The Company has adopted a Shareholder Rights Plan ("Rights Plan").The objectives of the Rights Plan are to ensure, to the extentpossible, that all Shareholders are treated equally and fairly inconnection with any take-over bid or similar proposal to acquire commonshares of the Corporation.
Take-over bids may be structured insuch a way as to be coercive or discriminatory in effect, or may beinitiated at a time when it will be difficult for the board ofdirectors of the Corporation to prepare an adequate response. Suchoffers may result in shareholders receiving unequal or unfairtreatment, or not realizing the full or maximum value of theirinvestment in the Corporation.
The Rights Plan discourages themaking of any such offers by creating the potential of significantdilution to any offeror who does so. This potential is created throughthe issuance to all Shareholders of contingent rights to acquireadditional common shares of the Corporation at a significant discountto then prevailing market prices, which could, in certaincircumstances, become exercisable by all Shareholders other than anofferor and its associates, affiliates and joint actors.
Anofferor can avoid that potential by making an offer that either: (i)qualifies as a "Permitted Bid" under the Rights Plan, and thereforemeets certain specified conditions (including a minimum deposit periodof 90 days) which aim to ensure that all Shareholders are treatedfairly and equally; or (ii) does not qualify as a "Permitted Bid" butis negotiated with the Corporation and has been exempted by the boardof directors from the application of the Rights Plan in light of theopportunity to bargain for agreed terms and conditions to the offerthat are believed to be in the best interests of Shareholders.
Undercurrent Canadian securities laws, any party wishing to make a formaltake-over bid for the common shares of the Corporation will be requiredto leave the offer open for acceptance for at least 35 days. To qualifyas a "Permitted Bid" under the Rights Plan, however, a take-over bidmust remain open for acceptance for not less than 90 days. The board ofdirectors believes that the statutory minimum period of 35 days may beinsufficient for the directors to: (i) evaluate a take-over bid(particularly if the consideration consists, wholly or in part, ofshares of another issuer); (ii) explore, develop and pursue alternativetransactions that could better maximize shareholder value; and (iii)make reasoned recommendations to the Shareholders. The additional timeafforded under a "Permitted Bid" is intended to address these concernsby providing the board of directors with a greater opportunity toassess the merits of the offer and identify other possible suitors oralternative transactions, any by providing other bidders or proponentsof alternative transactions with time to come forward with competing,and potentially superior, proposals.
The Rights Plan is notbeing proposed in response to, or in anticipation of, any pending,threatened or proposed acquisition or take-over bid that is known tothe management of the Corporation. The adoption of the Rights Plan isalso not intended as a means to prevent a take-over of the Corporation,to secure the continuance of management or the directors in theirrespective offices, or to deter fair offers for the common shares ofthe Corporation.
The Rights Plan is subject to regulatory and shareholder approval.