"affected security"
means
(a) for a business
combination of an issuer, an equity
security of the issuer in which
the interest of a holder would be
terminated as a consequence of the
transaction, and
(b) for a related
party transaction of an issuer,
an equity security of the issuer;
"affiliated entity":
a person or company is considered
to be an affiliated entity of another
person or company if one is a subsidiary
entity of the other or if both are
subsidiary entities of the same person
or company;
"arm's length"
has the meaning ascribed to that term
in section 251 of the Income Tax
Act (Canada), or any successor
to that legislation, and, in addition
to that meaning, an entity is deemed
not to deal at arm's length with a
related party of the entity;
"associated entity",
where used to indicate a relationship
with an entity, has the meaning ascribed
to the term "associate"
in subsection 1(1) of the Act and
also includes any person of which
the entity beneficially owns voting
securities carrying more than 10 per
cent of the voting rights attached
to all outstanding voting securities
of the person;
"beneficially owns"
includes direct or indirect beneficial
ownership, and
(a) despite subsectionsubsections
1(5) and 1(6) of the Act, a
person or company is not deemed
to beneficially own securities that
are beneficially owned by its affiliated
entity, unless the affiliated entity
is also its subsidiary entity, and
(b) for the purposes
of the definitions of control block
holder and related party, section
90 of the Act applies in determining
beneficial ownership of securities;
"bona fide lender"
means a person or company that
(a) holds securities
sufficient to affect materially
the control of an issuer(i)
solely as collateral for a debt
under a written pledge
agreement entered into by the person
or company as a lender, or
(ii) solely as collateral acquired
under a written agreement by the
person or company as an assignee
or transferee of the debt and collateral
referred to in subparagraph (i),assignee,
transferee or participant,
(b) is not yet legally
entitled to dispose of the securities
for the purpose of applying proceeds
of realization in repayment of the
secured debt, and
(c) was not a related
party of the issuer at the time
the pledge agreement
referred to in subparagraph
(a)(i) or the assignment or transfer
referred to in subparagraph (a)(iiparagraph
(a) was entered into;
"business combination"
means, for an issuer, an amalgamation,
arrangement, consolidation, amendment
to the terms of a class of equity
securities or any other transaction
of the issuer, as a consequence of
which the interest of a holder of
an equity security of the issuer may
be terminated without the holder's
consent, regardless of whether the
equity security is replaced with another
security, but does not include
(a) an acquisition
of an equity security of the issuer
under a statutory right of compulsory
acquisition,
(b) a consolidation
of securities that does not have
the effect of terminating the interests
of holders of equity securities
of the issuer in those securities
without their consent, through the
elimination of post-consolidated
fractional interests or otherwise,
except to an extent that is nominal
in the circumstances,
(c) a termination
of a holder's interest in a security,
under the terms attached to the
security, for the purpose of enforcing
an ownership or voting constraint
that is necessary to enable the
issuer to comply with legislation,
lawfully engage in a particular
activity or have a specified level
of Canadian ownership,
(d) (c)
a downstream transaction for the
issuer, or
(e) (d)
a transaction in which no person
or company that is a related party
of the issuer at the time the transaction
is agreed to
(i) would, as a
consequence of the transaction,
directly or indirectly acquire
the issuer or the business of
the issuer, or combine with the
issuer, through an amalgamation,
arrangement or otherwise, whether
alone or with joint actors,
(ii) is a party
to any connected transaction to
the transaction, or
(iii) is entitled
to receive, directly or indirectly,
as a consequence of the transaction
(A) consideration
per equity security that
is not identical in amount and
form to the entitlement of the
general body of holders in Canada
of equity securities
of the same class,
(B) a collateral
benefit, or
(C) consideration
for securities of the issuer
if those securities are neither
equity securities nor employee
stock options, or{1}
(DC)
consideration for securities
of a class of equity securities
of the issuer if the issuer
has more than one outstanding
class of equity securities,
unless that consideration is
not greater than the entitlement
of the general body of holders
in Canada of every other class
of equity securities of the
issuer in relation to the voting
and financial participating
interests in the issuer represented
by the respective securities;
"class" includes
a series of a class;
"collateral benefit",
for a transaction of an issuer or
for a formal bid for securities of
an issuer, means any benefit that
a related party of the issuer is entitled
to receive, directly or indirectly,
as a consequence of the transaction
or bid, including, without
limitation, an increase in salary,
a lump sum payment, a payment for
surrendering stock optionssecurities,
or other enhancement in benefits related
to past or future employment
withservices as an employee
or director of the issuer or of
another entity, regardless of the
existence of any offsetting costs
to the related party or whether the
benefit is provided, or agreed to,
by the issuer or by,
another party to the transaction or
the offeror in the bid, but does
not include
(a) a payment or distribution
per equity security that
is identical in amount and form
to the entitlement of the general
body of holders in Canada of equity
securities of the same class,
(b) an enhancement
of employee benefits resulting from
participation by the related party
in a group plan, other than an incentive
plan, for employees of a successor
to the business of the issuer, if
the benefits provided by the group
plan are reasonably consistent
with customary industry practices
and are generally provided
to employees of the successor to
the business of the issuer who hold
positions of a similar nature to
the position held by the related
party, or
(c) a benefit, not
described in paragraph (b), that
is received solely in connection
with the past or future
employment of the related
party with's
services as an employee or director
of the issuer, an affiliated
entity of the issuer or a successor
to the business of the issuer, if
(i) the conferring
of the benefit is reasonably consistent
with customary industry practices,benefit
is not conferred for the purpose,
in whole or in part, of increasing
the value of the consideration
paid to the related party for
securities relinquished under
the transaction or bid,
(ii) the conferring
of the benefit is not, by its
terms, conditional on the
related party supporting the transaction
or bid in any manner,
(iii) full particulars
of the benefit are disclosed in
the disclosure document for the
transaction, or in the directors'
circular in the case of a take-over
bid, and
(iv)
related parties, and associated
entities of related parties, of
the issuer that are entitled to
receive benefits described in
this paragraph (c) do not,
(iv)
(A) at
the time the transaction is
agreed to, whether alone
or with joint actors,
or the bid is publicly announced,
the related party and its associated
entities beneficially own
or exercise control or direction
over, in the aggregate,
more less than
10one
per cent of the outstanding
securities of anyeach
class of equity securities of
the issuer, andor
(B) if
the transaction is a business
combination for the issuer or
a formal bid for securities
of the issuer,
(I) the related
party discloses to an independent
committee of the issuer the
amount of consideration that
the related party expects
it will be beneficially entitled
to receive, under the terms
of the transaction or bid,
in exchange for the equity
securities beneficially owned
by the related party,
(II) the
independent committee, acting
in good faith, determines
that the value of the benefit,
net of any offsetting costs
to the related party, is less
than five per cent of the
value referred to in subclause
(I), and
(iv)
full particulars of the benefits
described in this paragraph
(c) are
(III) the
independent committee's determination
is disclosed in anythe
disclosure document sent
to security holders of the
issuer in connection withfor
the transaction, or in
the directors' circular in
the case of a take-over bid;
"connected transactions"
means two or more transactions that
have at least one party in common,
directly or indirectly, and
(a) are negotiated
or completed at approximately the
same time, or
(b) the completion
of at least one of the transactions
is conditional on the completion
of each of the other transactions,
other than transactions
relatingrelated
solely to employment;services
as an employee or director;{2}
"control block
holder" of an entity means a
person or company, other than a bona
fide lender, that, whether alone or
with joint actors, beneficially owns
or exercises control or direction
over securities of the entity sufficient
to affect materially the control of
the entity, and in the absence of
evidence to the contrary, beneficial
ownership or control or direction
over voting securities to which are
attached more than 20 per cent of
the votes attached to all of the outstanding
voting securities of the entity is
considered sufficient to affect materially
the control of the entity;
"controlled":
for the purposes only of the definition
of "subsidiary entity",
an entity is considered to be controlled
by a person or company if
(a) in the case of
an entity that has directors
(i) the person or
company beneficially owns or exercises
control or direction over voting
securities of the entity carrying
more than 50 per cent of the votes
for the election of directors,
and
(ii) the votes carried
by the securities are
entitled, if exercised,entitle
the holder to elect a majority
of the directors of the entity,
(b) in the case of
a partnership or other entity that
does not have directors, other than
a limited partnership, the person
or company beneficially owns or
exercises control or direction over
more than 50 per cent of the voting
interests in the partnership or
other entity, or
(c) in the case of
an entity that is a limited partnership,
the person or company is the general
partner or controls the general
partner within the meaning of paragraph
(a) or (b);
"convertible"
means convertible into, exchangeable
for, or carrying the right to purchase
or cause the purchase of, another
security;
"director",
for an issuer that is a limited partnership,
includes a director of the general
partner of the issuer, except for
the purposes of the definition of
"controlled";
"disclosure document"
means
(a) for a take-over
bid{3}
(including an insider bid),
(i) a take-over
bid circular sent to holders of
offeree securities, or
(ii) if the insidertake-over
bid takes the form of a stock
exchange insidertake-over bid,
the disclosure document sent to
holders of offeree securities
that is deemed to be a take-over
bid circular under subsection
131(10) of the Act,
(b) for an issuer
bid,
(i) an issuer bid
circular sent to holders of offeree
securities, or
(ii) if the issuer
bid takes the form of a stock
exchange issuer bid, the disclosure
document sent to holders of offeree
securities that is deemed to be
an issuer bid circular under subsection
131(10) of the Act,
(c) for a business
combination, an information circular
sent to holders of affected securities,
or, if no information circular is
required, another document sent
to holders of affected securities
in connection with a meeting of
holders of affected securities,
and
(d) for a related
party transaction,
(i) an information
circular sent to holders of affected
securities,
(ii) if no information
circular is required, another
document sent to holders of affected
securities in connection with
a meeting of holders of affected
securities, or
(iii) if no information
circular or other document referred
to in subparagraph (ii) is required,
a material change report filed
for the transaction;
"downstream transaction"
means, for an issuer, a transaction
between the issuer and a related party
of the issuer if, at the time the
transaction is agreed to
(a) the issuer is
a control block holder of the related
party, and
(b) to the knowledge
of the issuer after reasonable inquiry,
no related party of the issuer,
other than a wholly-owned subsidiary
entity of the issuer, beneficially
owns or exercises control or direction
over, other than through its interest
in the issuer, more than five per
cent of any class of voting or equity
securities of the related party
that is a party to the transaction;
"entity" means
a person or company;
"equity security"
has the meaning ascribed to that term
in subsection 89(1) of the Act;
"fair market value"
means, except as provided in paragraph
6.4(2)(d), the monetary consideration
that, in an open and unrestricted
market, a prudent and informed buyer
would pay to a prudent and informed
seller, each acting at arm's length
with the other and under no compulsion
to act;
"formal bid"
has the meaning ascribed to that term
in subsection 89(1) of the Act;
"formal valuation"
means a valuation prepared in accordance
with Part 6;
"freely tradeable"
means, for securities, that
(a) the securities
are transferable,
(b) the securities
are not subject to any escrow requirements,
(c) the securities
do not form part of the holdings
of any person or company or combination
of persons or companies referred
to in paragraph (c) of the definition
of "distribution" in the
Act,
(d) the securities
are not subject to any cease trade
order imposed by a Canadian securities
regulatory authority,
(e) all hold periods
imposed by Canadian securities legislation
before the securities can be traded
without a prospectus or in reliance
on a prospectus exemption have expired,
and
(f) any period of
time imposed by Canadian securities
legislation for which the issuer
has to have been a reporting issuer
in a jurisdiction before the securities
can be traded without a prospectus
or in reliance on a prospectus exemption
has passed;
"incentive plan"
means an employeea
group plan that provides for stock
options or other equity incentives,
profit sharing, bonuses, or other
performance-based payments;
"income trust"
means a trust or other entity that
issues securities that entitle the
holders to net cash flows generated
by another entity;
"independent committee"
means, for an issuer, a committee
consisting exclusively of one or more
independent directors of the issuer;
"independent director"
means, for an issuer in respect of
a transaction, a director who is independent
as determined in section 7.1;
"independent valuator"
means, for a transaction, a valuator
that is independent of all interested
parties in the transaction, as determined
in section 6.1;
"insider bid"
means a take-over bid made by
(a) an issuer insider
of the offeree issuer,
(b) an associated
or affiliated entity of an issuer
insider of the offeree issuer,
(c) an associated
or affiliated entity of the offeree
issuer, or
(d) a person
or company described in paragraphs
(a), (b) or (c) at any time within
12 months preceding the commencement
of the bid, or
(de)
a joint actor with a person or company
referred to in paragraphs (a), (b)
or, (c);
or (d);
"interested party"
means
(a) for a take-over
bid{4}
(including an insider bid),
the offeror or a joint actor with
the offeror,
(b) for an issuer
bid
(i) the issuer,
and
(ii) any control
block holder of the issuer, or
any person or company that would
reasonably be expected to be a
control block holder of the issuer
upon successful completion of
the issuer bid,
(c) for a business
combination, a related party of
the issuer at the time the transaction
is agreed to, if the related party
(i) would, as a
consequence of the transaction,
directly or indirectly acquire
the issuer or the business of
the issuer, or combine with the
issuer, through an amalgamation,
arrangement or otherwise, whether
alone or with joint actors,
(ii) is a party
to any connected transaction to
the business combination, or
(iii) is entitled
to receive, directly or indirectly,
as a consequence of the transaction
(A) consideration
per affected security
that is not identical in amount
and form to the entitlement
of the general body of holders
in Canada of affected
securities of the same class,
(B) a collateral
benefit, or
(C) consideration
for securities of the issuer
if those securities are neither
equity securities nor employee
stock options, or
(C) (D)
consideration for securities
of a class of equity securities
of the issuer if the issuer
has more than one outstanding
class of equity securities,
unless that consideration is
not greater than the entitlement
of the general body of holders
in Canada of every other class
of equity securities of the
issuer in relation to the voting
and financial participating
interests in the issuer represented
by the respective securities,
and
(d) for a related
party transaction, a related party
of the issuer at the time the transaction
is agreed to, if the related party
(i) is a party to
the transaction, unless it is
a party only in its capacity as
a holder of affected securities
and is treated identically to
the general body of holders in
Canada of securities of the same
class on a per security basis,
or
(ii) is entitled
to receive, directly or indirectly,
as a consequence of the transaction
(A) a collateral
benefit, or
(B) a payment
or distribution made to one
or more holders of securities
of the issuer if those securities
are not equity securities, or(C)
a payment or distribution made
to one or more holders of
a class of equity securities
of the issuer if the issuer
has more than one outstanding
class of equity securities,
unless the amount of that payment
or distribution is not greater
than the entitlement of the
general body of holders in Canada
of every other class of equity
securities of the issuer in
relation to the voting and financial
participating interests in the
issuer represented by the respective
securities;
"issuer insider"
means, for an issuer
(a) every director
or senior officer of the issuer,
(b) every director
or senior officer of an entity that
is itself an issuer insider or subsidiary
entity of the issuer, and
(c) a person or company
that beneficially owns voting securities
of the issuer or that exercises
control or direction over voting
securities of the issuer, or a combination
of both, carrying more than 10 per
cent of the voting rights attached
to all voting securities of the
issuer for the time being outstanding,
other than voting securities beneficially
owned by the person or company as
an underwriter in the course of
a distribution;
"joint actors",
when used to describe the relationship
among two or more entities, means
persons or companies "acting
jointly or in concert" as defined
in section 91 of the Act, with necessary
modifications where the term is used
in the context of a transaction that
is not a take-over bid or issuer bid,
but a security holder is not considered
to be a joint actor with an offeror
making a formal bid, or with a person
or company involved in a business
combination or related party transaction,
solely because there is an agreement,
commitment or understanding that the
security holder will tender to the
bid or vote in favour of the transaction;
"liquid market"
means a market that meets the criteria
specified in section 1.2;
"market capitalization"
of an issuer means, for a transaction,
the aggregate market price of all
outstanding securities of all classes
of equity securities of the issuer,
the market price of the outstanding
securities of a class being
(a) in the case of
equity securities of a class for
which there is a published market,
the product of
(i) the number of
securities of the class outstanding
as of the close of business on
the last business day of the calendar
month preceding the calendar month
in which the transaction is agreed
to or, if no securities of the
class were outstanding on that
day, on the first business day
after that day that securities
of the class became outstanding,
so long as that day precedes the
date the transaction is agreed
to, and
(ii) the market
price of the securities at the
time referred to in subparagraph
(i), on the published market on
which the class of securities
is principally traded, as determined
in accordance with subsections
183(1), (2) and (4) of the Regulation,
(b) in the case of
equity securities of a class for
which there is no published market
but that are currently convertible
into a class of equity securities
for which there is a published market,
the product of
(i) the number of
equity securities into which the
convertible securities were convertible
as of the close of business on
the last business day of the calendar
month preceding the calendar month
in which the transaction is agreed
to or, if no convertible securities
were outstanding or convertible
on that day, on the first business
day after that day that the convertible
securities became outstanding
or convertible, so long as that
day precedes the date the transaction
is agreed to, and
(ii) the market
price of the securities into which
the convertible securities were
convertible, at the time referred
to in subparagraph (i), on the
published market on which the
class of securities is principally
traded, as determined in accordance
with subsections 183(1), (2) and
(4) of the Regulation, and
(c) in the case of
equity securities of a class not
referred to in paragraphs (a) or
(b), the amount determined by the
issuer's board of directors in good
faith to represent the fair market
value of the outstanding securities
of that class;
"minority approval"
means, for a business combination
or related party transaction of an
issuer, approval of the proposed transaction
by a majority of the votes as specified
in Part 8, cast by holders of each
class of affected securities at a
meeting of security holders of that
class called to consider the transaction;
"OBCA" means
the Business Corporations Act;
"offeree security"
means a security that is subject to
a take-over bid or issuer bid;
"offeror"
has the meaning ascribed to that term
in subsection 89(1) of the Act;
"prior valuation"
means a valuation or appraisal of
an issuer or its securities or material
assets, whether or not prepared by
an independent valuator, that, if
disclosed, would reasonably be expected
to affect the decision of a security
holder to vote for or against a transaction,
or to retain or dispose of affected
securities or offeree securities,
other than
(a) a report of a
valuation or appraisal prepared
by an entity other than the issuer,
if
(i) the report was
not solicited by the issuer, and
(ii) the entity
preparing the report did so without
knowledge of any material information
concerning the issuer, its securities
or any of its material assets,
that had not been generally disclosed
at the time the report was prepared,
(b) an internal valuation
or appraisal prepared for the issuer
in the ordinary course of business
that has not been made available
to, and has been prepared without
the participation of
(i) the board of
directors of the issuer, or
(ii) any director
or senior officer of an interested
party, except a senior officer
of the issuer in the case of an
issuer bid,
(c) a report of a
market analyst or financial analyst
that
(i) has been prepared
by or for and at the expense of
an entity other than the issuer,
an interested party, or an associated
or affiliated entity of the issuer
or an interested party, and
(ii) is either generally
available to clients of the analyst
or of the analyst's employer or
of an associated or affiliated
entity of the analyst's employer
or, if not, is not based, so far
as the entity required to disclose
a prior valuation is aware, on
any material information concerning
the issuer, its securities or
any of its material assets, that
had not been generally disclosed
at the time the report was prepared,
(d) a valuation or
appraisal prepared by an entity
or a person or company retained
by the entity, for the purpose of
assisting the entity in determining
the price at which to propose a
transaction that resulted in the
entity becoming an issuer insider,
if the valuation or appraisal is
not made available to any of the
independent directors of the issuer,
or
(e) a valuation or
appraisal prepared by an interested
party or an entity retained by the
interested party, for the purpose
of assisting the interested party
in determining the price at which
to propose a transaction that, if
pursued, would be an insider bid,
business combination or related
party transaction, if the valuation
or appraisal is not made available
to any of the independent directors
of the issuer;
"related party"
of an entity means a person or company
that, at the relevant time and after
reasonable inquiry, is known by the
entity or a director or senior officer
of the entity to be
(a) a control block
holder of the entity,
(b) a person or company
of which a person or company referred
to in paragraph (a) is a control
block holder,
(c) a person or company
of which the entity is a control
block holder,
(d) a person or company
that beneficially owns or exercises
control or direction over voting
securities of the entity carrying
more than 10 per cent of the voting
rights attached to all of the outstanding
voting securities of the entity,
(e) a director or
senior officer of
(i) the entity,
or
(ii) a person or
company described in any other
paragraph of this definition,
(f) a person or company
that manages or directs, to any
substantial degree, the affairs
or operations of the entity under
an agreement, arrangement or understanding
between the person or company and
the entity, including the general
partner of an entity that is a limited
partnership, but excluding a person
or company appointedacting
under bankruptcy or insolvency law,
(g) a person or company
of which persons or companies described
in any paragraph of this definition
beneficially own, in the aggregate,
more than 50 per cent of the securities
of any outstanding class of equity
securities, or
(h) an affiliated
entity of any person or company
described in any other paragraph
of this definition;
"related party
transaction" means, for an issuer,
a transaction between the issuer and
a person or company that is a related
party of the issuer at the time the
transaction is agreed to, whether
or not there are also other parties
to the transaction, as a consequence
of which, either through the transaction
itself or together with connected
transactions, the issuer directly
or indirectly
(a) purchases or acquires
an asset from the related party
for valuable consideration,
(b) purchases or acquires,
as a joint actor with the related
party, an asset from a third party
if the proportion of the asset acquired
by the issuer is less than the proportion
of the consideration paid by the
issuer,
(c) sells, transfers
or disposes of an asset to the related
party,
(d) sells, transfers
or disposes of, as a joint actor
with the related party, an asset
to a third party if the proportion
of the consideration received by
the issuer is less than the proportion
of the asset sold, transferred or
disposed of by the issuer,
(e) leases property
to or from the related party,
(f) acquires the related
party, or combines with the related
party, through an amalgamation,
arrangement or otherwise, whether
alone or with joint actors,
(g) issues a security
to the related party or subscribes
for a security of the related party,
(h) amends the terms
of a security of the issuer if the
security is beneficially owned,
or is one over which control or
direction is exercised, by the related
party, or agrees to the amendment
of the terms of a security of the
related party if the security is
beneficially owned by the issuer
or is one over which the issuer
exercises control or direction,
(i) assumes or otherwise
becomes subject to a liability of
the related party,
(j) borrows money
from or lends money to the related
party, or createsenters
into a credit facility with
the related party,
(k) releases, cancels
or forgives a debt or liability
owed by the related party,
(l) materially amends
the terms of an outstanding debt
or liability owed by or to the related
party, or the terms of an outstanding
credit facility with the related
party, or
(m) provides a guarantee
or collateral security for a debt
or liability of the related party,
or materially amends the terms of
the guarantee or security;
"senior officer",
for an issuer that is a limited partnership,
includes a senior officer of the general
partner of the issuer;
"stock exchange
insider bid" means an insider
bid described in subclause (b)(i)
of the definition of "formal
bid" in subsection 89(1) of the
Act;
"stock exchange
issuer bid" means an issuer bid
described in subclause (b)(i) of the
definition of "formal bid"
in subsection 89(1) of the Act;
"subsidiary entity":
a person or company is considered
to be a subsidiary entity of another
person or company if
(a) it is controlled
by
(i) that other,
(ii) that other
and one or more persons or companies,
each of which is controlled by
that other, or
(iii) two or more
persons or companies, each of
which is controlled by that other,
or
(b) it is a subsidiary
entity of a person or company that
is that other's subsidiary entity;
and
"wholly-owned subsidiary
entity": a person or company
is considered to be a wholly-owned
subsidiary entity of an issuer if
the issuer owns, directly or indirectly,
all the voting and equity securities
and securities convertible into voting
and equity securities of the person
or company.
