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Exhibit 2.1
SHAREHOLDER PROTECTION RIGHTS AGREEMENT
Dated as of August 12, 1999
BETWEEN
FANTOM TECHNOLOGIES INC.
- and -
CIBC MELLON TRUST COMPANY
as Rights Agent
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TABLE OF CONTENTS
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ARTICLE I - INTERPRETATION
1.1 Certain Definitions .......................................................................... 1
1.2 Currency ..................................................................................... 14
1.3 Number and Gender ............................................................................ 14
1.4 Descriptive Headings and References .......................................................... 14
1.5 Acting Jointly or in Concert ................................................................. 14
1.6 Holder ....................................................................................... 14
ARTICLE 2 - THE RIGHTS
2.1 Legend on Common Share Certificates........................................................... 15
2.2 Initial Exercise Price; Exercise of Rights; Detachment of Rights ............................. 15
2.3 Adjustments to Exercise Price; Number of Rights .............................................. 18
2.4 Date on Which Exercise is Effective .......................................................... 24
2.5 Execution, Authentication, Delivery and Dating of Rights Certificates ........................ 24
2.6 Registration, Registration of Transfer and Exchange .......................................... 25
2.7 Mutilated, Destroyed, Lost and Stolen Rights Certificates .................................... 25
2.8 Persons Deemed Owners ........................................................................ 26
2.9 Delivery and Cancellation of Certificates .................................................... 26
2.10 Agreement of Rights Holders .................................................................. 26
ARTICLE 3 - ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF A FLIP-IN EVENT
3.1 Flip-in Event ................................................................................ 27
ARTICLE 4 - THE RIGHTS AGENT
4.1 General ...................................................................................... 29
4.2 Merger or Consolidation or Change of Name of Rights Agent .................................... 30
4.3 Duties of Rights Agent ....................................................................... 30
4.4 Change of Rights Agent ....................................................................... 32
ARTICLE 5 - MISCELLANEOUS
5.1 Redemption of Rights ......................................................................... 32
5.2 Waiver of Flip-In Events ..................................................................... 33
5.3 Expiration ................................................................................... 34
5.4 Issuance of New Rights Certificates .......................................................... 34
5.5 Supplements and Amendments ................................................................... 34
5.6 Fractional Rights and Fractional Shares ...................................................... 36
5.7 Rights of Action ............................................................................. 36
5.8 Holder of Rights Not Deemed a Shareholder .................................................... 37
5.9 Notice of Proposed Actions ................................................................... 37
5.10 Notices ...................................................................................... 37
5.11 Costs of Enforcement.......................................................................... 38
5.12 Successors ................................................................................... 38
5.13 Benefits of this Agreement ................................................................... 38
5.14 Governing Law ................................................................................ 38
5.15 Counterparts ................................................................................. 39
5.16 Severability ................................................................................. 39
5.17 Determinations and Actions by the Board of Directors ......................................... 39
5.18 Effective Date ............................................................................... 39
5.19 Regulatory Approvals ......................................................................... 39
Exhibit A - Form of Rights Certificate
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SHAREHOLDER PROTECTION RIGHTS AGREEMENT
SHAREHOLDER PROTECTION RIGHTS AGREEMENT dated as of August 12, 1999 between
FANTOM TECHNOLOGIES INC., a corporation incorporated under the Business
Corporations Act (Ontario) (the "Corporation") and CIBC MELLON TRUST COMPANY, a
trust company incorporated under the laws of Canada, as rights agent (the
"Rights Agent", which term shall include any successor Rights Agent hereunder).
WHEREAS the Board of Directors has determined that it is advisable and in the
best interests of the Corporation to adopt a shareholder protection rights plan
(the "Rights Plan") to ensure, to the extent possible, that all shareholders of
the Corporation are treated fairly in connection with any take-over offer for
the Corporation;
AND WHEREAS in order to implement the Rights Plan, the Board of Directors has:
(a) authorized and declared a distribution of one right (a "Right") effective
the Close of Business (as hereinafter defined) on August 12, 1999 in
respect of each Common Share (as hereinafter defined) outstanding at the
Record Time (as hereinafter defined); and
(b) authorized the issuance of one Right in respect of each Common Share issued
after the Record Time and prior to the earlier of the Separation Time (as
hereinafter defined) and the Expiration Time (as hereinafter defined);
AND WHEREAS each Right entitles the holder thereof, after the Separation Time,
to purchase securities of the Corporation pursuant to the terms and subject to
the conditions set forth herein;
AND WHEREAS the Rights Agent has agreed to act on behalf of the Corporation in
connection with the issuance, transfer, exchange and replacement of Rights
Certificates (as hereinafter defined), the exercise of Rights and other matters
referred to herein;
NOW THEREFORE, in consideration of the premises and the respective agreements
set forth herein, the Corporation and the Rights Agent hereby agree as follows:
ARTICLE I - INTERPRETATION
1.1 Certain Definitions
For purposes of this Agreement, the following terms have the meanings
indicated:
"Acquiring Person" shall mean any Person who is the Beneficial Owner of 20%
or more of the outstanding Voting Shares; provided, however, that the term
"Acquiring Person" shall not include:
(i) the Corporation or any Subsidiary of the Corporation;
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(ii) any Person who becomes the Beneficial Owner of 20% or more of the
outstanding Voting Shares as a result of one or any combination of:
(A) a Voting Share Reduction which, by reducing the number of Voting
Shares outstanding, increases the percentage of Voting Shares
Beneficially Owned by such Person to 20% or more of the Voting
Shares then outstanding,
(B) a Pro Rata Acquisition,
(C) a Permitted Bid Acquisition,
(D) an Exempt Acquisition, or
(E) a Convertible Security Acquisition,
provided further, however, that if a Person shall become the
Beneficial Owner of 20% or more of the Voting Shares then outstanding
by reason of one or any combination of a Voting Share Reduction, a
Pro Rata Acquisition, a Permitted Bid Acquisition, an Exempt
Acquisition or a Convertible Security Acquisition and thereafter
becomes the Beneficial Owner of more than an additional 1% of the
outstanding Voting Shares (other than pursuant to a Voting Share
Reduction, a Pro Rata Acquisition, a Permitted Bid Acquisition, an
Exempt Acquisition or a Convertible Security Acquisition), then as of
the date that such Person becomes the Beneficial Owner of such
additional Voting Shares, such Person shall become an Acquiring
Person;
(iii) for the period of 10 days after the Disqualification Date (as
hereinafter defined), any Person who becomes the Beneficial Owner of
20% or more of the outstanding Voting Shares as a result of such
Person becoming disqualified from relying on Clause (v) of the
definition of Beneficial Owner solely because such Person makes or
has announced a current intention to make a Take-over Bid alone or by
acting jointly or in concert with any other Person (the first date of
public announcement (which, for purposes of this definition, shall
include, without limitation, a report filed pursuant to Section 101
of the Securities Act (Ontario)) by such Person or the Corporation of
facts indicating that any Person is making or has announced a current
intention to make a Take-over Bid being herein referred to as the
"Disqualification Date");
(iv) an underwriter or member of a banking or selling group that acquires
Voting Shares from the Corporation in connection with a distribution
of securities pursuant to a prospectus or by way of private
placement; and
(v) a Grandfathered Person, provided, however, that if such Person shall
thereafter become the Beneficial Owner (other than pursuant to a
Voting Share Reduction, a Pro Rata Acquisition, a Permitted Bid
Acquisition, an Exempt Acquisition or a Convertible Security
Acquisition) of additional Voting Shares constituting more than 1% of
the number of Voting Shares then outstanding, such Person shall
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become an Acquiring Person as of the date and time of acquisition of
such additional Voting Shares.
"Affiliate", when used to indicate a relationship with a specified Person,
shall mean a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control
with, such specified Person.
"Agreement" shall mean this shareholder protection rights agreement dated
as of August 12, 1999 between the Corporation and the Rights Agent, as may
be amended and/or supplemented or restated from time to time.
"Associate", when used to indicate a relationship with a specified Person,
shall mean (i) a spouse of such specified Person, (ii) any Person of either
sex with whom such specified Person is living in a conjugal relationship
outside marriage, or (iii) any relative of such specified Person or of a
Person mentioned in Clauses (i) or (ii) of this definition if that relative
has the same residence as the specified Person.
"Beneficial Owner": a Person shall be deemed the "Beneficial Owner" and to
have "Beneficial Ownership" of and to "Beneficially Own":
(i) any securities of which such Person or any of such Person's
Affiliates or Associates is the owner at law or in equity;
(ii) any securities as to which such Person or any of such Person's
Affiliates or Associates has the right to become the owner at law or
in equity, where such right is exercisable immediately or within 60
days of the date of the determination of Beneficial Ownership and
whether or not on condition or the occurrence of any contingency or
the making of any payment, upon the exercise of any conversion right,
exchange right or purchase right attaching to Convertible Securities,
or pursuant to any agreement, arrangement, pledge or understanding,
written or oral (other than customary agreements with and between
underwriters and/or banking group and/or selling group members with
respect to a distribution of securities pursuant to a prospectus or
by way of private placement and other than pursuant to pledges of
securities in the ordinary course of business); and
(iii) any securities which are Beneficially Owned within the meaning of
Clauses (i) or (ii) of this definition by any other Person with
which, and in respect of which securities, such Person is acting
jointly or in concert;
provided, however, that a Person shall not be deemed the "Beneficial Owner"
of, or to have "Beneficial Ownership" of, or to "Beneficially Own", any
security:
(iv) by reason of:
(A) such security having been deposited or tendered pursuant to a
Take-over Bid made by such Person or any of such Person's
Affiliates or Associates or any other Person referred to in
Clause (iii) of this definition, until the earlier of such
deposited or tendered security being accepted
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unconditionally for payment or exchange or being taken up and
paid for; or
(B) the holder of such security having agreed pursuant to a Permitted
Lock-up Agreement to deposit or tender such security pursuant to
a Take-over Bid made by any such Person or any of such Person's
Affiliates or Associates or any other Person referred to in
Clause (iii) of this definition;
(v) by reason of such Person, any of such Person's Affiliates or
Associates or any other Person referred to in Clause (iii) of this
definition holding such security, provided, however, that:
(A) the ordinary business of the Person (in this definition, a
"Manager") includes the management of investment funds for others
and such security is held by the Manager in the ordinary course
of such business in the performance of such Manager's duties for
the account of any other Person (in this definition, a "Client");
(B) the Person (in this definition, a "Trust Company") is licensed to
carry on the business of a trust company under applicable law
and, as such, acts as a trustee or administrator or in a similar
capacity in relation to the estates of deceased or incompetent
Persons (each, in this definition, an "Estate Account") or in
relation to other accounts (each, in this definition, an "Other
Account") and holds such security and is acting in the ordinary
course of such duties for the Estate Account or for such Other
Accounts;
(C) such Person is a Crown agent or agency (in this definition, a
"Crown Agent");
(D) the Person is established by statute for purposes that include,
and the ordinary business or activity of such Person (in this
definition, a "Statutory Body") includes, the management of
investment funds for employee benefit plans, pension plans and
insurance plans of various public bodies and the Statutory Body
holds such security for the purposes of its activities as such;
or
(E) the Person (in this definition, an "Administrator") is the
administrator or trustee of one or more pension funds or plans
(each, in this definition, a "Plan") registered under the laws of
Canada or any province thereof or the corresponding laws of the
jurisdiction by which such Plan is governed or is such a Plan and
the Administrator or Plan holds such security for the purposes of
its activities as such;
but only if the Manager, the Trust Company, the Crown Agent, the
Statutory Body, the Administrator or the Plan, as the case may be, is
not then making and has not announced a current intention to make a
Take-over Bid, other than an Offer to Acquire Voting Shares or other
securities pursuant to a distribution by the Corporation or by means
of ordinary market transactions (including
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prearranged trades entered into in the ordinary course of business of
such Person) executed through the facilities of a stock exchange or
an organized over-the-counter market, alone or by acting jointly or
in concert with any other Person;
(vi) because such Person:
(A) is a Client of the same Manager as another Person on whose
account the Manager holds such security;
(B) has an Estate Account or an Other Account with the same Trust
Company as another Person on whose account the Trust Company
holds such security; or
(C) is a Plan with the same Administrator as another Plan on whose
account the Administrator holds such security;
(vii) because such Person:
(A) is a Client of a Manager and such security is owned at law or
in equity by the Manager;
(B) has an Estate Account or an Other Account with a Trust Company
and such security is owned at law or in equity by the Trust
Company; or
(C) is a Plan and such security is owned at law or in equity by the
Administrator of the Plan; or
(viii) because such Person is the registered holder of such security as a
result of carrying on the business of, or acting as nominee for, a
securities depositary.
"Board of Directors" shall mean the board of directors of the Corporation.
"Business Corporations Act (Ontario)" shall mean the Business Corporations
Act, R.S.O. 1990, c.B-16, as amended, and the regulations made thereunder
and any comparable or successor laws or regulations thereto.
"Business Day" shall mean any day other than a Saturday, a Sunday or a day
on which banking institutions in Toronto are authorized or obliged by law
to close.
"Close of Business" on any given date shall mean the time on such date (or,
if such date is not a Business Day, the time on the next succeeding
Business Day) at which the office of the transfer agent for the Common
Shares in the City of Toronto (or, after the Separation Time, the office of
the Rights Agent in the City of Toronto) is closed to the public.
"Common Shares" shall mean the common shares in the capital of the
Corporation.
"Competing Permitted Bid" shall mean a Take-over Bid that:
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(i) is made after a Permitted Bid or another Competing Permitted Bid has
been made and prior to the expiry of that Permitted Bid or Competing
Permitted Bid (in this definition, the "Prior Bid");
(ii) satisfies all the provisions of the definition of a Permitted Bid
other than the requirements set out in Clauses (ii)(A) and (D) of the
definition of Permitted Bid; and
(iii) contains, and the take-up and payment for securities tendered or
deposited thereunder are subject to, irrevocable and unqualified
conditions that:
(A) no Voting Shares shall be taken up or paid for pursuant to such
Take-over Bid (x) prior to the Close of Business on a date that
is not earlier than the later of 21 days after the date of such
Take-over Bid and the sixtieth day after the earliest date on
which any Prior Bid in existence was made, and (y) then only if,
at the time that such Voting Shares are first taken up or paid
for, more than 50% of the then outstanding Voting Shares held by
Independent Shareholders have been deposited or tendered
pursuant to such Take-over Bid and not withdrawn; and
(B) in the event that the requirement set forth in Subclause
(iii)(A)(y) of this definition is satisfied, the Offeror will
make a public announcement of that fact and the Take-over Bid
will remain open for deposits and tenders of Common Shares for
not less than 10 Business Days from the date of such public
announcement.
"controlled": a body corporate is "controlled" by another Person or two or
more Persons acting jointly or in concert if:
(i) securities entitled to vote in the election of directors carrying
more than 50% of the votes for the election of directors are held,
directly or indirectly, by or on behalf of the other Person or two or
more Persons acting jointly or in concert; and
(ii) the votes carried by such securities are entitled, if exercised, to
elect a majority of the board of directors of such body corporate;
and "controls", "controlling" and "under common control with" shall be
interpreted accordingly.
"Co-Rights Agent" shall have the meaning attributed thereto in Subsection
4.1(a).
"Convertible Securities" shall mean at any time any securities issued by
the Corporation (including rights, warrants and options but excluding the
Rights) carrying any purchase, exercise, conversion or exchange right,
pursuant to which the holder thereof may acquire Voting Shares or other
securities convertible into or exercisable or exchangeable for Voting
Shares (in each case, whether such right is exercisable immediately or
after a specified period and whether or not on condition or the happening
of any contingency).
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"Convertible Security Acquisition" shall mean the acquisition of Voting
Shares upon the exercise of Convertible Securities acquired by a Person
pursuant to a Permitted Bid Acquisition, an Exempt Acquisition or a Pro
Rata Acquisition.
"Election to Exercise" shall have the meaning attributed thereto in
Subsection 2.2(d).
"Exempt Acquisition" shall mean an acquisition of Voting Shares or
Convertible Securities (i) in respect of which the Board of Directors has
waived the application of Section 3.1 pursuant to the provisions of Section
5.2, or (ii) pursuant to a distribution of Voting Shares or Convertible
Securities made by the Corporation pursuant to a prospectus or a securities
exchange take-over bid circular or by way of a private placement (provided
that (x) all necessary stock exchange approvals for such private placement
have been obtained and such private placement complies with the terms and
conditions of such approvals, and (y) the purchaser does not become the
Beneficial Owner of Voting Shares equal in number to more than 25% of the
Voting Shares outstanding immediately prior to the private placement, and
in making this determination, the securities to be issued to such purchaser
on the private placement shall be deemed to be held by such purchaser but
shall not be included in the aggregate number of outstanding Voting Shares
immediately prior to the private placement) or pursuant to an amalgamation,
merger or other statutory procedure requiring shareholder approval.
"Exercise Price" shall mean, as of any date, the price at which a holder of
a Right may purchase the securities issuable upon exercise of one whole
Right. Until adjustment thereof in accordance with the terms hereof, the
Exercise Price shall equal $60.00.
"Expansion Factor" shall have the meaning attributed thereto in Subsection
2.3(b)(x).
"Expiration Time" shall mean the earlier of (i) the Termination Time, and
(ii) the termination of the annual meeting of the shareholders of the
Corporation in the year 2002.
"Flip-in Event" shall mean a transaction in which any Person becomes an
Acquiring Person.
"Grandfathered Person" shall mean any Person who is the Beneficial Owner of
20% or more of the outstanding Common Shares of the Corporation at the
Record Time.
"Independent Shareholders" shall mean holders of Voting Shares, other than
(i) any Acquiring Person, (ii) any Offeror, (iii) any Affiliate or
Associate of any Acquiring Person or Offeror, (iv) any Person acting
jointly or in concert with any Acquiring Person or Offeror, and (v) any
employee benefit plan, deferred profit sharing plan, stock participation
plan or trust for the benefit of employees of the Corporation or a wholly-
owned Subsidiary of the Corporation, unless the beneficiaries of such plan
or trust direct the manner in which such Voting Shares are to be voted or
direct whether the Voting Shares are to be tendered to a Take-over Bid.
"Market Price" per security of any securities on any date of determination
shall mean the average of the daily closing prices per security of such
securities (determined as
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described below) on each of the 20 consecutive Trading Days through and
including the Trading Day immediately preceding such date; provided,
however, that if an event of a type analogous to any of the events
described in Section 2.3 shall have caused the closing prices used to
determine the Market Price on any Trading Day not to be fully comparable
with the closing price on such date of determination (or, if the date of
determination is not a Trading Day, on the immediately preceding Trading
Day), each such closing price so used shall be appropriately adjusted in a
manner analogous to the applicable adjustment provided for in Section 2.3
in order to make it fully comparable with the closing price on such date of
determination (or, if the date of determination is not a Trading Day, on
the immediately preceding Trading Day). The closing price per security of
any securities on any date shall be:
(i) the closing board lot sale price or, in case no such sale takes place
on such date, the average of the closing bid and asked prices for
each of such securities as reported by the principal stock exchange
in Canada on which such securities are listed or admitted to trading;
or
(ii) if for any reason none of such prices described in (i) above is
available for such date or the securities are not listed or admitted
to trading on a Canadian stock exchange, the last sale price or, if
such price is not available, the average of the closing bid and asked
prices, for each such security on such date as reported by such other
securities exchange on which such securities are listed or admitted
to trading; or
(iii) if for any reason none of such prices described in (i) and (ii) above
is available for such date or the securities are not listed or
admitted to trading on a Canadian stock exchange or other securities
exchange, the last sale price, or if no sale takes place, the average
of the high bid and low asked prices for each such security on such
date in the over-the-counter market, as quoted by any reporting
system then in use (as determined by the Board of Directors); or
(iv) if for such date none of such prices described in (i), (ii) and (iii)
above is available or the securities are not listed or admitted to
trading on a Canadian stock exchange or any other securities exchange
and are not quoted by any such reporting system, the average of the
closing bid and asked prices for such date as furnished by a
professional market maker making a market in the securities selected
in good faith by the Board of Directors;
provided, however, that if on any such date none of such prices is
available, the closing price per security of such securities on such date
shall mean the fair value per security of such securities on such date as
determined in good faith by a recognized investment banking firm selected
by the Board of Directors.
"Offer Date" shall mean the date of a Take-over Bid.
"Offer to Acquire" shall include:
(i) an offer to purchase, or a solicitation of an offer to sell, Voting
Shares; and
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(ii) an acceptance of an offer to sell Voting Shares, whether or not such
offer to sell has been solicited;
or any combination thereof, and the Person accepting an offer to sell shall
be deemed to be making an Offer to Acquire to the Person that made the
offer to sell.
"Offeror" shall mean a Person who has announced an intention to make or who
has made a Take-over Bid (including a Permitted Bid or Competing Permitted
Bid but excluding an Offer to Acquire Common Shares or other securities of
the Corporation made by a Manager, Trust Company, Crown Agent, Statutory
Body, Administrator or Plan referred to in Clause 1.1 (d)(v) of the
definition of Beneficial Owner pursuant to a distribution by the
Corporation or by means of ordinary market transactions (including pre-
arranged trades entered into in the ordinary course of business of such
Person) in the circumstances contemplated in said Clause 1.1 (d)(v)) but
only so long as the Take-over Bid so announced or made has not been
withdrawn or terminated and has not expired.
"Offeror's Securities" shall mean the aggregate of the Voting Shares
Beneficially Owned on the date of an Offer to Acquire by an Offeror.
"Permitted Bid" shall mean a Take-over Bid which is made by means of a
take-over bid circular and which also complies with the following
additional provisions:
(i) the Take-over Bid is made to all holders of record of Voting Shares,
other than the Offeror; and
(ii) the Take-over Bid shall contain, and the take-up and payment for
securities tendered or deposited thereunder shall be subject to,
irrevocable and unqualified conditions that:
(A) no Voting Shares shall be taken up or paid for pursuant to the
Take-over Bid (x) prior to the Close of Business on a date which
is not earlier than 60 days following the Offer Date, and (y)
then only if, at the Close of Business on the date Voting Shares
are first taken up or paid for under the Take-over Bid, more
than 50% of the then outstanding Voting Shares held by
Independent Shareholders have been deposited or tendered
pursuant to the Take-over Bid and not withdrawn;
(B) Voting Shares may be deposited pursuant to such Take-over Bid,
unless such Take-over Bid is withdrawn, at any time prior to the
Close of Business on the date Voting Shares are first taken up
or paid for under the Take-over Bid;
(C) any Voting Shares deposited pursuant to the Take-over Bid may be
withdrawn until taken up and paid for; and
(D) in the event that the requirement set forth in Subclause
(ii)(A)(y) of this definition is satisfied, the Offeror will
make a public announcement of that fact and the Take-over Bid
will remain open for deposits and tender of
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Voting Shares for not less than 10 Business Days from the date
of such public announcement;
provided, however, always that a Permitted Bid will cease to be a Permitted
Bid at any time when such bid ceases to meet any of the provisions of this
definition and any acquisition of Voting Shares made pursuant to such
Permitted Bid will cease to be a Permitted Bid Acquisition.
"Permitted Bid Acquisition" shall mean an acquisition of Voting Shares or
Convertible Securities made pursuant to a Permitted Bid or a Competing
Permitted Bid.
"Permitted Lock-Up Agreement" shall mean an agreement between a Person and
one or more holders of Voting Shares or Convertible Securities (each a
"Locked-up Person") (the terms of which are publicly disclosed and a copy
of which is made available to the public (including the Corporation) not
later than the date the Lock-up Bid (as defined below) is publicly
announced or, if the Lock-up Bid has been made prior to the date on which
such agreement is entered into, not later than the date of such agreement),
pursuant to which each such Locked-up Person agrees to deposit or tender
Voting Shares or Convertible Securities (or both) to a Take-over Bid (the
"Lock-up Bid") made or to be made by the Person or any of such Person's
Affiliates or Associates or any other Person referred to in Clause (iii) of
the definition of Beneficial Owner, provided, however, that:
(i) the agreement:
(A) permits any Locked-up Person to terminate its obligation to
deposit or tender to or not to withdraw Voting Shares or
Convertible Securities (or both) from the Lock-up Bid in order
to tender or deposit such securities to another Take-over Bid or
support another transaction where the price or value per Voting
Share or Convertible Security offered under such other Take-over
Bid or transaction is higher than the price or value per Voting
Share or Convertible Security offered under the Lock-up Bid; or
(B) permits any Locked-up Person to terminate its obligation to
deposit or tender to or not to withdraw Voting Shares or
Convertible Securities (or both) from the Lock-up Bid in order
to tender or deposit such securities to another Take-over Bid or
support another transaction if:
(a) the price or value per Voting Share or Convertible Security
offered under the other Take-over Bid or transaction
exceeds by as much as or more than a specified amount (the
"Specified Amount") the price or value per Voting Share or
Convertible Security offered under the Lock-up Bid,
provided that such Specified Amount is not greater than 7%
of the price or value per Voting Share or Convertible
Security offered under the Lock-up Bid; or
(b) the number of Voting Shares or Convertible Securities to be
purchased under the other Take-over Bid or transaction
exceeds by as much as or more than a specified number (the
"Specified
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Number") the number of Voting Shares or Convertible
Securities that the Offeror has offered to purchase under
the Lock-up Bid at a price or value per Voting Share or
Convertible Security that is not less than the price or
value per Voting Share or Convertible Security offered under
the Lock-up Bid, provided that the Specified Number is not
greater than 7% of the number of Voting Shares or
Convertible Securities offered under the Lock-up Bid;
and, for greater clarity, the agreement may contain a right of first
refusal or require a period of delay to give such Person an
opportunity to match a higher price in another Take-over Bid or other
similar limitation on a Locked-up Person's right to withdraw Voting
Shares or Convertible Securities (or both) from the agreement, so long
as the limitation does not preclude the exercise by the Locked-up
Person of the right to withdraw Voting Shares or Convertible
Securities (or both) during the period of the other Take-over Bid or
transaction; and
(ii) no "break-up" fees, "top-up" fees, penalties, expenses or other
amounts that exceed in the aggregate the greater of:
(A) the cash equivalent of 2.5% of the price or value payable under
the Lock-up Bid to a Locked-up Person; and
(B) 50% of the amount by which the price or value payable under
another Take-over Bid or transaction to a Locked-up Person
exceeds the price or value of the consideration that such Locked-
up Person would have received under the Lock-up Bid,
shall be payable by a Locked-up Person pursuant to the agreement in
the event a Locked-up Person fails to deposit or tender Voting Shares
or Convertible Securities (or both) to the Lock-up Bid, withdraws
Voting Shares or Convertible Securities (or both) previously tendered
thereto or supports another transaction.
"Person" shall include any individual, firm, partnership, syndicate,
association, trust, trustee, executor, administrator, legal personal
representative, government, governmental body or authority, corporation or
other incorporated or unincorporated organization.
"Pro Rata Acquisition" shall mean an acquisition by a Person of Voting
Shares or Convertible Securities (i) as a result of a stock dividend, a
stock split or other event pursuant to which such Person receives or
acquires Voting Shares or Convertible Securities on the same pro rata basis
as all other holders of Voting Shares or Convertible Securities of the same
class or series of the Corporation; (ii) pursuant to a regular dividend
reinvestment or other plan of the Corporation made available by the
Corporation to the holders of Voting Shares where such plan permits the
holder to direct that the dividends paid in respect of such Voting Shares
be applied to the purchase from the Corporation of further securities of
the Corporation; or (iii) pursuant to the receipt and/or exercise of rights
(other than the Rights) issued by the Corporation to all of the holders of
a series or class of Voting Shares on a pro rata basis to subscribe for or
<PAGE>
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purchase Voting Shares or Convertible Securities, provided that such rights
are acquired directly from the Corporation and not from any other Person.
"Record Time" shall mean the Close of Business on August 12, 1999.
"Redemption Price" shall have the meaning attributed thereto in Subsection
5.1(a).
"Regular Periodic Cash Dividend" shall have the meaning attributed thereto
in Section 2.3(d).
"Rights" shall mean the herein described rights to purchase securities
pursuant to the terms and subject to the conditions set forth herein.
"Rights Certificate" shall mean the certificates representing the Rights
after the Separation Time which shall be substantially in the form attached
hereto as Exhibit A or such other form as the Corporation and the Rights
Agent may agree.
"Rights Register" and "Rights Registrar" shall each have the meaning
attributed thereto in Subsection 2.6(a).
"Securities Act (Ontario)" shall mean the Securities Act, R.S.O. 1990, c.
S-5, as amended, and the regulations made thereunder and any comparable or
successor laws or regulations thereto.
"Separation Time" shall mean the Close of Business on the tenth Trading Day
after the earliest of:
(i) the Stock Acquisition Date;
(ii) the date of the commencement of, or first public announcement of the
intent of any Person (other than the Corporation or any Subsidiary of
the Corporation) to commence, a Take-over Bid (other than a Permitted
Bid or Competing Permitted Bid); and
(iii) the date upon which a Permitted Bid or Competing Permitted Bid ceases
to be such;
or such later date as may be determined by the Board of Directors in good
faith, provided, however, that if any Take-over Bid referred to in Clause
(ii) above expires or is cancelled, terminated or otherwise withdrawn prior
to the Separation Time, such Take-Over Bid shall be deemed, for the
purposes of this definition, never to have been made.
"Stock Acquisition Date" shall mean the first date of public announcement
(which, for purposes of this definition, shall include, without limitation,
a report filed pursuant to Section 101 of the Securities Act (Ontario)) by
the Corporation or an Acquiring Person of facts indicating that an
Acquiring Person has become such.
"Subsidiary": a body corporate is a Subsidiary of another body corporate
if:
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(i) it is controlled by (A) that other, or (B) that other and one or more
bodies corporate, each of which is controlled by that other, or (C)
two or more bodies corporate, each of which is controlled by that
other; or
(ii) it is a Subsidiary of a body corporate that is that other's
Subsidiary.
"Take-over Bid" shall mean an Offer to Acquire Voting Shares or Convertible
Securities (or both), where the Voting Shares subject to the Offer to
Acquire together with the Voting Shares which the securities subject to the
Offer to Acquire are convertible into, exchangeable for or otherwise
entitled to acquire and the Offeror's Securities, constitute in the
aggregate 20% or more of the outstanding Voting Shares at the date of the
Offer to Acquire.
"Termination Time" shall mean the time at which the right to exercise
Rights shall terminate pursuant to Section 5.1 or Section 5.18.
"Trading Day", when used with respect to any securities, shall mean a day
on which the principal Canadian securities exchange on which such
securities are listed or admitted to trading is open for the transaction of
business or, if the securities are not listed or admitted to trading on any
Canadian securities exchange, a Business Day.
"Voting Share Reduction" shall mean an acquisition or a redemption by the
Corporation of Voting Shares.
"Voting Shares" shall mean collectively the Common Shares of the
Corporation and any other shares in the capital stock or voting interests
of the Corporation entitled to vote generally in the election of directors.
For the purposes of this Agreement, the percentage of Voting Shares
Beneficially Owned by any Person shall be and be deemed to be the product
determined by the formula:
100 x A
---
B
where
A = the number of votes for the election of all directors generally
attaching to the Voting Shares Beneficially Owned by such Person;
and
B = the number of votes for the election of all directors generally
attaching to all outstanding Voting Shares.
Where any Person is deemed to Beneficially Own unissued Voting Shares, such
Voting Shares shall be deemed to be outstanding for the purposes of both A
and B above, but no other unissued Voting Shares shall, for the purposes of
such calculation, be deemed to be outstanding.
<PAGE>
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1.2 Currency
All sums of money which are referred to in this Agreement are expressed in
lawful money of Canada, unless otherwise specified.
1.3 Number and Gender
Wherever the context so requires, terms used herein importing the singular
number only shall include the plural and vice versa and words importing any one
gender shall include all others.
1.4 Descriptive Headings and References
Descriptive headings and the Table of Contents appear herein for
convenience of reference only and shall not affect the meaning or construction
of any of the provisions hereof. All references to Articles, Sections,
Subsections, Clauses and Exhibits are to the articles, sections, subsections,
clauses and exhibits forming part of this Agreement unless otherwise indicated.
The words "hereto", "herein", "hereof", "hereunder", "this Agreement" and
similar expressions refer to this Agreement including the Exhibits, as the same
may be amended, modified or supplemented from time to time.
1.5 Acting Jointly or in Concert
For purposes of this Agreement, a Person is acting jointly or in concert
with every other Person who is a party to any agreement, commitment or
understanding, whether formal or informal and whether or not in writing, with
the first mentioned Person to acquire or offer to acquire Voting Shares (other
than customary agreements with and between underwriters and/or banking group
and/or selling group members with respect to a distribution of securities
pursuant to a prospectus or by way of private placement and other than pursuant
to pledges of securities in the ordinary course of business).
1.6 Holder
As used in this Agreement, unless the context otherwise requires, the term
"holder" of any Rights shall mean the registered holder of such Rights (or,
prior to the Separation Time, of the associated Common Shares).
<PAGE>
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ARTICLE 2 - THE RIGHTS
2.1 Legend on Common Share Certificates
Common Share certificates issued after the Record Time and prior to the
Close of Business on the earlier of the Separation Time and the Expiration Time
shall evidence one Right for each Common Share represented thereby and shall
have impressed on, printed on, written on or otherwise affixed to them a legend,
substantially in the following form:
"Until the Separation Time (as such term is defined in the Shareholder
Protection Rights Agreement referred to below), this certificate also
evidences and entitles the holder hereof to certain Rights as set forth in
the Shareholder Protection Rights Agreement dated as of August 12, 1999 as
amended from time to time (the "Rights Agreement") between Fantom
Technologies Inc. (the "Corporation") and CIBC Mellon Trust Company, as
Rights Agent, the terms of which are hereby incorporated herein by
reference and a copy of which is on file and may be inspected during normal
business hours at the head office of the Corporation. In certain
circumstances, as set forth in the Rights Agreement, such Rights may be
amended, may be redeemed, may expire, may become void or may be evidenced
by separate certificates and may no longer be evidenced by this
certificate. The Corporation will mail or arrange for the mailing of a
copy of the Rights Agreement to the holder of this certificate without
charge promptly after the receipt of a written request therefor."
Certificates representing Common Shares that are issued and outstanding at the
Record Time shall also evidence one Right for each Common Share evidenced
thereby, notwithstanding the absence of the foregoing legend, until the earlier
of the Separation Time and the Expiration Time.
2.2 Initial Exercise Price; Exercise of Rights; Detachment of Rights
(a) Subject to adjustment as herein set forth, each Right will entitle the
holder thereof, from and after the Separation Time and prior to the
Expiration Time, to purchase one Common Share for the Exercise Price (which
Exercise Price and number of Common Shares are subject to adjustment as set
forth below). Notwithstanding any other provision of this Agreement, any
Rights held by the Corporation or any of its Subsidiaries shall be void.
(b) Until the Separation Time, (i) the Rights shall not be exercisable and
no Right may be exercised, and (ii) for administrative purposes, each Right
will be evidenced by the certificate for the associated Common Share
registered in the name of the holder thereof (which certificate shall be
deemed to represent a Rights Certificate) and will be transferable only
together with, and will be transferred by a transfer of, such associated
Common Share.
(c) From and after the Separation Time and prior to the Expiration Time,
the Rights may be exercised and the registration and transfer of the Rights
shall be separate from
<PAGE>
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and independent of Common Shares. Promptly following the Separation Time,
the Corporation will prepare and the Rights Agent will mail to each holder
of record of Common Shares as of the Separation Time (other than an
Acquiring Person, any other Person whose Rights are or become void pursuant
to the provisions of Subsection 3.1(b) and, in respect of any Rights
Beneficially Owned by such Acquiring Person which are not held of record by
such Acquiring Person, the holder of record of such Rights), at such
holder's address as shown by the records of the Corporation (the
Corporation hereby agreeing to furnish copies of such records to the Rights
Agent for this purpose):
(i) a Rights Certificate in substantially the form set out in Exhibit
"A" hereto, appropriately completed, representing the number of
Rights held by such holder at the Separation Time and having such
marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Corporation may
deem appropriate and as are not inconsistent with the provisions
of this Agreement, or as may be required to comply with any law
or with any rule or regulation or judicial or administrative
order made pursuant thereto or with any rule or regulation of any
self-regulatory organization, stock exchange or quotation system
on which the Rights may from time to time be listed or traded, or
to conform to usage; and
(ii) a disclosure statement prepared by the Corporation describing the
Rights;
provided, however, that a nominee shall be sent the materials provided for
in Clauses (i) and (ii) above in respect of all Common Shares held of
record by it which are not Beneficially Owned by an Acquiring Person. In
order for the Corporation to determine whether any Person is holding Common
Shares which are Beneficially Owned by another Person, the Corporation may
require such first-mentioned Person to furnish such information and
documentation as the Corporation deems necessary or appropriate to make
such determination.
(d) Rights may be exercised in whole or in part on any Business Day after
the Separation Time and prior to the Expiration Time by submitting to the
Rights Agent at its office in the City of Toronto, Canada or, with the
approval of the Rights Agent, at any other office of the Rights Agent in
the cities designated from time to time for that purpose by the
Corporation:
(i) the Rights Certificate evidencing such Rights with an election to
exercise (an "Election to Exercise") substantially in the form
attached to the Rights Certificate appropriately completed and
duly executed by the holder or his executors or administrators or
other personal representatives or his legal attorney duly
appointed by an instrument in writing in form and executed in a
manner satisfactory to the Rights Agent; and
(ii) payment by certified cheque or money order payable to the order
of the Corporation, of a sum equal to the Exercise Price
multiplied by the number of Rights being exercised and a sum
sufficient to cover any transfer tax or charge which may be
payable in respect of the transfer or delivery of Rights
Certificates or the issuance or delivery of certificates
<PAGE>
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for Common Shares in a name other than that of the holder of the
Rights being exercised.
(e) Upon receipt of a Rights Certificate, with a completed Election to
Exercise appropriately completed and duly executed which does not indicate
that such Right is null and void as provided by Subsection 3.1(b),
accompanied by payment as set forth in Clause 2.2(d)(ii), the Rights Agent
(unless otherwise instructed in writing by the Corporation) will thereupon
promptly:
(i) requisition from the transfer agent of the Common Shares
certificates for the number of Common Shares to be purchased
(the Corporation hereby irrevocably agreeing to authorize its
transfer agent to comply with all such requisitions);
(ii) after receipt of such certificates referred to in Clause
2.2(e)(i), deliver such certificates to or upon the order of the
registered holder of such Rights Certificate, registered in such
name or names as may be designated by such holder;
(iii) when appropriate, requisition from the Corporation the amount
of cash to be paid in lieu of issuing fractional Common Shares;
(iv) after receipt, deliver such cash referred to in Clause
2.2(e)(iii) to or to the order of the registered holder of the
Rights Certificate; and
(v) tender to the Corporation all payments received on exercise of
the Rights.
(f) In case the holder of any Rights shall exercise less than all the
Rights evidenced by such holder's Rights Certificate, a new Rights
Certificate evidencing the Rights remaining unexercised will be issued by
the Rights Agent to such holder or to such holder's duly authorized
assigns.
(g) The Corporation covenants and agrees that it will:
(i) take all such action as may be necessary and within its power to
ensure that all Common Shares delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such
Common Shares (subject to payment of the Exercise Price), be duly
and validly authorized, executed, issued and delivered as fully
paid and non-assessable;
(ii) take all such action as may be necessary and within its power to
comply with any applicable requirements of the Business
Corporations Act (Ontario), the Securities Act (Ontario) and the
securities statute or comparable legislation of each of the other
provinces and territories of Canada, and other applicable
securities laws and the rules and regulations thereunder, and any
other applicable law, rule or regulation, in connection with the
issuance and delivery of the Rights Certificates and the issuance
of any Common Shares upon exercise of Rights;
<PAGE>
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(iii) use reasonable efforts to cause all Common Shares issued upon
exercise of Rights to be listed upon issuance on The Toronto
Stock Exchange and each other stock exchange on which the Common
Shares are then listed or admitted to trading at that time; and
(iv) pay when due and payable any and all Canadian and United States
federal, provincial and state transfer taxes (not in the nature
of income or withholding taxes) and charges which may be payable
in respect of the original issuance or delivery of the Rights
Certificates or certificates for Common Shares, provided that
the Corporation shall not be required to pay any transfer tax or
charge which may be payable in respect of the transfer or
delivery of Rights Certificates or the issuance or delivery of
certificates for Common Shares in a name other than that of the
holder of the Rights being transferred or exercised.
2.3 Adjustments to Exercise Price; Number of Rights
(a) The Exercise Price, the number and kind of securities subject to
purchase upon exercise of each Right and the number of Rights outstanding
are subject to adjustment from time to time as provided in this Section
2.3.
(b) In the event the Corporation shall at any time after the Record Time
and prior to the Expiration Time:
(i) declare or pay a dividend on the Common Shares of the
Corporation payable in Common Shares or other capital stock of
the Corporation (or securities exchangeable for or convertible
into or giving a right to acquire Common Shares) other than
pursuant to any optional stock dividend program;
(ii) subdivide or change the then outstanding Common Shares into a
greater number of Common Shares;
(iii) consolidate or change the then outstanding Common Shares into a
smaller number of Common Shares; or
(iv) issue any Common Shares or other capital stock of the
Corporation (or securities exchangeable for or convertible into
or giving a right to acquire Common Shares) in respect of, in
lieu of, or in exchange for existing Common Shares;
the Exercise Price and the number of Rights outstanding, or, if the payment
or effective date therefor shall occur after the Separation Time, the
securities purchasable upon exercise of Rights, shall be adjusted in the
manner set forth below.
If the Exercise Price and number of Rights outstanding are to be adjusted:
(x) the Exercise Price in effect after such adjustment will be equal
to the Exercise Price in effect immediately prior to such
adjustment divided by
<PAGE>
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the number of Common Shares (the "Expansion Factor") that a
holder of one Common Share immediately prior to such dividend,
subdivision, change, consolidation or issuance would hold
thereafter as a result thereof (assuming the exercise of all such
exchange, conversion or acquisition rights, if any); and
(y) each Right held prior to such adjustment will become that number
of Rights equal to the Expansion Factor and the adjusted number
of Rights will be deemed to be distributed among the Common
Shares with respect to which the original Rights were associated
(if they remain outstanding) and the Common Shares issued or
issuable in respect of such dividend, subdivision, change,
consolidation or issuance, so that each such Common Share will
have exactly one Right associated with it.
For greater certainty, if the securities purchasable upon exercise of
Rights are to be adjusted, the securities purchasable upon exercise of each
Right after such adjustment will be the securities that a holder of the
securities purchasable upon exercise of one Right immediately prior to such
dividend, subdivision, change, consolidation or issuance would hold
thereafter as a result thereof. To the extent that such rights of
exchange, conversion or acquisition are not exercised prior to the
expiration thereof, the Exercise Price shall be readjusted to the Exercise
Price which would then be in effect based on the number of Common Shares
(or securities convertible into or exchangeable for Common Shares) actually
issued upon the exercise of such rights.
If after the Record Time and prior to the Expiration Time the Corporation
shall issue any shares of capital stock other than Common Shares in a
transaction of a type described in Clauses 2.3(b)(i) or (iv), shares of
such capital stock shall be treated herein as nearly equivalent to Common
Shares as may be practicable and appropriate under the circumstances and
the Corporation and the Rights Agent shall amend this Agreement in order to
effect such treatment.
If an event occurs which would require an adjustment under both this
Section 2.3 and Section 3.1, the adjustment provided for in this Section
2.3 shall be in addition to, and shall be made prior to, any adjustment
required pursuant to Section 3.1.
If the Corporation shall at any time after the Record Time and prior to the
Separation Time issue any Common Shares otherwise than in a transaction
referred to in this Subsection 2.3(b), each such Common Share so issued
shall automatically have one new Right associated with it, which Right
shall be evidenced by the certificate representing such associated Common
Share.
(c) In the event the Corporation shall at any time after the Record Time
and prior to the Separation Time fix a record date for the issuance to all
holders of Common Shares of rights, options or warrants entitling them (for
a period expiring within 45 days after such record date) to subscribe for
or purchase Common Shares (or securities convertible into or exchangeable
for or carrying a right to acquire Common Shares) at a price per Common
Share (or, if a security convertible into or exchangeable for or carrying a
right to acquire Common Shares, having a conversion, exchange or exercise
price, including
<PAGE>
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the price required to be paid to purchase such convertible or exchangeable
security or right, per share) less than the Market Price per Common Share
on such record date, the Exercise Price shall be adjusted. The Exercise
Price in effect after such record date will equal the Exercise Price in
effect immediately prior to such record date multiplied by a fraction, of
which the numerator shall be the number of Common Shares outstanding on
such record date plus the number of Common Shares which the aggregate
offering price of the total number of Common Shares so to be offered
(and/or the aggregate initial conversion, exchange or exercise price of the
convertible or exchangeable securities or rights so to be offered
(including the price required to be paid to purchase such convertible or
exchangeable securities or rights)) would purchase at such Market Price per
Common Share and of which the denominator shall be the number of Common
Shares outstanding on such record date plus the number of additional Common
Shares to be offered for subscription or purchase (or into which the
convertible or exchangeable securities or rights so to be offered are
initially convertible, exchangeable or exercisable). In case such
subscription price may be paid by delivery of consideration part or all of
which shall be in a form other than cash, the value of such consideration
shall be as determined in good faith by the Board of Directors. To the
extent that such rights of exchange, conversion or acquisition are not
exercised prior to the expiration thereof, the Exercise Price shall be
readjusted to the Exercise Price which would then be in effect based on the
number of Common Shares (or securities convertible into or exchangeable for
Common Shares) actually issued upon the exercise of such rights.
For purposes of this Agreement, the granting of the right to purchase
Common Shares (whether from treasury shares or otherwise) pursuant to any
dividend or interest reinvestment plan and/or any Common Share purchase
plan providing for the reinvestment of dividends or interest payable on
securities of the Corporation and/or the investment of periodic optional
payments and/or employee benefit or similar plans (so long as such right to
purchase is in no case evidenced by the delivery of rights or warrants)
shall not be deemed to constitute an issue of rights or warrants by the
Corporation; provided, however, that, in the case of any dividend or
interest reinvestment plan, the right to purchase Common Shares is at a
price per share of not less than 90 percent of the current market price per
share (determined as provided in such plans) of the Common Shares.
(d) In the event the Corporation shall at any time after the Record Time
and prior to the Separation Time fix a record date for the making of a
distribution to all holders of Common Shares of evidences of indebtedness
or assets (other than a Regular Periodic Cash Dividend (as defined below)
or a dividend paid in Common Shares) or rights, options or warrants
(excluding those referred to in Subsection 2.3(c)), the Exercise Price
shall be adjusted. The Exercise Price in effect after such record date
will equal the Exercise Price in effect immediately prior to such record
date less the fair market value (as determined in good faith by the Board
of Directors) of the portion of the assets, evidences of indebtedness,
rights or warrants so to be distributed applicable to the securities
purchasable upon exercise of one Right.
For the purpose of this Subsection 2.3(d), "Regular Periodic Cash Dividend"
shall mean cash dividends paid at regular intervals in any fiscal year of
the Corporation to the extent that such cash dividends do not exceed, in
the aggregate, the greatest of:
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(i) 200% of the aggregate amount of cash dividends declared payable
by the Corporation on its Common Shares in its immediately
preceding fiscal year;
(ii) 300% of the arithmetic mean of the aggregate amounts of cash
dividends declared payable by the Corporation on its Common
Shares in its three immediately preceding fiscal years; and
(iii) 100% of the aggregate consolidated net income of the
Corporation, before extraordinary items, for its immediately
preceding fiscal year.
(e) Each adjustment made pursuant to this Section 2.3 shall be made as of:
(i) the payment or effective date for the applicable dividend,
subdivision, change, consolidation or issuance, in the case of
an adjustment made pursuant to Subsection 2.3(b) above; and
(ii) the record date for the applicable dividend or distribution, in
the case of an adjustment made pursuant to Subsection 2.3(c) or
(d) above.
(f) In the event the Corporation shall at any time after the Record Time
and prior to the Separation Time issue any shares of capital stock (other
than Common Shares), or rights, options or warrants to subscribe for or
purchase any such capital stock, or securities convertible into or
exchangeable for any such capital stock in a transaction referred to in
Clauses 2.3(b)(i) or (iv), if the Board of Directors acting in good faith
determines that the adjustments contemplated by Subsections 2.3(b), (c) and
(d) above in connection with such transaction will not appropriately
protect the interests of the holders of Rights, the Board of Directors may
determine what other adjustments to the Exercise Price, number of Rights
and/or securities purchasable upon exercise of Rights would be appropriate
and, notwithstanding Subsections 2.3(b), (c) and (d) above, but subject to
the prior consent of the holders of Common Shares or Rights obtained as set
forth in Subsection 5.5(b) or 5.5(c) as applicable, such adjustments,
rather than the adjustments contemplated by Subsections 2.3(b), (c) and (d)
above, shall be made. The Corporation and the Rights Agent shall amend
this Agreement as appropriate to provide for such adjustments.
(g) Notwithstanding anything herein to the contrary, no adjustment of the
Exercise Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in such Exercise Price; provided,
however, that any adjustments which by reason of this Subsection 2.3(g) are
not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All adjustments made pursuant to this Section
2.3 shall be made to the nearest cent or to the nearest ten-thousandth of a
Common Share, as the case may be.
(h) If as a result of an adjustment made pursuant to Section 3.1, the
holder of any Right thereafter exercised shall become entitled to receive
any securities other than Common Shares, thereafter the number of such
other shares so receivable upon exercise of any Right and the applicable
Exercise Price thereof shall be subject to adjustment from
<PAGE>
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time to time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the Common Shares contained in the
provisions of this Section 2.3 and the provisions of this Agreement with
respect to the Common Shares shall apply on like terms to any such other
securities.
(i) All Rights originally issued by the Corporation subsequent to any
adjustment made to an Exercise Price hereunder shall evidence the right to
purchase, at the adjusted Exercise Price, the number of Common Shares
purchasable from time to time hereunder upon exercise of the Rights, all
subject to further adjustment as provided herein.
(j) Unless the Corporation shall have exercised its election, as provided
in Subsection 2.3(k), upon each adjustment of the Exercise Price as a
result of the calculations made in Subsections 2.3(c) and (d), each Right
outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Exercise Price,
that number of Common Shares obtained by:
(i) multiplying (A) the number of Common Shares covered by a Right
immediately prior to such adjustment, by (B) the relevant
Exercise Price in effect immediately prior to such adjustment of
the relevant Exercise Price; and
(ii) dividing the product so obtained by the relevant Exercise Price
in effect immediately after such adjustment of the relevant
Exercise Price.
(k) The Corporation may elect on or after the date of any adjustment of an
Exercise Price to adjust the number of Rights, in lieu of any adjustment in
the number of Common Shares purchasable upon the exercise of a Right. Each
of the Rights outstanding after the adjustment in the number of Rights
shall be exercisable for the number of Common Shares for which a Right was
exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become the
number of Rights (calculated to the nearest one ten-thousandth) obtained by
dividing the relevant Exercise Price in effect immediately prior to
adjustment of relevant Exercise Price by the relevant Exercise Price in
effect immediately after adjustment of the relevant Exercise Price. The
Corporation shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record
date may be the date on which the relevant Exercise Price is adjusted or
any day thereafter, but, if the Rights Certificates have been issued, shall
be at least 10 days later than the date of the public announcement. If
Rights Certificates have been issued, upon each adjustment of the number of
Rights pursuant to this Subsection 2.3(k), the Corporation shall, as
promptly as practicable, cause to be distributed to holders of record of
Rights Certificates on such record date, Rights Certificates evidencing,
subject to Section 5.6, the additional Rights to which such holders shall
be entitled as a result of such adjustment, or, at the option of the
Corporation, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such
holders prior to the date of adjustment, and upon surrender thereof if
required by the Corporation, new Rights Certificates evidencing all the
Rights to which such holders shall be entitled after such adjustment.
Rights Certificates so to be distributed shall be issued, executed and
<PAGE>
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countersigned in the manner provided for herein and may bear, at the option
of the Corporation, the relevant adjusted Exercise Price and shall be
registered in the names of holders of record of Rights Certificates on the
record date specified in the public announcement.
(l) Irrespective of any adjustment or change in the securities purchasable
upon exercise of the Rights, the Rights Certificates theretofore and
thereafter issued may continue to express the securities so purchasable
which were expressed in the initial Rights Certificates issued hereunder.
(m) In any case in which this Section 2.3 shall require that an adjustment
in the Exercise Price be made effective as of a record date for a specified
event, the Corporation may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record
date of the number of Common Shares and other securities of the
Corporation, if any, issuable upon such exercise over and above the number
of Common Shares and other securities of the Corporation, if any, issuable
upon such exercise on the basis of the relevant Exercise Price in effect
prior to such adjustment; provided, however, that the Corporation shall
deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional Common Shares
(fractional or otherwise) or other securities upon the occurrence of the
event requiring such adjustment.
(n) Notwithstanding anything in this Section 2.3 to the contrary, the
Corporation shall be entitled to make such reductions in the Exercise
Price, in addition to those adjustments expressly required by this Section
2.3, as and to the extent that in its good faith judgment the Board of
Directors shall determine to be advisable in order that any (i) subdivision
or consolidation of the Common Shares, (ii) issuance (wholly or in part for
cash) of Common Shares at less than the applicable Market Price, (iii)
issuance (wholly for cash) of any Common Shares or securities that by their
terms are exchangeable for or convertible into or give a right to acquire
Common Shares, (iv) stock dividends, or (v) issuance of rights, options or
warrants referred to in this Section 2.3, hereafter made by the Corporation
to holders of its Common Shares, subject to applicable taxation laws, shall
not be taxable to such shareholders.
(o) After the Separation Time, the Corporation will not, except as
permitted by the provisions hereof, take (or permit any Subsidiary of the
Corporation to take) any action if at the time such action is taken it is
reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
(p) Whenever an adjustment to the Exercise Price or a change in the
securities purchasable upon the exercise of Rights is made pursuant to this
Section 2.3, the Corporation shall promptly:
(i) prepare a certificate setting forth such adjustment and a brief
statement of the facts accounting for such adjustment;
(ii) file with the Rights Agent and with each transfer agent for the
Common Shares, a copy of such certificate; and
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(iii) cause notice of the particulars of such adjustment or change
to be given to the holders of the Rights.
Failure to file such certificate or to cause such notice to be given as
aforesaid, or any defect therein, shall not affect the validity of any such
adjustment or change.
2.4 Date on Which Exercise is Effective
Each Person in whose name any certificate for Common Shares or other
securities, if applicable, is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of the Common Shares or
other securities, if applicable, represented thereby, and such certificate shall
be dated the date upon which the Rights Certificate evidencing such Rights was
duly surrendered in accordance with Subsection 2.2(e) (together with a duly
completed Election to Exercise) and payment of the Exercise Price for such
Rights (and any applicable transfer taxes and other governmental charges payable
by the exercising holder hereunder) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Common Share
transfer books of the Corporation are closed, such Person shall be deemed to
have become the record holder of such shares on, and such certificate shall be
dated, the next succeeding Business Day on which the Common Share transfer books
of the Corporation are open.
2.5 Execution, Authentication, Delivery and Dating of Rights Certificates
(a) The Rights Certificates shall be executed on behalf of the Corporation
by its President and its Chief Financial Officer, under its corporate seal
reproduced thereon attested by its Secretary. The signature of any of
these officers on the Rights Certificates may be manual or facsimile.
Rights Certificates bearing the manual or facsimile signatures of
individuals holding the above offices of the Corporation shall bind the
Corporation, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the countersignature and delivery of
such Rights Certificates.
(b) Promptly after the Corporation learns of the Separation Time, the
Corporation will notify the Rights Agent in writing of such Separation Time
and will deliver Rights Certificates executed by the Corporation to the
Rights Agent for countersignature, and the Rights Agent shall countersign
(manually or by facsimile signature in a manner satisfactory to the
Corporation) and deliver such Rights Certificates to the holders of the
Rights pursuant to Subsection 2.2(c). No Rights Certificate shall be valid
for any purpose until countersigned by the Rights Agent as aforesaid.
(c) Each Rights Certificate shall be dated the date of countersignature
thereof.
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2.6 Registration, Registration of Transfer and Exchange
(a) From and after the Separation Time, the Corporation will cause to be
kept a register (the "Rights Register") in which, subject to such
reasonable regulations as it may prescribe, the Corporation will provide
for the registration and transfer of Rights. The Rights Agent is hereby
appointed "Rights Registrar" for the purpose of maintaining the Rights
Register for the Corporation and registering Rights and transfers of Rights
as herein provided. In the event that the Rights Agent shall cease to be
the Rights Registrar, the Rights Agent will have the right to examine the
Rights Register at all reasonable times.
After the Separation Time and prior to the Expiration Time, upon surrender
for registration of transfer or exchange of any Rights Certificate, and
subject to the provisions of Subsection 2.6(c), the Corporation will
execute, and the Rights Agent will countersign and deliver, in the name of
the holder thereof or the designated transferee or transferees, as required
pursuant to the holder's instructions, one or more new Rights Certificates
evidencing the same aggregate number of Rights as did the Rights
Certificates so surrendered.
(b) All Rights issued upon any registration of transfer or exchange of
Rights Certificates shall be the valid obligations of the Corporation, and
such Rights shall be entitled to the same benefits under this Agreement as
the Rights surrendered upon such registration of transfer or exchange.
(c) Every Rights Certificate surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument
of transfer in form satisfactory to the Corporation or the Rights Agent, as
the case may be, duly executed, by the holder thereof or such holder's
attorney duly authorized in writing. As a condition to the issuance of any
new Rights Certificate under this Section 2.6, the Corporation may require
the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Rights Agent) connected therewith.
(d) The Corporation shall not be required to register the transfer or
exchange of any Rights after the Rights have been terminated pursuant to
the provisions of this Agreement.
2.7 Mutilated, Destroyed, Lost and Stolen Rights Certificates
(a) If any mutilated Rights Certificate is surrendered to the Rights Agent
prior to the Expiration Time, the Corporation shall execute and the Rights
Agent shall countersign and deliver in exchange therefor a new Rights
Certificate evidencing the same number of Rights as did the Rights
Certificate so surrendered.
(b) If there shall be delivered to the Corporation and the Rights Agent
prior to the Expiration Time (i) evidence to their satisfaction of the
destruction, loss or theft of any Rights Certificate, and (ii) such
security or indemnity as may be required by them to save each of them and
any of their agents harmless, then, in the absence of notice to the
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Corporation or the Rights Agent that such Rights Certificate has been
acquired by a bona fide purchaser, the Corporation shall execute and upon
its request the Rights Agent shall countersign and deliver, in lieu of any
such destroyed, lost or stolen Rights Certificate, a new Rights Certificate
evidencing the same number of Rights as did the Rights Certificate so
destroyed, lost or stolen.
(c) As a condition to the issuance of any new Rights Certificate under
this Section 2.7, the Corporation may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees and
expenses of the Rights Agent) connected therewith.
(d) Every new Rights Certificate issued pursuant to this Section 2.7 in
lieu of any destroyed, lost or stolen Rights Certificate shall evidence a
contractual obligation of the Corporation, whether or not the destroyed,
lost or stolen Rights Certificate shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Agreement equally
and proportionately with any and all other Rights duly issued hereunder.
2.8 Persons Deemed Owners
Prior to due presentment of a Rights Certificate (or, prior to the
Separation Time, the associated Common Share certificate) for registration of
transfer, the Corporation, the Rights Agent and any agent of the Corporation or
the Rights Agent may deem and treat the Person in whose name such Rights
Certificate (or, prior to the Separation Time, such Common Share certificate) is
registered. as the absolute owner thereof and of the Rights evidenced thereby
for all purposes whatsoever.
2.9 Delivery and Cancellation of Certificates
All Rights Certificates surrendered upon exercise or for redemption,
registration of transfer or exchange shall, if surrendered to any Person other
than the Rights Agent, be delivered to the Rights Agent and, in any case, shall
be promptly cancelled by the Rights Agent. The Corporation may at any time
deliver to the Rights Agent for cancellation any Rights Certificates previously
countersigned and delivered hereunder which the Corporation may have acquired in
any manner whatsoever, and all Rights Certificates so delivered shall be
promptly cancelled by the Rights Agent. No Rights Certificate shall be
countersigned in lieu of or in exchange for any Rights Certificates cancelled as
provided in this Section 2.9, except as expressly permitted by this Agreement.
The Rights Agent shall destroy all cancelled Rights Certificates and deliver a
certificate of destruction to the Corporation.
2.10 Agreement of Rights Holders
Every holder of Rights, by accepting such Rights, consents and agrees
with the Corporation and the Rights Agent and with every other holder of Rights
that:
(a) such holder shall be bound by and subject to the provisions of this
Agreement, as amended from time to time in accordance with the terms
hereof, in respect of all Rights held;
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(b) prior to the Separation Time, each Right will be transferable only
together with, and will be transferred by a transfer of, the associated
Common Share certificate representing such Right;
(c) after the Separation Time, the Rights will be transferable only on the
Rights Register as provided herein;
(d) prior to due presentment of a Rights Certificate (or, prior to the
Separation Time, the associated Common Share certificate) for registration
of transfer, the Corporation, the Rights Agent and any agent of the
Corporation or the Rights Agent may deem and treat the Person in whose name
the Rights Certificate (or, prior to the Separation Time, the associated
Common Share certificate) is registered as the absolute owner thereof and
of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on such Rights Certificate or the associated Common Share
certificate made by anyone other than the Corporation or the Rights Agent)
for all purposes whatsoever, and neither the Corporation nor the Rights
Agent shall be affected by any notice to the contrary;
(e) such holder of Rights is not entitled to receive any fractional Rights
or fractional Common Shares or other securities upon the exercise of
Rights;
(f) without the approval of any holder of Rights or Voting Shares and upon
the sole authority of the Board of Directors acting in good faith, this
Agreement may be supplemented or amended from time to time in accordance
with the provisions of Section 5.5 and the third last paragraph of
Subsection 2.3(b); and
(g) notwithstanding anything in this Agreement to the contrary, neither
the Corporation nor the Rights Agent shall have any liability to any holder
of a Right or to any other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a government, regulatory or administrative
agency or commission, or any statute, rule, regulation or executive order
promulgated or enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation.
ARTICLE 3 - ADJUSTMENTS TO THE RIGHTS IN
THE EVENT OF A FLIP-IN EVENT
3.1 Flip-in Event
(a) Subject to Subsection 3.1(b), Section 5.1 and Section 5.2, in the
event that prior to the Expiration Time a Flip-in Event shall occur, each
Right shall constitute, effective from and after the Close of Business on
the tenth Trading Day following the Stock Acquisition Date, the right to
purchase from the Corporation, upon exercise thereof in accordance with the
terms hereof, that number of Common Shares of the Corporation having an
aggregate Market Price on the date of consummation or occurrence of such
Flip-in Event equal to twice the Exercise Price for an amount in cash equal
to the Exercise Price (such right to be appropriately adjusted in a manner
analogous to the applicable adjustment provided for in Section 2.3 in the
event that after such date of
<PAGE>
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consummation or occurrence an event of a type analogous to any of the
events described in Section 2.3 shall have occurred with respect to such
Common Shares).
(b) Notwithstanding anything in this Agreement to the contrary, upon the
occurrence of a Flip-in Event, any Rights that are or were Beneficially
Owned on or after the earlier of the Separation Time or the Stock
Acquisition Date by:
(i) an Acquiring Person (or any Affiliate or Associate of an
Acquiring Person, or any Person acting jointly or in concert with
an Acquiring Person or with any Associate or Affiliate of an
Acquiring Person); or
(ii) a transferee or other successor-in-title, directly or indirectly,
from an Acquiring Person (or from any Affiliate or Associate of
an Acquiring Person, or any Person acting jointly or in concert
with an Acquiring Person or with any Associate or Affiliate of an
Acquiring Person) in a transfer of Rights, whether or not for
consideration, that the Board of Directors has determined is part
of a plan, understanding or scheme of an Acquiring Person (or of
any Affiliate or Associate of an Acquiring Person or any Person
acting jointly or in concert with an Acquiring Person or any
Affiliate or Associate of an Acquiring Person) that has the
purpose or effect of avoiding the provisions of Clause 3.1(b)(i);
shall become null and void without any further action and any holder of
such Rights (including transferees or other successors-in-title) shall
thereafter have no right to exercise or transfer such Rights under any
provision of this Agreement and shall have no other rights whatsoever with
respect to such Rights, whether under any provision of this Agreement or
otherwise. The holder of any Rights represented by a Rights Certificate
which is submitted to the Rights Agent upon exercise or for registration of
transfer or exchange which does not contain the necessary certifications
set forth in the Rights Certificate establishing that such Rights are not
void under this Subsection 3.1(b) shall be deemed to be an Acquiring Person
for the purposes of this Section 3.1 and such Rights shall become null and
void.
(c) Any Rights Certificate that represents Rights Beneficially Owned by a
Person described in either Clause 3.1(b)(i) or Clause 3.1(b)(ii) or
transferred to any nominee of any such Person, and any Rights Certificate
issued upon transfer, exchange, replacement or adjustment of any other
Rights Certificate referred to in this sentence, shall contain the
following legend:
"The Rights represented by this Rights Certificate were
issued to a Person who was an Acquiring Person, or an
Affiliate or an Associate of an Acquiring Person, or a
Person acting jointly or in concert with any of them (as
such terms are defined in the Shareholder Protection Rights
Agreement). This Rights Certificate and the Rights
represented hereby shall become void in the circumstances
specified in Subsection 3.1(b) of the Shareholder Protection
Rights Agreement."
<PAGE>
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provided, however, that the Rights Agent shall not be under any
responsibility to ascertain the existence of facts that would require the
imposition of such legend but shall be required to impose such legend only
if instructed to do so in writing by the Corporation or if a holder fails
to certify upon transfer or exchange in the space provided on the Rights
Certificate that such holder is not a Person described in such legend. The
issuance of a Rights Certificate without the legend referred to in this
Subsection 3.1(c) shall be of no effect on the provisions of Subsection
3.1(b).
ARTICLE 4 - THE RIGHTS AGENT
4.1 General
(a) The Corporation hereby appoints the Rights Agent to act as agent for
the Corporation and the holders of Rights in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment.
The Corporation may from time to time appoint one or more co-rights agents
(each a "Co-Rights Agent") as it may deem necessary or desirable, subject
to the approval of the Rights Agent. In the event the Corporation appoints
one or more Co-Rights Agents, the respective duties of the Rights Agent and
Co-Rights Agents shall be as the Corporation may determine with the
approval of the Rights Agent and the Co-Rights Agents. The Corporation
agrees to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of the Rights
Agent, its reasonable expenses and counsel fees and other disbursements
incurred in the administration and execution of this Agreement and the
exercise and performance of its duties hereunder. The Corporation also
agrees to indemnify the Rights Agent and its directors, officers, employees
and agents for, and to hold it harmless against, any loss, liability or
expense, incurred without negligence, bad faith or wilful misconduct on the
part of the Rights Agent, for anything done or omitted by the Rights Agent
in connection with the acceptance and administration of this Agreement,
including the costs and expenses of defending against any claim of
liability, which right to indemnification will survive the termination of
this Agreement and the resignation or removal of the Rights Agent.
(b) The Rights Agent shall be protected and shall incur no liability for
or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any certificate
for Common Shares, Rights Certificate, certificate for other securities of
the Corporation, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the
proper Person or Persons.
(c) The Corporation shall inform the Rights Agent in a reasonably timely
manner of events which may materially affect the administration of this
Agreement by the Rights Agent and, at any time upon request, shall provide
to the Rights Agent an incumbency certificate certifying the then current
officers of the Corporation.
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4.2 Merger or Consolidation or Change of Name of Rights Agent
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or amalgamated or with which it may be consolidated, or
any corporation resulting from any merger, amalgamation or consolidation to
which the Rights Agent or any successor Rights Agent is a party, or any
corporation succeeding to the shareholder services business of the Rights
Agent or any successor Rights Agent, will be the successor to the Rights
Agent under this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties hereto, provided that
such corporation would be eligible for appointment as a successor Rights
Agent under the provisions of Section 4.4. In case at the time such
successor Rights Agent succeeds to the agency created by this Agreement any
of the Rights Certificates have been countersigned but not delivered, any
such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates have
not been countersigned, any successor Rights Agent may countersign such
Rights Certificates either in the name of the predecessor Rights Agent or
in the name of the successor Rights Agent; and in all such cases such
Rights Certificates will have the full force provided in the Rights
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent is changed and at
such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver such Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates have not been
countersigned, the Rights Agent may countersign such Rights Certificates
either in its prior name or in its changed name; and in all such cases such
Rights Certificates will have the full force provided in the Rights
Certificates and in this Agreement.
4.3 Duties of Rights Agent
The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the
Corporation and the holders of Rights Certificates, by their acceptance thereof,
shall be bound:
(a) The Rights Agent may retain and consult with legal counsel (who may be
legal counsel for the Corporation), and the opinion of such counsel will be
full and complete authorization and protection to the Rights Agent as to
any action taken or omitted by it in good faith and in accordance with such
opinion and the Rights Agent may also retain and consult with such other
experts or advisors as the Rights Agent shall consider necessary or
appropriate to properly carry out the duties and obligations imposed under
this Agreement (at the Corporation's expense) and the Rights Agent shall be
entitled to act and rely in good faith on the advice of such experts or
advisors.
(b) Whenever in the performance of its duties under this Agreement, the
Rights Agent deems it necessary or desirable that any fact or matter be
proved or established by the Corporation prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by an individual
<PAGE>
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believed by the Rights Agent to be the President, the Chief Financial
Officer or the Secretary of the Corporation and delivered to the Rights
Agent; and such certificate will be full authorization to the Rights Agent
for any action taken, omitted or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent will be liable hereunder only for its own negligence,
bad faith or wilful misconduct.
(d) The Rights Agent will not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the
certificates for Common Shares or the Rights Certificates (except its
countersignature thereof) or be required to verify the same, but all such
statements and recitals are and will be deemed to have been made by the
Corporation only.
(e) The Rights Agent will not be under any responsibility in respect of the
validity of this Agreement or the execution and delivery hereof (except the
due authorization, execution and delivery hereof by the Rights Agent) or in
respect of the validity or execution of any Common Share certificate or
Rights Certificate (except its countersignature thereof); nor will it be
responsible for any breach by the Corporation of any covenant or condition
contained in this Agreement or in any Rights Certificate; nor will it be
responsible for any change in the exercisability of the Rights (including
the Rights becoming void pursuant to Subsection 3.1(b)) or any adjustment
required under the provisions of Section 2.3 or responsible for the manner,
method or amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment (except with
respect to the exercise of Rights after receipt of the certificate
contemplated by Subsection 2.3(p) describing any such adjustment); nor will
it by any act hereunder be deemed to make any representation or warranty as
to the authorization of any Common Shares to be issued pursuant to this
Agreement or any Rights or as to whether any Common Shares will, when
issued, be duly and validly authorized, executed, issued and delivered and
fully paid and non-assessable.
(f) The Corporation will perform, execute, acknowledge and deliver or cause
to be performed, executed, acknowledged and delivered all such further and
other acts, instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights Agent of the
provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from
any individual believed by the Rights Agent to be the President, the Chief
Financial Officer or the Secretary of the Corporation, and to apply to such
individuals for advice or instructions in connection with its duties, and
it shall not be liable for any action taken, omitted or suffered by it in
good faith in accordance with instructions of any such individual.
(h) The Rights Agent and any shareholder, director, officer or employee of
the Rights Agent may buy, sell or deal in Common Shares, Rights or other
securities of the Corporation or become pecuniarily interested in any
transaction in which the Corporation may be interested, or contract with or
lend money to the Corporation or otherwise act as fully and freely as
though it were not Rights Agent under this Agreement. Nothing
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herein shall preclude the Rights Agent from acting in any other capacity
for the Corporation or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent will not be
answerable or accountable for any act, default, neglect or misconduct of
any such attorneys or agents or for any loss to the Corporation resulting
from any such act, default, neglect or misconduct, provided reasonable care
was exercised in the selection and continued employment thereof.
4.4 Change of Rights Agent
The Rights Agent may resign and be discharged from its duties under this
Agreement upon 60 days' notice (or such lesser notice as is acceptable to the
Corporation) in writing mailed to the Corporation and to the transfer agent of
Common Shares by registered or certified mail. The Corporation may remove the
Rights Agent upon 60 days' notice in writing, mailed to the Rights Agent and to
the transfer agent of the Common Shares by registered or certified mail, and to
the holders of the Rights in accordance with Section 5.10. If the Rights Agent
should resign or be removed or otherwise become incapable of acting, the
Corporation will appoint a successor to the Rights Agent. If the Corporation
fails to make such appointment within a period of 30 days after such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent (at the Corporation's expense) or by the
holder of any Rights (which holder shall, with such notice if given after the
Separation Time, submit such holder's Rights Certificate for inspection by the
Corporation), then the holder of any Rights may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Corporation or by such a court, shall be a
corporation incorporated under the laws of Canada or a province thereof
authorized to carry on the business of a trust company in the Province of
Ontario. After appointment, the successor Rights Agent will be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights
Agent, upon receipt of any and all outstanding amounts owing to it pursuant to
this Agreement, shall deliver and transfer to the successor Rights Agent any
property at the time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment, the Corporation will file notice thereof
in writing with the predecessor Rights Agent and the transfer agent of the
Common Shares, and mail a notice thereof in writing to the holders of the
Rights. Failure to give any notice provided for in this Section 4.4, however, or
any defect therein, shall not affect the legality or validity of the resignation
or removal of the Rights Agent or the appointment of the successor Rights Agent,
as the case may be.
ARTICLE 5 - MISCELLANEOUS
5.1 Redemption of Rights
(a) With the prior consent of the holders of Voting Shares or Rights
obtained in accordance with Subsection 5.5(b) or (c), as applicable, the
Board of Directors, at any time prior to the occurrence of a Flip-in Event
as to which the application of Section 3.1
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has not been waived pursuant to Section 5.2, may elect to redeem all but
not less than all of the then outstanding Rights at a redemption price of
$0.001 per Right, appropriately adjusted in a manner analogous to the
applicable adjustment to the Exercise Price provided for in Section 2.3 if
an event analogous to any of the events described in Section 2.3 shall have
occurred (such redemption price being herein referred to as the "Redemption
Price").
(b) If a Person acquires, pursuant to a Permitted Bid or a Competing
Permitted Bid or pursuant to an Exempt Acquisition occurring under
Subsection 5.2(b), outstanding Voting Shares, other than Voting Shares
Beneficially Owned at the date of such Permitted Bid, Competing Permitted
Bid or Exempt Acquisition by such Person, the Board of Directors of the
Corporation shall, notwithstanding the provisions of Subsection 5.1(a),
immediately upon such acquisition and without further formality be deemed
to have elected to redeem the Rights at the Redemption Price.
(c) Where a Take-over Bid that is not a Permitted Bid or Competing
Permitted Bid expires, is withdrawn or is otherwise terminated after the
Separation Time has occurred and prior to the occurrence of a Flip-in
Event, the Board of Directors may elect to redeem all of the outstanding
Rights at the Redemption Price.
(d) If the Board of Directors elects to or is deemed to have elected to
redeem the Rights and, in circumstances where Subsection 5.1(a) is
applicable, the requisite consent is given by the holders of Voting Shares
or Rights, as applicable, (i) the right to exercise the Rights will
thereupon, without further action and without notice, terminate and the
only right thereafter of the holders of Rights shall be to receive the
Redemption Price, and (ii) subject to Subsection 5.1(f), no further Rights
shall thereafter be issued.
(e) Within 10 Business Days of the Board of Directors electing or having
been deemed to have elected to redeem the Rights or, if Subsection 5.1(a)
is applicable, within 10 Business Days after the requisite consent is given
by the holders of Voting Shares or Rights, as applicable, the Corporation
shall give notice of redemption to the holders of the then outstanding
Rights by mailing such notice to each such holder at his last address as it
appears upon the Rights Register or, prior to the Separation Time, on the
register of Voting Shares maintained by the Corporation's transfer agent or
transfer agents. Each such notice of redemption shall state the method by
which the payment of the Redemption Price shall be made.
(f) Upon the Rights being redeemed pursuant to Subsection 5.1(c), all the
provisions of this Agreement shall continue to apply as if the Separation
Time had not occurred and Rights Certificates representing the number of
Rights held by each holder of record of Voting Shares as of the Separation
Time had not been mailed to each such holder and, for all purposes of this
Agreement, the Separation Time shall be deemed not to have occurred.
5.2 Waiver of Flip-In Events
(a) With the prior consent of the holders of Voting Shares obtained in
accordance with Subsection 5.5(b), the Board of Directors may, at any time
prior to the occurrence of
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a Flip-in Event that would occur by reason of an acquisition of Voting
Shares otherwise than pursuant to a Take-over Bid made by means of a take-
over bid circular to all holders of record of Voting Shares or otherwise
than in the circumstances set forth in Subsection 5.2(c), waive the
application of Section 3.1 to such Flip-in Event by written notice
delivered to the Rights Agent. In the event it proposes to grant such a
waiver, the Board of Directors shall extend the Separation Time to a date
at least 10 Business Days subsequent to the meeting of shareholders called
to approve such waiver.
(b) The Board of Directors may, at any time prior to the occurrence of a
Flip-in Event that would occur as a result of a Take-over Bid made by way
of a take-over bid circular sent to all holders of record of Voting Shares
(which, for greater certainty, shall not include the circumstances
described in Subsection 5.2(c)), waive the application of Section 3.1 to
such Flip-in Event by written notice delivered to the Rights Agent,
provided, however, that if the Board of Directors waives the application of
Section 3.1 to such a Flip-in Event, the Board of Directors shall be deemed
to have waived the application of Section 3.1 to any other Flip-in Event
occurring by reason of any Take-over Bid which is made by means of a take-
over bid circular to all holders of record of Voting Shares prior to the
expiry of any Take-over Bid in respect of which a waiver is, or is deemed
to have been, granted under this Subsection 5.2(b).
(c) The Board of Directors may waive the application of Section 3.1 to a
Flip-in Event provided that the following conditions are satisfied:
(i) the Board of Directors has determined that the Acquiring Person
became an Acquiring Person by inadvertence and without any
intention to become, or knowledge that it would become, an
Acquiring Person; and
(ii) such Acquiring Person has reduced its Beneficial Ownership of
Voting Shares such that, at the time of the waiver pursuant to
this Subsection 5.2(c), it is no longer an Acquiring Person.
5.3 Expiration
No Person shall have any rights pursuant to this Agreement or in respect of
any Right after the Expiration Time, except the Rights Agent as specified in
Subsection 4.1(a).
5.4 Issuance of New Rights Certificates
Notwithstanding any of the provisions of this Agreement or of the Rights to
the contrary, the Corporation may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by the Board of Directors to
reflect any adjustment or change in the number or kind or class of shares
purchasable upon exercise of Rights made in accordance with the provisions of
this Agreement.
5.5 Supplements and Amendments
(a) The Corporation may from time to time prior to or after the Separation
Time supplement or amend this Agreement without the approval of any holders
of Rights or Voting Shares in order to correct any clerical or
typographical error or to maintain the
<PAGE>
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validity and effectiveness of this Agreement as a result of any change in
applicable laws, rules or regulatory requirements. The Corporation may,
prior to the date of the annual meeting of the shareholders of the
Corporation in the year 1999 referred to in Section 5.18, supplement and
amend this Agreement without the approval of the holders of Rights or
Voting Shares in order to make any changes which the Board of Directors
acting in good faith may deem necessary or desirable. Notwithstanding
anything in this Section 5.5 to the contrary, no such supplement or
amendment shall be made to the provisions of Article 4 except with the
written concurrence of the Rights Agent to such supplement or amendment.
(b) Subject to Subsection 5.5(a), the Corporation may, with the prior
consent of the holders of Rights and Voting Shares obtained as set forth
below, at any time prior to the Separation Time, amend, vary or rescind any
of the provisions of this Agreement and the Rights (whether or not such
action would materially adversely affect the interests of the holders of
Rights generally). Such consent shall be deemed to have been given if the
action requiring such approval is authorized by the affirmative vote of a
majority of the votes cast by Independent Shareholders present or
represented at and entitled to vote at a meeting of the holders of Voting
Shares duly called and held in compliance with applicable laws and the
articles and by-laws of the Corporation.
(c) Subject to Subsection 5.5(a), the Corporation may, with the prior
consent of the holders of Rights obtained as set forth below, at any time
after the Separation Time, amend, vary or rescind any of the provisions of
this Agreement and the Rights (whether or not such action would materially
adversely affect the interests of the holders of Rights generally). Such
consent shall be deemed to have been given if the action requiring such
approval is authorized by the affirmative vote of a majority of the votes
cast by the holders of Rights (other than any holder of Rights whose Rights
have become null and void pursuant to the provisions hereof) present or
represented at and entitled to vote at a meeting of the holders of Rights.
For the purposes hereof, the procedures for the calling, holding and
conduct of a meeting of the holders of Rights shall be those, as nearly as
may be, which are provided in the Corporation's by-laws with respect to
meetings of its shareholders and each Right shall be entitled to one vote
at any such meeting.
(d) Any amendments made by the Corporation to this Agreement pursuant to
Subsection 5.5(a) which are required to maintain the validity and
effectiveness of this Agreement as a result of any change in any applicable
laws, rules or regulatory requirements shall:
(i) if made before the Separation Time, be submitted to the holders
of Voting Shares at the next meeting of holders of Voting Shares
and the holders of Voting Shares may, by the majority referred to
in Subsection 5.5(b), confirm or reject such amendment; and
(ii) if made after the Separation Time, be submitted to the holders of
Rights at a meeting to be called and held in accordance with the
provisions of Subsection 5.5(c) and the holders of Rights may, by
a majority referred to in Subsection 5.5(c), confirm or reject
such amendment.
<PAGE>
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Any such amendment shall, unless the Board of Directors otherwise
stipulates, be effective from the date of the resolution of the Board of
Directors adopting such amendment, until it is confirmed or rejected or
until it ceases to be effective (as described in the next sentence) and,
where such amendment is confirmed, it shall continue in effect in the form
so confirmed. If such amendment is rejected by the holders of Voting Shares
or the holders of Rights or is not submitted to the holders of Voting
Shares or holders of Rights as required, then such amendment shall cease to
be effective from and after the termination of the meeting at which it was
rejected or to which it should have been but was not submitted or if such a
meeting of the holders of Rights is not called within 90 days after the
date of the resolution of the Board of Directors adopting such amendment,
at the end of such period, and no subsequent resolution of the Board of
Directors to amend this Agreement to substantially the same effect shall be
effective until confirmed by the holders of Voting Shares or holders of
Rights as the case may be.
5.6 Fractional Rights and Fractional Shares
(a) The Corporation shall not be required to issue fractions of Rights or
to distribute Rights Certificates which evidence fractional Rights.
Subject to Section 5.3, after the Separation Time there shall be paid to
the registered holders of the Rights Certificates with regard to which
fractional Rights would otherwise be issuable, an amount in cash equal to
the same fraction of the Market Price at the Separation Time of a whole
Right in lieu of such fractional Rights.
(b) The Corporation shall not be required to issue fractional Common Shares
upon exercise of the Rights or to distribute certificates which evidence
fractional Common Shares. In lieu of issuing fractional Common Shares, the
Corporation shall pay to the registered holder of Rights Certificates at
the time such Rights are exercised as herein provided, an amount in cash
equal to the same fraction of the Market Price at the date of such exercise
of one Common Share.
5.7 Rights of Action
Subject to the terms of this Agreement, rights of action in respect of this
Agreement, other than rights of action vested solely in the Rights Agent, are
vested in the respective holders of the Rights; and any holder of any Rights,
without the consent of the Rights Agent or of the holder of any other Rights,
may, on such holder's own behalf and for such holder's own benefit and the
benefit of other holders of Rights, enforce, and may institute and maintain any
suit, action or proceeding against the Corporation to enforce, or otherwise act
in respect of, such holder's right to exercise such holder's Rights in the
manner provided in such holder's Rights Certificate and in this Agreement.
Without limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement and will be
entitled to specific performance of the obligations under, and injunctive relief
against actual or threatened violations of, the obligations of any Person
subject to this Agreement.
<PAGE>
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5.8 Holder of Rights Not Deemed a Shareholder
No holder, as such, of any Rights shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of Common Shares or any other
securities which may at any time be issuable on the exercise of such Rights, nor
shall anything contained herein or in any Rights Certificate be construed to
confer upon the holder of any Rights, as such, any of the rights of a
shareholder of the Corporation or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders (except as provided in Section
5.9), or to receive dividends or subscription rights or otherwise, until such
Rights shall have been exercised in accordance with the provisions hereof.
5.9 Notice of Proposed Actions
If after the Separation Time and prior to the Expiration Time:
(i) there shall occur an adjustment in the rights attaching to the Rights
pursuant to Section 3.1 as a result of the occurrence of a Flip-in
Event; or
(ii) the Corporation proposes to effect the liquidation, dissolution or
winding up of the Corporation or the sale of all or substantially all
of the Corporation's assets;
then, in each such case, the Corporation shall give to each holder of a Right,
in accordance with Section 5.10, a notice of such event or proposed action,
which shall specify the date on which such adjustment to the Rights occurred or
liquidation, dissolution or winding up is to take place, and such notice shall
be so given within 10 Business Days after the occurrence of an adjustment to the
Rights and not less than 20 Business Days prior to the date of taking such
proposed action by the Corporation.
5.10 Notices
Notices or demands authorized or required by this Agreement to be given or
made by the Rights Agent or by the holder of any Rights to or on the Corporation
shall be sufficiently given or made if delivered or sent by first class mail,
postage prepaid or sent by fax, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Fantom Technologies Inc.
1110 Hansler Road
Welland, Ontario
L3B 5S1
Attention: President
Fax No.: (905) 734-7085
Any notice or demand authorized or required by this Agreement to be given or
made by the Corporation or by the holder of any Rights to or on the Rights Agent
shall be sufficiently given or made if delivered or sent by first-class mail,
postage prepaid or sent by fax, addressed (until another address is filed in
writing with the Corporation) as follows:
<PAGE>
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CIBC Mellon Trust Company
320 Bay Street
P.O. Box 1
Toronto, Ontario
M5H 4A6
Attention: Assistant Vice-President
Client Services
Fax No.: (416) 643-5570
Notices or demands authorized or required by this Agreement to be given or made
by the Corporation or the Rights Agent to or on the holder of any Rights shall
be sufficiently given or made if delivered or sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as it appears
upon the Rights Register or, prior to the Separation Time, on the registry books
of the Corporation for the Common Shares. Any notice which is mailed to a
holder of Rights in the manner herein provided shall be deemed given, whether or
not such holder receives the notice.
5.11 Costs of Enforcement
The Corporation agrees that, if the Corporation fails to fulfil any of its
obligations pursuant to this Agreement, then the Corporation will reimburse the
holder of any Rights for the costs and expenses (including legal fees)
reasonably incurred by such holder in actions to enforce his rights pursuant to
any Rights or this Agreement.
5.12 Successors
All the covenants and provisions of this Agreement by or for the benefit
of the Corporation or the Rights Agent shall bind and inure to the benefit of
their respective successors and assigns hereunder.
5.13 Benefits of this Agreement
Nothing in this Agreement shall be construed to give to any Person other
than the Corporation, the Rights Agent and the holders of the Rights any legal
or equitable right, remedy or claim under this Agreement; this Agreement shall
be for the sole and exclusive benefit of the Corporation, the Rights Agent and
the holders of the Rights.
5.14 Governing Law
This Agreement and each Right issued hereunder shall be deemed to be a
contract made under the laws of the Province of Ontario and for all purposes
shall be governed by and construed in accordance with the laws of such province
applicable to contracts to be made and performed entirely within such province.
<PAGE>
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5.15 Counterparts
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
5.16 Severability
If any term or provision hereof or the application thereof to any
circumstance shall, in any jurisdiction and to any extent, be invalid or
unenforceable, such term or provision shall be ineffective as to such
jurisdiction to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable the remaining terms and provisions
hereof or the application of such term or provision to circumstances other than
those as to which it is held invalid or unenforceable.
5.17 Determinations and Actions by the Board of Directors
All actions, calculations and determinations (including all omissions with
respect to the foregoing) which are done or made by the Board of Directors in
good faith, shall not subject the Board of Directors to any liability to the
holders of the Rights.
5.18 Effective Date
This Agreement is effective from the date hereof. If this Agreement is not
confirmed by resolutions passed by a majority of the votes cast by Independent
Shareholders who vote in respect of confirmation of this Agreement at a meeting
of shareholders to be held not later than February 11, 2000, then this Agreement
and all outstanding Rights shall terminate and be void and of no further force
and effect on and from that the date which is the earlier of (a) the date of
termination of the meeting of shareholders to be held not later than February
11, 2000 under this Section 5.18, and (b) February 11, 2000.
5.19 Regulatory Approvals
Any obligation of the Corporation or action or event contemplated by this
Agreement, or any amendment or supplement to this Agreement, shall be subject to
receipt of any requisite approval or consent from any governmental or regulatory
authority having jurisdiction including, while any securities of the Corporation
are listed and admitted to trading thereon, The Toronto Stock Exchange.
<PAGE>
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
FANTOM TECHNOLOGIES INC.
Per: (signed)
-----------------------------------
Per: (signed)
-----------------------------------
CIBC MELLON TRUST COMPANY
Per: (signed)
----------------------------------
Per: (signed)
----------------------------------
<PAGE>
EXHIBIT A
(Form of Rights Certificate)
Certificate No. Rights
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE CORPORATION, ON THE
TERMS SET FORTH IN THE SHAREHOLDER PROTECTION RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES (SPECIFIED IN SUBSECTION 3.1(b) OF THE SHAREHOLDER PROTECTION
RIGHTS AGREEMENT), RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR ITS
AFFILIATES OR ASSOCIATES OR ANY PERSON ACTING JOINTLY OR IN CONCERT WITH ANY OF
THEM (AS SUCH TERMS ARE DEFINED IN THE SHAREHOLDER PROTECTION RIGHTS AGREEMENT)
OR TRANSFEREES OF ANY OF THE FOREGOING WILL BECOME VOID WITHOUT FURTHER ACTION.
Rights Certificate
This certifies that__________________, or registered assigns, is the registered
holder of the number of Rights set forth above, each of which entitles the
registered holder thereof, subject to the terms, provisions and conditions of
the Shareholder Protection Rights Agreement dated as of August 12, 1999 as
amended from time to time (the "Rights Agreement") between Fantom Technologies
Inc., a corporation incorporated under the laws of Ontario (the "Corporation")
and CIBC Mellon Trust Company, a trust company incorporated under the laws of
Canada, as Rights Agent (the "Rights Agent", which term shall include any
successor Rights Agent under the Rights Agreement), to purchase from the
Corporation at any time after the Separation Time and prior to the Expiration
Time (as such terms are defined in the Rights Agreement), one fully paid common
share of the Corporation (a "Common Share") at the Exercise Price referred to
below, upon presentation and surrender of this Rights Certificate with the Form
of Election to Exercise duly executed and submitted to the Rights Agent at its
principal office in any of the cities of Montreal, Toronto, Calgary and
Vancouver. Until adjustment thereof in certain events as provided in the Rights
Agreement, the Exercise Price shall be $60.00 (Canadian) per Right.
In certain circumstances described in the Rights Agreement, each Right evidenced
hereby may entitle the registered holder thereof to purchase more or less than
one Common Share, all as provided in the Rights Agreement.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Rights Agent, the Corporation and the holders of the Rights. Copies of the
Rights Agreement are on file at the head office of the Corporation and are
available upon written request.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at any of the offices of the Rights Agent designated for such purpose,
may be exchanged for another Rights
<PAGE>
-2-
Certificate or Rights Certificates of like tenor and date evidencing an
aggregate number of Rights equal to the aggregate number of Rights evidenced by
the Rights Certificate or Rights Certificates surrendered. If this Rights
Certificate shall be exercised in part, the registered holder shall be entitled
to receive, upon surrender hereof, another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by this
Certificate may be, and under certain circumstances are required to be, redeemed
by the Corporation at a redemption price of $0.001 (Canadian) per Right, subject
to adjustment in certain events.
No fractional Common Shares will be issued upon the exercise of any Right or
Rights evidenced hereby, but in lieu thereof, a cash payment will be made, as
provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Common Shares or
any other securities which may at any time be issuable upon the exercise hereof,
nor shall anything contained in the Rights Agreement or herein be construed to
confer upon the holder hereof, as such, any of the rights of a shareholder of
the Corporation or any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meeting or other
actions affecting shareholders (except as provided in the Rights Agreement), or
to receive dividends or subscription rights, or otherwise, until the Rights
evidenced by this Rights Certificate shall have been exercised as provided in
the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose until
it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Corporation and
its corporate seal.
Date:
FANTOM TECHNOLOGIES INC.
--------------------------
Authorized Signature
--------------------------
Authorized Signature
Countersigned:
CIBC MELLON TRUST COMPANY
--------------------------
<PAGE>
-3-
Authorized Signature
<PAGE>
(To be attached to each Rights Certificate)
FORM OF ELECTION TO EXERCISE
TO:
The undersigned hereby irrevocably elects to exercise
--------------------------
whole Rights represented by the attached Rights Certificate to purchase the
Common Shares issuable upon the exercise of such Rights and requests that
certificates for such shares be issued in the name of:
---------------------------------
Name
---------------------------------
Address
---------------------------------
---------------------------------
Social Insurance, Social Security or
Other Taxpayer Identification Number
-----------------------------------------
DATED: ------------------------------------
Signature
(Signature must correspond to name as
written upon the face of this Rights
Certificate in every particular,
without alteration or enlargement or
any change whatsoever)
------------------------------
Signature Guaranteed
Signature must be guaranteed by a Canadian chartered bank, a Canadian trust
company or by a medallion guarantee by a member firm of the Securities Transfer
Agents Medallion Programme.
...............................................................................
(To be completed if true)
The undersigned hereby represents, for the benefit of all holders of Rights and
Common Shares, that the Rights evidenced by this Rights Certificate are not,
and, to the knowledge of the undersigned, have never been, Beneficially Owned by
an Acquiring Person or an Affiliate or
<PAGE>
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Associate thereof or by any Person acting jointly or in concert with any of the
foregoing (all as defined in the Rights Agreement).
------------------------------------
Signature
................................................................................
NOTICE
In the event the certification set forth above is not completed, the Corporation
will deem the Beneficial Owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person (as defined in the Rights Agreement) and,
accordingly, such Rights shall be null and void and not transferrable or
exercisable.
<PAGE>
(To be executed by the registered holder if such holder desires to transfer the
Rights evidenced by this Rights Certificate.)
FORM OF ASSIGNMENT
FOR VALUE RECEIVED hereby sells,
------------------------------------------
assigns and transfers unto
-----------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(please print name and address of transferee)
the Rights evidenced by this Rights Certificate, together with all right, title
and interest therein, and does hereby irrevocably constitute and appoint
-------
attorney, to transfer the within Rights on the books of the within-named
Corporation, with full power of substitution.
DATED:
--------------------------------------
Signature
(Signature must correspond to name as
written upon the face of this Rights
Certificate in every particular,
without alteration or enlargement or
any change whatsoever)
------------------------------
Signature Guaranteed
Signature must be guaranteed by a Canadian chartered bank, a Canadian trust
company or by a medallion guarantee by a member firm of the Securities Transfer
Agents Medallion Programme.
................................................................................
(To be completed if true)
The undersigned hereby represents, for the benefit of all holders of Rights and
Common Shares, that the Rights evidenced by this Rights Certificate are not,
and, to the knowledge of the undersigned, have never been, Beneficially Owned by
an Acquiring Person or an Affiliate or Associate thereof or by any Person acting
jointly or in concert with any of the foregoing (as defined in the Rights
Agreement).
---------------------------------------
Signature
................................................................................
<PAGE>
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NOTICE
In the event the certification set forth above is not completed, the Corporation
will deem the Beneficial Owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person (as defined in the Rights Agreement) and,
accordingly, such Rights shall be null and void and not transferrable or
exercisable.
