrictions and conditions attaching to the Exchangeable Shares, which
rights, privileges, restrictions and conditions shall be substantially
as set forth in Appendix 1 hereto.
"EXCHANGEABLE SHARE VOTING EVENT" has the meaning ascribed thereto in
the Exchangeable Share Provisions.
"EXEMPT EXCHANGEABLE SHARE VOTING EVENT" has the meaning ascribed
thereto in the Exchangeable Share Provisions.
"FINAL ORDER" means the final order of the Court approving the
Arrangement as such order may be amended at any time prior to the
Effective Date or, if appealed, then, unless such appeal is withdrawn or
denied, as affirmed.
"HOLDCO" means Founders Holdings Corp., a corporation existing under the
laws of Canada.
"HOLDCO COMMON SHARES" means the outstanding voting common shares and
non-voting common shares of capital stock of Holdco.
"INCLUDING" means including without limitation.
"INTERIM ORDER" means the interim order of the Court made in connection
with the process for obtaining securityholder approval of the
Arrangement and related matters, as the same may be amended by the Court
from time to time.
"ITA" means the Income Tax Act (Canada), as the same may be amended from
time to time.
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"JACKSON SECONDARY SPECIAL WARRANTS" means 75,000 special warrants
issued by Timothy Jackson pursuant to the Special Warrant Indenture
which are exercisable into 150,000 currently issued and outstanding
Class A Shares registered in the name of Timothy Jackson but subject to
a deposit agreement among Timothy Jackson, CIBC Mellon Trust Company and
others.
"KAPAREL SALE" means the sale by PixStream of all of its shares in the
capital of Kaparel Corporation for a purchase price of Cdn. $12,800,000.
"LETTER OF TRANSMITTAL" means, as applicable, the respective letter of
transmittal for use by holders of Pixstream Common Shares, Pixstream
Warrants and Holdco Common Shares, in the applicable form accompanying
the Circular.
"LIQUIDATION AMOUNT" has the meaning ascribed thereto in the
Exchangeable Share Provisions.
"LIQUIDATION CALL PURCHASE PRICE" has the meaning ascribed thereto in
section 5.1(a).
"LIQUIDATION CALL RIGHT" has the meaning ascribed thereto in section
5.1(a).
"LIQUIDATION DATE" has the meaning ascribed thereto in the Exchangeable
Share Provisions.
"MEETING DATE" means the date of the Pixstream Meeting.
"MERGER AGREEMENT" means the agreement made as of August 29, 2000
between Cisco, Cisco Newco, Cisco Exchangeco and Pixstream, as amended,
supplemented and/or restated in accordance therewith prior to the
Effective Date, providing for, among other things, the Arrangement.
"NASDAQ" means the National Stock Market's National Market.
"PERSON" includes any individual, firm, partnership, limited liability
company, unlimited liability company, joint venture, venture capital
fund, association, trust, trustee, executor, administrator, legal
personal representative, estate, group, body corporate, corporation,
unincorporated association or organization, governmental entity,
syndicate or other entity, whether or not having legal status.
"PIXSTREAM" means Pixstream Incorporated, a corporation existing under
the laws of Canada.
"PIXSTREAM COMMON SHARES" means the Class A Shares and Class B Shares.
"PIXSTREAM EXPENSES" has the meaning ascribed to the term "TARGET
Expenses" in the Merger Agreement.
"PIXSTREAM MEETING" means the special meeting of the holders of
Pixstream Common Shares, Pixstream Options and Pixstream Warrants
(including any adjournment thereof)
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convened as provided by the Interim Order to consider, and if deemed
advisable, approve the Arrangement and various other matters.
"PIXSTREAM OPTION" means an option to purchase Pixstream Common Shares
granted under the Pixstream Stock Option Plans, and being outstanding
and unexercised on the Effective Date.
"PIXSTREAM STOCK OPTION PLANS" means the Canadian Plan and the U.K.
Plan.
"PIXSTREAM WARRANTS" means 4,375,000 Treasury Special Warrants issued by
Pixstream pursuant to the Special Warrant Indenture which are currently
exercisable into 8,750,000 Pixstream Common Shares and the Jackson
Secondary Special Warrants and the Caputo Secondary Special Warrants.
"REDEMPTION CALL PURCHASE PRICE" has the meaning ascribed thereto in
section 5.2(a).
"REDEMPTION CALL RIGHT" has the meaning ascribed thereto in section
5.2(a).
"REDEMPTION DATE" has the meaning ascribed thereto in the Exchangeable
Share Provisions.
"SPECIAL WARRANT INDENTURE" means the indenture pursuant to which the
Pixstream Warrants were issued dated February 15, 2000.
"TRANSFER AGENT" has the meaning ascribed thereto in section 5.1(b).
"U.K. OPTION" means a Pixstream Option granted under the U.K. Plan.
"U.K. PLAN" means Pixstream's Inland Revenue Approved Rules for UK
employees as approved by the U.K Inland Revenue on March 17, 2000.
"WAIVER" has the meaning ascribed thereto in the Merger Agreement.
1.2 SECTIONS AND HEADINGS
The division of this Plan of Arrangement into sections and the insertion
of headings are for reference purposes only and shall not affect the
interpretation of this Plan of Arrangement. Unless otherwise indicated, any
reference in this Plan of Arrangement to a section or an exhibit refers to the
specified section of or exhibit to this Plan of Arrangement.
1.3 CURRENCY
Except as expressly set forth otherwise, all sums of money referred to
herein are expressed in lawful money of the United States of America.
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1.4 NUMBER, GENDER AND PERSONS
In this Plan of Arrangement, unless the context otherwise requires,
words importing the singular number include the plural and vice versa and words
importing any gender include all genders.
ARTICLE 2
ARRANGEMENT
2.1 BINDING EFFECT
This Plan of Arrangement will become effective at, and be binding at and
after, the Effective Time on (i) Pixstream, (ii) Cisco, (iii) Cisco Newco, (iv)
Cisco Exchangeco, (v) Holdco, (vi) all holders of Pixstream Common Shares, (vii)
all holders of Exchangeable Shares, (viii) all holders of rights to purchase or
of securities exchangeable for or convertible into Pixstream Common Shares,
including all holders of Pixstream Options and Pixstream Warrants; (ix) all
holders of Holdco Common Shares; and (x) all holders of rights to purchase or
securities exchangeable for or convertible into Holdco Common Shares.
2.2 EXCHANGE OF SECURITIES
At the Effective Time, the following shall occur and be deemed to occur
in the following order and without any further act or formality:
(a) Pixstream and Holdco shall amalgamate (the "Amalgamation") and
continue as one corporation governed by the laws of Canada
("Amalco");
(b) upon the Amalgamation:
(i) except for the Pixstream Common Shares held by Holdco,
each of the outstanding Pixstream Common Shares shall be
converted into one (1) common share of Amalco;
(ii) the Pixstream Common Shares held by Holdco shall be
cancelled without any repayment of capital in respect
thereof; and
(iii) each of the outstanding Holdco Common Shares shall be
converted into 1.55624 common shares of Amalco;
(c) the following provisions shall apply to Amalco:
(i) the name of Amalco shall be PIXSTREAM INCORPORATED;
(ii) the registered office of Amalco, shall be located in the
City of Waterloo in the Province of Ontario. The address
of the registered office of Amalco shall be 180 Columbia
Street West, Unit 1110, Waterloo, Ontario N2L 3L3;
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(iii) there shall be no restrictions on the business Amalco
may carry on or the powers it may exercise;
(iv) Amalco shall be authorized to issue an unlimited number
of common shares;
(v) the issue, transfer or ownership of the shares of Amalco
will be subject to the following restrictions:
A. the transfer of shares shall be restricted in
that no share shall be transferred without
either (i) the consent of the directors of
Amalco expressed by resolution passed by the
board of directors or by an instrument or
instruments in writing signed by all of such
directors, or (ii) the consent of the holders of
shares to which are attached more than 50% of
the voting rights attaching to all shares for
the time being outstanding entitled to vote at
such time expressed by a resolution passed by
such shareholders at a meeting duly called and
constituted for that purpose or by an instrument
or instruments in writing signed by all of such
shareholders; provided that these restrictions
shall not apply to the transfer of the shares of
Amalco pursuant to the provisions of this Plan
of Arrangement;
B. immediately following the exchange provided for
in paragraph (d) below, the number of
shareholders of Amalco, exclusive of persons who
are in its employment and exclusive of persons
who, having been formerly in the employment of
Amalco, were, while in that employment, and have
continued after termination of that employment
to be shareholders of Amalco, is limited to not
more than 50, two or more persons who are the
joint registered owners of one or more common
shares being counted as one shareholder; and
(vi) any invitation to the public to subscribe for any
securities of Amalco is prohibited;
(vii) the number of directors of Amalco shall be a minimum of
one and a maximum of ten; the initial directors of
Amalco shall be
NAME RESIDENCE ADDRESS CANADIAN RESIDENT
; and
(viii) the by-laws of Amalco shall be the by-laws of Pixstream;
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(d) all of the issued and outstanding common shares of Amalco will
be exchanged for issued, fully paid and non-assessable
Exchangeable Shares based on the Exchange Ratio, and Cisco
Exchangeco will become the registered and beneficial owner of
all the issued and outstanding common shares of Amalco;
(e) in lieu of fractional Exchangeable Shares, each holder of common
shares of Amalco shall, for those common shares of Amalco being
exchanged that would otherwise give rise to an entitlement for
that holder to receive a fraction of an Exchangeable Share, be
paid an amount in cash equal to the product obtained by
multiplying such fractional interests by the Effective Cisco
Price;
(f) each Pixstream Option outstanding at the Effective Time shall be
assumed by Cisco (an "Assumed Option") or exchanged by Cisco on
the following terms and Pixstream shall cease to have any
liability in respect thereof:
(i) the Pixstream Stock Option Plans and each outstanding
Pixstream Option will be assumed by Cisco, except to the
extent otherwise provided in Section 2.2(f)(iii) below.
Each Assumed Option shall continue to have, and be
subject to, the same terms and conditions set forth in
the relevant Pixstream Stock Option Plan and the
applicable stock option agreement immediately prior to
the Effective Time, except that (i) such Assumed Option
shall be modified by the Waiver, (ii) such Assumed
Option will be exercisable for that number of whole
Cisco Common Shares equal to the product of the number
of Pixstream Common Shares that were issuable upon
exercise of such Pixstream Option immediately prior to
the Effective Time multiplied by the Exchange Ratio and
rounded down to the nearest whole number of Cisco Common
Shares, and (iii) the per share exercise price for the
Cisco Common Shares issuable upon exercise of such
Assumed Option will be equal to the quotient determined
by dividing the exercise price per Pixstream Common
Share at which such Pixstream Option was exercisable
immediately prior to the Effective Time (adjusted for
the U.S. Dollar/Canadian Dollar Noon Spot Rate exchange
rate effective as of 12:00 p.m. Eastern Standard Time on
the Effective Date as reported by the Bank of Canada) by
the Exchange Ratio, rounded up to the nearest whole
cent. Consistent with the terms of the relevant
Pixstream Stock Option Plan and the documents governing
the outstanding options under such plan, as modified by
the Waiver, the transaction contemplated hereby will not
terminate any of the outstanding options under the
relevant Pixstream Stock Option Plan or accelerate the
exercisability or vesting of such options or the Cisco
Common Shares which will be subject to those options
upon Cisco's assumption of the options;
(ii) all outstanding rights of Pixstream which it may hold
immediately prior to the Effective Time to repurchase
unvested Pixstream Common Shares (the "Repurchase
Options") shall be assigned to Cisco and shall
thereafter be exercisable by Cisco upon the same terms
and conditions in effect immediately prior to the
Effective Time, except that the shares
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purchasable pursuant to the Repurchase Options and the
purchase price per share shall be adjusted in the manner
set forth in Section 2.2(f)(i) above to reflect the
Exchange Ratio and the U.S. Dollar/Canadian Dollar Noon
Spot Rate exchange rate effective as of 12:00 p.m.
Eastern Standard Time on the Effective Date as reported
by the Bank of Canada;
(iii) each outstanding U.K. Option shall be exchanged by Cisco
for an option to acquire Cisco Common Shares as set
forth below, provided the holder of each such option has
consented to such exchange and Cisco has received U.K.
Inland Revenue approval for such exchanged option to
continue to be treated as an approved option under
Schedule 9 of the U.K. Income and Corporation Taxes Act
1988. Each such option so exchanged by Cisco under this
Agreement shall continue to have, and be subject to, the
same terms and conditions set forth in the U.K. Plan and
the applicable stock option agreements, immediately
prior to the Effective Time, except that (i) such option
will be exercisable for that number of whole Cisco
Common Shares equal to the product of the number of
Pixstream Common Shares that were issuable upon exercise
of such option immediately prior to the Effective Time
multiplied by the Exchange Ratio and rounded down to the
nearest whole number of Cisco Common Shares, and (ii)
the per share exercise price for the Cisco Common Shares
issuable upon exercise of such exchanged option will be
equal to the quotient determined by dividing the
exercise price per Pixstream Common Share at which such
option was exercisable immediately prior to the
Effective Time (adjusted for the U.S. Dollar/Canadian
Dollar Noon Spot Rate exchange rate effective as of
12:00 p.m. Eastern Standard Time on the Effective Date
as reported by the Bank of Canada) by the Exchange
Ratio, rounded up to the nearest whole cent. Consistent
with the terms of the U.K. Plan and the documents
governing the outstanding options under such Plan, the
transaction contemplated hereby will not terminate any
of the outstanding options under the U.K. Plan or
accelerate the exercisability or vesting of such options
or the Cisco Common Shares which will be subject to
those options upon Cisco's exchange of the options at
the Effective Time. In the event U.K. Inland Revenue
approval is not obtained, then the U.K. Options shall be
assumed by Cisco as provided in Section 2.2(f)(i) above.
[NOTE: SECTION 2.2(f)(ii) MAY NEED MODIFICATION AT THE
TIME OF FILING ARTICLES OF ARRANGEMENT TO REFLECT
WHETHER OR NOT U.K. INLAND REVENUE APPROVAL HAS BEEN
OBTAINED]
(g) Subject to adjustment in accordance with section 2.3 hereof, the
"Exchange Ratio" shall equal the ratio of (x) a quotient, the
numerator of which is $361.295 million less the amount of any
Pixstream Expenses less $5.22 times the difference between
1,140,000 and the number of Pixstream Options granted between
the date hereof and the Effective Time, and the denominator of
which is the Effective Cisco Price and (y) the total number of
Pixstream Common Shares issued and outstanding on a fully
diluted basis at the Effective Time (after giving effect to the
conversion, exchange or exercise, as the case may be, of all
securities convertible
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into, or exercisable or exchangeable for, Pixstream Common
Shares, including all unexpired and unexercised outstanding
options, warrants or other rights to acquire Pixstream Common
Shares assumed or exchanged by the Cisco Parties).
The "Effective Cisco Price" shall equal the average of the
closing prices of Cisco Common Shares as quoted on Nasdaq for
the ten (10) consecutive trading days ending on the third
trading day prior to the Effective Date.
[NOTE: THE EXCHANGE RATIO AS DETERMINED BY CISCO AND PIXSTREAM
IN ACCORDANCE WITH THE FOREGOING SHALL BE SET FORTH IN THE
ARTICLES OF ARRANGEMENT.]
(h) Amalco shall be authorized to continue under the laws of the
Province of Nova Scotia and apply pursuant to the Companies Act
of Nova Scotia for a certificate of continuance continuing
Amalco as a body corporate under that Act [NOTE: IF NECESSARY,
THE PLAN OF ARRANGEMENT WILL INCLUDE AS APPENDICES THE FORM OF
THE MEMORANDUM OF ASSOCIATION AND ARTICLES OF ASSOCIATION AND
ANY OTHER PROVISIONS REQUIRED BY THE REGISTRAR OF JOINT STOCK
COMPANIES OF NOVA SCOTIA TO GIVE APPROVAL TO THE CHANGE IN
JURISDICTION.]
2.3 ADJUSTMENT TO EXCHANGE RATIO
The Exchange Ratio shall be adjusted to reflect fully the effect of any
stock split, reverse split, stock dividend (including any dividend or
distribution of securities convertible into Cisco Common Shares or Pixstream
capital stock), reorganization, recapitalization or other like change with
respect to Cisco Common Shares or Pixstream capital stock occurring after the
date hereof and prior to the Effective Time, so as to provide the parties the
same economic effect as contemplated by this Plan of Arrangement prior to such
stock split, reverse split, stock dividend, reorganization, recapitalization, or
other like change. No other adjustment shall be made in the number of Cisco
Common Shares or Exchangeable Shares issuable hereunder as a result of (x) any
increase or decrease in the market price of Cisco Common Shares prior to the
Effective Time, or (y) any cash proceeds received by Pixstream from the date
hereof to the Effective Time pursuant to the exercise of currently outstanding
Pixstream Options or Pixstream Warrants.
2.4 TAX ELECTIONS
Holders of common shares of Amalco shall be entitled to make an income
tax election pursuant to subsection 85(1) or 85(2) of the ITA (or the analogous
provisions of provincial income tax law) with respect to the transfer of their
common shares of Amalco to Cisco Exchangeco by providing two signed copies of
the necessary prescribed election forms to the Depositary within 90 days
following the Effective Date, duly completed with the details of the number of
common shares of Amalco transferred and the applicable agreed upon amounts for
the purposes of such elections. Thereafter, subject to the election forms
complying with the provisions of the ITA (or applicable provincial income tax
law), the forms shall be signed by Cisco Exchangeco (within 30 days of the
receipt thereof by Cisco Exchangeco) and promptly returned to such holders of
common shares of Amalco by ordinary mail for filing with the Canada Customs and
Revenue Agency (or the applicable provincial taxing authority).
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ARTICLE 3
RIGHTS OF DISSENT
3.1 RIGHTS OF DISSENT
Holders of Pixstream Common Shares may exercise rights of dissent
("Dissent Rights") with respect to such shares pursuant to and in the manner set
forth in section 190 of the CBCA and this section 3.1 (the "Dissent Procedures")
in connection with the Arrangement, provided that, notwithstanding subsection
190(5) of the CBCA, the written objection to the Arrangement Resolution referred
to in subsection 190(5) of the CBCA must be received by Pixstream not later than
5:00 p.m. (Toronto time) on the Business Day preceding the Pixstream Meeting.
Holders of Pixstream Common Shares who duly exercise such rights of dissent and
who:
(a) are ultimately entitled to be paid fair value for their
Pixstream Common Shares shall be deemed to have transferred such
Pixstream Common Shares to Pixstream immediately prior to the
Effective Time, without any further act or formality and free
and clear of all liens, claims and encumbrances and such shares
shall be cancelled as of the Effective Time; or
(b) are ultimately not entitled, for any reason, to be paid fair
value for their Pixstream Common Shares shall be deemed to have
participated in the Arrangement on the same basis as a
non-dissenting holder of Pixstream Common Shares and shall
receive Exchangeable Shares of Cisco Exchangeco on the basis
determined in accordance with section 2.2;
but in no case shall Cisco, Cisco Exchangeco, Cisco Newco, Pixstream or any
other Person be required to recognize such holders as holders of Pixstream
Common Shares after the Effective Time, and the names of such holders of
Pixstream Common Shares shall be deleted from the register of holders of
Pixstream Common Shares at the Effective Time. Each of Pixstream and the Cisco
Parties shall cause any payments to be made to the Dissenting Shareholders to be
made by Pixstream using Pixstream's assets. The Cisco Parties will not directly
or indirectly provide any funds for the purposes of making payments to
Dissenting Shareholders.
ARTICLE 4
CERTIFICATES AND FRACTIONAL SHARES
4.1 ISSUANCE OF CERTIFICATES REPRESENTING EXCHANGEABLE SHARES
At or promptly after the Effective Time, Cisco Exchangeco shall deposit
with the Depositary, for the benefit of the holders of Pixstream Common Shares
and Holdco Common Shares who will receive Exchangeable Shares in connection with
the Arrangement, certificates representing the Exchangeable Shares issued
pursuant to section 2.2. Upon surrender to the Depositary for cancellation of a
certificate which immediately prior to the Effective Time represented one or
more Pixstream Common Shares or Holdco Common Shares that were converted into
common shares of Amalco and then exchanged for one or more Exchangeable Shares
under the Arrangement or which represented one or more Pixstream Warrants that
were exercised into Pixstream Common Shares prior to the Arrangement and for
which certificates
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representing Pixstream Common Shares have not been issued, together with such
other documents and instruments as would have been required to effect the
transfer of the shares formerly represented by such certificate under the CBCA
and the by-laws of Pixstream or Holdco, as the case maybe, and such additional
documents and instruments as the Depositary may reasonably require, the holder
of such surrendered certificate shall be entitled to receive in exchange
therefor, and the Depositary shall deliver to such holder, a certificate
representing that number (rounded down to the nearest whole number) of
Exchangeable Shares which such holder has the right to receive (together with
any dividends or distributions with respect thereto pursuant to section 4.2 and
any cash in lieu of fractional Exchangeable Shares pursuant to section 4.3), and
the certificate so surrendered shall forthwith be cancelled. In the event of a
transfer of ownership of Pixstream Common Shares or Holdco Common Shares that is
not registered in the transfer records of Pixstream or Holdco, as the case
maybe, a certificate representing the proper number of Exchangeable Shares may
be issued to the transferee if the certificate representing such Pixstream
Common Shares or Holdco Common Shares is presented to the Depositary,
accompanied by all documents required to evidence and effect such transfer.
Until surrendered as contemplated by this section 4.1, each certificate which
immediately prior to the Effective Time represented Pixstream Common Shares or
Holdco Common Shares that were converted into common shares of Amalco and were
then exchanged for Exchangeable Shares (or, as described above, that represented
Pixstream Warrants that were exercised into Pixstream Common Shares) shall be
deemed at all times after the Effective Time to represent only the right to
receive upon such surrender (i) the certificate representing Exchangeable Shares
as contemplated by this section 4.1, (ii) a cash payment in lieu of any
fractional Exchangeable Shares as contemplated by section 4.3, and (iii) any
dividends or distributions with a record date after the Effective Time
theretofore paid or payable with respect to Exchangeable Shares as contemplated
by section 4.2. The rights of the holders of the Pixstream Common Shares and
Holdco Common Shares to receive certificates representing Exchangeable Shares
shall be subject to Article VIII of the Merger Agreement.
4.2 DISTRIBUTIONS WITH RESPECT TO UNSURRENDERED CERTIFICATES
No dividends or other distributions declared or made after the Effective
Time with respect to Exchangeable Shares with a record date after the Effective
Time shall be paid to the holder of any unsurrendered certificate which
immediately prior to the Effective Time represented outstanding Pixstream Common
Shares or Holdco Common Shares that were converted, transferred and exchanged
pursuant to section 2.2 (or, as applicable, representing Pixstream Warrants as
described in Section 4.1), and no cash payment in lieu of fractional shares
shall be paid to any such holder pursuant to section 4.3, unless and until the
holder of record of such certificate shall surrender such certificate in
accordance with section 4.1. Subject to applicable law, there shall be paid to
the record holder of the certificates representing Pixstream Common Shares or
Holdco Common Shares (or, as applicable, representing Pixstream Warrants as
described in Section 4.1), without interest, (i) at the time of such surrender
of any such certificate, the amount of any cash payable in lieu of a fractional
Exchangeable Share to which such holder is entitled pursuant to section 4.3,
(ii) at the time of such surrender of any such certificate, the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to whole Exchangeable Shares, to which such holder
is entitled and (iii) on the appropriate payment date, the amount of dividends
or other distributions
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with a record date after the Effective Time but prior to surrender and a payment
date subsequent to surrender payable with respect to whole Exchangeable Shares.
4.3 FRACTIONAL SHARES
No certificates or scrip representing fractional Exchangeable Shares
shall be issued upon the surrender for exchange of certificates pursuant to
section 4.1 and no dividend, stock split or other change in the capital
structure of Cisco Exchangeco or Cisco shall relate to any such fractional
security and such fractional interests shall not entitle the owner thereof to
exercise any rights as a security holder of Cisco Exchangeco or Cisco. In lieu
of any such fractional securities, each Person otherwise entitled to a
fractional interest in an Exchangeable Share will receive the cash payment from
the Depositary as provided in Section 2.2 hereof. As soon as possible after the
Effective Time, Cisco Exchangeco shall deposit with the Depositary such amounts
of cash as may be required to pay for such fractional interests of Exchangeable
Shares.
4.4 LOST CERTIFICATES
In the event any certificate which immediately prior to the Effective
Time represented one or more outstanding Pixstream Common Shares or Holdco
Common Shares that were converted, transferred and exchanged pursuant to section
2.2 (or, as applicable, that represented Pixstream Warrants as described in
Section 4.1), shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such certificate to be lost,
stolen or destroyed, the Depositary will issue in exchange for such lost, stolen
or destroyed certificate, one or more certificates representing one or more
Exchangeable Shares (and any dividends or distributions with respect thereto and
any cash pursuant to section 4.3) in accordance with the foregoing provisions of
this Article 4. When authorizing such payment in exchange for any lost, stolen
or destroyed certificate, the Person to whom certificates representing
Exchangeable Shares are to be issued shall, as a condition precedent to the
issuance thereof, give a bond satisfactory to Cisco Exchangeco, Cisco and their
respective transfer agents in such sum as Cisco Exchangeco or Cisco may direct
or otherwise indemnify Cisco Exchangeco and Cisco in a manner satisfactory to
Cisco Exchangeco and Cisco against any claim that may be made against Cisco
Exchangeco or Cisco with respect to the certificate alleged to have been lost,
stolen or destroyed.
4.5 EXTINCTION OF RIGHTS
Any certificate which immediately prior to the Effective Time
represented outstanding Pixstream Common Shares or Holdco Common Shares that
were converted, transferred and exchanged pursuant to section 2.2 (or, as
applicable, that represented Pixstream Warrants as described in Section 4.1),
and not deposited, with all other instruments required by section 4.1 on or
prior to the sixth anniversary of the Effective Date shall cease to represent a
claim or interest of any kind or nature as a shareholder of Cisco Exchangeco or
Cisco. On such date, the Exchangeable Shares (or cash in lieu of fractional
interests therein, as provided in section 4.3) to which the former registered
holder of the certificate referred to in the preceding sentence was ultimately
entitled shall be deemed to have been surrendered to Cisco Exchangeco or Cisco,
as the case may be, together with all entitlements to dividends, distributions
and interest thereon held for such former registered holder.
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4.6 WITHHOLDING RIGHTS
Cisco Exchangeco, Cisco Newco, Cisco and the Depositary shall be
entitled to deduct and withhold from any dividend or consideration otherwise
payable to any holder of Pixstream Common Shares, Holdco Common Shares, Cisco
Common Shares or Exchangeable Shares such amounts as Pixstream, Holdco, Cisco
Exchangeco, Cisco Newco, Cisco or the Depositary are required or permitted to
deduct and withhold with respect to such payment under the ITA, the United
States Internal Revenue Code of 1986 or any provision of provincial, state,
local or foreign tax law, in each case, as amended or would be permitted to
withhold if an equal amount were remitted to the appropriate taxing authority.
To the extent that amounts are so withheld, such withheld amounts shall be
treated for all purposes hereof as having been paid to the holder of the shares
in respect of which such deduction and withholding was made, provided that such
withheld amounts (or equivalent amounts, if applicable) are actually remitted to
the appropriate taxing authority. To the extent that the amount so required or
permitted or which would be permitted to be deducted or withheld from any
payment to a holder exceeds the cash portion of the consideration otherwise
payable to the holder, Cisco Exchangeco, Cisco Newco, Cisco and the Depositary
are hereby authorized to sell or otherwise dispose of such portion of the
consideration as is necessary to provide sufficient funds to Cisco Exchangeco,
Cisco Newco, Cisco or the Depositary, as the case may be, to enable it to comply
with such deduction or withholding requirement and Cisco Exchangeco, Cisco
Newco, Cisco or the Depositary shall notify the holder thereof and remit any
unapplied balance of the net proceeds of such sale.
ARTICLE 5
CERTAIN RIGHTS OF CISCO NEWCO TO ACQUIRE EXCHANGEABLE SHARES
5.1 CISCO NEWCO LIQUIDATION CALL RIGHT
(a) Cisco Newco shall have the overriding right (the "Liquidation
Call Right"), in the event of and notwithstanding the proposed
liquidation, dissolution or winding-up of Cisco Exchangeco or
any other distribution of the assets of Cisco Exchangeco among
its shareholders for the purpose of winding up its affairs
pursuant to Article 5 of the Exchangeable Share Provisions, to
purchase from all but not less than all of the holders of
Exchangeable Shares (other than Cisco or any holder of
Exchangeable Shares which is an affiliate of Cisco) on the
effective date of such liquidation, dissolution, winding-up or
other distribution (the "Liquidation Date") all but not less
than all of the Exchangeable Shares held by each such holder on
payment by Cisco Newco of an amount per Exchangeable Share (the
"Liquidation Call Purchase Price") equal to the Current Market
Price of a Cisco Common Share on the last Business Day prior to
the Liquidation Date which shall be satisfied in full by Cisco
Newco causing to be delivered to such holder one Cisco Common
Share, plus, to the extent not paid by Cisco Exchangeco, an
additional amount equivalent to the full amount of all declared
and unpaid dividends on each such Exchangeable Share held by
such holder on any dividend record date which occurred prior to
the Liquidation Date (as used in this section, the "Dividend
Amount"). In the event of the exercise of the Liquidation Call
Right by Cisco Newco, each holder shall be obligated to sell all
the Exchangeable Shares held by
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the holder to Cisco Newco on the Liquidation Date on payment by
Cisco Newco to the holder of the Liquidation Call Purchase Price
for each such share, and Cisco Exchangeco shall have no
obligation to pay any Liquidation Amount to the holders of such
Exchangeable Shares so purchased by Cisco Newco.
(b) To exercise the Liquidation Call Right, Cisco Newco must notify
Cisco Exchangeco's transfer agent (the "Transfer Agent"), as
agent for the holders of Exchangeable Shares, and Cisco
Exchangeco of Cisco Newco's intention to exercise such right at
least 45 days before the Liquidation Date in the case of a
voluntary liquidation, dissolution or winding-up of Cisco
Exchangeco or any other voluntary distribution of the assets of
Cisco Exchangeco among its shareholders for the purpose of
winding up its affairs and at least five Business Days before
the Liquidation Date in the case of an involuntary liquidation,
dissolution or winding-up of Cisco Exchangeco or any other
involuntary distribution of the assets of Cisco Exchangeco among
its shareholders for purposes of winding up its affairs. The
Transfer Agent will notify the holders of Exchangeable Shares as
to whether or not Cisco Newco has exercised the Liquidation Call
Right forthwith after the earlier of (i) receipt of notice by
the Transfer Agent from Cisco Newco of its intention to exercise
such right and (ii) the expiry of the period during which the
same may be exercised by Cisco Newco. If Cisco Newco exercises
the Liquidation Call Right, then on the Liquidation Date, Cisco
Newco will purchase and the holders will sell all of the
Exchangeable Shares then outstanding for a price per share equal
to the Liquidation Call Purchase Price, which shall be satisfied
as set out in paragraph 5.1(a) above.
(c) For the purposes of completing the purchase of the Exchangeable
Shares pursuant to the Liquidation Call Right, Cisco Newco shall
deposit with the Transfer Agent, on or before the Liquidation
Date, certificates representing the aggregate number of Cisco
Common Shares deliverable by Cisco Newco and a cheque or cheques
of Cisco Newco payable at par at any branch of the bankers of
Cisco Newco representing the aggregate Dividend Amount, if any,
in payment of the total Liquidation Call Purchase Price, less
any amounts withheld pursuant to section 4.6 hereof. Provided
that Cisco Newco has complied with the immediately preceding
sentence, on and after the Liquidation Date the rights of each
holder of Exchangeable Shares will be limited to receiving,
without interest, such holder's proportionate part of the total
Liquidation Call Purchase Price payable by Cisco Newco upon
presentation and surrender by the holder of certificates
representing the Exchangeable Shares held by such holder and the
holder shall on and after the Liquidation Date be considered and
deemed for all purposes to be the holder of the Cisco Common
Shares to which it is entitled. Upon surrender to the Transfer
Agent of a certificate or certificates representing Exchangeable
Shares, together with such other documents and instruments as
may be required to effect a transfer of Exchangeable Shares
under the laws applicable to Cisco Exchangeco and the by-laws of
Cisco Exchangeco and such additional documents and instruments
as the Transfer Agent may reasonably require, the holder of such
surrendered certificate or certificates shall be entitled to
receive in exchange therefor, and the
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Transfer Agent on behalf of Cisco Newco shall deliver to such
holder, certificates representing the Cisco Common Shares to
which the holder is entitled and a cheque or cheques of Cisco
Newco payable at par at any branch of the bankers of Cisco Newco
in payment of any Dividend Amount less any amounts withheld
pursuant to section 4.6 hereof. If Cisco Newco does not exercise
the Liquidation Call Right in the manner described above, on the
Liquidation Date the holders of the Exchangeable Shares will be
entitled to receive in exchange therefor the Liquidation Amount
otherwise payable by Cisco Exchangeco in connection with the
liquidation, dissolution or winding-up of Cisco Exchangeco
pursuant to Article 5 of the Exchangeable Share Provisions.
5.2 CISCO NEWCO REDEMPTION CALL RIGHT
(a) Cisco Newco shall have the overriding right (the "Redemption
Call Right"), notwithstanding the proposed redemption of the
Exchangeable Shares by Cisco Exchangeco pursuant to Article 7 of
the Exchangeable Share Provisions, to purchase from all but not
less than all of the holders of Exchangeable Shares (other than
Cisco or any holder of Exchangeable Shares which is an affiliate
of Cisco ) on the Redemption Date all but not less than all of
the Exchangeable Shares held by each such holder on payment by
Cisco Newco to each holder of an amount per Exchangeable Share
(the "Redemption Call Purchase Price") equal to the Current
Market Price of an Cisco Common Share on the last Business Day
prior to the Redemption Date, which shall be satisfied in full
by Cisco Newco causing to be delivered to such holder one Cisco
Common Share, plus, to the extent not paid by Cisco Exchangeco,
an additional amount equivalent to the full amount of all
declared and unpaid dividends on each such Exchangeable Share
held by such holder on any dividend record date which occurred
prior to the Redemption Date (as used in this section, the
"Dividend Amount"). In the event of the exercise of the
Redemption Call Right by Cisco Newco, each holder shall be
obligated to sell all the Exchangeable Shares held by the holder
to Cisco Newco on the Redemption Date on payment by Cisco Newco
to the holder of the Redemption Call Purchase Price for each
such Exchangeable Share, and Cisco Exchangeco shall have no
obligation to redeem such Exchangeable Shares so purchased by
Cisco Newco.
(b) To exercise the Redemption Call Right, Cisco Newco must notify
the Transfer Agent, as agent for the holders of Exchangeable
Shares, and Cisco Exchangeco of Cisco Newco's intention to
exercise such right at least 60 days before the Redemption Date,
except in the case of a redemption occurring as a result of an
Cisco Control Transaction, an Exchangeable Share Voting Event or
an Exempt Exchangeable Share Voting Event, in which case Cisco
Newco shall so notify the Transfer Agent and Cisco Exchangeco on
or before the Redemption Date. The Transfer Agent will notify
the holders of the Exchangeable Shares as to whether or not
Cisco Newco has exercised the Redemption Call Right forthwith
after the earlier of (i) receipt of notice by the Transfer Agent
from Cisco Newco of its intention to exercise such right and
(ii) the expiry of the period during which the same may be
exercised by Cisco Newco. If Cisco Newco exercises the
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Redemption Call Right, on the Redemption Date Cisco Newco will
purchase and the holders will sell all of the Exchangeable
Shares then outstanding for a price per share equal to the
Redemption Call Purchase Price, which shall be satisfied as set
out in paragraph 5.2(a) above.
(c) For the purposes of completing the purchase of the Exchangeable
Shares pursuant to the Redemption Call Right, Cisco Newco shall
deposit with the Transfer Agent, on or before the Redemption
Date, certificates representing the aggregate number of Cisco
Common Shares deliverable by Cisco Newco upon exercise of such
right and a cheque or cheques of Cisco Newco payable at par at
any branch of the bankers of Cisco Newco representing the
aggregate Dividend Amount, if any, in payment of the total
Redemption Call Purchase Price, less any amounts withheld
pursuant to section 4.6 hereof. Provided that Cisco Newco has
complied with the immediately preceding sentence, on and after
the Redemption Date the rights of each holder of Exchangeable
Shares will be limited to receiving such holder's proportionate
part of the total Redemption Call Purchase Price payable by
Cisco Newco upon presentation and surrender by the holder of
certificates representing the Exchangeable Shares held by such
holder and the holder shall on and after the Redemption Date be
considered and deemed for all purposes to be the holder of the
Cisco Common Shares to which it is entitled. Upon surrender to
the Transfer Agent of a certificate or certificates representing
Exchangeable Shares, together with such other documents and
instruments as may be required to effect a transfer of
Exchangeable Shares under the laws applicable to Cisco
Exchangeco and the by-laws of Cisco Exchangeco and such
additional documents and instruments as the Transfer Agent may
reasonably require, the holder of such surrendered certificate
or certificates shall be entitled to receive in exchange
therefor, and the Transfer Agent on behalf of Cisco Newco shall
deliver to such holder, certificates representing the Cisco
Common Shares to which the holder is entitled and a cheque or
cheques of Cisco Newco payable at par at any branch of the
bankers of Cisco Newco in payment of any Dividend Amount, less
any amounts withheld pursuant to section 4.6 hereof. If Cisco
Newco does not exercise the Redemption Call Right in the manner
described above, on the Redemption Date the holders of the
Exchangeable Shares will be entitled to receive in exchange
therefor the redemption price otherwise payable by Cisco
Exchangeco in connection with the redemption of the Exchangeable
Shares pursuant to Article 7 of the Exchangeable Share
Provisions.
ARTICLE 6
AMENDMENTS
6.1 AMENDMENTS TO PLAN OF ARRANGEMENT
(a) Pixstream reserves the right to amend, modify and/or supplement
this Plan of Arrangement at any time and from time to time prior
to the Effective Date, provided that each such amendment,
modification and/or supplement must be (i)
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set out in writing, (ii) approved by Cisco , (iii) filed with
the Court and, if made following the Pixstream Meeting, approved
by the Court, and (iv) communicated to holders of Pixstream
Common Shares, Pixstream Options, Pixstream Warrants and Holdco
Common Shares if and as required by the Court.
(b) Any amendment, modification or supplement to this Plan of
Arrangement may be proposed by Pixstream at any time prior to
the Pixstream Meeting (provided that Cisco shall have consented
thereto) with or without any other prior notice or communication
(except as may be required under the Interim Order), and if so
proposed and accepted by the Persons voting at the Pixstream
Meeting, shall become part of this Plan of Arrangement for all
purposes.
(c) Any amendment, modification or supplement to this Plan of
Arrangement that is approved by the Court following the
Pixstream Meeting shall be effective only if (i) it is consented
to by each of Pixstream and Cisco , and (ii) if required by the
Court, it is consented to by holders of the Pixstream Common
Shares, Pixstream Options, Pixstream Warrants and Holdco Common
Shares in the manner directed by the Court.
(d) Any amendment, modification or supplement to this Plan of
Arrangement may be made following the Effective Date
unilaterally by Cisco , provided that it concerns a matter
which, in the reasonable opinion of Cisco , is of an
administrative nature required to better give effect to the
implementation of this Plan of Arrangement and is not adverse to
the financial or economic interests of any holder of
Exchangeable Shares or Cisco Common Shares.
(e) In the event the Kaparel Sale has not been completed prior to
the Meeting Date the Plan of Arrangement will be amended in
accordance with Appendix II to this Plan of Arrangement.
[NOTE: THE PROVISIONS OF THE PLAN OF ARRANGEMENT ASSUME THAT THE KAPAREL
SALE (AS DESCRIBED IN THE CIRCULAR) HAS TAKEN PLACE. IF THE KAPAREL SALE
HAS NOT TAKEN PLACE, THE PROVISIONS OF THE PLAN OF ARRANGEMENT WILL BE
MODIFIED TO REFLECT THE KAPAREL SPIN-OUT AS DESCRIBED IN THE CIRCULAR TO
WHICH THIS EXHIBIT IS ATTACHED.]
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APPENDIX I
PROVISIONS ATTACHING TO THE
EXCHANGEABLE SHARES OF
3801110 CANADA INC.
The Exchangeable Shares shall have the following rights, privileges,
restrictions and conditions:
ARTICLE 1
INTERPRETATION
1.1 For the purposes of these share provisions:
"AFFILIATE" has the meaning ascribed thereto in the CBCA.
"BOARD OF DIRECTORS" means the board of directors of the Corporation.
"BUSINESS DAY" means any day other than Saturday, Sunday or any day on
which commercial banks located in either the State of California or
Toronto, Canada are authorized or obligated to close.
"CANADIAN DOLLAR EQUIVALENT" means, in respect of an amount expressed in
a currency other than Canadian dollars (the "Foreign Currency Amount")
at any date, the product obtained by multiplying (a) the Foreign
Currency Amount by (b) the noon spot exchange rate on such date for such
foreign currency expressed in Canadian dollars as reported by the Bank
of Canada or, in the event such spot exchange rate is not available,
such exchange rate on such date for such foreign currency expressed in
Canadian dollars as may be deemed by the Board of Directors to be
appropriate for such purpose.
"CBCA" means the Canada Business Corporations Act R.S.C. 1982, c.C --
44, as amended.
"CISCO" means Cisco Systems, Inc., a corporation existing under the
laws of California, and any successor corporation thereto.
"CISCO COMMON SHARES" means the shares of common stock, par value U.S.
$0.001, of Cisco, and any other securities into which such shares may be
changed.
"CISCO CONTROL TRANSACTION" means any merger, amalgamation, tender
offer, material sale of shares or rights or interests therein or thereto
or similar transactions involving Cisco, or any proposal to do so.
"CISCO DIVIDEND DECLARATION DATE" means the date on which the Board of
Directors of Cisco declares any dividend on the Cisco Common Shares.
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"CISCO NEWCO" means 3045848 Nova Scotia Company, an unlimited liability
company existing under the laws of the Province of Nova Scotia.
"CISCO NEWCO CALL NOTICE" has the meaning ascribed thereto in section
6.3 of these share provisions.
"COMMON SHARES" means the common shares in the capital of the
Corporation.
"CORPORATION" means 3801110 Canada Inc., a corporation existing under
the laws of Canada.
"CURRENT MARKET PRICE" means, in respect of a Cisco Common Share on any
date, the Canadian Dollar Equivalent of the average of the closing bid
and asked prices of Cisco Common Shares during a period of 10
consecutive trading days ending not more than three trading days before
such date on Nasdaq or, if the Cisco Common Shares are not then listed
on Nasdaq, on such stock exchange or automated quotation system on which
the Cisco Common Shares are listed or quoted, as the case may be, as may
be selected by the Board of Directors for such purpose; provided,
however, that if in the opinion of the Board of Directors the public
distribution or trading activity of Cisco Common Shares during such
period does not create a market which reflects the fair market value of
a Cisco Common Share, then the Current Market Price of a Cisco Common
Share shall be determined by the Board of Directors, in good faith and
in its sole discretion, and provided further that any such selection,
opinion or determination by the Board of Directors shall be conclusive
and binding.
"DIVIDEND AMOUNT" has the meaning ascribed thereto in section 6.3 of
these share provisions.
"EFFECTIVE DATE" has the meaning ascribed to it in the Merger Agreement.
"EXCHANGEABLE SHARES" means exchangeable shares in the capital of the
Corporation having the rights, privileges, restrictions and conditions
set forth herein.
"EXCHANGEABLE SHARE VOTING EVENT" means any matter in respect of which
holders of Exchangeable Shares are entitled to vote as shareholders of
the Corporation, other than an Exempt Exchangeable Share Voting Event,
and, for greater certainty, excluding any matter in respect of which
holders of Exchangeable Shares are entitled to vote (or instruct the
Trustee to vote) in their capacity as Beneficiaries under (and as that
term is defined in) the Voting and Exchange Trust Agreement.
"EXEMPT EXCHANGEABLE SHARE VOTING EVENT" means any matter in respect of
which holders of Exchangeable Shares are entitled to vote as
shareholders of the Corporation in order to approve or disapprove, as
applicable, any change to, or in the rights of the holders of, the
Exchangeable Shares, where the approval or
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disapproval, as applicable, of such change would be required to maintain
the equivalence of the Exchangeable Shares and the Cisco Common Shares.
"LIQUIDATION AMOUNT" has the meaning ascribed thereto in section 5.1 of
these share provisions.
"LIQUIDATION CALL RIGHT" has the meaning ascribed thereto in the Plan of
Arrangement.
"LIQUIDATION DATE" has the meaning ascribed thereto in section 5.1 of
these share provisions.
"MERGER AGREEMENT" means the agreement made as of August 29, 2000
between Cisco , the Corporation, Cisco Newco, and Pixstream, as amended,
supplemented and/or restated in accordance therewith prior to the
Effective Date, providing for, among other things, the Arrangement.
"NASDAQ" means the National Stock Market's National Market.
"PLAN OF ARRANGEMENT" means the plan of arrangement relating to the
arrangement of Pixstream under section 192 of the CBCA, to which plan
these share provisions are attached as Appendix I. [NOTE: THIS
DEFINITION WILL BE MODIFIED IN THE ARTICLES OF AMENDMENT OF CISCO
EXCHANGECO.]
"PURCHASE PRICE" has the meaning ascribed thereto in section 6.3 of
these share provisions.
"REDEMPTION CALL PURCHASE PRICE" has the meaning ascribed thereto in the
Plan of Arrangement.
"REDEMPTION CALL RIGHT" has the meaning ascribed thereto in the Plan of
Arrangement.
"REDEMPTION DATE" means the date, if any, established by the Board of
Directors for the redemption by the Corporation of all but not less than
all of the outstanding Exchangeable Shares pursuant to Article 7 of
these share provisions, which date shall be no earlier than the fifth
anniversary of the Effective Date, unless:
(a) there are fewer than 250,000 Exchangeable Shares outstanding
(other than Exchangeable Shares held by Cisco and its Affiliates
and as such number of shares may be adjusted as deemed
appropriate by the Board of Directors to give effect to any
subdivision or consolidation of or stock dividend on the
Exchangeable Shares, any issue or distribution of rights to
acquire Exchangeable Shares or securities exchangeable for or
convertible into Exchangeable Shares, any issue or distribution
of other securities or rights or evidences of indebtedness or
assets, or any
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other capital reorganization or other transaction affecting the
Exchangeable Shares), in which case the Board of Directors may
accelerate such redemption date to such date prior to the fifth
anniversary of the Effective Date as it may determine, upon at
least 60 days' prior written notice to the registered holders of
the Exchangeable Shares;
(b) a Cisco Control Transaction occurs, in which case, provided that
the Board of Directors determines, in good faith and in its sole
discretion, that it is not reasonably practicable to
substantially replicate the terms and conditions of the
Exchangeable Shares in connection with such Cisco Control
Transaction and that the redemption of all but not less than all
of the outstanding Exchangeable Shares is necessary to enable
the completion of such Cisco Control Transaction in accordance
with its terms, the Board of Directors may accelerate such
redemption date to such date prior to the fifth anniversary of
the Effective Date as it may determine, upon such number of
days' prior written notice to the registered holders of the
Exchangeable Shares as the Board of Directors may determine to
be reasonably practicable in such circumstances;
(c) an Exchangeable Share Voting Event is proposed, in which case,
provided that the Board of Directors has determined, in good
faith and in its sole discretion, that it is not reasonably
practicable to accomplish the business purpose intended by the
Exchangeable Share Voting Event (which business purpose must be
bona fide and not for the primary purpose of causing the
occurrence of a Redemption Date), in any other commercially
reasonable manner that does not result in an Exchangeable Share
Voting Event, the Board of Directors may accelerate such
redemption date to such date prior to the fifth anniversary of
the Effective Date as it may determine and the Board of
Directors shall give such number of days' prior written notice
of such redemption to the registered holders of the Exchangeable
Shares as the Board of Directors may determine to be reasonably
practicable in such circumstances; or
(d) an Exempt Exchangeable Share Voting Event is proposed and the
holders of the Exchangeable Shares fail to take the necessary
action at a meeting or other vote of holders of Exchangeable
Shares, to approve or disapprove, as applicable, the Exempt
Exchangeable Share Voting Event, in which case the Board of
Directors may accelerate such redemption date to such date prior
to the fifth anniversary of the Effective Date as it may
determine and the Board of Directors shall give such number of
days' prior written notice of such redemption to the registered
holders of the
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Exchangeable Shares as the Board of Directors may determine to
be reasonably practicable in such circumstances,
provided, however, that the accidental failure or omission to give any
notice of redemption under clauses (a), (b), (c) or (d) above to less
than 10% of such holders of Exchangeable Shares shall not affect the
validity of any such redemption.
"REDEMPTION PRICE" has the meaning ascribed thereto in section 7.1 of
these share provisions.
"RETRACTED SHARES" has the meaning ascribed thereto in section 6.1(a) of
these share provisions.
"RETRACTION CALL RIGHT" has the meaning ascribed thereto in section
6.1(c) of these share provisions.
"RETRACTION DATE" has the meaning ascribed thereto in section 6.1(b) of
these share provisions.
"RETRACTION PRICE" has the meaning ascribed thereto in section 6.1 of
these share provisions.
"RETRACTION REQUEST" has the meaning ascribed thereto in section 6.1 of
these share provisions.
"SUPPORT AGREEMENT" means an agreement between Cisco , Cisco Newco and
the Corporation, substantially in the form and content of Exhibit I
annexed to the Merger Agreement, as the same may be amended pursuant to
the terms of the Support Agreement.
"TRANSFER AGENT" means Montreal Trust Company of Canada or such other
person as may from time to time be appointed by the Corporation as the
registrar and transfer agent for the Exchangeable Shares.
"TRUSTEE" means Montreal Trust Company of Canada and, subject to the
provisions of Article 9 of the Voting and Exchange Trust Agreement,
includes any successor trustee.
"VOTING AND EXCHANGE TRUST AGREEMENT" means an agreement between Cisco ,
the Corporation and the Trustee, substantially in the form and content
of Exhibit J annexed to the Merger Agreement, as the same may be amended
pursuant to the terms of the Voting and Exchange Trust Agreement.
1.2 Payments. All payments to be made hereunder shall be made without
interest and less any tax required by Canadian law to be deducted or
withheld.
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1.3 Currency. In these Exchangeable Share Provisions, unless stated
otherwise, all dollar amounts are in Canadian dollars.
ARTICLE 2
RANKING OF EXCHANGEABLE SHARES
2.1 The Exchangeable Shares shall be entitled to a preference over the
Common Shares and any other shares ranking junior to the Exchangeable
Shares with respect to the payment of dividends and the distribution of
assets in the event of the liquidation, dissolution or winding-up of the
Corporation, whether voluntary or involuntary, or any other distribution
of the assets of the Corporation among its shareholders for the purpose
of winding up its affairs.
ARTICLE 3
DIVIDENDS
3.1 A holder of an Exchangeable Share shall be entitled to receive and the
Board of Directors shall, subject to applicable law, on each Cisco
Dividend Declaration Date, declare a dividend on each Exchangeable
Share:
(a) in the case of a cash dividend declared on the Cisco
Common Shares, in an amount in cash for each
Exchangeable Share, at the election of the Corporation
in U.S. dollars or the Canadian Dollar Equivalent
thereof on the Cisco Dividend Declaration Date, in each
case, corresponding to the cash dividend declared on
each Cisco Common Share;
(b) in the case of a stock dividend declared on the Cisco
Common Shares to be paid in Cisco Common Shares, in such
number of Exchangeable Shares for each Exchangeable
Share as is equal to the number of Cisco Common Shares
to be paid on each Cisco Common Share; or
(c) in the case of a dividend declared on the Cisco Common
Shares in property other than cash or Cisco Common
Shares, in such type and amount of property for each
Exchangeable Share as is the same as or economically
equivalent to (to be determined by the Board of
Directors as contemplated by section 3.5 hereof) the
type and amount of property declared as a dividend on
each Cisco Common Share.
Such dividends shall be paid out of money, assets or property of the
Corporation properly applicable to the payment of dividends, or out of
authorized but unissued shares of the Corporation, as applicable. The
holders of Exchangeable Shares shall not be entitled to any dividends
other than or in excess of the dividends referred to in this section
3.1.
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3.2 Cheques of the Corporation payable at par at any branch of the bankers
of the Corporation shall be issued in respect of any cash dividends
contemplated by section 3.1(a) hereof and the sending of such a cheque
to each holder of an Exchangeable Share shall satisfy the cash dividend
represented thereby unless the cheque is not paid on presentation.
Certificates registered in the name of the registered holder of
Exchangeable Shares shall be issued or transferred in respect of any
stock dividends contemplated by section 3.1(b) hereof and the sending of
such a certificate to each holder of an Exchangeable Share shall satisfy
the stock dividend represented thereby. Such other type and amount of
property in respect of any dividends contemplated by section 3.1(c)
hereof shall be issued, distributed or transferred by the Corporation in
such manner as it shall determine and the issuance, distribution or
transfer thereof by the Corporation to each holder of an Exchangeable
Share shall satisfy the dividend represented thereby. No holder of an
Exchangeable Share shall be entitled to recover by action or other legal
process against the Corporation any dividend that is represented by a
cheque that has not been duly presented to the Corporation's bankers for
payment or that otherwise remains unclaimed for a period of six years
from the date on which such dividend was payable.
3.3 The record date for the determination of the holders of Exchangeable
Shares entitled to receive payment of, and the payment date for, any
dividend declared on the Exchangeable Shares under section 3.1 hereof
shall be the same dates as the record date and payment date,
respectively, for the corresponding dividend declared on the Cisco
Common Shares.
3.4 If on any payment date for any dividends declared on the Exchangeable
Shares under section 3.1 hereof the dividends are not paid in full on
all of the Exchangeable Shares then outstanding, any such dividends that
remain unpaid shall be paid on a subsequent date or dates determined by
the Board of Directors on which the Corporation shall have sufficient
moneys, assets or property properly applicable to the payment of such
dividends.
3.5 The Board of Directors shall determine, in good faith and in its sole
discretion, economic equivalence for the purposes of section 3.1 hereof,
and each such determination shall be conclusive and binding on the
Corporation and its shareholders. In making each such determination, the
following factors shall, without excluding other factors determined by
the Board of Directors to be relevant, be considered by the Board of
Directors:
(a) in the case of any stock dividend payable in Cisco
Common Shares, the number of such shares issued as a
result of such stock dividend in proportion to the
number of Cisco Common Shares previously outstanding;
(b) in the case of the issuance or distribution of any
rights, options or warrants to subscribe for or purchase
Cisco Common Shares (or securities exchangeable for or
convertible into or carrying rights to
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acquire Cisco Common Shares), the relationship between
the Canadian Dollar Equivalent of the exercise price of
each such right, option or warrant and the Current
Market Price of a Cisco Common Share;
(c) in the case of the issuance or distribution of any other
form of property (including without limitation any
shares or securities of Cisco of any class other than
Cisco Common Shares, any rights, options or warrants
other than those referred to in section 3.5 (b) above,
any evidences of indebtedness of Cisco or any assets of
Cisco), the relationship between the fair market value
(as determined by the Board of Directors in the manner
above contemplated) of such property to be issued or
distributed with respect to each outstanding Cisco
Common Share and the Current Market Price of a Cisco
Common Share;
(d) in the case of any subdivision, redivision or change of
the then outstanding Cisco Common Shares into a greater
number of Cisco Common Shares or the reduction,
combination, consolidation or change of the then
outstanding Cisco Common Shares into a lesser number of
Cisco Common Shares or any amalgamation, merger,
reorganization or other transaction affecting Cisco
Common Shares, the effect thereof upon the then
outstanding Cisco Common Shares; and
(e) in all such cases, the general taxation consequences of
the relevant event to holders of Exchangeable Shares to
the extent that such consequences may differ from the
taxation consequences to holders of Cisco Common Shares
as a result of differences between taxation laws of
Canada and the United States (except for any differing
consequences arising as a result of differing marginal
taxation rates and without regard to the individual
circumstances of holders of Exchangeable Shares).
ARTICLE 4
CERTAIN RESTRICTIONS
4.1 So long as any of the Exchangeable Shares are outstanding, the
Corporation shall not at any time without, but may at any time with, the
approval of the holders of the Exchangeable Shares given as specified in
section 10.2 of these share provisions:
(a) pay any dividends on the Common Shares or any other
shares ranking junior to the Exchangeable Shares, other
than stock dividends payable in Common Shares or any
such other shares ranking junior to the Exchangeable
Shares, as the case may be;
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(b) redeem or purchase or make any capital distribution in
respect of Common Shares or any other shares ranking
junior to the Exchangeable Shares;
(c) redeem or purchase any other shares of the Corporation
ranking equally with the Exchangeable Shares with
respect to the payment of dividends or on any
liquidation or distribution; or
(d) issue any Exchangeable Shares or any other shares of the
Corporation ranking equally with, or superior to, the
Exchangeable Shares other than by way of stock dividends
to the holders of such Exchangeable Shares.
The restrictions in sections 4.1(a), 4.1(b), 4.1(c) and 4.1(d) above
shall not apply if all dividends on the outstanding Exchangeable Shares
corresponding to dividends declared and paid to date on the Cisco Common
Shares shall have been declared and paid on the Exchangeable Shares.
ARTICLE 5
DISTRIBUTION ON LIQUIDATION
5.1 Subject to applicable law and the exercise by Cisco Newco of the
Liquidation Call Right, in the event of the liquidation, dissolution or
winding-up of the Corporation or any other distribution of the assets of
the Corporation among its shareholders for the purpose of winding up its
affairs, a holder of Exchangeable Shares shall be entitled, subject to
applicable law, to receive from the assets of the Corporation in respect
of each Exchangeable Share held by such holder on the effective date
(the "Liquidation Date") of such liquidation, dissolution or winding-up,
before any distribution of any part of the assets of the Corporation
among the holders of the Common Shares or any other shares ranking
junior to the Exchangeable Shares, an amount per share (the "Liquidation
Amount") equal to the Current Market Price of an Cisco Common Share on
the last Business Day prior to the Liquidation Date, which shall be
satisfied in full by the Corporation causing to be delivered to such
holder one Cisco Common Share, together with all declared and unpaid
dividends on each such Exchangeable Share held by such holder on any
dividend record date which occurred prior to the Liquidation Date.
5.2 On or promptly after the Liquidation Date, and subject to the exercise
by Cisco Newco of the Liquidation Call Right, the Corporation shall
cause to be delivered to the holders of the Exchangeable Shares the
Liquidation Amount for each such Exchangeable Share upon presentation
and surrender of the certificates representing such Exchangeable Shares,
together with such other documents and instruments as may be required to
effect a transfer of Exchangeable Shares under the CBCA and the by-laws
of the Corporation and such additional documents and instruments as the
Transfer Agent may reasonably require, at the registered office of the
Corporation or at any office of the Transfer Agent as may be specified
by the Corporation by notice to the holders of the Exchangeable Shares.
Payment of
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the total Liquidation Amount for such Exchangeable Shares shall be made
by delivery to each holder, at the address of the holder recorded in the
securities register of the Corporation for the Exchangeable Shares or by
holding for pick-up by the holder at the registered office of the
Corporation or at any office of the Transfer Agent as may be specified
by the Corporation by notice to the holders of Exchangeable Shares, on
behalf of the Corporation of certificates representing Cisco Common
Shares (which shares shall be duly issued as fully paid and
non-assessable and shall be free and clear of any lien, claim or
encumbrance) and a cheque of the Corporation payable at par at any
branch of the bankers of the Corporation in respect of the declared and
unpaid dividends on the Exchangeable Shares of such holder (in each case
less any amounts withheld on account of tax required to be deducted and
withheld therefrom). On and after the Liquidation Date, the holders of
the Exchangeable Shares shall cease to be holders of such Exchangeable
Shares and shall not be entitled to exercise any of the rights of
holders in respect thereof, other than the right to receive their
proportionate part of the total Liquidation Amount, unless payment of
the total Liquidation Amount for such Exchangeable Shares shall not be
made upon presentation and surrender of share certificates in accordance
with the foregoing provisions, in which case the rights of the holders
shall remain unaffected until the total Liquidation Amount has been paid
in the manner hereinbefore provided. The Corporation shall have the
right at any time after the Liquidation Date to deposit or cause to be
deposited certificates representing the Cisco Common Shares issuable in
respect of, and an amount representing declared and unpaid dividends on,
the Exchangeable Shares represented by certificates that have not at the
Liquidation Date been surrendered by the holders thereof in a custodial
account with any chartered bank or trust company in Canada, and any
interest allowed on such deposit shall belong to the Corporation. Upon
such deposit being made, the rights of the holders of Exchangeable
Shares after such deposit shall be limited to receiving their
proportionate part of the total Liquidation Amount (in each case less
any amounts withheld on account of tax required to be deducted and
withheld therefrom) for such Exchangeable Shares so deposited, against
presentation and surrender of the said certificates held by them,
respectively, in accordance with the foregoing provisions. Upon such
payment or deposit of the total Liquidation Amount, the holders of the
Exchangeable Shares shall thereafter be considered and deemed for all
purposes to be holders of the Cisco Common Shares delivered to them or
the custodian on their behalf.
5.3 After the Corporation has satisfied its obligations to pay the holders
of the Exchangeable Shares the Liquidation Amount per Exchangeable Share
pursuant to section 5.1 of these share provisions, such holders shall
not be entitled to share in any further distribution of the assets of
the Corporation.
ARTICLE 6
RETRACTION OF EXCHANGEABLE SHARES BY HOLDER
6.1 A holder of Exchangeable Shares shall be entitled at any time (but not
more than once per calendar month), subject to the exercise by Cisco
Newco of the
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Retraction Call Right and otherwise upon compliance with the provisions
of this Article 6, to require the Corporation to redeem any or all of
the Exchangeable Shares registered in the name of such holder for an
amount per share (the "Retraction Price") equal to the Current Market
Price of a Cisco Common Share on the last Business Day prior to the
Retraction Date, which shall be satisfied in full by the Corporation
causing to be delivered to such holder one Cisco Common Share for each
Exchangeable Share presented and surrendered by the holder, together
with, on the payment date therefor, the full amount of all declared and
unpaid dividends on any such Exchangeable Share held by such holder on
any dividend record date which occurred prior to the Retraction Date. To
effect such redemption, the holder shall present and surrender at the
registered office of the Corporation or at any office of the Transfer
Agent as may be specified by the Corporation by notice to the holders of
Exchangeable Shares the certificate or certificates representing the
Exchangeable Shares which the holder desires to have the Corporation
redeem, together with such other documents and instruments as may be
required to effect a transfer of Exchangeable Shares under the CBCA and
the by-laws of the Corporation and such additional documents and
instruments as the Transfer Agent may reasonably require, and together
with a duly executed statement (the "Retraction Request") in the form of
Schedule A hereto or in such other form as may be acceptable to the
Corporation:
(a) specifying that the holder desires to have all or any
number specified therein of the Exchangeable Shares
represented by such certificate or certificates (the
"RETRACTED SHARES") redeemed by the Corporation;
(b) stating the Business Day on which the holder desires to
have the Corporation redeem the Retracted Shares (the
"Retraction Date"), provided that the Retraction Date
shall be not less than 10 Business Days nor more than 15
Business Days after the date on which the Retraction
Request is received by the Corporation and further
provided that, in the event that no such Business Day is
specified by the holder in the Retraction Request, the
Retraction Date shall be deemed to be the 15th Business
Day after the date on which the Retraction Request is
received by the Corporation; and
(c) acknowledging the overriding right (the "Retraction Call
Right") of Cisco Newco to purchase all but not less than
all the Retracted Shares directly from the holder and
that the Retraction Request shall be deemed to be a
revocable offer by the holder to sell the Retracted
Shares to Cisco Newco in accordance with the Retraction
Call Right on the terms and conditions set out in
section 6.3 below.
6.2 Subject to the exercise by Cisco Newco of the Retraction Call Right,
upon receipt by the Corporation or the Transfer Agent in the manner
specified in section 6.1 hereof of a certificate or certificates
representing the Retracted Shares, together
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with a Retraction Request, and provided that the Retraction Request is
not revoked by the holder in the manner specified in section 6.7, the
Corporation shall redeem the Retracted Shares effective at the close of
business on the Retraction Date and shall deliver or cause to be
delivered to such holder certificates representing the Cisco Common
Shares to which such holder is entitled with respect to such shares, and
on the designated payment date therefor, a cheque of the Corporation
payable at par at any branch of the bankers of the Corporation in
respect of any dividends on the Retracted Shares for which the record
date was prior to the Retraction Date and the payment date was after the
Retraction Date (in such case less any amounts withheld on account of
tax required to be deducted and withheld therefrom). If only a part of
the Exchangeable Shares represented by any certificate is redeemed (or
purchased by Cisco Newco pursuant to the Retraction Call Right), a new
certificate for the balance of such Exchangeable Shares shall be issued
to the holder at the expense of the Corporation.
6.3 Upon receipt by the Corporation of a Retraction Request, the Corporation
shall immediately notify Cisco Newco thereof and shall provide Cisco
Newco with a copy of the Retraction Request. In order to exercise the
Retraction Call Right, Cisco Newco must notify the Corporation of its
determination to do so (the "Cisco Newco Call Notice") within five
Business Days of notification to Cisco Newco by the Corporation of the
receipt by the Corporation of the Retraction Request. If Cisco Newco
does not so notify the Corporation within such five Business Day period,
Cisco Newco will be deemed not to have exercised the Retraction Call
Right. If Cisco Newco delivers the Cisco Newco Call Notice within such
five Business Day period, and provided that the Retraction Request is
not revoked by the holder in the manner specified in section 6.7, the
Retraction Request shall thereupon be considered only to be an offer by
the holder to sell the Retracted Shares to Cisco Newco in accordance
with the Retraction Call Right. In such event, the Corporation shall not
redeem the Retracted Shares and Cisco Newco shall purchase from such
holder and such holder shall sell to Cisco Newco on the Retraction Date
the Retracted Shares for a purchase price (the "Purchase Price") per
share equal to the Current Market Price of a Cisco Common Share on the
last Business Day prior to the Retraction Date, which shall be satisfied
in full by Cisco Newco causing to be delivered to such holder one Cisco
Common Share for each Exchangeable Share, plus, to the extent not paid
by the Corporation, an additional amount equivalent to the full amount
of all declared and unpaid dividends on those Retracted Shares held by
such holder on any dividend record date which occurred prior to the
Retraction Date (the "Dividend Amount"). For the purposes of completing
a purchase pursuant to the Retraction Call Right, such Purchase Price
shall be satisfied by Cisco Newco depositing with the Transfer Agent, on
or before the Retraction Date, certificates representing Cisco Common
Shares and a cheque or cheques of Cisco Newco payable at par at any
branch of the bankers of Cisco Newco representing the aggregate Dividend
Amount, less any amounts withheld on account of tax required to be
deducted and withheld therefrom. Provided that Cisco Newco has complied
with the immediately preceding sentence, the closing of the purchase and
sale of the Retracted Shares pursuant to the Retraction Call Right shall
be deemed to have occurred as at the
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close of business on the Retraction Date and, for greater certainty, no
redemption by the Corporation of such Retracted Shares shall take place
on the Retraction Date. In the event that Cisco Newco does not deliver a
Cisco Newco Call Notice within such five Business Day period, and
provided that the Retraction Request is not revoked by the holder in the
manner specified in section 6.7, the Corporation shall redeem the
Retracted Shares on the Retraction Date and in the manner otherwise
contemplated in this Article 6.
6.4 The Corporation or Cisco Newco, as the case may be, shall deliver or
cause the Transfer Agent to deliver to the relevant holder, at the
address of the holder recorded in the securities register of the
Corporation for the Exchangeable Shares or at the address specified in
the holder's Retraction Request or by holding for pick-up by the holder
at the registered office of the Corporation or at any office of the
Transfer Agent as may be specified by the Corporation by notice to the
holders of Exchangeable Shares, certificates representing the Cisco
Common Shares (which shares shall be duly issued as fully paid and
non-assessable and shall be free and clear of any lien, claim or
encumbrance) registered in the name of the holder or in such other name
as the holder may request, and, if applicable and on or before the
payment date therefor, a cheque payable at par at any branch of the
bankers of the Corporation or Cisco Newco, as applicable, representing
the aggregate Dividend Amount in payment of the total Retraction Price
or the total Purchase Price, as the case may be, in each case, less any
amounts withheld on account of tax required to be deducted and withheld
therefrom, and such delivery of such certificates and cheques on behalf
of the Corporation or by Cisco Newco, as the case may be, or by the
Transfer Agent shall be deemed to be payment of and shall satisfy and
discharge all liability for the total Retraction Price or total Purchase
Price, as the case may be, to the extent that the same is represented by
such share certificates and cheques (plus any tax deducted and withheld
therefrom and remitted to the proper tax authority).
6.5 On and after the close of business on the Retraction Date, the holder of
the Retracted Shares shall cease to be a holder of such Retracted Shares
and shall not be entitled to exercise any of the rights of a holder in
respect thereof, other than the right to receive his proportionate part
of the total Retraction Price or total Purchase Price, as the case may
be, unless upon presentation and surrender of certificates in accordance
with the foregoing provisions, payment of the total Retraction Price or
the total Purchase Price, as the case may be, shall not be made as
provided in section 6.4, in which case the rights of such holder shall
remain unaffected until the total Retraction Price or the total Purchase
Price, as the case may be, has been paid in the manner hereinbefore
provided. On and after the close of business on the Retraction Date,
provided that presentation and surrender of certificates and payment of
the total Retraction Price or the total Purchase Price, as the case may
be, has been made in accordance with the foregoing provisions, the
holder of the Retracted Shares so redeemed by the Corporation or
purchased by Cisco Newco shall thereafter be considered and deemed for
all purposes to be a holder of the Cisco Common Shares delivered to it.
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6.6 Notwithstanding any other provision of this Article 6, the Corporation
shall not be obligated to redeem Retracted Shares specified by a holder
in a Retraction Request to the extent that such redemption of Retracted
Shares would be contrary to solvency requirements or other provisions of
applicable law. If the Corporation believes that on any Retraction Date
it would not be permitted by any of such provisions to redeem the
Retracted Shares tendered for redemption on such date, and provided that
Cisco Newco shall not have exercised the Retraction Call Right with
respect to the Retracted Shares, the Corporation shall only be obligated
to redeem Retracted Shares specified by a holder in a Retraction Request
to the extent of the maximum number that may be so redeemed (rounded
down to a whole number of shares) as would not be contrary to such
provisions and shall notify the holder at least two Business Days prior
to the Retraction Date as to the number of Retracted Shares which will
not be redeemed by the Corporation. In any case in which the redemption
by the Corporation of Retracted Shares would be contrary to solvency
requirements or other provisions of applicable law, the Corporation
shall redeem Retracted Shares in accordance with section 6.2 of these
share provisions on a pro rata basis and shall issue to each holder of
Retracted Shares a new certificate, at the expense of the Corporation,
representing the Retracted Shares not redeemed by the Corporation
pursuant to section 6.2 hereof. Provided that the Retraction Request is
not revoked by the holder in the manner specified in section 6.7, the
holder of any such Retracted Shares not redeemed by the Corporation
pursuant to section 6.2 of these share provisions as a result of
solvency requirements or other provisions of applicable law shall be
deemed by giving the Retraction Request to require Cisco to purchase
such Retracted Shares from such holder on the Retraction Date or as soon
as practicable thereafter on payment by Cisco to such holder of the
Purchase Price for each such Retracted Share, all as more specifically
provided in the Voting and Exchange Trust Agreement.
6.7 A holder of Retracted Shares may, by notice in writing given by the
holder to the Corporation before the close of business on the Business
Day immediately preceding the Retraction Date, withdraw its Retraction
Request, in which event such Retraction Request shall be null and void
and, for greater certainty, the revocable offer constituted by the
Retraction Request to sell the Retracted Shares to Cisco Newco shall be
deemed to have been revoked.
ARTICLE 7
REDEMPTION OF EXCHANGEABLE SHARES BY THE CORPORATION
7.1 Subject to applicable law, and provided Cisco Newco has not exercised
the Redemption Call Right, the Corporation shall on the Redemption Date
redeem all but not less than all of the then outstanding Exchangeable
Shares for an amount per share equal to the Current Market Price of an
Cisco Common Share on the last Business Day prior to the Redemption Date
(the "Redemption Price"), which shall be satisfied in full by the
Corporation causing to be delivered to each holder of Exchangeable
Shares one Cisco Common Share for each Exchangeable Share held by such
holder, together with the full amount of all declared and unpaid
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dividends on each such Exchangeable Share held by such holder on any
dividend record date which occurred prior to the Redemption Date.
7.2 In any case of a redemption of Exchangeable Shares under this Article 7,
the Corporation shall, at least 60 days before the Redemption Date
(other than a Redemption Date established in connection with an Cisco
Control Transaction, an Exchangeable Share Voting Event or an Exempt
Exchangeable Share Voting Event), send or cause to be sent to each
holder of Exchangeable Shares a notice in writing of the redemption by
the Corporation or the purchase by Cisco Newco under the Redemption Call
Right, as the case may be, of the Exchangeable Shares held by such
holder. In the case of a Redemption Date established in connection with
an Cisco Control Transaction, an Exchangeable Share Voting Event and an
Exempt Exchangeable Share Voting Event, the written notice of redemption
by the Corporation or the purchase by Cisco Newco under the Redemption
Call Right will be sent on or before the Redemption Date, on as many
days prior written notice as may be determined by the Board of Directors
of the Corporation to be reasonably practicable in the circumstances. In
any such case, such notice shall set out the formula for determining the
Redemption Price or the Redemption Call Purchase Price, as the case may
be, the Redemption Date and, if applicable, particulars of the
Redemption Call Right.
7.3 On or after the Redemption Date and subject to the exercise by Cisco
Newco of the Redemption Call Right, the Corporation shall cause to be
delivered to the holders of the Exchangeable Shares to be redeemed the
Redemption Price for each such Exchangeable Share, together with the
full amount of all declared and unpaid dividends on each such
Exchangeable Share held by such holder on any dividend record date which
occurred prior to the Redemption Date, upon presentation and surrender
at the registered office of the Corporation or at any office of the
Transfer Agent as may be specified by the Corporation in such notice of
the certificates representing such Exchangeable Shares, together with
such other documents and instruments as may be required to effect a
transfer of Exchangeable Shares under the CBCA and the by-laws of the
Corporation and such additional documents and instruments as the
Transfer Agent may reasonably require. Payment of the total Redemption
Price for such Exchangeable Shares, together with payment of such
dividends, shall be made by delivery to each holder, at the address of
the holder recorded in the securities register of the Corporation or by
holding for pick-up by the holder at the registered office of the
Corporation or at any office of the Transfer Agent as may be specified
by the Corporation in such notice, on behalf of the Corporation of
certificates representing Cisco Common Shares (which shares shall be
duly issued as fully paid and non-assessable and shall be free and clear
of any lien, claim or encumbrance) and, if applicable, a cheque of the
Corporation payable at par at any branch of the bankers of the
Corporation in payment of any such dividends, in each case, less any
amounts withheld on account of tax required to be deducted and withheld
therefrom. On and after the Redemption Date, the holders of the
Exchangeable Shares called for redemption shall cease to be holders of
such Exchangeable Shares and shall not be entitled to exercise any of
the rights of
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holders in respect thereof, other than the right to receive their
proportionate part of the total Redemption Price and any such dividends,
unless payment of the total Redemption Price and any such dividends for
such Exchangeable Shares shall not be made upon presentation and
surrender of certificates in accordance with the foregoing provisions,
in which case the rights of the holders shall remain unaffected until
the total Redemption Price and any such dividends have been paid in the
manner hereinbefore provided. The Corporation shall have the right at
any time after the sending of notice of its intention to redeem the
Exchangeable Shares as aforesaid to deposit or cause to be deposited
certificates representing the Cisco Common Shares issuable in respect
of, and the full amount of such dividends on (except as provided in this
section 7.3), the Exchangeable Shares so called for redemption, or such
of the said Exchangeable Shares represented by certificates that have
not at the date of such deposit been surrendered by the holders thereof
in connection with such redemption, in a custodial account with any
chartered bank or trust company in Canada named in such notice, less any
amounts withheld on account of tax required to be deducted and withheld
therefrom. Upon the later of such deposit being made and the Redemption
Date, the Exchangeable Shares in respect whereof such deposit shall have
been made shall be redeemed and the rights of the holders thereof after
such deposit or Redemption Date, as the case may be, shall be limited to
receiving their proportionate part of the total Redemption Price and
such dividends for such Exchangeable Shares so deposited, against
presentation and surrender of the said certificates held by them,
respectively, in accordance with the foregoing provisions. Upon such
payment or deposit of the total Redemption Price and the full amount of
such dividends, the holders of the Exchangeable Shares shall thereafter
be considered and deemed for all purposes to be holders of the Cisco
Common Shares delivered to them or the custodian on their behalf.
ARTICLE 8
PURCHASE FOR CANCELLATION
8.1 Subject to applicable law and the articles of the Corporation, the
Corporation may at any time and from time to time purchase for
cancellation all or any part of the outstanding Exchangeable Shares at
any price by tender to all the holders of record of Exchangeable Shares
then outstanding or through the facilities of any stock exchange on
which the Exchangeable Shares are listed or quoted at any price per
share. If in response to an invitation for tenders under the provisions
of this section 8.1, more Exchangeable Shares are tendered at a price or
prices acceptable to the Corporation than the Corporation is prepared to
purchase, the Exchangeable Shares to be purchased by the Corporation
shall be purchased as nearly as may be pro rata according to the number
of shares tendered by each holder who submits a tender to the
Corporation, provided that when shares are tendered at different prices,
the pro rating shall be effected (disregarding fractions) only with
respect to the shares tendered at the price at which more shares were
tendered than the Corporation is prepared to purchase after the
Corporation has purchased all the shares tendered at lower prices. If
part only of the Exchangeable Shares represented by any certificate
shall be purchased a new
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certificate for the balance of such shares shall be issued at the
expense of the Corporation. Notwithstanding the foregoing, the
Corporation shall be entitled to purchase for cancellation by private
contract any Exchangeable Shares held by Cisco Newco or an Affiliate of
Cisco.
ARTICLE 9
VOTING RIGHTS
9.1 Except as required by applicable law and by Article 10 hereof, the
holders of the Exchangeable Shares shall not be entitled as such to
receive notice of or to attend any meeting of the shareholders of the
Corporation or to vote at any such meeting.
ARTICLE 10
AMENDMENT AND APPROVAL
10.1 The rights, privileges, restrictions and conditions attaching to the
Exchangeable Shares may be added to, changed or removed but only with
the approval of the holders of the Exchangeable Shares given as
hereinafter specified.
10.2 Any approval given by the holders of the Exchangeable Shares to add to,
change or remove any right, privilege, restriction or condition
attaching to the Exchangeable Shares or any other matter requiring the
approval or consent of the holders of the Exchangeable Shares shall be
deemed to have been sufficiently given if it shall have been given in
accordance with applicable law subject to a minimum requirement that
such approval be evidenced by resolution passed by not less than
two-thirds of the votes cast on such resolution at a meeting of holders
of Exchangeable Shares duly called and held at which the holders of at
least 25% of the outstanding Exchangeable Shares at that time are
present or represented by proxy; provided that if at any such meeting
the holders of at least 25% of the outstanding Exchangeable Shares at
that time are not present or represented by proxy within one-half hour
after the time appointed for such meeting, then the meeting shall be
adjourned to such date not less than five days thereafter and to such
time and place as may be designated by the Chairman of such meeting. At
such adjourned meeting the holders of Exchangeable Shares present or
represented by proxy thereat may transact the business for which the
meeting was originally called and a resolution passed thereat by the
affirmative vote of not less than two-thirds of the votes cast on such
resolution at such meeting shall constitute the approval or consent of
the holders of the Exchangeable Shares.
ARTICLE 11
RECIPROCAL CHANGES, ETC.
IN RESPECT OF CISCO COMMON SHARES
11.1 Each holder of an Exchangeable Share acknowledges that the Support
Agreement provides, in part, that Cisco will not without the prior
approval of the Corporation
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and the prior approval of the holders of the Exchangeable Shares given
in accordance with section 10.2 of these share provisions:
(a) issue or distribute Cisco Common Shares (or securities
exchangeable for or convertible into or carrying rights
to acquire Cisco Common Shares) to the holders of all or
substantially all of the then outstanding Cisco Common
Shares by way of stock dividend or other distribution,
other than an issue of Cisco Common Shares (or
securities exchangeable for or convertible into or
carrying rights to acquire Cisco Common Shares) to
holders of Cisco Common Shares who exercise an option to
receive dividends in Cisco Common Shares (or securities
exchangeable for or convertible into or carrying rights
to acquire Cisco Common Shares) in lieu of receiving
cash dividends;
(b) issue or distribute rights, options or warrants to the
holders of all or substantially all of the then
outstanding Cisco Common Shares entitling them to
subscribe for or to purchase Cisco Common Shares (or
securities exchangeable for or convertible into or
carrying rights to acquire Cisco Common Shares); or
(c) issue or distribute to the holders of all or
substantially all of the then outstanding Cisco Common
Shares:
(i) shares or securities of Cisco of any class other
than Cisco Common Shares (other than shares
convertible into or exchangeable for or carrying
rights to acquire Cisco Common Shares);
(ii) rights, options or warrants other than those
referred to in section 11.1(b) above;
(iii) evidences of indebtedness of Cisco; or
(iv) assets of Cisco,
unless the economic equivalent on a per share basis of such rights,
options, securities, shares, evidences of indebtedness or other assets
is issued or distributed simultaneously to holders of the Exchangeable
Shares.
11.2 Each holder of an Exchangeable Share acknowledges that the Support
Agreement further provides, in part, that Cisco will not without the
prior approval of the Corporation and the prior approval of the holders
of the Exchangeable Shares given in accordance with section 10.2 of
these share provisions:
(a) subdivide, redivide or change the then outstanding Cisco
Common Shares into a greater number of Cisco Common
Shares;
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<PAGE> 37
(b) reduce, combine, consolidate or change the then
outstanding Cisco Common Shares into a lesser number of
Cisco Common Shares; or
(c) reclassify or otherwise change the Cisco Common Shares
or effect an amalgamation, merger, reorganization or
other transaction affecting the Cisco Common Shares,
unless the same or an economically equivalent change shall
simultaneously be made to, or in the rights of the holders of, the
Exchangeable Shares.
11.3 The Support Agreement further provides, in part, that the aforesaid
provisions of the Support Agreement shall not be changed without the
approval of the holders of the Exchangeable Shares given in accordance
with section 10.2 of these share provisions (other than certain
amendments which are not prejudicial to the rights or interests of the
holders of Exchangeable Shares).
ARTICLE 12
ACTIONS BY THE CORPORATION UNDER SUPPORT AGREEMENT
12.1 The Corporation will take all such actions and do all such things as
shall be necessary or advisable to perform and comply with all
provisions of the Support Agreement applicable to the Corporation, in
accordance with the terms thereof including, without limitation, taking
all such actions and doing all such things as shall be necessary or
advisable to enforce to the fullest extent possible for the direct
benefit of the Corporation all rights and benefits in favour of the
Corporation under or pursuant to such agreement.
12.2 The Corporation shall not propose, agree to or otherwise give effect to
any amendment to, or waiver or forgiveness of its rights or obligations
under, the Support Agreement without the approval of the holders of the
Exchangeable Shares given in accordance with section 10.2 of these share
provisions other than such amendments, waivers and/or forgiveness as may
be necessary or advisable for the purposes of:
(a) adding to the covenants of any or all parties to such
agreement for the protection of the Corporation or the
holders of the Exchangeable Shares thereunder;
(b) making such provisions or modifications not inconsistent
with such agreement as may be necessary or desirable
with respect to matters or questions arising thereunder
which, in the good faith opinion of the Board of
Directors, it may be expedient to make, provided that
the Board of Directors shall be of the good faith
opinion, after consultation with counsel, that such
provisions and modifications will not be prejudicial to
the interests of the holders of the Exchangeable Shares;
or
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<PAGE> 38
(c) making such changes in or corrections to such agreement
which, on the advice of counsel to the Corporation, are
required for the purpose of curing or correcting any
ambiguity or defect or inconsistent provision or
clerical omission or mistake or manifest error contained
therein, provided that the Board of Directors shall be
of the good faith opinion, after consultation with
counsel, that such changes or corrections will not be
prejudicial to the interests of the holders of the
Exchangeable Shares.
ARTICLE 13
LEGEND; CALL RIGHTS; WITHHOLDINGS
13.1 The certificates evidencing the Exchangeable Shares shall contain or
have affixed thereto a legend in form and on terms approved by the Board
of Directors, with respect to the Support Agreement, the provisions of
the Plan of Arrangement relating to the Liquidation Call Right and the
Redemption Call Right, and the Voting and Exchange Trust Agreement
(including the provisions with respect to the voting rights, exchange
right and automatic exchange thereunder).
13.2 Each holder of an Exchangeable Share, whether of record or beneficial,
by virtue of becoming and being such a holder shall be deemed to
acknowledge each of the Liquidation Call Right, the Retraction Call
Right and the Redemption Call Right, in each case, in favour of Cisco
Newco, and the overriding nature thereof in connection with the
liquidation, dissolution or winding-up of the Corporation or the
retraction or redemption of Exchangeable Shares, as the case may be, and
to be bound thereby in favour of Cisco Newco as therein provided.
13.3 The Corporation, Cisco Newco or Cisco shall be entitled to deduct and
withhold from any dividend or consideration otherwise payable to any
holder of Exchangeable Shares such amounts as the Corporation, Cisco
Newco or Cisco are required to deduct and withhold with respect to such
payment under the Income Tax Act (Canada) (including for greater
certainty pursuant to Section 116 thereof), the United States Internal
Revenue Code of 1986 or any provision of provincial, state, local or
foreign tax law, in each case, as amended. To the extent that amounts
are so withheld, such withheld amounts shall be treated for all purposes
hereof as having been paid to the holder of the Exchangeable Shares in
respect of which such deduction and withholding was made, provided that
such withheld amounts are actually remitted to the appropriate taxing
authority. To the extent that the amount so required or permitted to be
deducted or withheld from any payment to a holder exceeds the cash
portion of the consideration otherwise payable to the holder, the
Corporation, Cisco Newco and Cisco are hereby authorized to sell or
otherwise dispose of such portion of the consideration as is necessary
to provide sufficient funds to the Corporation, Cisco Newco and Cisco as
the case may be, to enable it to comply with such deduction or
withholding requirement and the Corporation, Cisco Newco or Cisco shall
notify the holder thereof and remit any unapplied balance of the net
proceeds of such sale. All
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<PAGE> 39
payments to be made hereunder shall be made without interest and less
any tax required by Canadian law to be deducted and withheld.
ARTICLE 14
NOTICES
14.1 Any notice, request or other communication to be given to the
Corporation by a holder of Exchangeable Shares shall be in writing and
shall be valid and effective if given by mail (postage prepaid) or by
telecopy or by delivery to the registered office of the Corporation and
addressed to the attention of the President. Any such notice, request or
other communication, if given by mail, telecopy or delivery, shall only
be deemed to have been given and received upon actual receipt thereof by
the Corporation.
14.2 Any presentation and surrender by a holder of Exchangeable Shares to the
Corporation or the Transfer Agent of certificates representing
Exchangeable Shares in connection with the liquidation, dissolution or
winding-up of the Corporation or the retraction or redemption of
Exchangeable Shares shall be made by registered mail (postage prepaid)
or by delivery to the registered office of the Corporation or to such
office of the Transfer Agent as may be specified by the Corporation, in
each case, addressed to the attention of the President of the
Corporation. Any such presentation and surrender of certificates shall
only be deemed to have been made and to be effective upon actual receipt
thereof by the Corporation or the Transfer Agent, as the case may be.
Any such presentation and surrender of certificates made by registered
mail shall be at the sole risk of the holder mailing the same.
14.3 Any notice, request or other communication to be given to a holder of
Exchangeable Shares by or on behalf of the Corporation shall be in
writing and shall be valid and effective if given by mail (postage
prepaid) or by delivery to the address of the holder recorded in the
securities register of the Corporation or, in the event of the address
of any such holder not being so recorded, then at the last known address
of such holder. Any such notice, request or other communication, if
given by mail, shall be deemed to have been given and received on the
third Business Day following the date of mailing and, if given by
delivery, shall be deemed to have been given and received on the date of
delivery. Accidental failure or omission to give any notice, request or
other communication to one or more holders of Exchangeable Shares shall
not invalidate or otherwise alter or affect any action or proceeding to
be taken by the Corporation pursuant thereto.
ARTICLE 15
SPECIFIED AMOUNT
15.1 For the purposes of sub-section 191(4) of the Income Tax Act (Canada)
the specified amount for each Exchangeable Share is C$ [NOTE: TO BE
INSERTED PRIOR TO THE FILING OF THE ARTICLES OF ARRANGEMENT TO BE EQUAL
TO THE EFFECTIVE CISCO
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<PAGE> 40
PRICE (AS DEFINED IN THE PLAN OF ARRANGEMENT) MULTIPLIED BY THE U.S.
DOLLAR/CANADIAN DOLLAR NOON SPOT RATE EXCHANGE RATE ON THE EFFECTIVE
DATE]
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<PAGE> 41
SCHEDULE A
NOTICE OF RETRACTION
To 3801110 Canada Inc. (the "Corporation") and 3045848 Nova
Scotia Company ("Cisco Newco").
This notice is given pursuant to Article 6 of the provisions
(the "Share Provisions") attaching to the Exchangeable Shares of the Corporation
represented by this certificate and all capitalized words and expressions used
in this notice that are defined in the Share Provisions have the meanings
ascribed to such words and expressions in such Share Provisions.
The undersigned hereby notifies the Corporation that, subject to
the Retraction Call Right referred to below, the undersigned desires to have the
Corporation redeem the following Exchangeable Shares (the "Retracted Shares") in
accordance with Article 6 of the Share Provisions:
[ ] all share(s) represented by this certificate; or
[ ] __________ share(s) only.
The undersigned hereby notifies the Corporation that the
Retraction Date shall be ________.
NOTE:
The Retraction Date must be a Business Day and must not be less than 10
Business Days nor more than 15 Business Days after the date upon which
this notice is received by the Corporation. If no such Business Day is
specified above, the Retraction Date shall be deemed to be the 15th
Business Day after the date on which this notice is received by the
Corporation.
The undersigned acknowledges the overriding Retraction Call
Right of Cisco Newco to purchase all but not less than all the Retracted Shares
from the undersigned and that this notice is and shall be deemed to be a
revocable offer by the undersigned to sell the Retracted Shares to Cisco Newco
in accordance with the Retraction Call Right on the Retraction Date for the
Purchase Price and on the other terms and conditions set out in section 6.3 of
the Share Provisions. This notice of retraction, and this offer to sell the
Retracted Shares to Cisco Newco, may be revoked and withdrawn by the undersigned
only by notice in writing given to the Corporation at any time before the close
of business on the Business Day immediately preceding the Retraction Date.
The undersigned acknowledges that if, as a result of solvency
provisions of applicable law, the Corporation is unable to redeem all Retracted
Shares and provided Cisco Newco shall not have exercised the Retraction Call
Right with respect to the Retracted Shares and the undersigned has not revoked
this notice of retraction, the undersigned will be deemed to have exercised the
Exchange Right (as defined in the Voting and Exchange Trust Agreement) so as to
require Cisco Systems, Inc. to purchase the unredeemed Retracted Shares.
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<PAGE> 42
The undersigned hereby represents and warrants to Cisco Newco
and the Corporation that the undersigned:
[ ] is
(select one)
[ ] is not
a non-resident of Canada for purposes of the Income Tax Act
(Canada). THE UNDERSIGNED ACKNOWLEDGES THAT IN THE ABSENCE OF AN INDICATION THAT
THE UNDERSIGNED IS NOT A NON-RESIDENT OF CANADA, WITHHOLDING ON ACCOUNT OF
CANADIAN TAX MAY BE MADE IN RESPECT OF AMOUNTS PAYABLE TO THE UNDERSIGNED ON THE
REDEMPTION OR PURCHASE OF THE RETRACTED SHARES.
The undersigned hereby represents and warrants to Cisco Newco
and the Corporation that the undersigned has good title to, and owns, the
share(s) represented by this certificate to be acquired by Cisco Newco or the
Corporation, as the case may be, free and clear of all liens, claims and
encumbrances.
------------- ---------------------------- ------------------
(Date) (Signature of Shareholder) (Guarantee of
[ ] Please check box if the certificates for and any cheque(s) resulting
from the retraction or purchase of the Retracted Shares are to be held
for pick-up by the shareholder from the Transfer Agent, failing which
the securities and any cheque(s) will be mailed to the last address of
the shareholder as it appears on the register.
NOTE:
This panel must be completed and this certificate, together with such
additional documents as the Transfer Agent may require, must be
deposited with the Transfer Agent. The securities and any cheque(s)
resulting from the retraction or purchase of the Retracted Shares will
be issued and registered in, and made payable to, respectively, the name
of the shareholder as it appears on the register of the Corporation and
the securities and any cheque(s) resulting from such retraction or
purchase will be delivered to such shareholder as indicated above,
unless the form appearing immediately below is duly completed.
Date:
----------------------------
Name of Person in Whose Name Securities or Cheque(s)
Are to be Registered, Issued or Delivered (please print):
---------------
Street Address or P.O. Box:
---------------------------------------------
City, Province and Postal Code:
-----------------------------------------
Signature of Shareholder:
-----------------------------------------------
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<PAGE> 43
Signature Guaranteed by:
------------------------------------------------
NOTE:
If this notice of retraction is for less than all of the shares represented by
this certificate, a certificate representing the remaining share(s) of the
Corporation represented by this certificate will be issued and registered in the
name of the shareholder as it appears on the register of the Corporation, unless
the Share Transfer Power on the share certificate is duly completed in respect
of such share(s).
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<PAGE> 44
APPENDIX II
1.1 AMENDMENT TO PLAN OF ARRANGEMENT
In the event that the Kaparel Sale is not completed prior to the Meeting
Date, the Plan of Arrangement will be amended in accordance with this
Appendix II to this Plan of Arrangement
1.2 DEFINITIONS.
Section 1.1 of the Plan of Arrangement shall be amended by adding the
following definitions:
"K Holdco" means the corporation that prior to the Effective
Time has acquired the capital stock of Kaparel Corporation held by
Pixstream.
"K Holdco Note" has the meaning ascribed thereto in the Merger
Agreement.
1.3 BINDING EFFECT
Section 2.1 of the Plan of Arrangement shall be amended so that the Plan
of Arrangement will also be binding at and after, the Effective Time on K
Holdco, all holders of K Holdco Common Shares and all holders of rights to
purchase securities exchangeable for or convertible into K Holdco Common Shares.
2.2 EXCHANGE OF SECURITIES
Section 2.2 of the Plan of Arrangement shall be deleted and replaced
in its entirety by the following:
"2.2 EXCHANGE OF SECURITIES
At the Effective Time, the following shall occur and be deemed to
occur in the following order and without any further act or formality:
(a) Pixstream and Holdco shall amalgamate (the "Amalgamation") and
continue as one corporation governed by the laws of Canada
("Amalco");
(b) upon the Amalgamation:
(i) except for the Pixstream Common Shares held by Holdco,
each of the outstanding Pixstream Common Shares shall be
converted into
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<PAGE> 45
one (1) common share of Amalco and one (1) special share
of Amalco;
(ii) the Pixstream Common Shares held by Holdco shall be
cancelled without any repayment of capital in respect
thereof;
(iii) each of the outstanding Holdco Common Shares shall be
converted into 1.55624 common shares of Amalco and
1.55624 special shares of Amalco; and
(iv) the aggregate stated capital of the special shares of
Amalco shall be Cdn. $12,800,000 and the aggregate
stated capital of the common shares of Amalco shall be
equal to the amount by which Amalco's aggregate paid up
capital (as determined for the purposes of the ITA)
exceeds Cdn. $12,800,000;
(c) the following provisions shall apply to Amalco:
(i) the name of Amalco shall be PIXSTREAM INCORPORATED;
(ii) the registered office of Amalco, shall be located in the
City of Waterloo in the Province of Ontario. The address
of the registered office of Amalco shall be 180 Columbia
Street West, Unit 1110, Waterloo, Ontario N2L 3L3;
(iii) (iii) there shall be no restrictions on the business
Amalco may carry on or the powers it may exercise;
(iv) Amalco shall be authorized to issue an unlimited number
of common shares and an unlimited number of special
shares. The rights, privileges, restrictions and
conditions attaching to the common shares and special
shares of Amalco are set forth in Schedule "A" to
Appendix II to this Plan of Arrangement;
(v) the issue, transfer or ownership of the shares of Amalco
will be subject to the following restrictions:
A. the transfer of shares shall be restricted in
that no share shall be transferred without
either (i) the consent of the directors of
Amalco expressed by resolution passed by the
board of directors or by an instrument or
instruments in writing signed by all of such
directors, or (ii) the consent of the holders of
shares to which are attached more than 50% of
the voting rights attaching to all shares for
the time being outstanding entitled to vote at
such time expressed by a resolution passed by
such shareholders at a meeting duly called and
constituted for that purpose or by an instrument
or instruments in writing signed by all of such
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<PAGE> 46
shareholders; provided that these restrictions
shall not apply to the transfer of the shares of
Amalco pursuant to the provisions of this Plan
of Arrangement;
B. immediately following the exchange provided for
in paragraph (f) below, the number of
shareholders of Amalco, exclusive of persons who
are in its employment and exclusive of persons
who, having been formerly in the employment of
Amalco, were, while in that employment, and have
continued after termination of that employment
to be shareholders of Amalco, is limited to not
more than 50, two or more persons who are the
joint registered owners of one or more common
shares being counted as one shareholder; and
(vi) any invitation to the public to subscribe for any
securities of Amalco is prohibited;
(vii) the number of directors of Amalco shall be a minimum of
one and a maximum of ten; the initial directors of
Amalco shall be
NAME RESIDENCE ADDRESS CANADIAN RESIDENT
; and
(viii) the by-laws of Amalco shall be the by-laws of Pixstream;
(d) the special shares of Amalco held by the former Pixstream and
Holdco shareholders shall be transferred to K Holdco in exchange
for an equal number of issued, fully paid and non-assessable
common shares of K Holdco and K Holdco will become the
registered and beneficial owner of all of the special shares of
Amalco;
(e) the special shares of Amalco held by K Holdco shall be purchased
for cancellation by Amalco for Cdn. $12,800,000 to be satisfied
by cancellation of the K Holdco Note;
(f) all of the issued and outstanding common shares of Amalco will
be exchanged for issued, fully paid and non-assessable
Exchangeable Shares based on the Exchange Ratio, and Cisco
Exchangeco will become the registered and beneficial owner of
all the issued and outstanding common shares of Amalco;
(g) in lieu of fractional Exchangeable Shares, each holder of common
shares of Amalco shall, for those common shares of Amalco being
exchanged
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<PAGE> 47
that would otherwise give rise to an entitlement for that holder
to receive a fraction of an Exchangeable Share, be paid an
amount in cash equal to the product obtained by multiplying such
fractional interests by the Effective Cisco Price;
(h) each Pixstream Option outstanding at the Effective Time shall be
assumed by Cisco (an "Assumed Option") or exchanged by Cisco on
the following terms and Pixstream shall cease to have any
liability in respect thereof:
(i) the Pixstream Stock Option Plans and each outstanding
Pixstream Option will be assumed by Cisco, except to the
extent otherwise provided in Section 2.2(h)(iii) below.
Each Assumed Option shall continue to have, and be
subject to, the same terms and conditions set forth in
the relevant Pixstream Stock Option Plan and the
applicable stock option agreement immediately prior to
the Effective Time, except that (i) such Assumed Option
shall be modified by the Waiver, (ii) such Assumed
Option will be exercisable for that number of whole
Cisco Common Shares equal to the product of the number
of Pixstream Common Shares that were issuable upon
exercise of such Pixstream Option immediately prior to
the Effective Time multiplied by the Exchange Ratio and
rounded down to the nearest whole number of Cisco Common
Shares, and (iii) the per share exercise price for the
Cisco Common Shares issuable or upon exercise of such
Assumed Option will be equal to the quotient determined
by dividing the exercise price per Pixstream Common
Share at which such Pixstream Option was exercisable
immediately prior to the Effective Time (adjusted for
the U.S. Dollar/Canadian Dollar Noon Spot Rate exchange
rate effective as of 12:00 p.m. Eastern Standard Time on
the Effective Date as reported by the Bank of Canada) by
the Exchange Ratio, rounded up to the nearest whole
cent. Consistent with the terms of the relevant
Pixstream Stock Option Plan and the documents governing
the outstanding options under such plan, as modified by
the Waiver, the transaction contemplated hereby will not
terminate any of the outstanding options under the
relevant Pixstream Stock Option Plan or accelerate the
exercisability or vesting of such options or the Cisco
Common Shares which will be subject to those options
upon Cisco's assumption of the options;
(ii) all outstanding rights of Pixstream which it may hold
immediately prior to the Effective Time to repurchase
unvested Pixstream Common Shares (the "Repurchase
Options") shall be assigned to Cisco and shall
thereafter be exercisable by Cisco upon the same terms
and conditions in effect immediately prior to the
Effective Time, except that the shares purchasable
pursuant to the Repurchase Options and the purchase
price per share shall be adjusted in the manner set
forth in Section 2.2(h)(i) above to reflect
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<PAGE> 48
the Exchange Ratio and the U.S. Dollar/Canadian Dollar
Noon Spot Rate exchange rate effective as of 12:00 p.m.
Eastern Standard Time on the Effective Date as reported
by the Bank of Canada;
(iii) each outstanding U.K. Option shall be exchanged by Cisco
for an option to acquire Cisco Common Shares as set
forth below, provided the holder of each such option has
consented to such exchange and Cisco has received U.K.
Inland Revenue approval for such exchanged option to
continue to be treated as an approved option under
Schedule 9 of the U.K. Income and Corporation Taxes Act
1988. Each such option so exchanged by Cisco under this
Agreement shall continue to have, and be subject to, the
same terms and conditions set forth in the U.K. Plan and
the applicable stock option agreements, immediately
prior to the Effective Time, except that (i) such option
will be exercisable for that number of whole Cisco
Common Shares equal to the product of the number of
Pixstream Common Shares that were issuable upon exercise
of such option immediately prior to the Effective Time
multiplied by the Exchange Ratio and rounded down to the
nearest whole number of Cisco Common Shares, and (ii)
the per share exercise price for the Cisco Common Shares
issuable upon exercise of such exchanged option will be
equal to the quotient determined by dividing the
exercise price per Pixstream Common Share at which such
option was exercisable immediately prior to the
Effective Time (adjusted for the U.S. Dollar/Canadian
Dollar Noon Spot Rate exchange rate effective as of
12:00 p.m. Eastern Standard Time on the Effective Date
as reported by the Bank of Canada) by the Exchange
Ratio, rounded up to the nearest whole cent. Consistent
with the terms of the U.K. Plan and the documents
governing the outstanding options under such Plan, the
transaction contemplated hereby will not terminate any
of the outstanding options under the U.K. Plan or
accelerate the exercisability or vesting of such options
or the Cisco Common Shares which will be subject to
those options upon Cisco's exchange of the options at
the Effective Time. In the event U.K. Inland Revenue
approval is not obtained, then the U.K. Options shall be
assumed by Cisco as provided in Section 2.2(h)(i) above.
[NOTE: SECTION 2.2(h)(ii) MAY NEED MODIFICATION AT THE
TIME OF FILING ARTICLES OF ARRANGEMENT TO REFLECT
WHETHER OR NOT U.K. INLAND REVENUE APPROVAL HAS BEEN
OBTAINED]
(i) Subject to adjustment in accordance with section 2.3 hereof, the
"Exchange Ratio" shall equal the ratio of (x) a quotient, the
numerator of which is $352.762 million less the amount of any
Pixstream Expenses less $5.22 times the difference between
1,140,000 and the number of Pixstream Options granted between
the date hereof and the Effective
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<PAGE> 49
Time, and the denominator of which is the Effective Cisco Price
and (y) the total number of Pixstream Common Shares issued and
outstanding on a fully diluted basis at the Effective Time
(after giving effect to the conversion, exchange or exercise, as
the case may be, of all securities convertible into, or
exercisable or exchangeable for, Pixstream Common Shares,
including all unexpired and unexercised outstanding options,
warrants or other rights to acquire Pixstream Common Shares
assumed or exchanged by the Cisco Parties).
The "Effective Cisco Price" shall equal the average of the
closing prices of Cisco Common Shares as quoted on Nasdaq for
the ten (10) consecutive trading days ending on the third
trading day prior to the Effective Date.
[NOTE: THE EXCHANGE RATIO AS DETERMINED BY CISCO AND PIXSTREAM
IN ACCORDANCE WITH THE FOREGOING SHALL BE SET FORTH IN THE
ARTICLES OF ARRANGEMENT.]
(j) Amalco shall be authorized to continue under the laws of the
Province of Nova Scotia and apply pursuant to the Companies Act of Nova Scotia
for a certificate of continuance continuing Amalco as a body corporate under
that Act [NOTE: IF NECESSARY, THE PLAN OF ARRANGEMENT WILL INCLUDE AS APPENDICES
THE FORM OF THE MEMORANDUM OF ASSOCIATION AND ARTICLES OF ASSOCIATION AND ANY
OTHER PROVISIONS REQUIRED BY THE REGISTRAR OF JOINT STOCK COMPANIES OF NOVA
SCOTIA TO GIVE APPROVAL TO THE CHANGE IN JURISDICTION.]
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<PAGE> 50
SCHEDULE "A"
TO
APPENDIX II
RIGHTS, PRIVILEGES, RESTRICTIONS AND CONDITIONS ATTACHING TO THE
COMMON SHARES AND SPECIAL SHARES OF AMALCO
A. SPECIAL SHARES
1. Dividends
(a) The holders of the special shares, in priority to the common shares
and all other shares ranking junior to the special shares, shall be entitled to
receive and the Corporation shall pay thereon, as and when declared by the board
of directors of the Corporation out of the assets of the Corporation properly
applicable to the payment of dividends, cumulative cash dividends at the rate of
8% per annum of the Redemption Price (as hereinafter defined) payable on the
first days of January, April, July and October in each year. Cheques of the
Corporation payable at par at any branch of the Corporation's bankers in Canada
shall be issued in respect of such dividends and payment thereof shall satisfy
such dividends. Such dividends shall accrue from such date or dates not later
than six months after the respective dates of issue as may in the case of each
issue be determined by the board of directors of the Corporation or in case no
date be so determined then from the date of issue. If on any dividend payment
date, the dividend payable on such date is not paid in full on all of the
special shares then issued and outstanding, such dividend, or the unpaid part
thereof, shall be paid at a subsequent date or dates as and when declared by the
board of directors. The holders of the special shares shall not be entitled to
any dividends other than or in excess of the dividends hereinbefore provided
for.
(b) Except with the consent in writing of the holders of all of the
special shares outstanding, no dividend shall at any time be declared and paid
on or declared and set apart for payment on the common shares or on any other
shares of the Corporation ranking junior to the special shares for any financial
year unless all cumulative cash dividends on the special shares then issued and
outstanding in respect of such financial year shall have been declared and paid
or set apart for payment at the date of such declaration and payment or setting
apart of dividends on the common shares or on any other shares ranking junior to
the special shares.
2. Liquidation, Dissolution or Winding-Up
In the event of the liquidation, dissolution or winding-up of the
Corporation or other distribution of assets of the Corporation among
shareholders for the purpose of winding-up its affairs, the holders of the
special shares, in priority to the holders of the common shares, shall be
entitled to receive from the assets of the Corporation a sum equivalent to the
aggregate Redemption Price (as hereinafter defined)
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<PAGE> 51
of all of the special shares held by them plus all accrued and unpaid cumulative
cash dividends thereon up to but not including the date of distribution. After
payment to the holders of the special shares of the amount so payable to them as
above provided they shall not be entitled to share in any further distribution
of the assets of the Corporation.
3. Redemption
(a) The Corporation may, subject to the requirements of the
Canada Business Corporations Act (the "Act"), upon giving notice as hereinafter
provided, redeem at any time the whole, or from time to time any part, of the
then outstanding special shares on payment of a redemption price of [$?] per
share [NOTE: THIS AMOUNT WILL BE INSERTED IN THE ARTICLES OF ARRANGEMENT AND
WILL BE EQUAL TO CDN. $12.8 MILLION DIVIDED BY THE AGGREGATE NUMBER OF SPECIAL
SHARES INTO WHICH THE PIXSTREAM COMMON SHARES AND THE HOLDCO COMMON SHARES ARE
CONVERTED ON THE AMALGAMATION] (the "Redemption Price"), plus all accrued and
unpaid cumulative cash dividends thereon up to but not including the date of
redemption (such Redemption Price plus the per share dividend being herein
referred to together as the "Redemption Amount").
(b) In the case of redemption of special shares under the provisions of
sub-clause 3(a) hereof, the Corporation shall, unless waived in writing by the
holders of all of the special shares to be redeemed, at least 10 days before the
date specified for redemption deliver or mail to each person who at the date of
mailing is a registered holder of special shares to be redeemed a notice in
writing of the intention of the Corporation to redeem such special shares. Such
notice shall be delivered or mailed by letter, postage prepaid, addressed to
each such shareholder at the shareholder's address as it appears on the records
of the Corporation or in the event of the address of any such shareholder not so
appearing then to the last known address of such shareholder or if delivered,
delivered to each such shareholder at such address; provided, however, that
accidental failure to give any such notice to one or more of such shareholders
shall not affect the validity of such redemption. Such notice shall set out the
Redemption Amount and the date on which redemption is to take place and if part
only of the shares held by the person to whom it is addressed is to be redeemed
the number thereof to be so redeemed; provided, however, that if a part only of
the special shares for the time being outstanding is to be redeemed, the shares
so to be redeemed shall be selected by lot in such manner as the directors in
their discretion shall decide or if the directors so determine may be redeemed
pro rata (disregarding fractions) unless otherwise agreed in writing by the
holders of all of the special shares. On the date so specified for redemption,
the Corporation shall pay or cause to be paid to or to the order of the
registered holders of the special shares to be redeemed the Redemption Amount
thereof on presentation and surrender at the registered office of the
Corporation or any other place designated in such notice of the certificates
representing the special shares called for redemption. Such payment shall be
made by cheque payable at par at any branch of the Corporation's bankers in
Canada. If less than all of the special shares represented by any certificate
are redeemed the holder shall be entitled to receive a new certificate for that
number of special shares represented by the original certificate which are not
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redeemed. From and after the date specified for redemption in any such notice
the holders of the special shares called for redemption shall cease to be
entitled to dividends and shall not be entitled to exercise any of the rights of
shareholders in respect thereof unless payment of the Redemption Amount shall
not be made upon presentation of certificates in accordance with the foregoing
provisions, in which case the rights of shareholders shall remain unaffected.
The Corporation shall have the right at any time after the mailing of notice of
its intention to redeem any special shares to deposit the Redemption Amount for
the shares so called for redemption or of such of the said shares represented by
certificates as have not at the date of such deposit been surrendered by the
holders thereof in connection with such redemption to a special account in any
chartered bank or in any trust Corporation in Canada, named in such notice, to
be paid without interest to or to the order of the respective holders of such
special shares called for redemption upon presentation and surrender to such
bank or trust Corporation of the certificates representing the same. Upon such
deposit being made or upon the date specified for redemption in such notice,
whichever is the later, the special shares in respect whereof such deposit shall
have been made shall be redeemed and the rights of the holders thereof after
such deposit or such redemption date, as the case may be, shall be limited to
receiving without interest their proportionate part of the total Redemption
Amount so deposited against presentation and surrender of the said certificates
held by them respectively and any interest on the amount so deposited shall be
for the account of the Corporation. If any part of the total Redemption Amount
so deposited has not been paid to or to the order of the respective holders of
the special shares which were called for redemption within two years after the
date upon which such deposit was made or the date specified for redemption in
the said notice, whichever is the later, such balance remaining in the said
special account shall be returned to the Corporation without prejudice to the
rights of the holders of the shares being redeemed to claim the Redemption
Amount to which they are entitled without interest from the Corporation.
4. Retraction
Any holder of special shares shall be entitled to require the
Corporation to redeem, subject to the requirements of the Act, at any time or
times all or any of the special shares registered in the name of such holder on
the books of the Corporation by tendering to the Corporation at the registered
office of the Corporation a share certificate or certificates representing the
special shares which the registered holder desires to have the Corporation
redeem together with a notice in writing specifying (i) that the registered
holder desires to have the special shares represented by such certificate or
certificates redeemed by the Corporation and (ii) the business day ("Retraction
Date") on which the holder desires to have the Corporation redeem such special
shares. The Retraction Date shall not be less than 30 days after the day on
which the notice in writing is given to the Corporation without the consent of
the Corporation. Upon receipt of a share certificate or certificates
representing the special shares which the registered holder desires to have the
Corporation redeem together with such notice, the Corporation shall on the
Retraction Date redeem such special shares by paying to such registered holder
the Redemption Amount for each such special share being redeemed. Such payment
shall be made by a cheque payable at par at any branch of the Corporation's
bankers for the time being in Canada. If less than all of the special shares
represented by any certificate are redeemed,
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the holder shall be entitled to receive a new certificate for that number of
special shares represented by the original certificate or certificates which are
not redeemed. The said special shares shall be redeemed on the Retraction Date
and from and after the Retraction Date the holder of such shares shall cease to
be entitled to dividends and shall not be entitled to exercise any of the rights
of holders of special shares in respect thereof unless payment of the Redemption
Amount is not made on the Retraction Date, in which event the rights of the
holder of the said special shares shall remain unaffected.
5. Voting
Except as otherwise provided by law, the holders of the special shares
shall not be entitled as such to receive notice of, or to attend, any meeting of
the shareholders of the Corporation and shall not be entitled to vote at any
such meeting or to sign any resolution in writing in lieu thereof.
B. COMMON SHARES
1. Dividends
Subject to the prior rights of the holders of the special shares and not
otherwise, the board of directors may declare and cause to be paid dividends to
the holders of the common shares from any assets at the time properly applicable
to the payment of dividends.
2. Liquidation, Dissolution or Winding-Up
In the event of liquidation, dissolution or winding-up of the
Corporation or other distribution of assets of the Corporation among
shareholders for the purpose of winding-up its affairs, subject to the prior
rights of the holders of the special shares, the holders of the common shares
shall be entitled to receive the remaining assets of the Corporation.
3. Voting
The holders of the common shares shall be entitled to receive notice of
and to attend any meeting of the shareholders of the Corporation and shall be
entitled to one vote in respect of each common share held at such meetings,
except a meeting of holders of a particular class of shares other than the
common shares who are entitled to vote separately as a class at such meeting.
4. Other Provisions
Notwithstanding the provisions of the foregoing, the directors shall not
declare and the Corporation shall not at any time pay a dividend on the common
shares or any other shares ranking junior to the special shares, or redeem or
purchase for cancellation or make a capital distribution in respect of the
common shares or any other shares ranking junior to the special shares unless,
after giving effect to such action, the
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Corporation will be able to redeem all of the issued special shares pursuant to
clauses A.3 and A.4.
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