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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) or (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
COREL CORPORATION
(Exact name of Registrant as specified in its Charter)
CANADA NOT APPLICABLE
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1600 CARLING AVENUE, OTTAWA, ONTARIO, CANADA K1Z 8R7
(Address of principal executive offices) (Zip Code)
If this Form relates to the registration of a class of securities pursuant to
Section 12(b) of the Exchange Act and is effective pursuant to General
Instruction A.(c), please check the following box. [_]
If this Form relates to the registration of a class of securities pursuant to
Section 12(g) of the Exchange Act and is effective pursuant to General
Instruction A.(d), please check the following box. [x]
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: COMMON SHARE
PURCHASE RIGHTS
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
On February 11, 1999, the Board of Directors of Corel Corporation (the
"Company") declared a distribution of one common share purchase right (a
"Right") in respect of each common share outstanding at the Close of Business on
February 25, 1999 (the "Record Time"). In addition, one Right shall be issued
with each Common Share issued after the Record Time and prior to the earlier of
the Separation Time and the Expiration Time (as such terms are defined in the
Shareholder Rights Plan Agreement). Each right entitles the holder thereof,
after the Separation Time to purchase one Common Share of the Corporation for
the Exercise Price as at the Business Day immediately preceding Separation Time.
In the event that any person becomes an Acquiring Person (a "Flip-in Event"),
each Right shall thereafter constitute the right to purchase from the Company,
upon exercise thereof in accordance with the terms hereof, that number of Common
Shares of the Company as have an aggregate Market Price on the date of
consummation or occurrence of such Flip-in Event equal to twice the Exercise
Price for an amount in cash equal to the Exercise Price. The description and
terms of the Rights are set forth in a Shareholder Rights Plan Agreement
("Rights Agreement") between the Company and Montreal Trust Company of Canada,
as Rights Agent, which is included as Exhibit 4.3 hereto. The Rights Agreement
is effective as of the close of business on February 25, 1999 and will be
operative until the date of Corel's next Annual and Special Shareholders'
Meeting on April 14, 1999. To remain effective, the Plan must be approved by
more than 50 percent of the votes cast at that meeting.
Until the earlier to occur of (i) 8 business days following a public
announcement or disclosure that a Person (an "Acquiring Person") has acquired
20% or more of the outstanding Voting Shares of the Corporation (the "Stock
Acquisition Date") or (ii) 8 business days following a public announcement or
disclosure of the intent of any Person to commence a Take-over Bid (other than a
Permitted Bid, so long as such Take-over Bid continues to satisfy the
requirements of a Permitted Bid) or such later Business Day as may be determined
at any time or from time to time by the Board of Directors (the earlier of such
dates being called the "Separation Time"), the Rights will be evidenced, with a
legend affixed to the Common Share certificates issued after the Record Time but
prior to the Close of Business on the earlier of the Separation Time and the
Expiration Time. For those Common Shares issued prior to the Record Time, one
Right for each Common Share will be evidenced thereby, notwithstanding the
absence of the foregoing legend, until the earlier of the Separation Time and
the Expiration Time.
The Rights Agreement provides that, 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. Until the Separation Time, new Common Share
certificates will have a legend affixed to them which incorporates the Rights
Agreement by reference. Promptly following the Separation Time, the Corporation
will prepare or cause to be prepared and the Rights Agent will mail to each
holder of record of Common Shares as of the Separation Time and to each holder
of Convertible Securities converted into Common Shares as of the Separation Time
or after the Separation Time and prior to the Expiration Time, a Rights
Certificate and a disclosure statement prepared by the Corporation describing
the Rights. The Rights Certificates alone will evidence the rights.
The Exercise Price, the number and kind of securities subject to purchase upon
exercise of each Right and the number of Rights outstanding are subject to
adjustment from time to time when (i) a dividend in Voting Shares or Convertible
Securities is declared or paid, (ii) the outstanding Common Shares are
subdivided or changed into a greater number of Common Shares, (iii) the
outstanding Common Shares are consolidated or changed into a smaller number of
Common Shares, or (iv) Voting Shares (or Convertible Securities in respect
thereof) are issued in lieu of or in exchange for existing Common Shares.
If the Exercise Price and number of Rights outstanding are to be adjusted, (i)
the Exercise Price in effect after such adjustment will be equal to the Exercise
Price in effect immediately prior to such adjustment divided by the number of
Common Shares that a holder of one Common Share immediately prior to such
adjustment would hold thereafter as a result thereof; and (ii) each Right held
prior to such adjustment will become that number of Rights equal to the
Expansion Factor (as defined in the Rights Agreement), and the adjusted number
of Rights will be deemed to be
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allocated among the Common Shares with respect to which the original Rights were
associated and the securities of the Corporation issued in respect of such
adjustment so that each such Common Share will have exactly one Right associated
with it.
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: (i) the Rights Certificate evidencing such Rights; (ii) an Election to
Exercise substantially in the form attached to the Rights Certificate duly
completed, and executed in a manner acceptable to the Rights Agent; and (iii)
payment by certified cheque, banker's draft or money order payable to the order
of the Rights Agent that covers both the number of shares being purchased
multiplied by the exercise price and any transfer tax or charges which may be
payable in respect of any transfer involved in the transfer or delivery of
Rights Certificates or the issuance or delivery of certificates for Common
Shares in a name other than that of the holder of the Rights being exercised.
The Rights will expire at the earlier of the "Termination Time," as described
below, and the Close of Business on the date on which the first annual meeting
of shareholders of the Corporation is held following the third anniversary of
the date of the Rights Agreement.
Notwithstanding anything in the Rights Agreement to the contrary, upon the
occurrence of any Flip-in Event, any Rights that are or were Beneficially Owned
on or after the earlier of the Separation Time and the Stock Acquisition Date,
or which may thereafter be Beneficially Owned by an Acquiring Person or a
transferee of Rights, direct or indirect, shall become null and void without any
further action. Any holder of such Rights (including any transferee of, or
other successor entitled to, such Rights, whether directly or indirectly) shall
thereafter have no claim to exercise such Rights under any provisions of this
Agreement and further shall thereafter not have any rights whatsoever with
respect to such Rights, whether under any provision of the Rights Agreement or
otherwise.
The Board of Directors acting in good faith may, at any time prior to the later
of the Stock Acquisition Date and the Separation Time, elect to redeem all but
not less than all of the then outstanding Rights at a redemption price of
$0.0001 per Right. The Redemption Price will be adjusted at any time after the
Record Time and prior to the Expiration Time as a result of the same events that
cause an adjustment to the Exercise Price (as described above and in Section 2.3
(b) of the Rights Agreement).
If the Board of Directors is deemed to have elected or elects to redeem the
Rights, the right to exercise the Rights will thereupon, without further action
and without notice, terminate and the only right thereafter of the holders of
Rights shall be to receive the Redemption Price.
The terms of the Rights may be amended by a resolution of the Board of Directors
without the consent of the holders of the Rights, except that from and after
such time as a person or group becomes an Acquiring Person, no such amendment
may adversely affect the interests of the holders of the Rights (other than an
Acquiring Person).
Until a Right is exercised, the holder thereof, as such, will have no rights as
a stockholder of the Company, including, without limitation, the right to vote
or to receive dividends.
As of March 19, 1999, there were 61,073,648 of the Company's Common Shares
outstanding. Each Common Share outstanding at the close of business on February
25, 1999 will receive one Right. As long as the Rights are attached to the
Common Shares, one additional Right shall be deemed to be delivered for each
Common Share issued or transferred by the Company in the future, including but
not limited to Common Shares issuable upon exercise of options granted by the
Company.
The Rights Agreement, which specifies the terms of the Rights and which includes
as exhibits thereto the Form of Rights Certificate, is filed as Exhibit 4.3
hereto. The aforementioned exhibit hereto is incorporated herein by reference,
and the foregoing description of the Rights is qualified in its entirety by
reference to such exhibits.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: March 19, 1999
COREL CORPORATION
By: /s/ Dr. Michael C.J. Cowpland
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Dr. Michael C.J. Cowpland
Chairman of the Board, President,
Chief Executive Officer
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ITEM 2. EXHIBITS
Exhibit
Number Description
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3.1 Certificate and Articles of Amalgamation (1)
4.1 Specimen of Common Share Certificate (2)
4.2 Specimen of Right Certificate (Attached as Exhibit A to Exhibit 4.3)
4.3 Shareholder Rights Plan Agreement dated February 11, 1999 between
the Company and Montreal Trust as Rights Agent, which includes as
Exhibit A the Form of Rights Certificate.
___________________
/(1)/ Incorporated by reference to Annual Report on Form 10-K for the fiscal
year ended November 30, 1998.
/(2)/ Incorporated by reference to Registration Statement on Form F-5, File No.
33-50886.
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EXHIBIT 4.3
Schedule A
SHAREHOLDER RIGHTS PLAN AGREEMENT
THIS AGREEMENT is dated as of February 11, 1999.
BETWEEN:
COREL CORPORATION
(the "Corporation")
OF THE FIRST PART
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MONTREAL TRUST COMPANY OF CANADA
(the "Rights Agent")
OF THE SECOND PART
WHEREAS:
A. The Board of Directors has determined that it is advisable to adopt a
shareholder rights plan (the "Rights Plan") to ensure, to the extent
possible, that all shareholders of the Corporation are treated fairly in
connection with any takeover offer for the Corporation or other acquisition
of control of the Corporation.
B. In order to implement the Rights Plan, the Board of Directors has:
(a) authorized and declared a distribution of one right (a "Right")
effective at the Close of Business at the Record Time in respect of
each Common Share outstanding at the Close of Business at the Record
Time;
(b) authorized the issuance of one Right in respect of each Common Share
issued after the Record Time and prior to the earlier of the
Separation Time and the Expiration Time; and
(c) authorized the issuance of Rights Certificates to holders of Rights
pursuant to the terms and subject to the conditions set forth herein.
C. 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.
D. The Corporation desires to appoint the Rights Agent to act on behalf of the
Corporation, and the Rights Agent is willing to so act, in connection with
the issuance, transfer, exchange and replacement of Rights Certificates,
the exercise of Rights and other matters referred to herein.
NOW THEREFORE in consideration of the premises and respective agreements
set forth herein, the parties hereby agree as follows:
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ARTICLE 1
INTERPRETATION
1.1 Certain Definitions
For the purposes of this agreement (the "Agreement"), including the recitals
hereto, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who is at any time after the
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date hereof the Beneficial Owner of 20% or more of the outstanding Voting
Shares of the Corporation; provided, however, that the term "Acquiring
Person" shall not include
(i) the Corporation or any corporation controlled by the
Corporation;
(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;
(B) a Permitted Bid Acquisition;
(C) an Exempt Acquisition; and
(D) a Pro Rata Acquisition;
provided, however, that if a Person shall become the Beneficial
Owner of 20% or more of the outstanding Voting Shares by reason
of one or any combination of a Voting Share Reduction, a
Permitted Bid Acquisition, an Exempt Acquisition or a Pro Rata
Acquisition, and thereafter becomes the Beneficial Owner of an
additional one per cent of the Voting Shares then outstanding
(otherwise than pursuant to a Voting Share Reduction, a
Permitted Bid Acquisition, an Exempt Acquisition or a Pro Rata
Acquisition), then, as of the date that such Person becomes a
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
1.1(d)(v) hereof where such disqualification results solely
because such Person is making or has announced a current
intention to make a Take-over Bid, either alone or by acting
jointly or in concert with any other Person. For the purposes of
this definition, "Disqualification Date" means the first date of
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public announcement that such Person is making or has announced
a current intention to make a Take-over Bid, alone or by acting
jointly or in concert with another Person; or
(iv) an underwriter that becomes the Beneficial Owner of 20% or more
of the Voting Shares in connection with a distribution of
securities pursuant to an underwriting agreement with the
Corporation.
(b) "Affiliate" when used to indicate a relationship with a specified Person,
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means a Person that directly or indirectly controls, or is controlled by,
or is under common control with, such specified Person.
(c) "Associate" has the meaning ascribed to such term in the Securities Act.
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(d) A Person shall be deemed the "Beneficial Owner" of, and to have
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"Beneficial Ownership" of, and to "Beneficially Own":
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(i) any securities of which such Person or any of such
Person's Affiliates or Associates is owner at law or in
equity, including, for greater certainty, as described in
Section 90 of the Securities Act;
(ii) any securities which the Person or any of such Person's
Affiliates or Associates has the right to acquire, within
60 days (whether such right is exercisable immediately or
after the passage of not more than 60 days thereafter or
upon the occurrence of a contingency or the making of a
payment) pursuant to any Convertible Security, agreement,
arrangement, pledge or understanding, whether or not in
writing (other than (x) customary agreements with and
between underwriters and/or banking group and/or selling
group members with respect to a distribution of
securities and (y) pledges of securities in the ordinary
course of the pledgee's business); and
(iii) any securities that are Beneficially Owned within the
meaning of clauses (i) or (ii) of this Subsection 1.1 (d)
by any other Person with which 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) because such security has been, or has been agreed to be,
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 acting jointly or in
concert with such Person until the earlier of such
tendered security being (x) accepted unconditionally for
payment or exchange and (y) taken up and paid for;
(v) because (A) such Person or any of the Affiliates or
Associates of such Person or any other Person acting
jointly or in concert with such Person, holds such
security provided that the ordinary business of any such
Person (the "Fund Manager") includes the management of
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investment funds for others and such security is held by
the Fund Manager in the ordinary course of such business
in the performance of such Fund Manager's duties for the
account of any other Person (a "Client"), (B) such Person
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(the "Trust Company") is licensed to carry on the
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business of a trust company under applicable laws and, as
such, acts as trustee or administrator or in a similar
capacity in relation to the estates of deceased or
incompetent Persons (each an "Estate Account") or in
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relation to other accounts (each an "Other Account") and
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holds such security in the ordinary course of such duties
for such Estate Accounts or for such Other Accounts, (C)
such Person (the "Plan Administrator") is the
------------------
administrator or the trustee of one or more pension funds
or plans (a "Plan") registered under the laws of Canada
----
or any province thereof or the laws of the United States
of America or any state thereof, (D) such Person (the
"Crown Agent") is established by statute for purposes
------------
that include, and the ordinary business or activity of
such Person includes, the management of investment funds
for employee benefit plans, pension plans, insurance
plans, or various public bodies, or (E) such Person is a
Plan; provided, however, that in any of the foregoing
cases the Fund Manager, the Trust Company, the Plan
Administrator, the Crown Agent or the Plan, as the case
may be, is not then making or has not then announced an
intention to make a Take-over Bid, alone or by acting
jointly or in concert with any other Person, other than
an Offer to Acquire Voting Shares or other securities (X)
pursuant to a distribution by the Corporation or (Y) by
means of a Permitted Bid;
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(vi) because such Person is a Client of the same Fund Manager
as another Person on whose account the Fund Manager holds
such security, or because such Person is an Estate
Account or an Other Account of the same Trust Company as
another Person on whose account the Trust Company holds
such security, or because such Person is a Plan with the
same Plan Administrator as another Plan on whose account
the Plan Administrator holds such securities;
(vii) because such Person is a Client of a Fund Manager and
such security is owned at law or in equity by the Fund
Manager or because such Person is an Estate Account or an
Other Account of a Trust Company and such security is
owned at law or in equity by the Trust Company or such
Person is a Plan and such security is owned at
law or in equity by the Plan Administrator; or
(viii) because such Person is the registered holder of
securities as a result of carrying on the business of or
acting as a nominee of a securities depositary.
For purposes of this Agreement in determining the percentage of
the outstanding Voting Shares with respect to which a Person is
or is deemed to be the Beneficial Owner, any unissued Voting
Shares as to which such Person is deemed the Beneficial Owner
pursuant to this Subsection l. 1(d) shall be deemed outstanding.
(e) "Board of Directors" shall mean the board of directors of the Corporation
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or any duly constituted and empowered committee thereof.
(f) "Business Day" shall mean any day, other than a Saturday or Sunday or a
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day on which banking institutions in the City of Ottawa are authorized or
obligated by law to close.
(g) "Canadian Dollar Equivalent" of any amount which is expressed in United
--------------------------
States dollars shall mean on any day the Canadian dollar equivalent of
such amount determined by reference to the U.S. -Canadian Exchange Rate
in effect on such date.
(h) "Canada Business Corporations Act " shall mean the Canada
--------------------------------
Business Corporations Act, R.S.C. 1985, c.C- 44, as amended and
the regulations thereunder, as from time to time in effect.
(i) "Close of Business" on any given date shall mean the time on such date
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(or, if such date is not a Business Day, the time on the next Business
Day) at which the principal office of the transfer agent for the Common
Shares in Toronto, Ontario (or after the Separation Time, the principal
office of the Rights Agent in Toronto, Ontario) is closed to the public.
(j) "Closing Price" per security of any securities on any date of
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determination shall mean:
(i) the closing board lot sale price or, if such price is not
available, the average of the closing bid and asked prices, for
such securities as reported by the stock exchange or national
securities quotation system on which such securities are listed or
admitted to trading (provided that, if at the date of
determination such securities are listed or admitted to trading on
more than one stock exchange or national securities quotation
system, such price or prices shall be determined based on the
stock exchange or quotation system on which such securities are
then listed or admitted to trading on which the largest number of
such securities were traded during the most recently completed
calendar year); or
(ii) if for any reason none of such prices is available on such day or
the securities are not listed or admitted to trading on a stock
exchange or a national securities quotation
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system, the last sale price, or in case no sale takes place on
such date, the average of the high bid and low asked prices for
each of such securities in the over-the-counter market;
provided, however, that (A) if for any reason none of such prices are
available on such date, the "Closing Price" per security of such
securities on such date shall mean the fair value per security of the
securities on such date as determined by a nationally or internationally
recognized investment dealer or investment banker with respect to the
fair value per security of such securities, and (B) if the Closing Price
so determined is expressed in United States dollars, such amount shall be
converted to the Canadian Dollar Equivalent.
(k) "Common Shares", when used with reference to the Corporation, shall mean
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the Common Shares in the share capital of the Corporation as presently
constituted, as such shares may be subdivided, consolidated, reclassified
or otherwise changed from time to time, and "Common Shares" when used
with reference to any Person other than the Corporation means the class
or classes of shares (or similar equity interest) with the greatest per
share voting power entitled to vote generally in the election of all
directors of such other Person or the equity securities or other equity
interest having power (whether or not exercised) to control or direct the
management of such other Person or, if such other Person is a corporation
controlled by another Person, the Person (other than an individual) which
ultimately controls such first mentioned other Person.
(l) "Competing Permitted Bid" means a Take-Over Bid that:
-----------------------
(i) is made after a Permitted Bid has been made and prior to the
expiry of the Permitted Bid;
(ii) satisfies all components of the definition of a Permitted Bid
other than the requirement in Clause (ii)(A)(x) thereof; and
(iii) contains, and the take-up and payment for securities tendered or
deposited is subject to irrevocable and unqualified provisions
that no Voting Shares shall be taken up or paid for pursuant to
the Takeover Bid prior to the Close of Business on a date that is
no earlier than the later of (i) 21 days after the date of the
Take-over Bid, and (ii) the 45th day after the earliest date on
which any other Permitted Bid that is then in existence was made.
(m) "contro11ed": a body corporate is "controlled" by another Person if and
----------
only 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 for the benefit of the other Person;
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" "under common control with" shall
-------- ----------- -------------------------
be interpreted accordingly.
(n) "Convertible Security" means, with respect to any security, a security
--------------------
convertible into or exchangeable for the first-mentioned security.
(o) "Co-Rights Agents" shall have the meaning ascribed thereto in Subsection
----------------
4.1 (a).
(p) "Disposition Date" has the meaning ascribed thereto in Subsection 5.1
----------------
(b).
(q) "Disqualification Date" has the meaning ascribed thereto in Clause 1.1
---------------------
(a)(iii).
(r) "Effective Date" shall mean the Close of Business on the date on which
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The Toronto Stock
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Exchange accepts notice for filing of this Agreement.
(s) "Election to Exercise" has the meaning ascribed thereto in Subsection
--------------------
2.2(d).
(t) "Exempt Acquisition" means a share acquisition in respect of which the
------------------
Board of Directors has waived the application of Section 3.1 pursuant to
Subsection 5.1(b), 5.1(d) or 5.1(e) or which was made on or prior to the
date of this Agreement.
(u) "Exercise Price" shall mean, as of any date, the price at which a holder
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of a Right may purchase the securities issuable upon exercise of one
whole Right and, until adjustment thereof in accordance with the terms
hereof, the Exercise Price shall be $100.00.
(v) "Expansion Factor" has the meaning ascribed thereto in Subclause
----------------
2.3(b)(iv)(A)(1).
(w) "Expiration Time" shall mean the earlier of (i) the Termination Time; and
---------------
(ii) the Close of Business on the date on which the first annual meeting
of shareholders of the Corporation following the third anniversary of the
date of this Agreement is held; provided, however, that if the resolution
referred to in Section 5.15 is approved by the Independent Shareholders
in accordance with Section 5.15 at or prior to such annual meeting,
"Expiration Time" means the earlier of (i) the Termination Time; and (ii)
the Close of Business on the sixth anniversary of the date of this
Agreement.
(x) "Fiduciary" shall mean a trust company registered under the trust company
---------
legislation of Canada or any province thereof when engaged in a fiduciary
capacity, a trust company organized under the laws of any state of the
United States, a portfolio manager registered under the securities
legislation of one or more provinces of Canada or an investment adviser
registered under the United States Investment Advisers Act of 1940 or any
other securities legislation of the United States or any state of the
United States.
(y) "Flip-in Event" shall mean a transaction or event in or pursuant to which
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any Person becomes an Acquiring Person.
(z) "holder" shall have the meaning ascribed thereto in Section 2.8.
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(aa) "Independent Shareholders" shall mean holders of outstanding Voting
------------------------
Shares, other than Voting Shares Beneficially Owned by (i) any Acquiring
Person; (ii) any Offeror other than a Person who at the relevant time is
deemed not to Beneficially Own such Voting Shares by reason of Clause
1.1(d)(v) hereof; (iii) any Person acting jointly or in concert with such
Acquiring Person or Offeror referred to in (ii); (iv) any Associate or
Affiliate of such Acquiring Person or Offeror referred to in (ii); and
(v) any employee benefit plan, deferred profit sharing plan and any
similar plan or trust for the benefit of employees of the Corporation
unless the beneficiaries of the plan or trust direct the manner in which
the Voting Shares are to be voted or withheld from voting or direct
whether the Voting Shares are to be tendered to a Take-over Bid.
(ab) "Market Price" per security of any securities on any date of
------------
determination shall mean the average of the daily Closing Prices on The
Toronto Stock Exchange (or if the securities are not then listed on The
Toronto Stock Exchange, on such other exchange on which such securities
are listed or quoted as determined by the Board of Directors) per
security of such securities on each of the 20 consecutive Trading Days
through and including the Trading Day immediately preceding such date of
determination; provided, however, that if an event of a type analogous to
any of the events described in Section 2.3 hereof shall have caused any
Closing Price used to determine the Market Price on any Trading Day not
to be fully comparable with the Closing Price on the Trading Day
immediately preceding such date of determination, each such Closing Price
so used shall be appropriately adjusted in a manner analogous to the
applicable adjustment provided for in Section
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2.3 hereof in order to make it fully comparable with the Closing Price on
the Trading Day immediately preceding such date of determination.
(ac) "Nominee" has the meaning ascribed thereto in Subsection 2.2(c).
-------
(ad) "Offer to Acquire" shall include:
----------------
(i) an offer to purchase or a solicitation of an offer to sell Voting
Shares, or a public announcement of an intention to make such an
offer or solicitation; and
(ii) an acceptance of an offer to sell Voting Shares, whether or
not such offer to sell has been solicited;
or any combination thereof, and the Person accepting an offer to sell
shall be deemed to be making an Offer to Acquire to the Person that made
the offer to sell.
(ae) "Offeror" shall mean a Person who has announced a current intention to
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make, or who is making, a Take-over Bid.
(af) "Offeror's Securities" shall mean the Voting Shares Beneficially Owned on
--------------------
the date of a Take-over Bid by an Offeror.
(ag) "Permitted Bid" means a Take-over Bid made by way of a Take-over Bid
-------------
circular which also complies with the following additional provisions:
(i) the Take-over Bid is made to all holders of record of Voting
Shares wherever resident as registered on the books of the
Corporation, other than the Offeror;
(ii) the Take-over Bid contains, and the take-up and payment for
securities tendered or deposited thereunder is 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 less than 45 days following the date of
the Take-over Bid and (y) unless, at the Close of Business
on that date, the Voting Shares deposited or tendered
pursuant to the Take-over Bid and not withdrawn constitute
more than 50% of the Voting Shares outstanding which are
held by Independent Shareholders;
(B) unless the Take-over Bid is withdrawn, Voting Shares may be
deposited pursuant to such Take-over Bid at any time prior
to the Close of Business on the date of the first take-up of
or payment for Voting Shares;
(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
(A)(y) of this Clause 1.1(ag)(ii) is satisfied, the Offeror
will make a public announcement of that fact and the Take-
over Bid will remain open for deposits and tenders of Voting
Shares for not less than 10 Business Days from the date of
such public announcement.
For purposes of this Agreement, (A) should a Take-over Bid which
qualified as a Permitted Bid when made cease to be a Permitted Bid
because it ceases to meet any or all of the requirements
<PAGE>
-8-
mentioned above prior to the time it expires (after giving effect to any
extension) or is withdrawn, any acquisition of Voting Shares made
pursuant to such Take-over Bid shall not be a Permitted Bid Acquisition
and (B) the term "Permitted Bid" shall include a Competing Permitted Bid.
(ah) "Permitted Bid Acquisition" means an acquisition of Voting Shares made
-------------------------
pursuant to a Permitted Bid or a Competing Permitted Bid.
(ai) "Person" includes any individual, firm, partnership, association, trust,
------
trustee, executor, administrator, legal personal representative,
government, governmental body or authority, corporation, or other
incorporated or unincorporated organization, syndicate or other entity.
(aj) "Pro Rata Acquisition" means an acquisition by a Person of Voting Shares
--------------------
pursuant to (i) any dividend reinvestment plan or share purchase plan of
the Corporation made available to all holders of Voting Shares (other
than holders resident in any jurisdiction where participation in any such
plan is restricted or impractical as a result of applicable law), (ii) a
stock dividend, a stock split or other event pursuant to which such
Person becomes the Beneficial Owner of Voting Shares on the same pro rata
basis as all other holders of Voting Shares of the same class or series,
(iii) the acquisition or exercise of rights to purchase Voting Shares
distributed to all holders of Voting Shares (other than holders resident
in any jurisdiction where such distribution is restricted or impractical
as a result of applicable law) by the Corporation pursuant to a rights
offering (but only if such rights are acquired directly from the
Corporation) or (iv) a distribution of Voting Shares or Convertible
Securities in respect thereof offered pursuant to a prospectus or by way
of a private placement or a conversion or exchange of any such
Convertible Security, provided such Person does not thereby acquire a
greater percentage of Voting Shares or Convertible Securities so offered
than the Person's percentage of Voting Shares Beneficially Owned
immediately prior to such acquisition.
(ak) "Record Time" means the Close of Business on the Effective Date.
-----------
(al) "Redemption Price" shall have the meaning attributed thereto in
----------------
Subsection 5.1(a).
(am) "Regular Periodic Cash Dividend" means cash dividends paid on the Common
--------------------------------
Shares at regular intervals in any fiscal year of the Corporation to the
extent that such cash dividends do not exceed in the aggregate in any
fiscal year, on a per share basis, the greatest of:
(i) 200% of the aggregate amount of cash dividends declared payable by
the Corporation on its Common Shares in its immediately preceding
fiscal year divided by the number of Common Shares outstanding as
at the end of such 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 divided by the
arithmetic mean of the number of Common Shares outstanding as at
the end of each of such fiscal years; and
(iii) 100% of the aggregate consolidated net income of the Corporation,
before extraordinary items, for its immediately preceding fiscal
year divided by the number of Common Shares outstanding as at the
end of such fiscal year.
(an) "Right" shall mean the herein described rights to purchase securities
-----
pursuant to the terms and subject to the conditions set forth herein.
(ao) "Rights Certificate" shall mean the certificates representing the Rights
------------------
after the Separation Time
<PAGE>
-9-
which shall be substantially in the form attached hereto as Exhibit A.
(ap) "Rights Register" and "Rights Registrar" shall have the respective
--------------- ----------------
meanings ascribed thereto in Subsection 2.6(a).
(aq) "Securities Act" shall mean the Securities Act (Ontario), R.S.O. 1990,
----------------
c.S.5, as amended and the regulations and rules made thereunder, as from
time to time in effect.
(ar) "Separation Time" means the Close of Business on the eighth Business Day
-----------------
after the earlier of:
(i) the Stock Acquisition Date; and
(ii) the date of the commencement of, or first public announcement or
disclosure of the intent of any Person (other than the Corporation
or any corporation controlled by the Corporation) to commence, a
Take-over Bid (other than a Permitted Bid, so long as such Take-
over Bid continues to satisfy the requirements of a Permitted Bid)
or such later Business Day as may be determined at any time or
from time to time by the Board of Directors;
provided, however, that if any such Take-over Bid expires, is canceled,
is terminated or is otherwise withdrawn prior to the Separation Time,
such Take-over Bid shall be deemed, for purposes of this Subsection
1.l(ar) never to have been made, and, provided further, that if the Board
of Directors determines, pursuant to Section 5.1, to waive the
application of Section 3.1 to a Flip-In Event, the Separation Time in
respect of such Flip-In Event shall be deemed never to have occurred.
(as) "Stock Acquisition Date" shall mean the first date of public announcement
----------------------
or disclosure by the Corporation or an Acquiring Person of facts
indicating that a Person has become an Acquiring Person (which, for the
purposes of this definition, shall include, without limitation, a report
filed pursuant to Section 101 of the Securities Act or Section 13(d) of
the U.S. Exchange Act disclosing such information).
(at) "Take-over Bid" means an Offer to Acquire Voting Shares of any class, or
-------------
Convertible Securities with respect thereto, where the Voting Shares
subject to the Offer to Acquire, together with the Voting Shares into or
for which the securities subject to the Offer to Acquire are convertible
or exchangeable 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.
(au) "Termination Time" means the time at which the right to exercise Rights
----------------
shall terminate pursuant to Section 5.1 hereof.
(av) "Trading Day" when used with respect to any securities, means the day on
-----------
which the principal Canadian or United States securities exchange (as
determined by the Board of Directors) 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 or
United States securities exchange, a Business Day.
(aw) "U.S. - Canadian Exchange Rate" on any date shall mean:
-----------------------------
(i) if on such date the Bank of Canada sets an average noon
spot rate of exchange for the conversion of one United
States dollar into Canadian dollars, such rate; and
<PAGE>
-10-
(ii) in any other case, the rate for such date for the
conversion of one United States dollar into Canadian
dollars which is calculated in the manner which shall be
determined by the Board of Directors from time to time
acting in good faith;
(ax) "U.S. Exchange Act" means the United States Securities Exchange Act of
-----------------
1934, as amended, and the rules and regulations thereunder as from time
to time in effect.
(ay) "Voting Share Reduction" means an acquisition or redemption by the
----------------------
Corporation of Voting Shares which, by reducing the number of Voting
Shares outstanding, increases the percentage of Voting Shares
Beneficially Owned by any Person to 20% or more of the Voting Shares then
outstanding.
(az) "Voting Shares", when used in reference to the Corporation, shall mean
-------------
the Common Shares and any other securities the holders of which are
entitled to vote generally on the election of directors of the
Corporation, and "voting shares", when used with reference to any Person
-------------
other than the Corporation, means common shares of such other Person and
any other securities the holders of which are entitled to vote generally
in the election of the directors of such other Person.
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 will require, terms (including defined 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 Sections and Headings
The division of this Agreement into Articles, Sections, Subsections,
Clauses and Subclauses and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement. The terms this "Agreement", "hereunder", "hereof' and similar
--------- --------- ------
expressions refer to this Agreement as amended or supplemented from time to time
and not to any particular Article, Section or other portion hereof and include
any Agreement or instrument supplemental or ancillary hereto. Unless something
in the subject matter or context is inconsistent therewith, references herein to
Articles, Sections, Subsections, Clauses and Subclauses are to Articles,
Sections, Subsections, Clauses and Subclauses of this Agreement.
1.5 Statutory References
Unless the context otherwise requires, any reference to a specific
Section, Subsection, Clause or Rule of any statute or regulation shall be deemed
to refer to the same as it may be amended, reenacted or replaced or, if repealed
and there shall be no replacement therefor, to the same as it is in effect on
the date of this Agreement.
1.6 Determination of Percentage Ownership
The percentage of Voting Shares Beneficially Owned by any Person,
shall, for the purposes of this Agreement, be and be deemed to be the product
determined by the formula:
<PAGE>
-11-
100 x A
-
B
where:
A= the aggregate number of votes for the election of all directors
generally attaching to the Voting Shares Beneficially Owned by such
Person; and
B= the aggregate number of votes for the election of all directors
generally attaching to all outstanding Voting Shares.
Where any person is deemed to Beneficially Own unissued Voting Shares
pursuant to Subsection 1.1(d), such Voting Shares shall be deemed to be
outstanding for the purpose of both A and B in the formula above.
1.7 Acting Jointly or in Concert
For the purposes of this Agreement, a Person is acting jointly or in
concert with every Person who is a party to an agreement, commitment or
understanding, whether formal or informal, with the first Person for the purpose
of acquiring or offering to acquire Voting Shares or Convertible Securities in
respect thereof (other than customary agreements with and between underwriters
and banking group or selling group members with respect to a distribution of
securities or pursuant to a pledge of securities in the ordinary course of the
pledgee's business).
1.8 Generally Accepted Accounting Principles
Wherever in this Agreement reference is made to generally accepted
accounting principles, such reference shall be deemed to be the recommendations
at the relevant time of the Canadian Institute of Chartered Accountants, or any
successor institute, applicable on a consolidated basis (unless otherwise
specifically provided herein to be applicable on an unconsolidated basis) as at
the date on which a calculation is made or required to be made in accordance
with generally accepted accounting principles. Where the character or amount of
any asset or liability or item of revenue or expense is required to be
determined, or any consolidation or other accounting computation is required to
be made for the purpose of this Agreement or any document, such determination or
calculation shall, to the extent applicable and except as otherwise specified
herein or as otherwise agreed in writing by the parties, be made in accordance
with generally accepted accounting principles applied on a consistent basis.
ARTICLE 2
THE RIGHTS
2.1 Legend on Common Share Certificates
(a) Certificates representing the Common Shares, including without
limitation Common Shares issued upon the conversion of Convertible
Securities, issued after the Record Time but prior to the Close of
Business on the earlier of the Separation Time and the Expiration
Time, shall also evidence one Right for each Common Share
represented thereby and shall have impressed on, printed on, written
on or otherwise affixed to them the following legend:
"Until the Separation Time (as defined in the Rights Agreement
referred to below), this certificate also evidences and entitles the
holder hereof to certain Rights as set forth in a Shareholder Rights
Plan Agreement, dated as of February 11, 1999 (the "Rights
Agreement"), between Corel Corporation (the "Corporation") and
Montreal Trust Company of Canada (the "Rights Agent"), the terms of
which are hereby incorporated
<PAGE>
-12-
herein by reference and a copy of which is on file at the registered
office of the Corporation. Under certain circumstances, as set forth
in the Rights Agreement, such Rights may be amended or redeemed, may
expire, may become void (if, in certain cases, they are
"Beneficially Owned" by an "Acquiring Person", as such terms are
defined in the Rights Agreement, or a transferee thereof) or may be
evidenced by separate certificates and may no longer be evidenced by
this certificate. The Corporation will mail or arrange for the
mailing of a copy of the Rights Agreement to the holder of this
certificate without charge as soon as practicable after the receipt
of a written request therefor."
(b) Certificates representing Common Shares that are issued and
outstanding at the Record Time shall evidence one Right for each
Common Share evidenced thereby, notwithstanding the absence of the
foregoing legend, until the earlier of the Separation Time and the
Expiration Time.
2.2 Initial Exercise Price; Exercise of Rights; Detachment of Rights
(a) Subject to adjustment as herein set forth, including without
limitation as set forth in Article 3, 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
as at the Business Day immediately preceding Separation Time (which
Exercise Price and number of Common Shares are subject to adjustment
as set forth below). Notwithstanding any other provision of this
Agreement, any Rights held by the Corporation or any of its
subsidiaries shall be void.
(b) Until the Separation Time, (i) the Rights shall not be exercisable
and no Right may be exercised; and (ii) for administrative purposes,
each Right will be evidenced by the certificate for the associated
Common Share registered in the name of the holder thereof (which
certificate shall be deemed to represent a Rights Certificate) and
will be transferable only together with, and will be transferred by
a transfer of, such associated Common Share.
(c) 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 and independent of Common Shares.
Promptly following the Separation Time, the Corporation will prepare
or cause to be prepared and the Rights Agent will mail to each
holder of record of Common Shares as of the Separation Time and, in
respect of each Convertible Security converted into Common Shares
after the Separation Time and prior to the Expiration Time, promptly
after such conversion, the Corporation will prepare or cause to be
prepared and the Rights Agent will mail to the holder so converting
(other than an Acquiring Person and in respect of any Rights
Beneficially Owned by such Acquiring Person which are not held of
record by such Acquiring Person, the holder of record of such rights
(a "Nominee") at such holder's address as shown by the records of
the Corporation (the Corporation hereby agreeing to furnish copies
of such record to the Rights Agent for this purpose):
(i) a Rights Certificate in substantially the form of
Exhibit A hereto appropriately completed, representing
the number of Rights held by such holder at the
Separation Time and having such marks of identification
or designation and such legends, summaries or
endorsements printed thereon as the Corporation may deem
appropriate and as are not inconsistent with the
provisions of this Agreement, or
<PAGE>
-13-
as may be required to comply with any law, rule or
regulation or judicial or administrative order, or with
any article or regulation of any stock exchange or
quotation system on which the Rights may from time to
time be listed or traded, or to conform to usage; and
(ii) a disclosure statement prepared by the Corporation
describing the Rights, provided that a Nominee shall be
sent the materials provided for in (i) and (ii) only in
respect of all Common Shares held of record by it which
are not Beneficially Owned by an Acquiring Person and
the Corporation may require any Nominee or suspected
Nominee to provide such information and documentation as
the Corporation may reasonably require for such purpose.
(d) Rights may be exercised in whole or in part on any Business Day after the
Separation Time and prior to the Expiration Time by submitting to the
Rights Agent, at its principal office in Toronto, or any other office of
the Rights Agent designated for that purpose from time to time by the
Corporation:
(i) the Rights Certificate evidencing such Rights;
(ii) an election to exercise (an "Election to Exercise") substantial
--------------------
in the form attached to the Rights Certificate duly completed,
and executed in a manner acceptable to the Rights Agent; and
(iii) payment by certified cheque, banker's draft or money order
payable to the order of the Rights Agent, of a sum equal to the
Exercise Price multiplied by the number of Rights being
exercised and a sum sufficient to cover any transfer tax or
charge which may be payable in respect of any transfer involved
in the transfer or delivery of Rights Certificates or the
issuance or delivery of certificates for Common Shares in a name
other than that of the holder of the Rights being exercised.
(e) Upon receipt of a Rights Certificate, which is accompanied by an
appropriately completed and duly executed Election to Exercise (which
does not indicate that such Right is null and void as provided by
Subsection 3.1(b)) and payment as set forth in Subsection 2.2(d), the
Rights Agent (unless otherwise instructed by the Corporation) will
thereupon promptly:
(i) requisition from the transfer agent of the Common Shares
certificates representing the number of Common Shares to be
purchased (the Corporation hereby irrevocably authorizing its
transfer agent to comply with all such requisitions);
(ii) after receipt of such Common Share certificates, deliver such
certificates to, or to the order of, the registered holder of
such Rights Certificate, registered in such name or names as may
be designated by such holder,
(iii) when appropriate, requisition from the Corporation the amount of
cash, if any, to be paid in lieu of issuing fractional Common
Shares;
(iv) when appropriate, after receipt of such cash, deliver such
cash to, or to the order of, the
<PAGE>
-14-
registered holder of the Rights Certificate; and
(v) tender to the Corporation all payments received on exercise of
the Rights.
(f) If the holder of any Rights shall exercise less than all the Rights
evidenced by such holder's Rights Certificate, a new Rights Certificate
evidencing the Rights remaining unexercised subject to the Subsection
5.5(a) will be issued by the Rights Agent to such holder or to such
holder's duly authorized assigns.
(g) The Corporation shall:
(i) take all such action as may be necessary and within its power to
ensure that all Common Shares delivered upon the 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 reasonably be considered to be
necessary and within its power to comply with any applicable
requirements of the Canada Business Corporations Act or the
Securities Act, the U.S. Exchange Act, the United States
Securities Act of 1933, as amended, and comparable legislation of
each of the provinces and territories of Canada and states of the
United States of America, or the rules and regulations thereunder
or any other applicable law, rule or regulation, in connection
with the issuance and delivery of the Rights, the Rights
Certificates and the issuance of any Common Shares upon exercise
of the Rights;
(iii) use reasonable efforts to cause all Common Shares issued upon
exercise of the Rights to be listed on the stock exchanges on
which the Common Shares are listed at that time;
(iv) cause to be reserved and kept available out of its authorized and
unissued Common Shares, the number of Common Shares that, as
provided in this Agreement, will from time to time be sufficient
to permit the exercise in full of all outstanding Rights;
(v) pay when due and payable, if applicable, any and all federal,
provincial, state and municipal taxes (not in the nature of
income, capital gains or withholding taxes) and charges which may
be payable in respect of the original issuance or delivery of the
Rights Certificates or certificates for Common Shares issued upon
the exercise of Rights, provided that the Corporation shall not be
required to pay any transfer tax or charge which may be payable in
respect of any transfer of Rights or the issuance or delivery of
certificates for Common Shares issued upon the exercise of Rights,
in a name other than that of the holder of the Rights being
transferred or exercised; and
(vi) after the Separation Time, except as permitted by Section 5.1 or
Section 5.4 hereof, not take (or permit any corporation it controls
to take) any action if at the time such action is taken it is
reasonably foreseeable that such action will diminish substantially
or otherwise eliminate the benefits intended to be afforded by the
Rights.
2.3 Adjustments to Exercise Price; Number of Rights
(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 and
in Article 3.
(b) In the event that the Corporation shall at any time after the Record Time
and prior to the
<PAGE>
-15-
Expiration Time:
(i) declare or pay a dividend on the Common Shares payable in Voting
Shares or Convertible Securities in respect thereof other than
pursuant to any dividend reinvestment plan;
(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 Voting Shares (or Convertible Securities in respect
thereof) in respect of, in lieu of or in exchange for existing
Common Shares, whether in a reclassification, amalgamation,
statutory arrangement, consolidation or otherwise;
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 the exercise of Rights) shall be adjusted
as follows:
(A) If the Exercise Price and number of Rights outstanding are to be
adjusted:
1) the Exercise Price in effect after such
adjustment will be equal to the Exercise Price
in effect immediately prior to such adjustment
divided by the number of Common Shares (or other
securities of the Corporation) (the
"Expansion Factor") that a holder of one Common
-----------------
Share immediately prior to such dividend,
subdivision, change, combination or issuance
would hold thereafter as a result thereof; and
2) 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 allocated
among the Common Shares with respect to which the original
Rights were associated (if they remain outstanding) and
the securities of the Corporation issued in respect of
such dividend, subdivision, change, consolidation or
issuance, so that each such Common Share (or other
security of the Corporation) will have exactly one Right
associated with it.
(B) 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.
(c) Adjustments pursuant to Subsection 2.3(b) shall be made successively,
whenever an event referred to in Subsection 2.3(b) occurs.
(d) If an event occurs which would require an adjustment under both this
Section 2.3 and Section 3.1 hereof, 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 hereof.
<PAGE>
-16-
(e) In the event the Corporation shall at any time after the Record Time and
prior to the Separation Time issue any Common Shares otherwise than in a
transaction referred to in 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 Common Share.
(f) In the event the Corporation shall, at any time after the Record Time and
prior to the Expiration Time, fix a record date for the making of a
distribution to all holders of Common Shares of rights or warrants
entitling them (for a period expiring within 45 calendar days after such
record date) to subscribe for or purchase Common Shares (or Convertible
Securities in respect of Common Shares) at a price per Common Share (or, in
the case of such a Convertible Security, having a conversion, exchange or
exercise price per share (including the price required to be paid to
purchase such Convertible Security)) less than 90% of the Market Price per
Common Share on such record date, 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;
(i) 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 Securities so to be
offered (including the price required to be paid to purchase such
Convertible Securities)) would purchase at such Market Price per
Common Share; and
(ii) 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 Securities so to be offered are initially
convertible, exchangeable or exercisable).
In case such subscription price is satisfied, in whole or in part, by
consideration other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors. Such adjustment shall
be made successively whenever such a record date is fixed. To the extent
that such rights or warrants are not exercised prior to the expiration
thereof, the Exercise Price shall be readjusted in the manner contemplated
above based on the number of Common Shares (or securities convertible into
or exchangeable for Common Shares) actually issued on the exercise of such
rights or warrants.
For purposes of this Agreement, the granting of the right to purchase
Common Shares (whether from treasury or otherwise) pursuant to any dividend
or interest reinvestment plan or any share purchase plan providing for the
reinvestment of dividends or interest payable on securities of the
Corporation or the investment of periodic optional payments 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 by the Corporation) shall
not be deemed to constitute an issue of rights or warrants by the
Corporation; provided, however, that in the case of any dividend or
interest reinvestment or share purchase plan, the right to purchase Common
Shares is at a price per share of not less than 90% of the current Market
Price per share (determined as provided in such plans) of the Common
Shares.
(g) In the event the Corporation shall at any time after the Record Time and
prior to the Expiration Time fix a record date for the making of a
distribution to all holders of Common Shares of (i) evidences of
indebtedness or assets (other than a Regular Periodic Cash Dividend or a
dividend paid in Common Shares, but including any dividend payable in
securities other than Common Shares), (ii) rights or warrants entitling
them to subscribe for or purchase Voting Shares (or Convertible Securities
in respect of Voting Shares), at a price per Voting Share (or, in the case
of a Convertible Security in respect of Voting Shares, having a conversion,
exchange or exercise
<PAGE>
-17-
price per share (including the price required to be paid to purchase such
Convertible Security)) less than 90% of the Market Price per Common Share
on such record date (excluding rights or warrants referred to in Subsection
2.3(f)) or (iii) other securities of the Corporation, the Exercise Price in
effect after such record date shall be equal to the Exercise Price in
effect immediately prior to such record date less the fair market value (as
determined in good faith by the Board of Directors) of the portion of the
assets, evidences of indebtedness, rights or warrants or other securities
so to be distributed applicable to each of the securities purchasable upon
exercise of one Right. Such adjustment shall be made successively whenever
such a record date is fixed.
(h) Each adjustment made pursuant to Section 2.3 shall be made as of
(i) the payment or effective date for the applicable dividend,
subdivision, change, combination 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 Subsections 2.3(f) or 2.3(g)
above, subject to readjustment to reverse the same if such
distribution shall not be made.
(i) In the event the Corporation shall at any time after the Record Time and
prior to the Expiration Time issue any shares (other than Common Shares),
or rights or warrants to subscribe for or purchase any such shares, or
Convertible Securities in respect of any such shares, in a transaction
referred to in any of subclauses 2.3(b)(i) to (iv) above, if the Board of
Directors acting in good faith determines that the adjustments
contemplated by Subsections 2.3(b), 2.3(f) and 2.3(g) above in connection
with such transaction will not appropriately protect the interests of the
holders of Rights, the Board of Directors may from time to time, but
subject to obtaining the prior approval of the holders of the Rights
obtained as set forth in Subsection 5.4(b), determine what other
adjustments to the Exercise Price, number of Rights or securities
purchasable upon exercise of Rights would be appropriate and,
notwithstanding Subsections 2.3(b), 2.3(f) and 2.3(g) above, such
adjustments, rather than the adjustments contemplated by Subsections
2.3(b), 2.3(f) and 2.3(g) above, shall be made upon the Board of
Directors providing written certification thereof to the Rights Agent
pursuant to Subsection 2.3(q).
(j) 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(j))
are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All adjustments to the Exercise
Price made pursuant to this Section 2.3 shall be calculated to the
nearest cent.
(k) 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.
(l) Unless the Corporation shall have exercised its election, as provided in
Subsection 2.3(m), upon each adjustment of an Exercise Price as a result
of the calculations made in Subsections 2.3(f) and 2.3(g), 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:
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(i) multiplying (A) the number of Common Shares covered by a Right
immediately prior to such adjustment, by (B) the Exercise Price in
effect immediately prior to such adjustment; and
(ii) dividing the product so obtained by the Exercise Price in
effect immediately after such adjustment.
(m) 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 obtained by dividing the relevant Exercise
Price in effect immediately prior to adjustment of the relevant Exercise
Price by the relevant Exercise Price in effect immediately after
adjustment of the relevant Exercise Price. The Corporation shall make a
public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time,
the amount of the adjustment to be made. This record date may be the date
on which the relevant Exercise Price is adjusted or any day thereafter,
but, if the Rights Certificates have been issued, shall be at least 10
calendar days later than the date of the public announcement. If Rights
Certificates have been issued, upon each adjustment of the number of
Rights pursuant to this Subsection 2.3(m), the Corporation shall, as
promptly as practicable, cause to be distributed to holders of record of
Rights Certificates on such record date, Rights Certificates evidencing,
subject to Section 5.5, the additional Rights to which such holders shall
be entitled as a result of such adjustment, or, at the option of the
Corporation, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such
holders prior to the date of adjustment, and upon surrender thereof, if
required by the Corporation, new Rights Certificates evidencing all the
Rights to which such holders shall be entitled after such adjustment.
Rights Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein and may bear, at the
option of the Corporation, the relevant adjusted Exercise Price and shall
be registered in the names of holders of record of Rights Certificates on
the record date specified in the public announcement.
(n) In any case in which this Section 2.3 shall require that an adjustment
in an Exercise Price be made effective as of a record date for a
specified event, the Corporation may elect to defer until the
occurrence of such event the issuance to the holder of any Right
exercised after such record date of the number of Common Shares and
other securities of the Corporation, if any, issuable upon such
exercise over and above the number of Common Shares and other
securities of the Corporation, if any, issuable upon such exercise on
the basis of the relevant Exercise Price in effect prior to such
adjustment; provided, however, that the Corporation shall deliver to
such holder an appropriate instrument evidencing such holder's right
to receive such additional Common Shares (fractional or otherwise) or
other securities upon the occurrence of the event requiring such
adjustment.
(o) Notwithstanding anything in this Section 2.3 to the contrary, the
Corporation shall be entitled to make such adjustments in the Exercise
Price, in addition to those adjustments expressly required by this
Section 2.3, as and to the extent that in its good faith judgment the
Board of Directors shall determine to be advisable in order that any
(i) subdivision or consolidation of the Common Shares, (ii) issuance
wholly for cash of any Common Shares at less than the applicable
Market Price, (iii) issuance wholly for cash of any Common Shares or
securities that by their terms are exchangeable for or convertible
into or give a right to acquire Common Shares, (iv) stock dividends,
or (v) issuance of rights, options or warrants referred to in this
Section 2.3, hereafter made by the Corporation to
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holders of its Common Shares, shall not be taxable to such
shareholders.
(p) 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 represent the securities so
purchasable which were represented in the initial Rights Certificates
issued hereunder.
(q) Whenever an adjustment to the Exercise Price is made pursuant to this
Section 2.3, the Corporation shall
(i) promptly prepare a certificate setting forth such adjustment and a
brief statement of the facts accounting for such adjustment; and
(ii) promptly file with the Rights Agent and with each transfer agent
for the Common Shares a copy of such certificate and mail a brief
summary thereof to each holder of Rights who requests a copy.
Failure to file such certificate or to cause such notice to be given as
aforesaid, or any defect therein, shall not affect the validity of any
such adjustment or change.
2.4 Date on Which Exercise is Effective
Each Person in whose name any certificate for Common Shares is issued
upon the exercise of Rights shall for all purposes be deemed to have become the
holder of record of the Common Shares represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered (together with a duly completed
Election to Exercise) and payment of the Exercise Price for such Rights (and any
applicable transfer taxes and other govemmental charges payable by the
exercising Person 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
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 Chief Executive Officer, President, and by one of
its Chief Financial Officer, its Treasurer, its Secretary or its
Controller. The signature of any of these officers on the Rights
Certificates may be manual or facsimile. Rights Certificates bearing
the manual or facsimile signatures of individuals who were at any
time the proper officers of the Corporation shall bind the
Corporation, notwithstanding that such individuals or any of them
have ceased to hold such offices prior to the countersignature and
delivery of such Rights Certificates.
(b) Promptly following the Separation Time, the Corporation will notify
the Rights Agent of such Separation Time and will deliver Rights
Certificates executed by the Corporation to the Rights Agent for
countersignature and a statement describing the Rights, and the
Rights Agent shall countersign (manually or by facsimile signature
in a manner satisfactory to the Corporation) and deliver such Rights
Certificates and statement to the holders of the Rights pursuant to
Section 2.2 hereof. No Rights Certificate shall be valid for any
purpose until countersigned by the Rights Agent as aforesaid.
(c) Each Rights Certificate shall be dated the date of countersignature
thereof.
<PAGE>
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2.6 Registration, Transfer and Exchange
(a) After the Separation Time, the Corporation shall cause to be kept a
register (the "Rights Register") in which, subject to such
reasonable regulations as it may prescribe, the Corporation 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 and the Rights
Agent hereby accepts such appointment. In the event that the Rights
Agent shall cease to be the Rights Registrar, the Rights Agent will
have the right to examine the Rights Register at all reasonable
times.
(b) After the Separation Time and prior to the Expiration Time, upon
surrender for registration of transfer or exchange of any Rights
Certificate, and subject to the provisions of Subsections 2.6(d) and
3.1(b) below, the Corporation will execute, and the Rights Agent
will countersign, deliver and register, in the name of the holder or
the designated transferee or transferees, as required pursuant to
the holder's instructions, one or more new Rights Certificates
evidencing the same aggregate number of Rights as did the Rights
Certificates so surrendered.
(c) All Rights issued upon any registration of transfer or exchange
of Rights Certificates shall be 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.
(d) Every Rights Certificate surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Corporation or
the Rights Agent, as the case may be, duly executed by the holder
thereof or such holder's attorney duly authorized in writing. As a
condition to the issuance of any new Rights Certificate under this
Section 2.6, the Corporation may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the
fees and expenses of the Rights Agent) in connection therewith.
2.7 Mutilated, Lost, Stolen and Destroyed 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 reasonable
satisfaction of the destruction, loss or theft of any Rights
Certificate; and (ii) such security or indemnity as may be
reasonably required by them to save each of them and any of their
agents harmless, then, in the absence of notice to the Corporation
or the Rights Agent that such Rights Certificate has been acquired
by a bona fide purchaser, the Corporation shall execute and, upon
the Corporation's 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
<PAGE>
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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
The Corporation, the Rights Agent and any agent of the Corporation or
the Rights Agent may deem and treat the person in whose name a Rights
Certificate (or, prior to the Separation Time, the associated Common Share
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby for all purposes whatsoever. As used in this Agreement, unless
the context otherwise requires, the term "holder" of any Rights shall mean the
registered holder of such Rights (or, prior to the Separation Time, the
associated Common Shares).
2.9 Delivery and Cancellation of Certificates
All Rights Certificates surrendered upon exercise or for redemption,
for registration of transfer or for 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, subject to applicable law, 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:
(a) to be bound by and subject to the provisions of this Agreement, as
amended from time to time in accordance with the terms hereof, in respect
of all Rights held;
(b) that, prior to the Separation Time, each Right will be transferable only
together with, and will be transferred by a transfer of, the associated
Common Share;
(c) that, after the Separation Time, the Rights will be transferable only on
the Rights Register as provided herein;
(a) that, prior to due presentment of a Rights Certificate (or, prior
to the Separation Time, the associated Common Share certificate)
for registration of transfer, the Corporation, the Rights Agent
and any agent of the Corporation or the Rights Agent 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
<PAGE>
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the contrary;
(b) that such holder of Rights has waived its right to receive any
fractional Rights or any fractional Common Shares or other
securities upon exercise of a Right (except as provided herein);
(c) that, subject to the provisions of Section 5.4, without the
approval of any holder of Rights or Voting Shares and upon the
sole authority of the Board of Directors acting in good faith,
this Agreement may be supplemented or amended from time to time
as provided herein; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Corporation nor the Rights Agent shall have any
liability to any holder of a Right or any other Person as a
result of its inability to perform any of its obligations under
this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining
performance of such obligation.
ARTICLE 3
ADJUSTMENTS TO THE RIGHTS
3.1 Flip-in Event
(a) Subject to Sections 3.1(b) and 5.1, in the event that prior to
the Expiration Time a Flip-in Event occurs, each Right shall
thereafter constitute the right to purchase from the Corporation,
upon exercise thereof in accordance with the terms hereof, that
number of Common Shares of the Corporation as have an aggregate
Market Price on the date of consummation or occurrence of such
Flip-in Event equal to twice the Exercise Price for an amount in
cash equal to the Exercise Price (such right to be appropriately
adjusted in a manner analogous to the applicable adjustment
provided for in Section 2.3 in the event that, after such date of
consummation or occurrence, an event of a type analogous to any of
the events described in Section 2.3 shall have occurred with
respect to such Common Shares).
(b) Notwithstanding anything in this Agreement to the contrary, upon
the occurrence of any Flip-in Event, any Rights that are or were
Beneficially Owned on or after the earlier of the Separation Time
and the Stock Acquisition Date, or which may thereafter be
Beneficially Owned, by:
(i) an Acquiring Person (or any Affiliate or Associate of an
Acquiring Person or any other Person acting jointly or in
concert with an Acquiring Person or any Associate or
Affiliate of such other Person); or
(ii) a transferee of Rights, direct or indirect, 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 any associate or Affiliate
thereof) where such a transferee becomes a transferee
concurrently with or subsequent to the Acquiring Person
becoming such in a transfer that the Board of Directors has
determined is part of a plan, arrangement or scheme of an
Acquiring Person (or
<PAGE>
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of any Person acting jointly or in concert with an Acquiring
Person or any Associate or Affiliate of an Acquiring
Person), that has the purpose or effect of avoiding Clause
3.1(b)(i);
shall become null and void without any further action and any
holder of such Rights (including any transferee of, or other
successor entitled to, such Rights, whether directly or indirectly)
shall thereafter have no right to exercise such Rights under any
provisions of this Agreement and further shall thereafter not have
any 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 Subsection 3.1(b) and
such Rights shall become null and void.
(c) Any Rights Certificate that represents Rights Beneficially Owned by
a Person described in either of Clauses 3.1(b)(i) or 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 or will be deemed to contain the following
legend:
"The Rights represented by this Rights Certificate were issued
to a Person who was an Acquiring Person or an Affiliate or an
Associate of an Acquiring Person (as such terms are defined in
the Rights Agreement) or acting jointly or in concert with any
of them. This Rights Certificate and the Rights represented
hereby shall be void in the circumstances specified in
Subsection 3.1(b) of the Shareholder Rights Plan Agreement."
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 to
do so.
(d) After the Separation Time, the Corporation shall do all such acts
and things necessary and within its power to ensure compliance with
the provisions of this Section 3.1 including, without limitation,
all such acts and things as may be required to satisfy the
requirements of the Canada Business Corporations Act, the
Securities Act and the securities laws or comparable legislation in
each of the provinces of Canada and in any other jurisdiction where
the Corporation is subject to such laws and the rules of the stock
exchanges or quotation systems where the Common Shares are listed
or quoted at such time in respect of the issue of Common Shares
upon the exercise of Rights in accordance with this Agreement.
3.2 Fiduciary Duties of the Board of Directors of the Corporation
For clarification, it is understood that nothing contained in this
Article 3 shall be considered to affect the obligations of the Board of
Directors to exercise its fiduciary duties. Without limiting the generality of
the foregoing, nothing contained herein shall be construed to suggest or imply
that the Board of Directors shall not be entitled to recommend that holders of
the Voting Shares reject or accept any Take-over Bid or take any other action
including, without limitation, the commencement, prosecution, defense or
settlement of any litigation and the submission of additional or alternative
Take-over Bids or other proposals to the shareholders of the Corporation with
respect to any Takeover Bid or otherwise that the Board of Directors believes is
necessary or appropriate in the exercise of its fiduciary duties.
<PAGE>
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ARTICLE 4
THE RIGHTS AGENT
4.1 General
(a) The Corporation hereby appoints the Rights Agent to act as agent for the
Corporation and the holders of the Rights in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Corporation may from time to time appoint such co-rights
agents ("Co-Rights Agents") as it may deem necessary or desirable subject
to the prior written 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 written approval of the Rights Agent. The Corporation
agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on demand of
the Rights Agent, its reasonable expenses and other disbursements
reasonably incurred in the administration and execution of this Agreement
and the exercise and performance of its duties hereunder, including the
reasonable fees and disbursements of counsel and other experts consulted
by the Rights Agent pursuant to Subsection 4.3(a). The Corporation also
agrees to indemnify the Rights Agent, its officers, directors, employees
and agents for, and to hold it harmless against, any loss, liability,
cost, claim, action, damage, suit 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
legal costs and expenses, which right to indemnification will survive the
termination of this Agreement or the removal or resignation 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, aftidavit, 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.
4.2 Merger, Amalgamation, 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 filling of any
document or any further act on the part of any of the parties
hereto, provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of
Section 4.4 hereof. In case at the time such successor Rights Agent
succeeds to the agency created by this Agreement any of the Rights
Certificates have been countersigned but not delivered any such
successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights
Certificates have not been
<PAGE>
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countersigned, any successor Rights Agent may countersign such
Rights Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such
cases such Rights Certificates will have the full force provided in
the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent is changed and at such
time any of the Rights Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case
at that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates
either in its prior name or in its changed name; and in all such cases
such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
4.3 Duties of Rights Agent
The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the
Corporation and the holders of Rights Certificates, by their acceptance thereof,
shall be bound:
(a) The Rights Agent may retain and consult with legal counsel (who
may be legal counsel for the Corporation) or such other experts
that the Rights Agent considers necessary to carry out its duties
under this Agreement and the opinion of such counsel or other
expert will be full and complete authorization and protection to
the Rights Agent as to any action taken or omitted by it in good
faith and in accordance with such opinion; the Rights Agent may
also, with the approval of the Corporation (such approval not to
be unreasonably withheld), consult with such other experts as the
Rights Agent shall consider necessary or appropriate to properly
carry out the duties and obligations imposed under this Agreement
(at the expense of the Corporation) and the Rights Agent shall be
entitled to act and rely in good faith on the advice of any such
expert.
(b) Whenever in the performance of its duties under this Agreement the Rights
Agent deems it necessary or desirable that any fact or matter be proved
or established by the Corporation prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by a person believed by
the Rights Agent to be a senior officer of the Corporation and delivered
to the Rights Agent; and such certificate will be full authorization to
the Rights Agent for any action taken or suffered in good faith by it
under the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent will be liable hereunder only for its own negligence,
bad faith or wilful misconduct.
(d) The Rights Agent will not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the
certificates for Common Shares, or the Rights Certificates (except its
countersignature thereof) or be required to verify the same, and all such
statements and recitals are and will be deemed to have been made by the
Corporation only.
(a) 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
thereon) 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
<PAGE>
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any change in the exercisability of the Rights (including the Rights
becoming void pursuant to Subsection 3.1(b) hereof or any adjustment
required under the provisions of Section 2.3) hereof or responsible
for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights after
receipt of the certificate contemplated by Section 2.3 describing any
such adjustment or any written notice from the Corporation or any
holder that a Person has become an Acquiring Person); 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 any Common Shares, when issued,
being duly and validly authorized, issued and delivered as fully paid
and non-assessable.
(f) The Corporation agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept instructions
with respect to the performance of its duties hereunder from any person
designated in writing by the Corporation, and to apply to such
individuals for advice or instructions in connection with its duties, and
it shall not be liable for any action taken or suffered by it in good
faith in accordance with instructions of any such individual. It is
understood that instructions to the Rights Agent shall, except where
circumstances make it impractical or the Rights Agent otherwise agrees,
be given in writing and, where not in writing, such instructions shall be
confirmed in writing as soon as reasonably practicable after the giving
of such instructions.
(h) Subject to applicable law, the Rights Agent and any shareholder or
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 the Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Corporation or for any other legal
entity.
(i) The 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 by giving 60 days' prior written notice (or such lesser notice as
is acceptable to the Corporation) to the Corporation, to each transfer agent of
Common Shares and to the holders of the Rights, all in accordance with Section
5.9 and at the expense of the Corporation. The Corporation may remove the Rights
Agent by giving 30 days' prior written notice to the Rights Agent, to each
transfer agent of the Common Shares and to the holders of the Rights in
accordance with Section 5.9. If the Rights Agent should resign or be removed or
otherwise become incapable of acting, the Corporation will appoint a successor
to the Rights Agent. If the Corporation fails to make such appointment within a
period of 30 days after such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of any Rights (which holder shall, with such notice, submit such
holder's Rights Certificate
<PAGE>
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for inspection of the Corporation), then the holder of any Rights or the Rights
Agent may apply to any court of competent jurisdiction for the appointment of a
new Rights Agent at the Corporation's expense. Any successor Rights Agent,
whether appointed by the Corporation or by such a court, must be a corporation
incorporated under the laws of Canada or a province thereof and 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 outstanding fees and expenses then owing, shall deliver and
transfer to the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance, conveyance, act or
deed necessary for the purpose. Not later than the effective date of any such
appointment, the Corporation will file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Shares and mail a
notice thereof in writing to the holders of the Rights in accordance with
Section 5.9. 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, Waiver and Termination
(a) The Board of Directors acting in good faith may, at any time
prior to the later of the Stock Acquisition Date and the
Separation Time, elect to redeem all but not less than all of the
then outstanding Rights at a redemption price of $0.0001 per
Right appropriately adjusted in a manner analogous to the
applicable adjustments provided for in Section 2.3 in the event
that an event of the type analogous to any of the events
described in Section 2.3 shall have occurred (such redemption
price being herein referred to as the "Redemption Price").
(b) The Board of Directors shall waive the application of Section 3.1 in
respect of the occurrence of any Flip-in Event if the Board of Directors
has determined, following the Stock Acquisition Date and prior to the
Separation Time, that a Person became an Acquiring Person by inadvertence
and without any intention to become, or knowledge that it would become,
an Acquiring Person under this Agreement and, in the event that such a
waiver is granted by the Board of Directors, such Stock Acquisition Date
shall be deemed not to have occurred. Any such waiver pursuant to this
Subsection 5.1(b) may only be given on the condition that such Person,
within 10 days after the foregoing determination by the Board of
Directors or such later date as the Board of Directors may determine (the
"Disposition Date"), has reduced its Beneficial Ownership of Voting
Shares such that the Person is no longer an Acquiring Person. If the
Person remains an Acquiring Person at the Close of Business on the
Disposition Date, the Disposition Date shall be deemed to be the date of
occurrence of a further Stock Acquisition Date and Section 3.1 shall
apply thereto.
(c) In the event that a Person acquires Voting Shares pursuant to a Permitted
Bid or an Exempt Acquisition referred to in Subsection 5.l(d), then the
Board of Directors of the Corporation shall, immediately upon the
consummation of such acquisition and without further formality, be deemed
to have elected to redeem the Rights at the Redemption Price.
(d) The Board of Directors acting in good faith may, prior to the occurrence
of the relevant Flip-in Event, upon prior written notice delivered to the
Rights Agent, determine to waive the application of Section 3.1 to a
Flip-in Event that may occur by reason of a Take-over Bid made by means
of a Take-over Bid circular to all holders of record of Voting Shares
provided that if the Board of Directors waives the application of Section
3.1 in respect of a Take-over Bid pursuant to this
<PAGE>
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Subsection 5.1(d), the Board of Directors shall also be deemed to have
waived the application of Section 3.1 in respect of any other Take-over
Bid made by means of a 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 5.1(d).
(e) The Board of Directors may, prior to the Close of Business on the eighth
Business Day following a Stock Acquisition Date or such later Business
Day as they may from time to time determine, upon prior written notice
delivered to the Rights Agent, waive the application of Section 3.1 to
the related Flip-in Event, provided that the Acquiring Person has reduced
its Beneficial Ownership of Voting Shares (or has entered into a
contractual arrangement with the Corporation, acceptable to the Board of
Directors, to do so within 10 days of the date on which such contractual
arrangement is entered into or such later date as the Board of Directors
may determine) such that at the time the waiver becomes effective
pursuant to this Subsection 5.1(e) such Person is no longer an Acquiring
Person. In the event of such a waiver becoming effective prior to the
Separation Time, for the purposes of this Agreement, such Flip-in Event
shall be deemed not to have occurred.
(f) Where a Take-over Bid that is not a Permitted Bid Acquisition is
withdrawn or otherwise terminated after the Separation Time has occurred
and prior to the occurrence of a Flip-in Event, or if the Board of
Directors grants a waiver under Subsection 5.1(e) after the Separation
Time, the Board of Directors may elect to redeem all the outstanding
Rights at the Redemption Price. Upon the Rights being redeemed pursuant
to this Subsection 5.1(f), all the provisions of this Agreement shall
continue to apply as if the Separation Time had not occurred and Rights
Certificates representing the number of Rights held by each holder of
record of Common Shares at the Separation Time had not been mailed to
each such holder, for all purposes of this Agreement the Separation Time
shall be deemed not to have occurred and the Corporation shall be deemed
to have issued replacement Rights to the holders of its then outstanding
Common Shares.
(g) If the Board of Directors is deemed under Subsection 5.1(c) to have
elected or elects under Subsection 5.1(a) to redeem the Rights, the right
to exercise the Rights will thereupon, without further action and without
notice, terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price.
(h) Within 10 days after the Board of Directors is deemed under Subsection
5.1(c) to have elected or elects under Subsection 5.1(a) or (f) to redeem
the Rights, the Corporation shall give notice of redemption to the
holders of the then outstanding Rights by mailing such notice to each
such holder at his last address as it appears upon the registry books of
the Rights Agent or, prior to the Separation Time, on the registry books
of the transfer agent for the Voting Shares. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the
method by which the payment of the Redemption Price will be made.
5.2 Expiration
No person will have any rights pursuant to this Agreement or in
respect of any Right after the Expiration Time, except in respect of any right
to receive cash, securities or other property which has accrued at the
Expiration Time and except as specified in Subsections 4.1(a) and 4.1(b) hereof.
5.3 Issuance of New Rights Certificates
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Corporation may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change in the number or kind or class of
shares purchasable upon exercise of Rights made in accordance with the
provisions of this Agreement.
<PAGE>
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5.4 Supplements and Amendments
(a) Subject to Subsections 5.4(b) and (c) and this Subsection 5.4(a), the
Corporation may from time to time amend, vary or delete any of the
provisions of this Agreement and the Rights provided that no amendment,
variation or deletion made on or after the date of the meeting of
Shareholders at which the resolution referred to in Section 5.21 is to be
considered shall be made without the prior consent of the holders of the
Rights, given as provided in Subsection 5.4(b) below, except that
amendments, variations or deletions made for any of the following
purposes shall not require such prior approval but shall be subject to
subsequent ratification in accordance with Subsection 5.4(b):
(i) in order to make such changes as are necessary in
order to maintain the validity of this Agreement and the
Rights as a result of any change in any applicable
legislation, regulations or rules; or
(ii) in order to make such changes as are necessary in order to
cure any clerical or typographical error.
(b) Any amendment, variation or deletion made by the Board of Directors
pursuant to Subsection 5.4(a) shall:
(i) if made prior to the Separation Time, be submitted to the
shareholders of the Corporation at the next meeting of shareholders
and the shareholders may, by resolution passed by a majority of the
votes cast by Independent Shareholders who vote in respect of such
amendment, variation or deletion, confirm or reject such amendment
or supplement; or
(ii) if made after the Separation Time, be submitted to the holders of
Rights at a meeting to be held on a date not later than the date of
the next meeting of shareholders of the Corporation and the holders
of Rights may, by resolution passed by a majority of the votes cast
by the holders of Rights which have not become void pursuant to
Subsection 3.1(b) who vote in respect of such amendment, variation
or deletion, confirm or reject such amendment or supplement.
Any amendment, variation or deletion pursuant to Subsection 5.4(a) shall
be effective only when so consented to by the holders of Voting Shares or
Rights, as applicable (except in the case of an amendment, variation or
deletion referred to in any of Clauses 5.4(a)(i) or (ii), which shall be
effective from the date of the resolution of the Board of Directors
adopting such amendment, variation or deletion and shall continue in
effect until it ceases to be effective (as in this paragraph described)
and, where such amendment, variation or deletion is confirmed, it shall
continue in effect in the form so confirmed). If an amendment, variation
or deletion pursuant to Clause 5.4(a)(i) or (ii) is rejected by the
shareholders or the holders of Rights or is not submitted to the
shareholders or holders of Rights as required, then such amendment,
variation or deletion shall cease to be effective from and after the
termination of the meeting at which it was rejected or to which it should
have been but was not submitted or from and after the date of the meeting
of holders of Rights that should have been but was not held, and no
subsequent resolution of the Board of Directors to amend, vary or delete
any provision of this Agreement to substantially the same effect shall be
effective until confirmed by the shareholders or holders of Rights, as
the case may be.
(c) For greater certainty, (i) no amendment, variation or deletion to
the provisions of Article 4 shall be made except with the
concurrence of the Rights Agent thereto, and (ii) neither the
exercise by the Board of Directors of any power or discretion
conferred on it hereunder nor the making by the Board of Directors
of any determination or the granting
<PAGE>
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of any waiver it is permitted to make or give hereunder shall
constitute an amendment, variation or deletion of the provisions of
this Agreement or the Rights, for purposes of this Section 5.4 or
otherwise.
(d) The approval, confirmation or consent of the holders of Rights with
respect to any matter arising hereunder shall be deemed to have been
given if the action requiring such approval, confirmation or consent
is authorized by the affirmative votes of the holders of Rights
present or represented at and entitled to be voted at a meeting of
the holders of Rights and representing a majority of the votes cast
in respect thereof. For the purposes hereof, each outstanding Right
(other than Rights which are void pursuant to the provisions hereof
or which, prior to the Separation Time, are held otherwise than by
Independent Shareholders) shall be entitled to one vote, and the
procedures for the calling, holding and conduct of the meeting shall
be those, as nearly as may be, which are provided in the
Corporation's Bylaws and the Canada Business Corporations Act with
respect to meetings of shareholders of the Corporation.
(e) The Corporation shall be required to provide the Rights Agent with
notice in writing of any such amendment, variation or deletion to
this Agreement as referred to in this Section 5.4 within 5 days of
effecting such amendment, variation or deletion.
(f) Any supplement of amendment to this Agreement pursuant to
Subsections 5.4 (b) through (e) shall be subject to the receipt
of any requisite approval or consent from any governmental or
regulatory authority having jurisdiction over the Corporation,
including without limitation any requisite approval of stock
exchanges on which the Common Shares are listed.
5.5 Fractional Rights and Fractional Shares
(a) The Corporation will not be required to issue fractions of Rights or to
distribute Rights Certificates which evidence fractional Rights. After
the Separation Time there shall be paid, in lieu of such fractional
Rights, to the registered holders of the Rights Certificates with regard
to which fractional Rights would otherwise be issuable, an amount in cash
equal to the same fraction of the Market Price of a whole Right. The
Rights Agent shall have no obligation to make any payments in lieu of
fractional Rights unless the Corporation shall have provided the Rights
Agent with the necessary funds to pay in full all amounts payable in
accordance with Section 2.2(e).
(b) The Corporation shall not be required to issue fractional Common
Shares upon exercise of the Rights or to distribute certificates
that evidence fractional Common Shares. In lieu of issuing
fractional Common Shares, the Corporation shall pay to the
registered holder of Rights Certificates at the time such Rights
are exercised as herein provided, an amount in cash equal to the
same fraction of the Market Price of one Common Share at the date
of such exercise. The Rights Agent shall have no obligation to
make any payments in lieu of fractional Common Shares unless the
Corporation shall have provided the Rights Agent with the
necessary funds to pay in full all amounts payable in accordance
with Section 2.2(e).
5.6 Rights of Action
Subject to the terms of this Agreement, rights of action in respect of
this Agreement, other than rights of action vested solely in the Rights Agent,
are vested in the respective holders of the Rights; and any holder of any
Rights, without the consent of the Rights Agent or of the holder of any other
Rights may, on such holder's own behalf and for such holder's own benefit and
the benefit of other holders of Rights,
<PAGE>
-31-
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 this Agreement and in
such holder's Rights Certificate. Without limiting the foregoing or any remedies
available to the holders of Rights, it is specifically acknowledged that the
holders of Rights would not have an adequate remedy at law for any breach of
this Agreement and will be entitled to specific performance of the obligations
under, and injunctive relief against actual or threatened violations of, the
obligations of any Person subject to this Agreement.
5.7 Holder of Rights Not Deemed a Shareholder
No holder, as such, of any Rights or Rights Certificate shall be
entitled to vote, receive dividends or be deemed for any purpose the holder of
Common Shares or any other securities which may at any time be issuable on the
exercise of 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 5.8 hereof) or to receive dividends or subscription rights
or otherwise, until such Rights shall have been exercised in accordance with the
provisions hereof.
5.8 Notice of Proposed Actions
In case the Corporation proposes after the Separation Time and prior
to the Expiration Time 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 5.9 hereof, a notice of such proposed action,
which shall specify the date on which such liquidation, dissolution, or winding
up is to take place, and such notice shall be so given at least 20 Business Days
prior to the date of the taking of such proposed action by the Corporation.
5.9 Notices
Notices or demands authorized or required by this Agreement to be
given or made to or by the Rights Agent, the holder of any Rights or the
Corporation will be sufficiently given or made and shall be deemed to be
received if delivered or sent by first-class mail, postage prepaid, or by fax
machine or other means of printed telecommunication, charges prepaid and
confirmed in writing by mail or delivery, addressed (until another address is
filed in writing with the Rights Agent or the Corporation, as applicable), as
follows:
(a) if to the Corporation:
Corel Corporation
1600 Carling Avenue
Ottawa, Ontario
K1Z 8R7
Attention: Corporate Secretary
Facsimile No. (613) 725-2691
(b) if to the Rights Agent:
Montreal Trust Company of Canada
<PAGE>
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151 Front Street West
8/th/ Floor
Toronto, Ontario M5J 2N1
Attention: Senior Manager, Client Services
Facsimile No. (416) 981-9800
(c) if to the holder of any Rights, to the address of such holder
as it appears on the registry books of the Rights Agent or,
prior to the Separation Time, on the registry books of the
Corporation for the Common Shares.
5.10 Costs of Enforcement
The Corporation agrees that if the Corporation or any other Person the
securities of which are purchasable upon exercise of Rights fails to fulfil any
of its obligations pursuant to this Agreement, then the Corporation or such
Person will reimburse the holder of any Rights for the costs and expenses
(including legal fees) incurred by such holder in actions to enforce his rights
pursuant to any Rights or this Agreement.
5.11 Regulatory Approvals
Any obligation of the Corporation or action or event contemplated by
this Agreement, shall be subject to applicable law and to the receipt of any
requisite approval or consent from any governmental or regulatory authority.
Without limiting the generality of the foregoing, any issuance or delivery of
debt or equity securities (other than non- convertible debt securities) of the
Corporation upon the exercise of Rights and any amendment to this Agreement
shall be subject to any required prior consent of the stock exchange(s) on which
the Corporation is from time to time listed or has been listed during the six
months prior to such amendment.
5.12 Declaration as to Non-Canadian and Non-U.S. Holders
If in the opinion of the Board of Directors (who may rely upon the
advice of counsel), any action or event contemplated by this Agreement would
require compliance with the securities laws or comparable legislation of a
jurisdiction outside Canada and the United States of America, its territories
and possessions, the Board of Directors acting in good faith may take such
actions as it may deem appropriate to ensure that such compliance is not
required, including without limitation establishing procedures for the issuance
to a Canadian resident Fiduciary of Rights or securities issuable on exercise of
Rights, the holding thereof in trust for the Persons entitled thereto (but
reserving to the Fiduciary or to the judiciary and the Corporation, as the
Corporation may determine, absolute discretion with respect thereto) and the
sale thereof and remittance of the proceeds of such sale, if any, to the Persons
entitled thereto. In no event shall the Corporation or the Rights Agent be
required to issue or deliver Rights or securities issuable on exercise of Rights
to Persons who are citizens, residents or nationals of any jurisdiction other
than Canada and a province or territory thereof and the United States of America
and any state thereof in which such issue or delivery would be unlawful without
registration of the relevant Persons or securities for such purposes.
5.13 Successors
All the covenants and provisions of this Agreement by or for the
benefit of the Corporation or the Rights Agent shall bind and enure to the
benefit of their respective successors and assigns hereunder.
5.14 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
<PAGE>
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and the holders of the Rights.
5.15 Shareholder Review
At or prior to the first annual meeting of shareholders of the
Corporation following the third anniversary of the date of this Agreement,
provided that a Flip-in Event has not occurred prior to such time, the Board of
Directors shall submit a resolution ratifying the continued existence of this
Agreement to the Independent Shareholders for their consideration and, if
thought advisable, approval. Unless a majority of the votes cast by Independent
Shareholders who vote in respect of such resolution are voted in favour of the
continued existence of this Agreement, the Board of Directors shall, immediately
upon the confirmation by the chairman of such shareholders' meeting of the
result of the vote on such resolution and without further formality, be deemed
to have elected to redeem the Rights at the Redemption Price.
5.16 Determination and Actions by the Board of Directors
The Board of Directors shall have the authority to administer and,
subject to Section 5.4, amend this Agreement and to exercise all rights and
powers specifically granted to the Board or the Corporation hereunder or as may
be necessary or advisable in the administration of this Agreement.
All such actions, calculations, interpretations and determinations
(including all omissions with respect to the foregoing) which are done or made
by the Board of Directors, in good faith, (x) may be relied on by the Rights
Agent, and (y) shall not subject the Board of Directors to any liability to the
holders of the Rights or to any other parties.
5.17 Governing Law
This Agreement and the Rights issued hereunder shall be deemed to be a
contract made under the laws of the Province of Ontario and for all purposes
will be governed by and construed in accordance with the laws of such province
applicable to contracts to be made and performed entirely within such province.
5.18 Language
Les parties aux presentes ont exige que la presente convention ainsi
que tous les documents et avis qui s'y rattachent et ou qui en coulent soient
rediges en langue anglaise. The parties hereto have required that this Agreement
and all documents and notices related thereto and or resulting therefrom be
drawn up in English.
5.19 Counterparts
This Agreement may be executed in any number of counterparts and each
of such counterparts will for all purposes be deemed to be an original, and all
such counterparts shall together constitute one and the same instrument.
5.20 Severability
If any term or provision hereof or the application thereof to any
circumstance is, in any jurisdiction and to any extent, invalid or
unenforceable, such term or provision will be ineffective only 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.
<PAGE>
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5.21 Effective Date
This Agreement is effective as of the Effective Date. If the Rights
Plan is not confirmed by resolution passed by a majority of the votes cast by
Independent Shareholders who vote in respect of such Rights Plan at a meeting to
be held not later than August 11, 1999 then this Agreement and any outstanding
Rights shall be of no further force and effect from the earlier of (a) the date
of the meeting, and (b) August 11, 1999.
5.22 Time of the Essence
Time shall be of the essence hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed effective February 11, 1999.
COREL CORPORATION
By:____________________________________________
By:____________________________________________
MONTREAL TRUST COMPANY OF CANADA
By:____________________________________________
By:____________________________________________
<PAGE>
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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 RIGHTS PLAN AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES (SPECIFIED IN SUBSECTION 3. I (b) OF SUCH AGREEMENT), RIGHTS
BENEFICIALLY OWNED BY AN ACQUIRING PERSON, CERTAIN RELATED PARTIES OF AN
ACQUIRING PERSON OR A TRANSFEREE OF AN ACQUIRING PERSON OR ANY SUCH RELATED
PARTIES WILL BECOME VOID WITHOUT FURTHER ACTION.
Rights Certificate
This certifies that _______________________ is the registered holder of the
number of Rights set forth above, each of which entitles the registered holder
thereof, subject to the terms, provisions and conditions of the Shareholder
Rights Plan Agreement made as of February 11, 1999 (the "Rights Agreement")
between Corel Corporation, a corporation existing under the laws of Ontario (the
"Corporation") and Montreal Trust Company of Canada, a trust company
incorporated under the laws of Canada, as Rights Agent (the "Rights Agent"),
which term shall include any successor Rights Agent under the Rights Agreement,
to purchase from the Corporation, at any time after the Separation Time and
prior to the Expiration Time (as such terms are defined in the Rights
Agreement), one fully paid common share of the Corporation (a "Common Share") at
the Exercise Price referred to below, upon presentation and surrender of this
Rights Certificate, together with the Form of Election to Exercise appropriately
completed and duly executed, to the Rights Agent at its principal office in
Toronto. Until adjustment thereof in certain events as provided in the Rights
Agreement, the Exercise Price shall be $100.00 per Right (payable by certified
cheque, bankers draft or money order payable to the order of the Rights Agent).
The number of Common Shares which may be purchased for the Exercise Price is
subject to adjustment as set forth 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 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 holder of the Rights Certificates. Copies
of the Rights Agreement are on file at the registered office of the Corporation
and are available upon written request.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the principal office of the Rights Agent in Toronto, may be
exchanged for another Rights Certificate or Rights Certificates of like tenor
evidencing an aggregate number of Rights equal to the aggregate number of Rights
evidenced by the Rights Certificate or Rights Certificates surrendered. If this
Rights Certificate shall be exercised in part, the registered holder shall be
entitled to receive, upon surrender hereof, another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by this
Certificate may be redeemed by the Corporation at a redemption price of $0.0001
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.
<PAGE>
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No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Common Shares or
any other securities which may at any time be issuable upon the exercise hereof,
nor shall anything contained in the Rights Agreement or herein be construed to
confer upon the holder hereof, as such, any of the rights of a shareholder of
the Corporation or any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of any meeting or other
actions affecting shareholders (except as provided in the Rights Agreement), or
to receive dividends or subscription rights or otherwise, until the Rights
evidenced by this Rights Certificate shall have been exercised as provided in
the Rights Agreement.
This Rights Certificate shall not be valid for any purpose until it shall have
been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Corporation.
Date: ____________________
COREL CORPORATION
Per: ________________________________
Per: _________________________________
Countersigned:
MONTREAL TRUST COMPANY OF CANADA,
in the City of Toronto
Per: _________________________________
<PAGE>
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FORM OF ELECTION TO EXERCISE
The undersigned hereby irrevocably elects to exercise _________________ whole
Rights represented by this Rights Certificate to purchase the Common Shares
issuable upon the exercise of such Rights and requests that certificates for
such Common Shares be issued in the name of and delivered to:
__________________________________
Name
__________________________________
Address
__________________________________
City and Province
__________________________________
Social Insurance No. or other taxpayer identification number
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights shall be
registered in the name of and delivered to:
_________________________________
Name
_________________________________
Address
_________________________________
City and Province
_________________________________
Social Insurance No. or other taxpayer identification number
Date:________________________ _______________________________
Signature
Signature Guaranteed
(Signature must correspond to name as written
upon the face of this Rights Certificate in
every particular, without alteration or
enlargement or any change whatsoever)
Signature must be guaranteed by a Canadian chartered bank or trust company, a
member of a recognized stock exchange in Canada or a member of the Securities
Transfer Association Medallion (Stamp) Program.
(To be completed by the holder if true)
The undersigned hereby represents, for the benefit of the Corporation and all
holders of Rights and Common Shares, that the Rights evidenced by this Rights
Certificate are not and, to the knowledge of the undersigned, have never been,
Beneficially Owned by an Acquiring Person or by an Affiliate or Associate of an
Acquiring Person, any other Person acting jointly or in concert with an
Acquiring Person or any Affiliate or Associate of any such other Person (as such
terms are defined in the Rights Agreement).
<PAGE>
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_____________________________
Signature
NOTICE
In the event that the certifications set forth above in the Form of Election to
Exercise are not completed, the Corporation shall deem the Beneficial Owner of
the Rights represented by this Rights Certificate to be an Acquiring Person (as
defined in the Rights Agreement) and, accordingly, such Rights shall be null and
void.
<PAGE>
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FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
_______________________________________________________________________
(Please print name and address of transferee)
the Rights represented by this Rights Certificate, together with all right,
title and interest therein.
Date: _____________________________ ____________________________________
Signature
__________________________________
(Signature Guaranteed) (Signature must correspond to name as written
upon the face of this Rights Certificate in
every particular, without alteration or
enlargement or any change whatsoever)
Signature must be guaranteed by a Canadian chartered bank or trust company, a
member of a recognized stock exchange in Canada or a member of the Securities
Transfer Association Medallion (Stamp) Program.
(To be completed by the assignor if true)
The undersigned hereby represents, for the benefit of the Corporation and all
holders of Rights and Common Shares, that the Rights evidenced by this Rights
Certificate are not and, to the knowledge of the undersigned have never been,
Beneficially Owned by an Acquiring Person or by an Affiliate or Associate of an
Acquiring Person, any other Person acting jointly or in concert with an
Acquiring Person or any Affiliate or Associate of any such other Person (as such
terms are deemed in the Rights Agreement).
____________________________________
Signature
____________________________________
(Please print name below signature)
NOTICE
In the event that the certifications set forth above in the Form of Assignment
are not completed, the Corporation shall deem the Beneficial Owner of the Rights
represented by this Rights Certificate to be an Acquiring Person (as defined in
the Rights Agreement) and, accordingly, such Rights shall to be null and void.
