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  Exhibit 10.15    
    

 
  AMENDMENT NO. 1 TO VOTING AND RIGHT OF FIRST REFUSAL AGREEMENT    
    

        THIS AMENDMENT NO. 1 TO THE VOTING AND RIGHT OF FIRST REFUSAL AGREEMENT (this
"Amendment"), dated as of July 29, 2009, is made by and among Liberty Entertainment, Inc., a Delaware corporation
("Splitco"), The DIRECTV Group, Inc., a Delaware corporation ("DIRECTV"), DIRECTV, a Delaware
corporation formed as a direct, wholly-owned Subsidiary of DIRECTV ("Holdings"), Dr. John C. Malone
("Dr. Malone"), Mrs. Leslie Malone, The Tracy L. Neal Trust A (the "Tracy Trust") and The
Evan D. Malone Trust A (the "Evan Trust," and together with Dr. Malone, Mrs. Malone and the Tracy Trust, collectively, the
"Malones" and each a "Malone"). 

 
 

RECITALS    
    

        A.    Splitco,
DIRECTV, Holdings and each Malone entered into that certain Voting and Right of First Refusal Agreement, dated as of May 3, 2009 (the
"Malone Agreement"). 

        B.    Splitco,
Holdings and each Malone now intend to amend certain provisions of the Malone Agreement as set forth herein. 

        C.    Section 13(j)
of the Malone Agreement requires that prior to the Merger Effective Time, any amendment to the Malone Agreement be by written agreement of
(i) Holdings, (ii) Members holding a majority of the Member Shares, and (iii) Splitco. 

        NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of Splitco,
Holdings and each Malone hereby agrees as follows: 

        SECTION 1.    Defined Terms.    Terms defined in the Malone
Agreement are used in this Amendment with the same meaning, unless otherwise indicated. 

        SECTION 2.    Amendments to Malone Agreement.    The Malone
Agreement is hereby amended as follows: 

        2.1   The
definition of "Acquire" in Section 1 of the Malone Agreement is hereby amended by deleting such definition and replacing it in its entirety to read as
follows: 

        ""Acquire" means to purchase or otherwise acquire, or enter into any agreement with respect to the purchase or acquisition of any
security, including any Constructive Acquisition that is treated as an acquisition of beneficial ownership for federal income tax purposes." 

        2.2   The
definition of "Acquisition" in Section 1 of the Malone Agreement is hereby amended by deleting such definition and replacing it in its entirety to read as
follows: 

        ""Acquisition" means a purchase or other acquisition, or entering into any agreement with respect to the purchase or acquisition of any
security, including any Constructive Acquisition that is treated as an acquisition of beneficial ownership for federal income tax purposes." 

        2.3   The
definition of "Exchange Time" in Section 1 of the Malone Agreement is hereby amended by deleting such definition and replacing it in its entirety to read as
follows: 

        ""Exchange Time" means the time following the Split-Off Effective Time and immediately preceding the DIRECTV Effective Time
provided that all conditions set forth in Article VII of the Merger Agreement have been satisfied or waived (other than those conditions that by their nature may only be satisfied at the
Closing), and the parties to the Merger Agreement are obligated to complete the Closing." 

 

        2.4   The
definition of "Exempt Transfer" in Section 1 of the Malone Agreement is hereby amended by deleting clause (vii) thereof and replacing it in its
entirety to read as follows: 

        "(vii)
to a Related Party of a Malone;" 

        2.5   The
definition of "Malone Holdings Shares" in Section 1 of the Malone Agreement is hereby amended by deleting such definition and replacing it in its entirety to
read as follows: 

        ""Malone Holdings Shares" means, that number of shares of outstanding Holdings Class B Common Stock equal to the aggregate number
of shares of Splitco Series B Common Stock owned of record by the Members at the Exchange Time multiplied by the Splitco Exchange Ratio." 

        2.6   Section 7(b)(iii)
of the Malone Agreement is hereby amended by deleting the first sentence thereof and replacing it in its entirety to read as follows: 

        "Prior
to termination of this Agreement in accordance with Section 12, no voluntary transfers of Member Shares may be made by a Member, except to Holdings pursuant to the
Redemption Right, during the period commencing on the first day of the Redemption Period and ending on (x) the date Holdings actually purchases Member Shares pursuant to the Redemption Right or
(y) if earlier, the date Holdings is required to purchase Member Shares pursuant to the Redemption Right and fails to so purchase such Member Shares notwithstanding the applicable Member's
compliance with its obligations under Section 4.11 of the Holdings Charter; provided, that, prior to the date that the Member makes (or is deemed
to have made) an election pursuant to Section 4.11(a)(iv) of the Holdings Charter, such Member may transfer, to the extent allowed under Section 4 hereof, Member Shares to any transferee
if
the Class B Automatic Conversion (as defined in the Holdings Charter) is triggered as a result of such transfer." 

        2.7   Sections 9(a)
and (b) of the Malone Agreement are hereby deleted and replaced in their entirety to read as follows: 

        "(a)    Exchange.    At the Exchange Time, (i) each Member shall assign, transfer, convey and deliver to
Holdings and Holdings shall accept and acquire from such Member, all outstanding shares of Splitco Series B Common Stock owned of record by him, her or it (free and clear of all Liens, other
than Liens created by this Agreement and any Permitted Pledge (subject to the last sentence of this paragraph)), and (ii) Holdings shall issue and deliver to the Members, and the Members shall
accept and acquire from Holdings, in the aggregate, the Malone Holdings Shares (free and clear of all Liens, other than any Liens created by such Member (collectively, the
"Exchange"). The Members shall cause any Permitted Pledge on the shares of Splitco Series B Common Stock Beneficially Owned by them to be
released concurrent with the Exchange Time (it being understood that such Permitted Pledge shall thereupon encumber the Member Shares received in exchange therefor in the Exchange). 

        (b)    Exchange of Certificates.    To effect the Exchange at the Exchange Time, the exchange of certificates (or
evidence of shares in book-entry form) representing the shares of Splitco Series B Common Stock Beneficially Owned by the Members for certificates (or evidence of shares in
book-entry form) representing the Malone Holdings Shares, and the related actions thereto, shall be completed by the Exchange Agent (as if at the Merger Effective Time) pursuant to the
procedures set forth in Section 2.2 of the Merger Agreement." 

2

 

        2.8   Section 10(b)
of the Malone Agreement is hereby deleted and replaced in its entirety to read as follows: 

        "(b)    Malone Certificate and S-4 Malone Certificate.    (i) The parties acknowledge that it is a
condition to DIRECTV's obligation to consummate the Mergers that Dr. Malone has delivered to DIRECTV the certificate (the "Malone Certificate")
specified in Section 7.2(g) of the Merger Agreement. DIRECTV, Splitco and Holdings acknowledge that Dr. Malone is under no obligation, express or implied, to deliver the Malone
Certificate (regardless of whether the S-4 Malone Certificate (as defined below) is delivered in accordance with clause (ii) below) if the statements therein are not believed by him
in good faith to be true as of such time or to take any action or refrain from taking any action prior to the Closing to the extent necessary to make the representations specified therein true and
correct as of the Closing Date, and that Dr. Malone shall not have personal liability to DIRECTV, Splitco or Holdings if he fails to deliver the Malone Certificate.
DIRECTV, Splitco and Holdings acknowledge and agree that the representations contained in the Malone Certificate, if delivered, do not survive the Closing of the Mergers. 

         (ii)  In
addition, the parties acknowledge that in connection with the filing with the Securities and Exchange Commission of the executed tax opinion of Weil Gotshal &
Manges LLP (the date of such opinion, the "Opinion Date") as an exhibit to the Holdings Form S-4 (as defined in the Merger
Agreement), DIRECTV has requested that Dr. Malone deliver to Holdings a certificate, dated as of the Opinion Date, substantially in the form attached hereto as Exhibit A (the
"S-4 Malone Certificate"). DIRECTV, Splitco and Holdings acknowledge that Dr. Malone is under no obligation, express or implied, to
deliver the S-4 Malone Certificate if the statements therein are not believed by him in good faith to be true as of such time or to take any action or refrain from taking any action prior
to the Opinion Date to the extent necessary to make the representations specified therein true and correct as of the Opinion Date, and that Dr. Malone shall not have personal liability to
DIRECTV, Splitco or Holdings if he fails to deliver the S-4 Malone Certificate. DIRECTV, Splitco and Holdings further acknowledge and agree that (A) the representations contained in
the S-4 Malone Certificate, if delivered, do not survive the Opinion Date and (B) in no event will they seek damages or other remedies against Dr. Malone in the event
DIRECTV, Splitco or Holdings is subjected to any claims, demands, legal proceedings, damages or expenses based upon an allegation or determination that any securities filings of DIRECTV, Splitco or
Holdings contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading because any
statement in the S-4 Malone Certificate is alleged, or is ultimately determined to be, untrue, incomplete or misleading in any respect." 

        2.9   Section 12
of the Malone Agreement is hereby amended by deleting the second sentence thereof and replacing it in its entirety to read as follows: 

        "Following
the Merger Effective Time, this Agreement shall terminate automatically, without further action of the parties hereto, (i) with respect to a Member upon the first to
occur of the following: (w) all Member Shares held by such Member having been purchased by Holdings pursuant to the Redemption Right, (x) after electing to purchase the Member Shares
held by such Member pursuant to the Redemption Right, Holdings fails to complete the purchase of all such Member Shares by the Close of Business on the 5th business day following notice from
the applicable Member that Holdings failed to complete the purchase of all such Member Shares within the time period required by Section 4.11 of the Holdings Charter notwithstanding the
applicable Member's 

3

 

compliance
with its obligations under Section 4.11 of the Holdings Charter, (y) all of the Member Shares held by such Member having been Transferred in compliance with this Agreement, or
(z) the Redemption Right ceases to apply to the Member Shares held by such Member, and (ii) with respect to all Members upon the first to occur of (x) the date the Redemption
Right expires unexercised as to all Member Shares, or (y) upon the completion of a Change of Control; provided, however, that in the case of
clause (i) or clause (ii)(x), and absent the earlier termination of this Agreement in accordance with the first sentence of this Section 12, in no event shall Section 4
terminate prior to the day following the first anniversary of the Split-Off Effective Time." 

        SECTION 3.    Effect on Malone Agreement.    Other than as
specifically set forth herein, all other terms and provisions of the Malone Agreement shall remain unaffected by the terms of this Amendment, and shall continue in full force and effect. 

        SECTION 4.    Severability.    If any term or other provision
of this Amendment is determined by a court of competent jurisdiction to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other terms, provisions and
conditions of this Amendment shall nevertheless remain in full force and effect. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Amendment so as to effect the original intent of the parties as closely as possible to the fullest extent permitted by applicable law in an
acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible. 

        SECTION 5.    Captions.    The captions herein are included for
convenience of reference only and will be ignored in the construction or interpretation hereof. 

        SECTION 6.    Counterparts.    This Amendment may be executed
in counterparts (each of which shall be deemed to be an original but all of which taken together shall constitute one and the same agreement) and shall become effective when one or more counterparts
have been signed by each of the parties and delivered to the other parties. 

        SECTION 7.    Successors and Assigns.    This Amendment shall
be binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their respective successors and permitted assigns, including, in the case of any Malone, any trustee, executor,
heir, legatee or personal representative succeeding to the ownership of the Malone Liberty Shares, Malone Splitco Shares and Member Shares (and any other Malone Holdings Shares) (including upon the
death, disability or incapacity of any Malone). 

        SECTION 8.    Governing Law.    This amendment shall be
governed by and construed in accordance with the laws of the state of Delaware. 

        SECTION 9.    Jurisdiction.    All actions and proceedings
arising out of or relating to this Amendment shall be heard and determined in the Court of Chancery of the State of Delaware, or, if the Court of Chancery lacks subject matter jurisdiction, in any
federal court sitting in the State of Delaware, and the parties hereto hereby irrevocably submit to the exclusive jurisdiction of such courts (and, in the case of appeals, appropriate appellate courts
there from) in any such action or proceeding and irrevocably waive the defense of an inconvenient forum to the maintenance of any such action or proceeding. The consents to jurisdiction set forth in
this paragraph shall not constitute general consents to service of process in the State of Delaware and shall have no effect for any purpose except as provided in this paragraph and shall not be
deemed to confer rights on any Person other than the parties hereto. The parties hereto agree that a final judgment in any such action or proceeding shall be conclusive and may
be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Law. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AMENDMENT. 

[remainder
of page intentionally left blank] 

4

        IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of the date first above written. 

							
	 	 	LIBERTY ENTERTAINMENT, INC.
	

 	
 	
By:	
 	
/s/ CHARLES Y. TANABE

 
	 	 	 	 	Name:	 	Charles Y. Tanabe
	 	 	 	 	Title:	 	Executive Vice President
	

 	
 	
DIRECTV
	

 	
 	
By:	
 	
/s/ LARRY D. HUNTER

 
	 	 	 	 	Name:	 	Larry D. Hunter
	 	 	 	 	Title:	 	President and Chief Executive Officer
	

 	
 	
/s/ DR. JOHN C. MALONE

  Dr. John C. Malone, individually
	

 	
 	
/s/ MRS. LESLIE MALONE

  Mrs. Leslie Malone, individually
	

 	
 	
THE TRACY L. NEAL TRUST A
	

 	
 	
By:	
 	
/s/ DAVID THOMAS

 
	 	 	 	 	Name:	 	David Thomas
	 	 	 	 	Title:	 	Trustee
	

 	
 	
THE EVAN D. MALONE TRUST A
	

 	
 	
By:	
 	
/s/ DAVID THOMAS

 
	 	 	 	 	Name:	 	David Thomas
	 	 	 	 	Title:	 	Trustee
	

 	
 	
THE DIRECTV GROUP, INC.
	

 	
 	
By:	
 	
/s/ LARRY D. HUNTER

 
	 	 	 	 	Name:	 	Larry D. Hunter
	 	 	 	 	Title:	 	President and Chief Executive Officer

EXHIBIT
A 

S-4
MALONE CERTIFICATE 

        In
connection with (i) the Registration Statement on Form S-4 filed by DIRECTV ("Holdings") with the Securities
and Exchange Commission on June 8, 2009 (as amended through the date hereof, the "Registration Statement") relating to the transactions
contemplated by the Agreement and Plan of Merger, dated as of May 3, 2009, by and among Liberty Media Corporation ("LMC"), Liberty
Entertainment, Inc. ("LEI"), The DIRECTV Group, Inc. ("DIRECTV"), Holdings, DTVG
One, Inc. and DTVG Two, Inc. (as amended on July 29, 2009, the "Merger Agreement"; capitalized terms used but not defined herein
shall have the meanings ascribed to such terms in the Merger Agreement), and the Voting and Right of First Refusal Agreement, dated as of May 3, 2009, by and among LEI, DIRECTV, Holdings,
Dr. John C. Malone, Mrs. Leslie Malone, The Tracy L. Neal Trust A and The Evan D. Malone Trust A (as amended through the date hereof, the "Malone
Agreement"), and (ii) the delivery of the executed tax opinion, dated as of the date hereof, of Weil, Gotshal & Manges LLP which will be filed as an
Exhibit to the Registration Statement (the "Tax Opinion"), the undersigned, John C. Malone, hereby represents and warrants to Holdings, that, as of the
date hereof, neither I nor my wife, Mrs. Leslie Malone, are parties to any agreement, or have any current plan or intention, to sell, exchange, transfer by gift, or otherwise dispose of,
directly or indirectly, any Holdings Common Stock (including, without limitation, in any transaction treated as a constructive disposition for United States federal income tax purposes). 

        The
foregoing representation and warranty is made by me solely in my capacity as a stockholder of LMC and solely for purposes of the delivery of the Tax Opinion. 

					
	Dated:	 	 	 	 
	 	 	

  	 	

  John C. Malone

QuickLinks

Exhibit 10.15

AMENDMENT NO. 1 TO VOTING AND RIGHT OF FIRST REFUSAL AGREEMENT

RECITALSEXHIBIT
4.1

 

SHAREHOLDER RIGHTS PLAN
AGREEMENT

 

DATED AS OF

 

JANUARY 29, 2009

 

BETWEEN

 

DRAGONWAVE INC.

 

AND

 

COMPUTERSHARE INVESTOR
SERVICES INC.

 

AS RIGHTS AGENT

 

 

TABLE OF
CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 1

  	
   

  	
   

  
	
   

  	
  INTERPRETATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.1

  	
  Certain Definitions

  	
   

  	
  5

  
	
  1.2

  	
  Currency

  	
   

  	
  18

  
	
  1.3

  	
  Headings

  	
   

  	
  18

  
	
  1.4

  	
  Calculation of Number and Percentage of Beneficial Ownership of
  Outstanding Voting Shares

  	
   

  	
  18

  
	
  1.5

  	
  Acting Jointly or in Concert

  	
   

  	
  19

  
	
  1.6

  	
  Generally Accepted Accounting Principles

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 2

  	
   

  	
   

  
	
   

  	
  THE RIGHTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
  Legend on Share Certificates

  	
   

  	
  19

  
	
  2.2

  	
  Initial Exercise Price; Exercise of Rights; Detachment of Rights

  	
   

  	
  20

  
	
  2.3

  	
  Adjustments to Exercise Price; Number of Rights

  	
   

  	
  23

  
	
  2.4

  	
  Date on Which Exercise Is Effective

  	
   

  	
  28

  
	
  2.5

  	
  Execution, Authentication, Delivery and Dating of Rights Certificates

  	
   

  	
  28

  
	
  2.6

  	
  Registration, Transfer and Exchange

  	
   

  	
  29

  
	
  2.7

  	
  Mutilated, Destroyed, Lost and Stolen Rights Certificates

  	
   

  	
  30

  
	
  2.8

  	
  Persons Deemed Owners of Rights

  	
   

  	
  30

  
	
  2.9

  	
  Delivery and Cancellation of Certificates

  	
   

  	
  31

  
	
  2.10

  	
  Agreement of Rights Holders

  	
   

  	
  31

  
	
  2.11

  	
  Rights Certificate Holder Not Deemed a Shareholder

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 3

  	
   

  	
   

  
	
   

  	
  ADJUSTMENTS TO THE RIGHTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.1

  	
  Flip-in Event

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 4

  	
   

  	
   

  
	
   

  	
  THE RIGHTS AGENT

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
  General

  	
   

  	
  34

  
	
  4.2

  	
  Merger, Amalgamation or Consolidation or Change of Name of Rights Agent

  	
   

  	
  35

  
	
  4.3

  	
  Duties of Rights Agent

  	
   

  	
  35

  
	
  4.4

  	
  Change of Rights Agent

  	
   

  	
  37

  

 

 

	
   

  	
  ARTICLE 5

  	
   

  	
   

  
	
   

  	
  MISCELLANEOUS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.1

  	
  Redemption and Waiver

  	
   

  	
  38

  
	
  5.2

  	
  Expiration

  	
   

  	
  41

  
	
  5.3

  	
  Issuance of New Rights Certificates

  	
   

  	
  41

  
	
  5.4

  	
  Supplements and Amendments

  	
   

  	
  41

  
	
  5.5

  	
  Fractional Rights and Fractional Shares

  	
   

  	
  43

  
	
  5.6

  	
  Rights of Action

  	
   

  	
  43

  
	
  5.7

  	
  Regulatory Approvals

  	
   

  	
  44

  
	
  5.8

  	
  Notice of Proposed Actions

  	
   

  	
  44

  
	
  5.9

  	
  Notices

  	
   

  	
  44

  
	
  5.10

  	
  Compliance with Anti-Money Laundering Legislation

  	
   

  	
  45

  
	
  5.11

  	
  Privacy Legislation

  	
   

  	
  46

  
	
  5.12

  	
  Costs of Enforcement

  	
   

  	
  46

  
	
  5.13

  	
  Successors

  	
   

  	
  46

  
	
  5.14

  	
  Benefits of this Agreement

  	
   

  	
  46

  
	
  5.15

  	
  Governing Law

  	
   

  	
  46

  
	
  5.16

  	
  Severability

  	
   

  	
  47

  
	
  5.17

  	
  Effective Date and Shareholder Confirmation

  	
   

  	
  47

  
	
  5.18

  	
  Determinations and Actions by the Board of Directors

  	
   

  	
  47

  
	
  5.19

  	
  Declaration as to Non-Canadian Holders

  	
   

  	
  47

  
	
  5.20

  	
  Time of the Essence

  	
   

  	
  48

  
	
  5.21

  	
  Execution in Counterparts

  	
   

  	
  48

  

 

ATTACHMENT 1:

 

FORM OF RIGHTS CERTIFICATE

 

FORM OF ASSIGNMENT

 

FORM OF ELECTION TO EXERCISE

 

3

 

SHAREHOLDER
RIGHTS PLAN AGREEMENT

 

MEMORANDUM
OF AGREEMENT, dated as of January 29, 2009 between DragonWave Inc. (the “Corporation”), a corporation incorporated under the laws of
Canada, and Computershare Investor Services Inc., a company incorporated under
the laws of Canada (the “Rights Agent”);

 

WHEREAS the board of directors of the
Corporation (the “Board of Directors”),
in the exercise of its fiduciary duties to the Corporation, has determined that
it is advisable for the Corporation to adopt a shareholder rights plan (the “Rights Plan”) to ensure that any offer to acquire common
shares of the Corporation (the “Common Shares”)
is made to all the shareholders and cannot be completed unless shareholders
holding at least 50% of the Common Shares (other than the offeror and related
parties) issued and outstanding as at the Record Time (as hereinafter defined),
and in any case prior to the Expiration Time, are tendered in favour of the
offer, to ensure, to the extent possible, the fair treatment of all
shareholders in connection with any take-over bid for the securities of the
Corporation, and to ensure that the Board of Directors is provided with
sufficient time to evaluate unsolicited take-over bids and to explore and
develop alternatives to maximize shareholder value;

 

AND
WHEREAS
in order to implement the adoption of the Rights Plan as established by this
Agreement, the Board of Directors has:

 

(a)                                  authorized the issuance,
effective at the close of business (Toronto time) on the Effective Date (as
hereinafter defined), of one Right (as hereinafter defined) in respect of each
Common Share outstanding at the close of business (Toronto time) on the
Effective Date (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 (as hereinafter defined) and the Expiration
Time (as hereinafter defined); and

 

(c)                                  authorized the issuance of
Rights Certificate(s) (as hereinafter defined) to holders of Rights
pursuant to the terms and subject to the conditions set forth herein;

 

AND
WHEREAS
each Right entitles the holder thereof, after the Separation Time, to purchase
securities of the Corporation pursuant to the terms and subject to the
conditions set forth herein;

 

AND
WHEREAS
the Corporation desires to appoint the Rights Agent to act for and on behalf of
the Corporation and the holders of Rights, 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 the respective covenants and agreements
set forth herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and subject to such covenants and
agreements, the parties hereby agree as follows:

 

 

ARTICLE 1

INTERPRETATION

 

1.1                               Certain
Definitions

 

For purposes of this Agreement, the following terms have the meanings
indicated:

 

(a)                                  “Acquiring
Person” means any Person who is the Beneficial Owner of twenty-five
percent (25%) or more of the outstanding Voting Shares; provided, however, that
the term “Acquiring Person” does not include:

 

(i)                                     the Corporation or any
Subsidiary of the Corporation;

 

(ii)                                  any Person who becomes the
Beneficial Owner of twenty-five percent (25%) or more of the outstanding Voting
Shares as a result of one or any combination of:

 

A.                                   a Voting Share Reduction;

 

B.                                     Permitted Bid Acquisitions;

 

C.                                     an Exempt Acquisition;

 

D.                                    Pro Rata Acquisitions; or

 

E.                                      a Convertible Security
Acquisition;

 

provided,
however, that if a Person becomes the Beneficial Owner of twenty-five percent
(25%) or more of the outstanding Voting Shares by reason of one or any
combination of the operation of Paragraphs A., B, C, D or E above and such
Person’s Beneficial Ownership of Voting Shares thereafter increases by more
than 1% of the number of Voting Shares outstanding (other than pursuant to one
or any combination of a Voting Share Reduction, a Permitted Bid Acquisition, an
Exempt Acquisition, a Pro Rata Acquisition or a Convertible Security
Acquisition), then as of the date such Person becomes the Beneficial Owner of
such additional Voting Shares, such Person shall become an “Acquiring Person”;

 

(iii)                               for a period of ten days after
the Disqualification Date (as defined below), any Person who becomes the
Beneficial Owner of twenty-five percent (25%) or more of the outstanding Voting
Shares as a result of such Person becoming disqualified from relying on Clause
1.1(f)(iii)B 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 public announcement that any Person is
making or intends to make a Take-over Bid;

 

5

 

(iv)                              an underwriter or member of a
banking or selling group that becomes the Beneficial Owner of twenty-five
percent (25%) or more of the Voting Shares in connection with a distribution of
securities of the Corporation pursuant to an underwriting agreement with the
Corporation; or

 

(v)                                 a Person (a “Grandfathered Person”) who is the Beneficial Owner of
twenty-five percent (25%) or more of the outstanding Voting Shares determined
as at the Record Time, provided, however, that this exception shall not be, and
shall cease to be, applicable to a Grandfathered Person in the event that such
Grandfathered Person shall, after the Record Time, become the Beneficial Owner
of any additional Voting Shares that increases its Beneficial Ownership of
Voting Shares by more than 1% of the number of Voting Shares outstanding, other
than through one or any combination of a Permitted Bid Acquisition, an Exempt
Acquisition, a Voting Share Reduction, a Pro Rata Acquisition or a Convertible
Security Acquisition;

 

(b)                                 “Affiliate”,
when used to indicate a relationship with a specified Person, means a Person
that directly, or indirectly through one or more intermediaries, controls, or
is controlled by, or is under common control with, such specified Person;

 

(c)                                  “Agreement”
means this shareholder rights plan agreement dated as of January 29, 2009
between the Corporation and the Rights Agent, as amended or supplemented from
time to time; “hereof”, “herein”, “hereto” and similar expressions mean and
refer to this Agreement as a whole and not to any particular part of this
Agreement;

 

(d)                                 “annual cash
dividend” means cash dividends paid in any fiscal year of the
Corporation to the extent that such cash dividends do not exceed, in the
aggregate on a per share basis, in any fiscal year, the greatest of:

 

(i)                                   200% of the aggregate amount
of cash dividends, on a per share basis, declared payable by the Corporation on
its Common Shares in its immediately preceding fiscal year;

 

(ii)                                300% of the arithmetic mean of
the aggregate amounts of the cash dividends, on a per share basis, declared
payable by the Corporation on its Common Shares in its three immediately
preceding fiscal years; and

 

(iii)                             100% of the aggregate
consolidated net income of the Corporation, before extraordinary items, for its
immediately preceding fiscal year divided by the number of Common Shares
outstanding as at the end of such fiscal year;

 

(e)                                  “Associate”
means, when used to indicate a relationship with a specified Person, a spouse
of that Person, any Person of the same or opposite sex with whom that Person is
living in a conjugal relationship outside marriage, a child of that Person and
a relative of that Person if that relative has the same residence as that
Person;

 

6

 

(f)                                    A Person is deemed the “Beneficial Owner” of, and to have “Beneficial
Ownership” of, and to “Beneficially Own”:

 

(i)                                   any securities as to which
such Person or any of such Person’s Affiliates or Associates is the owner at
law or in equity;

 

(ii)                                any securities as to which
such Person or any of such Person’s Affiliates or Associates has the right to
become the owner at law or in equity (where such right is exercisable within a
period of 60 days, whether or not on condition or on the happening of any
contingency) pursuant to any agreement, arrangement, pledge or understanding,
whether or not in writing, or upon the exercise of any conversion, exchange or
purchase right (other than the Rights) attaching to a Convertible Security;
other than pursuant to (A) customary agreements between the Corporation
and underwriters or between underwriters and/or banking group members and/or
selling group members with respect to a distribution of securities by the
Corporation, (B) pledges of securities in the ordinary course of
business), and (C) any agreement between the Corporation and any Person or
Persons relating to a plan of arrangement, amalgamation or other statutory
procedure which is subject to the approval of the holders of Voting Shares;

 

(iii)                             any securities which are
Beneficially Owned within the meaning of Clauses 1.1(f)(i) or (ii) by
any other Person with which such Person is acting jointly or in concert;

 

provided, however, that a Person is not deemed the “Beneficial Owner” of, or to have “Beneficial
Ownership” of, or to “Beneficially Own”,
any security:

 

A.                                   where such security has been
deposited or tendered pursuant to any Take-over Bid or where the holder of such
security has agreed pursuant to a Permitted Lock-Up Agreement to deposit or
tender such security pursuant to a Take-Over Bid, in each case made by such Person,
made by any of such Person’s Affiliates or Associates or made by any other
Person acting jointly or in concert with such Person, until such deposited or
tendered security has been taken up or paid for, whichever shall first occur;

 

B.                                     where such Person, any of such
Person’s Affiliates or Associates or any other Person referred to in Clause
1.1(f)(iii), holds such security provided that (1) the ordinary business
of any such Person (the “Investment Manager”)
includes the management of mutual funds or investment funds for others (which
others, for greater certainty, may include or be limited to one or more
employee benefit plans or pension plans and/or includes the acquisition or
holding of securities for a non-discretionary account of a Client (as defined below)
by a dealer or broker registered under applicable 

 

7

 

securities laws to the extent required) and such
security is held by the Investment Manager in the ordinary course of such
business and in the performance of such Investment Manager’s duties for the
account of any other Person or Persons (a “Client”); or (2) such
Person (the “Trust Company”) is licensed to
carry on the 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 relation to other accounts (each an “Other Account”) and holds such security in the ordinary
course of such duties for such Estate Accounts or for such Other Accounts; or (3) such
Person is a pension plan or fund registered under the laws of Canada or any
Province thereof or the laws of the United States (a “Plan”)
or is a Person established by statute for purposes that include, and the
ordinary business or activity of such Person (the “Statutory
Body”) includes, the management of investment funds for employee
benefit plans, pension plans, insurance plans of various public bodies; or (4) such
Person (the “Administrator”) is the
administrator or trustee of one or more Plans and holds such security for the
purposes of its activities as an Administrator; provided, in any of the above
cases, that the Investment Manager, the Trust Company, the Statutory Body, the
Administrator or the Plan, as the case may be, is not then making and has not
then announced an intention to make a Take-over Bid (other than an Offer to
Acquire Voting Shares or other securities by means of a distribution by the
Corporation or by means of ordinary market transactions (including prearranged
trades) executed through the facilities of a stock exchange or organized
over-the-counter market), alone or by acting jointly or in concert with any
other Person;

 

C.                                     only because such Person or
any of such Person’s Affiliates or Associates is (1) a Client of the same
Investment Manager as another Person on whose account the Investment Manager
holds such security, (2) 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 (3) a Plan with the same Administrator as another Plan on
whose account the Administrator holds such security;

 

D.                                    only because such Person is (1) a
Client of an Investment Manager and such security is owned at law or in equity
by the Investment Manager, (2) 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 (3) a Plan and such security is owned at law or in equity by
the Administrator of the Plan; or

 

8

 

E.                                    where 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 depository.

 

(g)                                 “Board of
Directors” means the board of directors of the Corporation or any
duly constituted and empowered committee thereof;

 

(h)                                 “Business
Corporations Act” means the Canada  Business Corporations Act, as amended, and the regulations
made thereunder and any comparable or successor laws or regulations thereto;

 

(i)                                     “Business Day”
means any day other than a Saturday, Sunday or a day on which banking
institutions in Toronto, Ontario are authorized or obligated by law to close;

 

(j)                                     “Canadian
Dollar Equivalent” of any amount which is expressed in United States
dollars means 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;

 

(k)                                  “close of
business” on any given date means the time on such date (or, if such
date is not a Business Day, the time on the next succeeding Business Day) at
which the transfer office of the transfer agent for the Common Shares (or,
after the Separation Time, the principal transfer office of the Rights Agent)
is closed to the public in the city in which such transfer agent or Rights
Agent has an office for the purposes of this Agreement;

 

(l)                                     “Common
Shares” means the common shares in the capital of the Corporation as
presently constituted, as such common shares may be subdivided, consolidated,
reclassified or otherwise changed from time to time;

 

(m)                               “Competing
Permitted Bid” means a Take-over Bid which also complies with the
following additional provisions:

 

(i)                                   the Take-over bid is made
after a Permitted Bid or another Competing Permitted Bid has been made and
prior to the expiry of the Permitted Bid or Competing Permitted Bid;

 

(ii)                                the Take-over Bid complies
with all of the provisions of a Permitted Bid other than the condition set
forth in Clause (iii) of the definition of Permitted Bid; and

 

(iii)                             no Voting Shares are taken up
or paid for pursuant to the Take-over Bid prior to the close of business on a
date that is no earlier than the later of (A) 35 days after the date of
the Take-over Bid constituting the Competing Permitted Bid; and (B) 60
days (or such shorter period of time as may be permitted by the Board of
Directors from time to time) following the date 

 

9

 

on which the earliest Permitted Bid or Competing
Permitted Bid which preceded the Competing Permitted Bid was made;

 

(n)                                 “controlled”:
a corporation is “controlled” by
another Person 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 corporation;

 

and “controls”, “controlling” and “under common control with”
shall be interpreted accordingly;

 

(o)                                 “Convertible
Security” means a security convertible, exercisable or exchangeable
into a Voting Share and a “Convertible Security
Acquisition” means an acquisition by a Person of Voting Shares upon
the exercise, conversion or exchange of a Convertible Security received by a
Person pursuant to a Permitted Bid Acquisition, an Exempt Acquisition or a Pro
Rata Acquisition;

 

(p)                                 “Co-Rights
Agents” has the meaning ascribed thereto in Subsection 4.1(a);

 

(q)                                 “Disposition
Date” has the meaning ascribed thereto in Subsection 5.1(d);

 

(r)                                    “Dividend
Reinvestment Acquisition” means an acquisition of Voting Shares of
any class pursuant to a Dividend Reinvestment Plan;

 

(s)                                  “Dividend
Reinvestment Plan” means a regular dividend reinvestment or other
plan of the Corporation made available by the Corporation to holders of its
securities where such plan permits the holder to direct that some or all of:

 

(i)                                     dividends paid in respect of
securities of any class of the Corporation;

 

(ii)                                  proceeds of redemption of
securities of the Corporation;

 

(iii)                               interest paid on evidences of
indebtedness of the Corporation; or

 

(iv)                              optional cash payments;

 

be applied to the purchase from the Corporation of
Common Shares;

 

(t)                                    “Effective
Date” means January 29, 2009;

 

(u)                                 “Election to
Exercise” has the meaning ascribed thereto in Clause 2.2(d)(ii);

 

(v)                                 “Exempt Acquisition” means an acquisition of
Voting Shares

 

10

 

(i)            in respect of which the Board
of Directors has waived the application of Section 3.1 pursuant to the
provisions of Subsection 5.1(b), (c) or (d);

 

(ii)           pursuant to a distribution by
the Corporation of Voting Shares or Convertible Securities (and the conversion
or exchange of such securities) pursuant to a public offering or private
placement, provided that the acquiror does not thereby Beneficially Own a
greater percentage of the Voting Shares or Convertible Securities so issued
than the percentage of Voting Shares or Convertible Securities Beneficially
Owned by the acquiror immediately prior to such acquisition; or

 

(iii)          pursuant to an amalgamation,
merger or other statutory procedure requiring shareholder approval;

 

(w)          “Exercise Price”
means, as of any date, the price at which a holder may purchase the securities
issuable upon exercise of one whole Right which, until adjustment thereof in
accordance with the terms hereof, shall be three times the Market Price, as at
the Separation Time, per Common Share;

 

(x)            “Expansion Factor”
has the meaning ascribed thereto in Clause 2.3(a)(x);

 

(y)           “Expiration Time”
means the earlier of: (i) the Termination Time; and (ii) the close of
business on the date the this Agreement becomes void pursuant to the provisions
of Subsection 5.17(a) or 5.17(b);

 

(z)            “Flip-in Event”
means a transaction in or pursuant to which any Person becomes an Acquiring
Person;

 

(aa)         “holder” has the
meaning ascribed thereto in Section 2.8;

 

(bb)         “Independent Shareholders”
means holders of Voting Shares, other than:

 

(i)            any Acquiring Person;

 

(ii)           any Offeror, other than a Person referred
to in Clause 1.1(f)(iii)B;

 

(iii)          any Affiliate or Associate of such
Acquiring Person or Offeror;

 

(iv)          any Person acting jointly or in concert
with such Acquiring Person or Offeror; and

 

(v)           any employee benefit plan, deferred profit
sharing plan, stock participation plan and any other similar plan or trust for
the benefit of employees of the Corporation or a Subsidiary of the Corporation,
unless the beneficiaries of the plan or trust direct the manner in which the
Voting Shares are to be voted or direct whether the Voting Shares are to be
tendered to a Take-over Bid;

 

11

 

(cc)         “Market Price”
per share of any securities on any date of determination means the average of
the daily closing prices per share of such securities (determined as described
below) on each of the 20 consecutive Trading Days through and including the
Trading Day immediately preceding such date; provided, however, that if an
event of a type analogous to any of the events described in Section 2.3
hereof shall have caused the closing prices used to determine the Market Price
on any Trading Days not to be fully comparable with the closing price on such
date of determination or, if the date of determination is not a Trading Day, on
the immediately preceding Trading Day, each such closing price so used shall be
appropriately adjusted in a manner analogous to the applicable adjustment
provided for in Section 2.3 hereof in order to make it fully comparable
with the closing price on such date of determination or, if the date of
determination is not a Trading Day, on the immediately preceding Trading Day.
The closing price per share of any securities on any date is:

 

(i)            the closing board lot sale price or, in
case no such sale takes place on such date, the average of the closing bid and
asked prices for each of such securities as reported by the principal Canadian
stock exchange on which such securities are listed or admitted to trading;

 

(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 Canadian stock exchange, the last sale price or, in case no such 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, as quoted by any
reporting system then in use; or

 

(iii)          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 Canadian stock exchange or quoted by any such reporting system, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the securities selected in good faith by the
Board of Directors;

 

provided, however, that if for any reason none of such
prices is available on such day, the closing price per share of such securities
on such date means the fair value per share of such securities on such date as
determined by a nationally or internationally recognized investment dealer or
investment banker with respect to the fair value per share of such securities.
The Market Price shall be expressed in Canadian dollars and, if initially
determined in respect of any day forming part of the 20 consecutive Trading Day
period in question in United States dollars, such amount shall be translated
into Canadian dollars on such date at the Canadian Dollar Equivalent thereof;

 

(dd)         “Nominee” has
the meaning ascribed thereto in Subsection 2.2(c);

 

(ee)         “Offer to Acquire”
includes:

 

12

 

(i)            an offer to purchase or a solicitation of
an offer to sell or a public announcement of an intention to make such an offer
or solicitation; and

 

(ii)           an acceptance of an offer to sell, whether
or not such offer to sell has been solicited;

 

or any combination thereof, and the Person accepting
an offer to sell is deemed to be making an Offer to Acquire to the Person that
made the offer to sell;

 

(ff)           “Offeror” means
a Person who has announced a current intention to make or who is making a
Take-over Bid but only so long as the Take-over Bid so announced or made has
not been withdrawn or terminated or has not expired;

 

(gg)         “Permitted Bid”
means a Take-over Bid, made by an Offeror by way of take-over bid circular,
which also complies with the following additional provisions:

 

(i)            the Take-over Bid is made to all holders of
Voting Shares on the books of the Corporation, other than the Offeror;

 

(ii)           no Voting Shares are taken up or paid for
pursuant to the Take-over Bid unless more than 50% of the Voting Shares held by
Independent Shareholders shall have been deposited or tendered pursuant to the
Take-over Bid and not withdrawn;

 

(iii)          no Voting Shares are taken up or paid for
pursuant to the Take-over Bid prior to the close of business on a date that is
no earlier than 60 days (or such shorter period of time as may be permitted by
the Board of Directors from time to time) following the date of the Take-over
Bid;

 

(iv)          Voting Shares may be deposited pursuant to
such Take-over Bid at any time during the period of time between the date of
the Take-over Bid and the date on which Voting Shares may be taken up and paid
for and any Voting Shares deposited pursuant to the Take-over Bid may be
withdrawn until taken up and paid for; and

 

(v)           if on the date on which Voting Shares may
be taken up and paid for under the Take-over Bid, more than 50% of the Voting
Shares held by Independent Shareholders have been deposited or tendered
pursuant to the Take-over Bid and not withdrawn, the Offeror makes a public
announcement of that fact and the Take-over Bid is extended to remain open for
deposits and tenders of Voting Shares for not less than ten 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 cease to be a Permitted Bid
because it ceases to meet any or all of the requirements mentioned above prior
to the time it expires (after giving effect to any extension) or is withdrawn,
any acquisition of Voting Shares made 

 

13

 

pursuant to such Take-over Bid is not a Permitted Bid
Acquisition and (B) the term “Permitted Bid”
includes a Competing Permitted Bid.

 

(hh)         “Permitted Bid Acquisition”
means an acquisition of Voting Shares made pursuant to a Permitted Bid or a
Competing Permitted Bid;

 

(ii)           “Permitted Lock-Up
Agreement” means an agreement between a Person and one or more
holders of Voting Shares pursuant to which such holders (each a “Locked-Up Person”) agree to deposit or tender Voting Shares
to a Take-Over Bid (the “Lock-Up Bid”)
made or to be made by such Person or any of such Person’s Affiliates or
Associates or any other Person with which such Person is acting jointly or in
concert, provided that:

 

(i)            the terms of such agreement are publicly
disclosed and a copy of such agreement is made available to the pubic
(including the Corporation) not later than the date of the Lock-Up Bid or, if
the Lock-Up Bid has been made prior to the date on which such agreement is
entered into, not later than the first business day following the date of such
agreement;

 

(ii)           the agreement permits a Locked-Up Person to
terminate its obligation to deposit or tender Voting Shares to or not to
withdraw such Voting Shares from the Lock-Up Bid, and to terminate any
obligation with respect to the voting of such Voting Shares, in order to tender
or deposit the Voting Shares to another Take-over Bid or to support another
transaction:

 

A.            where the price or value of the
consideration per Voting Share offered under such other Take-over Bid or
transaction:

 

I.              is greater than the price or value of the
consideration per Voting Share at which the Locked-Up Person has agreed to
deposit or tender Voting Shares to the Lock-Up Bid; or

 

II.            exceeds by as much as or more than a
specified amount (the “Specified Amount”)
the price or value of the consideration per Voting Share at which the Locked-Up
Person has agreed to deposit or tender Voting Shares to the Lock-Up Bid,
provided that such Specified Amount is not greater than 7% of the price or
value of the consideration per Voting Share at which the Locked-Up Person has
agreed to deposit or tender Voting Shares to the Lock-Up Bid; and

 

B.            if the number of Voting Shares offered to
be purchased under the Lock-Up Bid is less than 100% of the Voting Shares held
by Independent Shareholders, where the number of Voting Shares to be purchased
under such other Take-over Bid or transaction at a price or value per Voting
Share that is not less than the price or value per Voting Share offered under
the Lock-Up Bid:

 

14

 

I.              is greater than the number of Voting Shares
that the Offeror has offered to purchase under the Lock-Up Bid; or

 

II.            exceeds by as much as or more than a
specified number (the “Specified Number”)
the number of Voting Shares that the Offeror has offered to purchase under the
Lock-Up Bid, provided that the Specified Number is not greater than 7% of the
number of Voting Shares that the Offeror has offered to purchase under the
Lock-Up Bid,

 

and, for
greater clarity, the agreement may contain a right of first refusal or require
a period of delay to give such Person an opportunity to match a higher price in
another Take-over Bid or transaction or other similar limitation on a Locked-up
Person’s right to withdraw Voting Shares from the agreement, so long as the
limitation does not preclude the exercise by the Locked-up Person of the right
to withdraw Voting Shares during the period of the other Take-over Bid or
transaction; and

 

(iii)          no “break-up” fees,
“top-up” fees, penalties, expenses or
other amounts that exceed in aggregate the greater of:

 

A.            2.5% of the price or value of the consideration
payable under the Lock-Up Bid to a Locked-Up Person; and

 

B.            50% of the amount by which the price or
value of the consideration received by a Locked-Up Person under another
Take-over Bid or transaction exceeds the price or value of the consideration that
the Locked-Up Person would have received under the Lock-Up Bid,

 

shall be
payable by such Locked-Up Person pursuant to the agreement if the Locked-Up
Person fails to deposit or tender Voting Shares to the Lock-Up Bid, withdraws
Voting Shares previously tendered thereto or supports another transaction;

 

(jj)           “Person”
includes an individual, body corporate, firm, partnership, syndicate or other
form of unincorporated association, trust, trustee, executor, administrator,
legal personal representative, group, unincorporated organization, a government
and its agencies or instrumentalities, or other entity whether or not having
legal personality;

 

(kk)         “Pro Rata Acquisition”
means an acquisition by a Person of Voting Shares pursuant to:

 

(i)            a Dividend Reinvestment Acquisition;

 

(ii)           a stock dividend, stock split or other
event in respect of securities of the Corporation of one or more particular
classes or series pursuant to which such Person becomes the Beneficial Owner of
Voting Shares on the same 

 

15

 

pro rata basis as all other holders of
securities of the particular class, classes or series;

 

(iii)          the acquisition or the exercise by the
Person of rights to purchase Voting Shares issued by the Corporation to all
holders of securities of the Corporation (other than holders resident in any
jurisdiction where such issuance is restricted or impractical as a result of
applicable law) of one or more particular classes or series pursuant to a
rights offering or pursuant to a prospectus, provided that such rights are
acquired directly from the Corporation and not from any other Person and the
Person does not thereby acquire a greater percentage of such Voting Shares than
the Person’s percentage of Voting Shares Beneficially Owned immediately prior
to such acquisition; or

 

(iv)          a distribution of Voting Shares or
Convertible Securities made pursuant to a prospectus or by way of a private
placement by the Corporation or a conversion or exchange of any Convertible
Security provided that the Person does not thereby acquire a greater percentage
of such Voting Shares or of Convertible Securities so offered than the Person’s
percentage of Voting Shares Beneficially Owned immediately prior to such
acquisition;

 

(ll)           “Record Time”
has the meaning set forth in the recitals hereto;

 

(mm)       “Redemption Price”
has the meaning attributed thereto in Subsection 5.1(a);

 

(nn)         “Right” means
the right to purchase one Common Share upon the terms and subject to the
conditions set forth in this Agreement;

 

(oo)         “Rights Certificate”
means a certificate representing the Rights after the Separation Time, which
shall be substantially in the form attached hereto as Attachment 1;

 

(pp)         “Rights Register”
has the meaning ascribed thereto in Subsection 2.6(a);

 

(qq)         “Securities Act”
means the Securities Act (Ontario), as amended,
and the regulations thereunder, and any comparable or successor laws or
regulations thereto;

 

(rr)           “Separation Time”
means, subject to Subsection 5.1(d), the close of business on the tenth Trading
Day after the earlier of:

 

(i)            the Stock Acquisition Date; and

 

(ii)           the date of the commencement of or first
public announcement of the intent of any Person (other than the Corporation or
any Subsidiary of the Corporation) to commence a Take-over Bid (other than a
Permitted Bid or a Competing Permitted Bid),

 

16

 

or such later time as may be determined by the Board
of Directors, provided that, if any Take-over Bid referred to in Clause (ii) above
expires, is not made, is cancelled, terminated or otherwise withdrawn prior to
the Separation Time, such Take-over Bid shall be deemed, for the purposes of
this definition, never to have been commenced, made or announced and further
provided 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, then the
Separation Time in respect of such Flip-In Event shall be deemed never to have
occurred and further provided that if the foregoing results in the Separation
Time being prior to the Record Time, the Separation Time shall be the Record
Time;

 

(ss)         “Stock Acquisition Date”
means the date of the first public announcement (which, for purposes of this
definition, shall include, without limitation, a report filed pursuant to Section 102.1
of the Securities Act) by the Corporation or an Acquiring Person of facts
indicating that a Person has become an Acquiring Person;

 

(tt)           “Subsidiary”: a
Person is a Subsidiary of another Person if:

 

(i)            it is controlled by:

 

A.            that other; or

 

B.            that other and one or more Persons each of
which is controlled by that other; or

 

C.            two or more Persons each of which is
controlled by that other; or

 

(ii)           it is a Subsidiary of a Person that is that
other’s Subsidiary;

 

(uu)         “Take-over Bid”
means an Offer to Acquire Voting Shares or other securities of the Corporation
convertible into Voting Shares, if, assuming that the Voting Shares or other
securities subject to the Offer to Acquire are acquired and are Beneficially
Owned at the date of such Offer to Acquire by the Person making such Offer to
Acquire, the Voting Shares Beneficially Owned by the Person making the Offer to
Acquire would constitute in the aggregate twenty-five percent (25%) or more of
the outstanding Voting Shares at the date of the Offer to Acquire;

 

(vv)         “Termination Time”
means the time at which the right to exercise Rights shall terminate pursuant
to Subsection 5.1(g) or 5.17(a);

 

(ww)       “Trading Day”,
when used with respect to any securities, means a day on which the principal
Canadian stock exchange on which such securities are listed or admitted to
trading is open for the transaction of business or, if the securities are not
listed or admitted to trading on any Canadian stock exchange, a Business Day;

 

(xx)          “U.S. — Canadian Exchange
Rate” on any date means:

 

17

 

(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

 

(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;

 

(yy)         “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 outstanding Voting Shares Beneficially Owned by any Person to twenty-five
percent (25%) or more of the Voting Shares then outstanding;

 

(zz)          “Voting Shares”
means the Common Shares and any other shares in the capital of the Corporation
entitled to vote generally in the election of all directors.

 

1.2                               Currency

 

All sums of money which are referred to in this Agreement are expressly
in lawful money of Canada, unless otherwise specified.

 

1.3                               Headings

 

The division of this Agreement into Articles, Sections, Subsections,
Clauses, Paragraphs, Subparagraphs or other portions hereof and the insertion
of headings, subheadings and a table of contents are for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement.

 

1.4                               Calculation
of Number and Percentage of Beneficial Ownership of Outstanding Voting Shares

 

(a)           For purposes of this Agreement, in
determining the percentage of outstanding Voting Shares with respect to which a
Person is or is deemed to be the Beneficial Owner, all unissued Voting Shares
of which such person is deemed to be the Beneficial Owner shall be deemed to be
outstanding.

 

(b)           For purposes of this Agreement, the
percentage of Voting Shares Beneficially Owned by any Person shall be and be
deemed to be the product (expressed as a percentage) determined by the formula:

 

100 x A/B where:

 

A             =              the number of votes for the election of directors of
the Corporation generally attaching to the Voting Shares Beneficially Owned by
such Person; and

 

18

 

B             =              the number of votes for the election of directors of
the Corporation generally attaching to all outstanding Voting Shares.

 

The percentage of outstanding Voting Shares
represented by any particular group of Voting Shares acquired or held by any
Person shall be determined in like manner mutatis mutandis.

 

1.5                               Acting
Jointly or in Concert

 

For purposes of this Agreement a Person is acting jointly or in concert
with every Person who is a party to an agreement, commitment, arrangement or
understanding, whether formal or informal or written or unwritten, with the
first Person to acquire or Offer to Acquire any Voting Shares or Convertible
Securities (other than (A) customary agreements with and between
underwriters and/or banking group members and/or selling group members with
respect to a distribution of securities by the Corporation, (B) pledges of
securities in the ordinary course of business, and (C) Permitted Lock-Up
Agreements).

 

1.6                               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
Share Certificates

 

Certificates representing Common Shares which are issued after the
Record Time but prior to the earlier of the Separation Time and the Expiration
Time, shall also evidence one Right for each Common Share represented thereby
until the earlier of the Separation Time or the Expiration Time and shall have
impressed on, printed on, written on or otherwise affixed to them the following
legend:

 

Until the earlier of the Separation Time or the
Expiration Time (as both terms are defined in the Shareholder Rights Plan 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 January 29, 2009, as may be amended or supplemented from time
to time (the “Shareholder Rights Plan 

 

19

 

Agreement”), between DragonWave Inc. (the “Corporation”) and ComputerShare Investor Services Inc., as
Rights Agent, the terms of which are incorporated herein by reference and a
copy of which is on file at the principal executive offices of the Corporation.
Under certain circumstances set out in the Shareholder Rights Plan Agreement,
the rights may be amended or redeemed, may expire or may become void (if, in
certain cases they are “Beneficially Owned”
by an “Acquiring Person” as such terms are
defined in the Shareholder Rights Plan Agreement, whether currently held by or
on behalf of such Person or a subsequent holder) or may be evidenced by
separate certificates and no longer evidenced by this certificate. The
Corporation will mail or arrange for the mailing of a copy of the Shareholder
Rights Plan Agreement to the holder of this certificate without charge as soon
as practicable after the receipt of a written request therefor.

 

Certificates representing Common Shares that are issued and outstanding
as at the Record Time shall also evidence one Right for each Common Share
represented thereby notwithstanding the absence of the foregoing legend, until
the earlier of the Separation Time and the Expiration Time.

 

2.2                               Initial
Exercise Price; Exercise of Rights; Detachment of Rights

 

(a)           Subject to adjustment as herein set forth,
each Right will entitle the holder thereof, from and after the Separation Time
and prior to the Expiration Time, to purchase one Common Share for the Exercise
Price as at the Business Day immediately preceding the day of exercise of the
Right (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)           each Right will be evidenced by the
certificate for the associated Common Share registered in the name of the
holder thereof (which certificate shall also 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:

 

(i)            the Rights shall be exercisable; and

 

(ii)           the registration and transfer of Rights
shall be separate from and independent of Common Shares.

 

20

 

 

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 in either case 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 records to the Rights
Agent for this purpose):

 

A.            a Rights Certificate appropriately
completed, representing the number of Rights held by such holder at the
Separation Time or at the time of conversion, as applicable, and having such
marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Corporation may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be required
to comply with any law, rule or regulation or with any rule or
regulation of any self-regulatory organization, stock exchange or quotation
system on which the Rights may from time to time be listed or traded, or to
conform to usage; and

 

B.            a disclosure statement describing the
Rights,

 

provided that a Nominee shall be sent the materials
provided for in (A) and (B) only in respect of all Common Shares held
of record by it which are not Beneficially Owned by an Acquiring Person. In
order for the Corporation to determine whether any Person is holding Common
Shares which are Beneficially Owned by another Person, the Corporation may
require such first Person to furnish such information and documentation as the
Corporation deems necessary.

 

(d)           Rights may be exercised, in whole or in
part, on any Business Day after the Separation Time and prior to the Expiration
Time by submitting to the Rights Agent at its office in Toronto, Ontario or any
other office of the Rights Agent in cities designated from time to time for
that purpose by the Corporation with the approval of the Rights Agent:

 

(i)            the Rights Certificate evidencing such
Rights;

 

(ii)           an election to exercise such Rights (an “Election to Exercise”) substantially in the form attached to
the Rights Certificate appropriately completed and duly executed by the holder
or such holder’s executors or administrators or other personal representatives
or such holder’s or their 

 

21

 

legal attorney duly appointed by an instrument in
writing in form and executed in a manner satisfactory to the Rights Agent; and

 

(iii)          payment by certified cheque, banker’s
draft, money order or wire transfer 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,
together with a completed Election to Exercise executed in accordance with
Clause 2.2(d)(ii), which does not indicate that such Right is null and void as
provided by Subsection 3.1(b), and payment as set forth in Clause 2.2(d)(iii),
the Rights Agent (unless otherwise instructed by the Corporation in the event
that the Corporation is of the opinion that the Rights cannot be exercised in
accordance with this Agreement) will thereupon as soon as practicable:

 

(i)            requisition from the transfer agent
certificates representing the number of such Common Shares to be purchased (the
Corporation hereby irrevocably authorizing its transfer agent to comply with
all such requisitions);

 

(ii)           when appropriate, requisition from the
Corporation the amount of cash to be paid in lieu of issuing fractional Common
Shares;

 

(iii)          after receipt of the certificates referred
to in Clause 2.2(e)(i), deliver the same to or upon the order of the registered
holder of such Rights Certificates, registered in such name or names as may be
designated by such holder;

 

(iv)          when appropriate, after receipt, deliver
the cash referred to in Clause 2.2(e)(ii) to or to the order of the
registered holder of such Rights Certificate; and

 

(v)           remit to the Corporation all payments
received on the exercise of Rights.

 

(f)            In case the holder of any Rights shall
exercise less than all the Rights evidenced by such holder’s Rights
Certificate, a new Rights Certificate evidencing the Rights remaining
unexercised (subject to the provisions of Subsection 5.1(a)) will be issued by
the Rights Agent to such holder or to such holder’s duly authorized assigns.

 

(g)           The Corporation covenants and agrees that
it will:

 

(i)            take all such action as may be necessary
and within its power to ensure that all Common Shares delivered upon exercise
of Rights shall, at the time of delivery of the certificates for such Common
Shares (subject to 

 

22

 

payment of the Exercise Price), be duly and validly
authorized, executed, issued and delivered as fully paid and non-assessable;

 

(ii)           take all such action as may be necessary
and within its power to comply with the requirements of the Business
Corporations Act, the Securities Act and the securities laws or comparable
legislation of each of the provinces of Canada, and any other applicable law, rule or
regulation, in connection with the issuance and delivery of the Rights
Certificates and the issuance of any Common Shares upon exercise of Rights;

 

(iii)          use reasonable efforts to cause all Common
Shares issued upon exercise of Rights to be listed on the stock exchanges and
markets on which such Common Shares were traded immediately prior to the Stock
Acquisition Date;

 

(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 and municipal transfer taxes and charges (not
including any income or capital taxes of the holder or exercising holder or any
liability of the Corporation to withhold tax) which may be payable in respect
of the original issuance or delivery of the Rights Certificates, or
certificates for Common Shares to be issued upon exercise of any 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 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
transferred or exercised; and

 

(vi)          after the Separation Time, except as
permitted by Sections 5.1 and 5.4, not take (or permit any Subsidiary 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

 

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.

 

(a)           In the event the Corporation shall at any
time after the date of this Agreement:

 

23

 

(i)            declare or pay a dividend on Common Shares
payable in Common 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 Common Shares (or Convertible
Securities in respect thereof) in respect of, in lieu of or in exchange for
existing Common Shares except as otherwise provided in this Section 2.3,

 

then the Exercise Price and the number of Rights
outstanding (or, if the payment or effective date therefor shall occur after
the Separation Time, the securities purchasable upon exercise of Rights) shall
be adjusted as of the payment or effective date in the manner set forth below.

 

If the Exercise Price and number of Rights outstanding are to be
adjusted:

 

(x)                            the Exercise Price in effect
after such adjustment will be equal to the Exercise Price in effect immediately
prior to such adjustment divided by the number of Common Shares (or other
capital stock) (the “Expansion Factor”)
that a holder of one Common Share immediately prior to such dividend,
subdivision, change, consolidation or issuance would hold thereafter as a
result thereof; and

 

(y)                           each Right held prior to such
adjustment will become that number of Rights equal to the Expansion Factor,

 

and the adjusted number of Rights will be deemed to be
distributed among the Common Shares with respect to which the original Rights
were associated (if they remain outstanding) and the shares issued in respect
of such dividend, subdivision, change, consolidation or issuance, so that each
such Common Share (or other capital stock) will have exactly one Right
associated with it.

 

For greater certainty, if the securities purchasable
upon exercise of Rights are to be adjusted, the securities purchasable upon
exercise of each Right after such adjustment will be the securities that a
holder of the securities purchasable upon exercise of one Right immediately
prior to such dividend, subdivision, change, consolidation or issuance would
hold thereafter as a result of such dividend, subdivision, change,
consolidation or issuance.

 

If, after the Record Time and prior to the Expiration
Time, the Corporation shall issue any shares of capital stock other than Common
Shares in a transaction of a type described in Clause 2.3(a)(i) or (iv),
shares of such capital stock shall be 

 

24

 

treated herein as nearly equivalent to Common Shares
as may be practicable and appropriate under the circumstances and the
Corporation and the Rights Agent agree to amend this Agreement in order to
effect such treatment.

 

If an event occurs which would require an adjustment
under both this Section 2.3 and Section 3.1, the adjustment provided
for in this Section 2.3 shall be in addition to, and shall be made prior
to, any adjustment required under Section 3.1.

 

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 this Subsection 2.3(a), each
such Common Share so issued shall automatically have one new Right associated
with it, which Right shall be evidenced by the certificate representing such
associated Common Share.

 

(b)           In the event the Corporation shall at any
time after the Record Time and prior to the Separation Time fix a record date
for the issuance of rights, options or warrants to all holders of Common Shares
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 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 the Market Price per Common Share on such record date, the
Exercise Price to be in effect after such record date shall be determined by
multiplying the Exercise Price in effect immediately prior to such record date
by a fraction:

 

(i)            the numerator of which shall be the number
of Common Shares outstanding on such record date plus the number of Common
Shares that 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, including the price required to be paid to
purchase such Convertible Securities) would purchase at such Market Price per
Common Share; and

 

(ii)           the denominator of which 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 may be paid by
delivery of consideration, part or all of which may be in a form other than
cash, the reasonable present cash value of such consideration shall be as
determined in good faith by the Board of Directors, whose determination shall
be described in a resolution filed with the Rights Agent and shall be binding
on the Rights Agent and the holders of Rights. . Such adjustment shall be made
successively whenever such a record date is fixed, and in the event that such
rights, options or warrants are not so issued, or if 

 

25

 

issued, are not exercised prior to the expiration
thereof, the Exercise Price shall be readjusted to the Exercise Price which
would then be in effect if such record date had not been fixed, or to the
Exercise Price which would be in effect based upon the number of Common Shares
(or securities convertible into, or exchangeable or exercisable for Common
Shares) actually issued upon the exercise of such rights, options or warrants,
as the case may be.

 

For purposes of this Agreement, the granting of the
right to purchase Common Shares (whether from treasury or otherwise) pursuant
to any Dividend Reinvestment Plan or any employee benefit, stock option or
similar plans shall be deemed not to constitute an issue of rights, options or
warrants by the Corporation; provided, however, that, in the case of any
Dividend Reinvestment Plan 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.

 

(c)           In the event the Corporation
shall at any time after the Record Time and prior to the Separation Time fix a
record date for the making of a distribution to all holders of Common Shares
(including any such distribution made in connection with a merger or
amalgamation) of evidences of indebtedness, cash (other than an annual cash
dividend or a dividend paid in Common Shares, but including any dividend
payable in securities other than Common Shares), assets or rights, options or
warrants (excluding rights, options or warrants expiring within 45 calendar
days after such record date) to purchase Common Shares or Convertible
Securities in respect of Common Shares, 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 evidences of indebtedness, cash,
assets, rights, options or warrants so to be distributed applicable to the
securities purchasable upon exercise of one Right.

 

(d)           Notwithstanding anything herein to the
contrary, no adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least one per cent in
the Exercise Price; provided, however, that any adjustments which by reason of
this Subsection 2.3(d) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under Section 2.3 shall be made to the nearest cent or to the nearest
ten-thousandth of a share. Any adjustment required by 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(a); or

 

(ii)           the record date for the applicable dividend
or distribution, the case of an adjustment made pursuant to Subsection 2.3(b) or
(c), subject to readjustment to reverse the same if such distribution shall not
be made.

 

26

 

(e)           In the event the Corporation
shall at any time after the Record Time and prior to the Separation Time issue
any shares of capital stock (other than Common Shares), or rights, options or
warrants to subscribe for or purchase any such capital stock, or securities
convertible into or exchangeable for any such capital stock, in a transaction
referred to in Clause 2.3(a)(i) or (iv) or Subsections 2.3(b) or
(c), if the Board of Directors acting in good faith determines that the
adjustments contemplated by Subsections 2.3(a), (b) and (c) in
connection with such transaction will not appropriately protect the interests
of the holders of Rights, the Board of Directors may determine what other
adjustments to the Exercise Price, number of Rights and/or securities
purchasable upon exercise of Rights would be appropriate and, notwithstanding
Subsections 2.3(a), (b) and (c), such adjustments, rather than the
adjustments contemplated by Subsections 2.3(a), (b) and (c), shall be
made. Subject to Subsection 5.4(b) and (c), the Corporation and the Rights
Agent may, with the prior approval of the holders of the Common Shares, amend
this Agreement as appropriate to provide for such adjustments.

 

(f)            Each Right originally issued by the
Corporation subsequent to any adjustment made to the 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 a Right immediately prior to such issue, all subject to further adjustment
as provided herein.

 

(g)           Irrespective of any adjustment or change in
the Exercise Price or the number of Common Shares issuable upon the exercise of
the Rights, the Rights Certificates theretofore and thereafter issued may
continue to express the Exercise Price per Common Share and the number of
Common Shares which were expressed in the initial Rights Certificates issued
hereunder.

 

(h)           In any case in which this Section 2.3
shall require that an adjustment in the Exercise Price be made effective as of
a record date for a specified event, the Corporation may elect to defer until
the occurrence of such event the issuance to the holder of any Right exercised
after such record date 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 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 shares (fractional or otherwise) or other securities upon the
occurrence of the event requiring such adjustment.

 

(i)            Notwithstanding anything contained in this Section 2.3
to the contrary, the Corporation shall be entitled to make such reductions in
the Exercise Price, in addition to those adjustments expressly required by this
Section 2.3, as and to the extent that in their good faith judgment the
Board of Directors shall determine to be advisable, in order that any:

 

(i)            consolidation or subdivision of Common
Shares;

 

27

 

(ii)           issuance (wholly or in part for cash) of
Common Shares or securities that by their terms are convertible into or
exchangeable for Common Shares;

 

(iii)          stock dividends; or

 

(iv)          issuance of rights, options or warrants
referred to in this Section 2.3,

 

hereafter made by the Corporation to holders of its
Common Shares, subject to applicable taxation laws, shall not be taxable to
such shareholders or shall subject such shareholders to a lesser amount of tax.

 

(j)            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 or other
securities, if applicable, is issued upon the exercise of Rights shall for all
purposes be deemed to have become the absolute holder of record of the Common
Shares or other securities, if applicable, represented thereon, and such
certificate shall be dated the date upon which the Rights Certificate evidencing
such Rights was duly surrendered in accordance with Subsection 2.2(d) (together
with a duly completed Election to Exercise) and payment of the Exercise Price
for such Rights (and any applicable transfer taxes and other governmental
charges payable by the exercising holder hereunder) was made; provided,
however, that if the date of such surrender and payment is a date upon which
the Common Share transfer books of the Corporation are closed, such Person
shall be deemed to have become the record holder of such shares on, and such
certificate shall be dated, the next succeeding Business Day on which the
Common Share transfer books of the Corporation are open.

 

2.5          Execution,
Authentication, Delivery and Dating of Rights Certificates

 

(a)           The Rights Certificates shall
be executed on behalf of the Corporation by its Chairman of the Board,
President or any Vice-President and by its Corporate Secretary or any Assistant
Secretary. The signature of any of these officers on the Rights Certificates
may be manual or facsimile. Rights Certificates bearing the manual or facsimile
signatures of individuals who were at any time the proper officers of the
Corporation shall bind the Corporation, notwithstanding that such 

 

28

 

individuals or any of them have ceased to hold such
offices either before or after the countersignature and delivery of such Rights
Certificates.

 

(b)           Promptly after the Corporation
learns of the Separation Time, the Corporation will notify the Rights Agent of
such Separation Time and will deliver Rights Certificates executed by the
Corporation to the Rights Agent for countersignature, together with disclosure
statements, and the Rights Agent shall countersign (manually in a manner
satisfactory to the Corporation) and send such Rights Certificates and such the
disclosure statements to the holders of the Rights pursuant to Subsection 2.2(c) 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.

 

2.6          Registration,
Transfer and Exchange

 

(a)           Following the Separation Time,
the Corporation will cause to be kept a register (the “Rights
Register”) in which, subject to such reasonable regulations as it
may prescribe, the Corporation will provide for the registration and transfer
of Rights. The Rights Agent, at its office in the City of Toronto, is hereby
appointed registrar for the Rights (the “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.

 

After the Separation Time and prior to the Expiration
Time, upon surrender for registration of transfer or exchange of any Rights
Certificate, and subject to the provisions of Subsection 2.6(c), the
Corporation will execute, and the Rights Agent will countersign and deliver, in
the name of the holder or the designated transferee or transferees, as required
pursuant to the holder’s instructions, one or more new Rights Certificates
evidencing the same aggregate number of Rights as did the Rights Certificates
so surrendered.

 

(b)           All Rights issued upon any
registration of transfer or exchange of Rights Certificates shall be the valid
obligations of the Corporation, and such Rights shall be entitled to the same
benefits under this Agreement as the Rights surrendered upon such registration
of transfer or exchange.

 

(c)           Every Rights Certificate
surrendered for registration of transfer or exchange shall be duly endorsed, or
be accompanied by a written instrument of transfer in form satisfactory to the
Corporation or the Rights Agent, as the case may be, duly executed by the
holder thereof or such holder’s attorney duly authorized in writing and shall
be guaranteed by a Canadian Schedule 1 chartered bank or an eligible guarantor
institution with membership in an approved signature guarantee medallion
program. As a condition to the issuance of any new Rights Certificate 

 

29

 

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 reasonable fees and expenses of the Rights Agent) connected
therewith.

 

2.7          Mutilated,
Destroyed, Lost and Stolen Rights Certificates

 

(a)           If any mutilated Rights
Certificate is surrendered to the Rights Agent prior to the Expiration Time,
the Corporation shall execute and the Rights Agent shall countersign and
deliver in exchange therefor a new Rights Certificate evidencing the same
number of Rights as did the Rights Certificate so surrendered.

 

(b)           If there shall be delivered to
the Corporation and the Rights Agent prior to the Expiration Time:

 

(i)            evidence to their reasonable
satisfaction of the destruction, loss or theft of any Rights Certificate; and

 

(ii)           such surety bond and 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 governmental
charge that may be imposed in relation thereto and any other expenses
(including the reasonable 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 the 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 of Rights

 

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

 

30

 

the context otherwise requires, the term “holder” of any Right means the registered holder of such
Right (or, prior to the Separation Time, of the associated Common Share).

 

2.9          Delivery
and Cancellation of Certificates

 

All Rights Certificates surrendered upon exercise or for redemption,
registration of transfer or exchange shall, if surrendered to any Person other
than the Rights Agent, be delivered to the Rights Agent and, in any case, shall
be promptly cancelled by the Rights Agent. The Corporation may at any time
deliver to the Rights Agent for cancellation any Rights Certificates previously
countersigned and delivered hereunder which the Corporation may have acquired
in any manner whatsoever, and all Rights Certificates so delivered shall be
promptly cancelled by the Rights Agent. No Rights Certificate shall be
countersigned in lieu of or in exchange for any Rights Certificates cancelled
as provided in this Section 2.9, except as expressly permitted by this
Agreement. The Rights Agent shall, subject to applicable laws, destroy all
cancelled Rights Certificates and deliver a certificate of destruction to the
Corporation on request.

 

2.10        Agreement
of Rights Holders

 

Every holder of Rights, by accepting the same, 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 certificate representing such Right;

 

(c)           that after the Separation Time, the Rights
Certificates will be transferable only on the Rights Register as provided
herein;

 

(d)           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 the contrary;

 

(e)           that such holder of Rights has waived his
right to receive any fractional Rights or any fractional shares or other
securities upon exercise of a Right (except as provided herein);

 

(f)            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, 

 

31

 

acting in good faith, this Agreement may be
supplemented or amended from time to time pursuant to and as provided herein;
and

 

(g)           that 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 preliminary or permanent injunctions 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, regulations or
executive order promulgated or enacted by any governmental authority
prohibiting or otherwise restraining performance of such obligation.

 

2.11        Rights
Certificate Holder 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 whatsoever the
holder of any Common Share or any other share or security of the Corporation
which may at any time be issuable on the exercise of the Rights represented
thereby, nor shall anything contained herein or in any Rights Certificate be
construed or deemed or confer upon the holder of any Right or Rights
Certificate, as such, any right, title, benefit or privilege of a holder of
Common Shares or any other shares or securities of the Corporation or any right
to vote at any meeting of shareholders of the Corporation whether for the
election of directors or otherwise or upon any matter submitted to holders of
Common Shares or any other shares of the Corporation at any meeting thereof, or
to give or withhold consent to any action of the Corporation, or to receive
notice of any meeting or other action affecting any holder of Common Shares or
any other shares of the Corporation except as expressly provided herein, or to
receive dividends, distributions or subscription rights, or otherwise, until
the Right or Rights evidenced by Rights Certificates shall have been duly
exercised in accordance with the terms and provisions hereof.

 

ARTICLE 3

ADJUSTMENTS TO THE RIGHTS

 

3.1          Flip-in
Event

 

(a)           Subject to Subsections 3.1(b) and Section 5.1,
in the event that prior to the Expiration Time a Flip-in Event shall occur,
each Right shall constitute, effective at the close of business on the tenth
Trading Day after the Stock Acquisition Date, the right to purchase from the
Corporation, upon exercise thereof in accordance with the terms hereof, that
number of Common Shares having an aggregate Market Price on the date of consummation
or occurrence of such Flip-in Event equal to twice the Exercise Price for an
amount in cash equal to the Exercise Price (such right to be appropriately
adjusted in a manner analogous to the applicable adjustment provided for in Section 2.3
in the event that after such consummation or occurrence, an event of a type
analogous to any of the events described in Section 2.3 shall have
occurred).

 

32

 

(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 or
the Stock Acquisition Date 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 Affiliate or Associate of such other
Person); or

 

(ii)           a transferee or other successor in title,
directly or indirectly, (a “Transferee”) of
Rights held by 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 Affiliate or Associate of such other Person), where
such Transferee becomes a transferee concurrently with or subsequent to the
Acquiring Person becoming such in a transfer that the Board of Directors acting
in good faith has determined is part of a plan, arrangement or scheme of 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
Affiliate or Associate of such other 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) shall thereafter have
no right to exercise such Rights under any provision of this Agreement and
further shall thereafter not have any other rights whatsoever with respect to
such Rights, whether under any provision of this Agreement or otherwise.

 

(c)           From and after the Separation Time, the
Corporation shall do all such acts and things as shall be 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 Business Corporations Act, the Securities Act
and the securities laws or comparable legislation of each of the provinces of
Canada in respect of the issue of Common Shares upon the exercise of Rights in
accordance with this Agreement.

 

(d)           Any Rights Certificate that represents
Rights Beneficially Owned by a Person described in either Clause 3.1(b)(i) or
(ii) or transferred to any nominee of any such Person, and any Rights
Certificate issued upon transfer, exchange, replacement or adjustment of any
other Rights Certificate referred to in this sentence, shall contain the
following legend:

 

The Rights represented by this Rights Certificate were
issued to a Person who was an Acquiring Person or an Affiliate or an Associate
of an Acquiring Person (as such terms are defined in the Shareholder Rights
Plan Agreement) or a Person who was acting jointly or in concert with an
Acquiring Person or an Affiliate or Associate of such Person. This Rights Certificate
and the 

 

33

 

Rights represented hereby are void or shall become
void in the circumstances specified in Subsection 3.1(b) of the Shareholder
Rights Plan Agreement.

 

provided, however, that the Rights Agent shall not be
under any responsibility to ascertain the existence of facts that would require
the imposition of such legend but shall impose such legend only if instructed
to do so by the Corporation in writing or if a holder fails to certify upon transfer
or exchange in the space provided on the Rights Certificate that such holder is
not a Person described in such legend and provided further that the fact that
such legend does not appear on a certificate is not determinative of whether
any Rights represented thereby are void under this Section.

 

ARTICLE 4

THE RIGHTS AGENT

 

4.1          General

 

(a)           The Corporation hereby appoints the Rights
Agent to act as agent for the Corporation 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 consent of the Rights Agent. In the event the Corporation
appoints one or more Co-Rights Agents, the respective duties of the Rights
Agent and Co-Rights Agents shall be as the Corporation may determine with the
approval of the Rights Agent and the Co-Rights 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 counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise and performance
of its duties hereunder (including the fees and disbursements of any expert or
advisor retained by the Rights Agent). The Corporation also agrees to indemnify
the Rights Agent, and its officers, directors, employees and agents for, and to
hold it and them harmless against, any loss, liability or expense, incurred
without gross negligence, bad faith or wilful misconduct on the part of the
Rights Agent or such persons, for anything done or omitted by the Rights Agent
or such persons in connection with the acceptance and administration of this
Agreement, including legal costs and expenses, which right to indemnification
will survive the termination of this Agreement and the resignation or removal
of the Rights Agent.

 

(b)           The Rights Agent shall be protected and
shall incur no liability for or in respect of any action taken, suffered or
omitted by it in connection with its administration of this Agreement in
reliance upon any certificate for Common Shares, Rights Certificate,
certificate for other securities of the Corporation, instrument of assignment
or transfer, power of attorney, endorsement, affidavit, letter, notice,
direction, consent, certificate, statement, or other paper or document believed
by 

 

34

 

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.

 

(d)           In the event of any disagreement arising
regarding the terms of this Agreement, the Rights Agent shall be entitled, at
its option, to refuse to comply with any and all demands whatsoever until the
dispute is settled either by written agreement amongst the parties to this
Agreement or by a court of competent jurisdiction.

 

4.2          Merger,
Amalgamation or Consolidation or Change of Name of Rights Agent

 

(a)           Any corporation into which the Rights Agent
may be merged or amalgamated or with which it may be consolidated, or any
corporation resulting from any merger, amalgamation, statutory arrangement or
consolidation to which the Rights Agent is a party, or any corporation
succeeding to the shareholder or stockholder services business of the Rights
Agent, will be the successor to the Rights Agent under this Agreement without
the execution or filing of any paper or any further act on the part of any of
the parties hereto, provided that such corporation would be eligible for
appointment as a successor rights agent under the provisions of Section 4.4
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 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 have
not been countersigned, any successor rights agent may countersign such Rights
Certificates 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, all of which the Corporation
and the holders of certificates 

 

35

 

for Common Shares 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 the legal counsel for the Corporation) and the
opinion of such counsel will be full and complete authorization and protection
to the Rights Agent as to any action taken or omitted by it in good faith and
in accordance with such opinion and the Rights Agent may also consult with such
other experts or advisors as the Rights Agent may reasonably 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 experts or
advisors;

 

(b)           whenever in the performance of its duties
under this Agreement, the Rights Agent deems it necessary or desirable that any
fact or matter be proved or established by the Corporation prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by a Person
believed by the Rights Agent to be the Chairman of the Board, President, any
Vice-President, Treasurer, Corporate Secretary or any Assistant Secretary of
the Corporation and delivered to the Rights Agent; and such certificate will be
full authorization to the Rights Agent for any action taken 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 gross negligence, bad faith or wilful misconduct;

 

(d)           the Rights Agent will not be liable for or
by reason of any of the statements of fact or recitals contained in this
Agreement or in the certificates for Common Shares or the Rights Certificates
(except its countersignature thereof), or be required to verify the same, but
all such statements and recitals are and will be deemed to have been made by
the Corporation only;

 

(e)           the Rights Agent will not be under any
responsibility in respect of the validity of this Agreement or the execution
and delivery hereof (except the due authorization, execution and delivery
hereof by the Rights Agent) or in respect of the validity or execution of any
certificate for a Common Share or Rights Certificate (except its
countersignature thereof); nor will it be responsible for any breach by the
Corporation of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor will it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void pursuant to
Subsection 3.1(b) 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); nor will it by any 

 

36

 

act hereunder be deemed to make any representation or
warranty as to the authorization of any Common Shares to be issued pursuant to
this Agreement or any Rights or as to whether any Common Shares will, when
issued, be duly and validly authorized, executed, issued and delivered and
fully paid and non-assessable;

 

(f)            the Corporation 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 in writing with respect to the performance of
its duties hereunder from any individual believed by the Rights Agent to be the
Chairman of the Board, President, Chief Executive Officer, Chief Financial
Officer, any Vice-President, Treasurer, Corporate Secretary or any Assistant
Secretary of the Corporation, and to apply to such individuals for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken 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 practicable after the giving of such
instructions;

 

(h)           the Rights Agent and any shareholder or
stockholder, director, officer or employee of the Rights Agent may buy, sell or
deal in Common Shares, Rights or other securities of the Corporation or become
pecuniarily interested in any transaction in which the Corporation may be
interested, or contract with or lend money to the Corporation or otherwise act
as fully and freely as though it were not Rights Agent under this Agreement.
Nothing herein shall preclude the Rights Agent from acting in any other
capacity for the Corporation or for any other legal entity; and

 

(i)            the Rights Agent may execute and exercise
any of the rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and the Rights Agent
will not be answerable or accountable for any act, default, neglect or misconduct
of any such attorneys or agents or for any loss to the Corporation resulting
from any such act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.

 

4.4          Change of
Rights Agent

 

The Rights Agent may resign and be discharged from its duties under
this Agreement upon 60 days notice (or such lesser notice as is acceptable to
the Corporation) in writing mailed to the Corporation and to each transfer
agent of Common Shares by registered mail, and to the 

 

37

 

holders of Rights in accordance with Section 5.9
at the expense of the Corporation. The Corporation may remove the Rights Agent
upon 30 days notice in writing, mailed to the Rights Agent and to each transfer
agent of the Common Shares by regular mail and to the holders of 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, then by prior written notice to the Corporation the
resigning Rights Agent or the holder of any Rights (which holder shall, with
such notice, submit such holder’s Rights Certificate, if any, for inspection by
the Corporation), may apply, at the Corporation’s expense, to any court of
competent jurisdiction for the appointment of a new rights agent. Any successor
rights agent, whether appointed by the Corporation or by such a court, shall be
a corporation incorporated under the laws of Canada or a province thereof
authorized to carry on the business of a trust company in the Province of
Ontario. After appointment, the successor rights agent will be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as rights agent without further act or deed; but the predecessor Rights
Agent shall, upon payment in full of any outstanding amounts owing by the
Corporation to the Rights Agent under this Agreement, deliver and transfer to
the successor rights agent, upon receipt of all outstanding fees and expenses
owing, 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 any successor rights agent,
as the case may be.

 

ARTICLE 5

MISCELLANEOUS

 

5.1          Redemption
and Waiver

 

(a)           The Board of Directors acting in good faith
may, with the prior approval of the holders of Voting Shares or of the holders
of Rights given in accordance with Section 5.1(i) or (j), as the case
may be, at any time prior to the occurrence of a Flip-in Event as to which the
application of Section 3.1 has not been waived pursuant to the provisions
of this Section 5.1, elect to redeem all but not less than all of the then
outstanding Rights at a redemption price of $0.001 per Right appropriately
adjusted in a manner analogous to the applicable adjustment 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 acting in good faith
may, with the prior approval of the holders of Voting Shares given in
accordance with Section 5.1(i), determine, at any time prior to the
occurrence of a Flip-in Event as to which the application of Section 3.1
has not been waived pursuant to this Section 5.1, if such Flip-in Event 

 

38

 

would occur by reason of an acquisition of Voting
Shares otherwise than pursuant to a Take-over Bid made by means of a take-over
bid circular to all holders of record of Voting Shares and otherwise than in
the circumstances set forth in Subsection 5.1(d), to waive the application of Section 3.1
to such Flip-in Event. In the event that the Board of Directors proposes such a
waiver, the Board of Directors shall extend the Separation Time to a date
subsequent to and not more than ten Business Days following the meeting of
shareholders called to approve such waiver.

 

(c)           The Board of Directors acting in good faith
may, until the occurrence of a Flip-in Event upon prior written notice
delivered to the Rights Agent, determine to waive the application of Section 3.1
to such particular Flip-in Event provided that the Flip-in Event would occur by
reason of a Take-over Bid made by way of take-over bid circular sent to all
holders of Voting Shares (which for greater certainty shall not include the
circumstances described in Subsection 5.1(d)); provided that if the Board of
Directors waives the application of Section 3.1 to a particular Flip-in
Event pursuant to this Subsection 5.1(c), the Board of Directors shall be
deemed to have waived the application of Section 3.1 to any other Flip-in
Event subsequently occurring by reason of any Take-over Bid which is made by
means of a take-over bid circular to all holders 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(c).

 

(d)           Notwithstanding the provisions of
Subsections 5.1(b) and (c) hereof, the Board of Directors may waive
the application of Section 3.1 in respect of the occurrence of any Flip-in
Event if the Board of Directors has determined within ten Trading Days
following a Stock Acquisition Date 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 such 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(d) must
be on the condition that such Person, within 14 days after the foregoing
determination by the Board of Directors or such earlier or 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.

 

(e)           The Board of Directors, shall, without
further formality, be deemed to have elected to redeem the Rights at the
Redemption Price on the date that a Person which has made a Permitted Bid, a
Competing Permitted Bid, a Take-Over Bid in respect of which the Board of
Directors has waived, or is deemed to have waived, pursuant to Subsection 5.1(c) the
application of Section 3.1, takes up and pays for Voting Shares in
connection with such Permitted Bid, Competing Permitted Bid or Take-over bid,
as the case may be.

 

39

 

(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,
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 as of the
Separation Time had not been mailed to each such holder and for all purposes of
this Agreement the Separation Time shall be deemed not to have occurred.

 

(g)           If the Board of Directors elects or is
deemed to have elected to redeem the Rights, and, in circumstances in which
Subsection 5.1(a) is applicable, such redemption is approved by the
holders of Voting Shares or the holders of Rights in accordance with Subsection
5.1(i) or (j), as the case may be, 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 Business Days after the Board of
Directors elects or is deemed to elect to redeem the Rights or if Subsection
5.1(a) is applicable within 10 Business Days after the holders of Common
Shares of the holders of Rights have approved a redemption of Rights in
accordance with Section 5.1(i) or (j), as the case may be, 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. The Corporation may not redeem, acquire or purchase for value any Rights
at any time in any manner other than specifically set forth in this Section 5.1
or in connection with the purchase of Common Shares prior to the Separation
Time.

 

(i)            If a redemption of Rights pursuant to
Subsection 5.1(a) or a waiver of a Flip-in Event pursuant to Section 5.1(b) is
proposed at any time prior to the Separation Time, such redemption or waiver
shall be submitted for approval to the holders of Voting Shares. Such approval
shall be deemed to have been given if the redemption or waiver is approved by
the affirmative vote of a majority of the votes cast by Independent
Shareholders represented in person or by proxy at a meeting of such holders
duly held in accordance with applicable laws and the Corporation’s by-laws.

 

(j)            If a redemption of Rights pursuant to
Subsection 5.1(a) is proposed at any time after the Separation Time, such
redemption shall be submitted for approval to the holders of Rights. Such
approval shall be deemed to have been given if the redemption is approved by
holders of Rights by a majority of the votes cast by the holders of Rights
represented in person or by proxy at and entitled to vote at a

 

40

 

meeting of such holders. For the purposes hereof, each
outstanding Right (other than Rights which are Beneficially Owned by any Person
referred to in clauses (i) to (v) inclusive of the definition of
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 by-laws and the Business
Corporations Act, with respect to meetings of shareholders of the Corporation.

 

(k)                                  The Corporation shall give
prompt written notice to the Rights Agent of any waiver of the application of Section 3.1
made by the Board of Directors under this Section 5.1.

 

5.2                               Expiration

 

No Person shall have any rights whatsoever pursuant to
this Agreement or in respect of any Right after the Expiration Time, except the
Rights Agent as specified in Section 4.1 of this Agreement.

 

5.3                               Issuance
of New Rights Certificates

 

Notwithstanding any of the provisions of this
Agreement or the Rights to the contrary, the Corporation may, at its option,
issue new Rights Certificates evidencing Rights in such form as may be approved
by the Board of Directors to reflect any adjustment or change in the number or kind or class
of securities purchasable upon exercise of Rights made in accordance with the
provisions of this Agreement.

 

5.4                               Supplements and Amendments

 

(a)                                 The Corporation may make
amendments to this Agreement to correct any clerical or typographical error or
which are required to maintain the validity of this Agreement as a result of
any change in any applicable legislation or regulations or rules thereunder.
The Corporation may, prior to the date of the shareholders’ meeting referred to
in Section 5.17, supplement, amend, vary, rescind or delete any of the provisions
of this Agreement and the Rights (whether or not such action would materially
adversely affect the interests of the holders of the Rights generally) without
the approval of any holders of Rights or Voting Shares in order to make any
changes which the Board of Directors acting in good faith may deem necessary or
desirable. Notwithstanding anything in this Section 5.4 to the contrary,
no such supplement or amendment shall be made to the provisions of Article 4
except with the written concurrence of the Rights Agent to such supplement or
amendment.

 

(b)                                Subject to Subsection 5.4(a),
the Corporation may, with the prior approval of the holders of Voting Shares
obtained as set forth below, at any time before the Separation Time,
supplement, amend, vary, rescind or delete any of the provisions of this
Agreement and the Rights (whether or not such action would materially adversely
affect the interests of the holders of Rights generally). Such consent shall be
deemed to have been given if the action requiring such approval is 

 

41

 

authorized by the affirmative vote of a majority of
the votes cast by Independent Shareholders present or represented at and
entitled to be voted at a meeting of the holders of Voting Shares duly called
and held in compliance with applicable laws and the articles and by-laws of the
Corporation.

 

(c)                                 Subject to Subsection 5.4(a),
the Corporation may, with the prior approval of the holders of Rights, at any
time on or after the Separation Time, supplement, amend, vary, rescind or
delete any of the provisions of this Agreement and the Rights (whether or not
such action would materially adversely affect the interests of the holders of
Rights generally), provided that no such amendment, variation or deletion shall
be made to the provisions of Article 4 except with the written concurrence
of the Rights Agent thereto.

 

(d)                                 Any approval of the holders of
Rights shall be deemed to have been given if the action requiring such approval
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) 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 by-laws and the
Business Corporations Act, with respect to meetings of shareholders of the
Corporation.

 

(e)                                 Any amendments made by the
Corporation to this Agreement pursuant to Subsection 5.4(a) which are
required to maintain the validity of this Agreement as a result of any change
in any applicable legislation or regulations or rules thereunder shall:

 

(i)                                    if made before the Separation
Time, be submitted to the shareholders of the Corporation at the next meeting
of shareholders and the shareholders may, by the majority referred to in
Subsection 5.4(b), confirm or reject such amendment;

 

(ii)                                 if made after the Separation
Time, be submitted to the holders of Rights at a meeting to be called for on a
date not later than immediately following the next meeting of shareholders of
the Corporation and the holders of Rights may, by resolution passed by the
majority referred to in Subsection 5.4(d), confirm or reject such amendment.

 

Any such amendment shall be effective from the date of
the resolution of the Board of Directors adopting such amendment, until it is
confirmed or rejected or until it ceases to be effective (as described in the
next sentence) and, where such amendment is confirmed, it continues in effect
in the form so confirmed. If such amendment 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 shall cease to be effective from and
after the termination of the 

 

42

 

meeting (or any adjournment of such 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 this Agreement to substantially the same effect shall be effective until
confirmed by the shareholders or holders of Rights as the case may be.  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 five
days of effecting such amendment, variation or deletion.

 

5.5                               Fractional Rights and Fractional Shares

 

(a)                                 The Corporation shall not be
required to issue fractions of Rights or to distribute Rights Certificates
which evidence fractional Rights. After the Separation Time, in lieu of issuing
fractional Rights, the Corporation shall pay to the holders of record of the
Rights Certificates (provided the Rights represented by such Rights
Certificates are not void pursuant to the provisions of Subsection 3.1(b), at
the time such fractional Rights would otherwise be issuable), an amount in cash
equal to the fraction of the Market Price of one whole Right that the fraction
of a Right that would otherwise be issuable is of one whole Right.  The Rights Agent will have no obligation to
make any payments in lieu of issuing fractions of Rights pursuant to this Subsection
5.5(a) unless and until the Corporation shall have provided to the Rights
Agent the amount of cash to be paid in lieu of issuing such fractional Rights.

 

(b)                                The Corporation shall not be
required to issue fractions of Common Shares upon exercise of Rights or to
distribute certificates which evidence fractional Common Shares. In lieu of
issuing fractional Common Shares, the Corporation shall pay to the registered
holders of Rights Certificates, at the time such Rights are exercised as herein
provided, an amount in cash equal to the fraction of the Market Price of one
Common Share that the fraction of a Common Share that would otherwise be
issuable upon the exercise of such Right is of one whole Common Share at the
date of such exercise. The Rights Agent will have no obligation to make any payments
in lieu of issuing fractions of Common Shares pursuant to this Subsection 5.5(b) unless
and until the Corporation shall have provided to the Rights Agent the amount of
cash to be paid in lieu of issuing such fractional Common Shares.

 

5.6                               Rights of Action

 

Subject to the terms of this Agreement, all 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. Any holder of
Rights, without the consent of the Rights Agent or of the holder of any other
Rights, may, on such holder’s own behalf and for such holder’s own benefit and
the benefit of other holders of Rights enforce, and may institute and maintain
any suit, action or proceeding against the Corporation to enforce such holder’s
right to exercise such holder’s Rights, or Rights to which such holder is
entitled, in the manner provided in such holder’s Rights 

 

43

 

Certificate and in this Agreement. Without limiting
the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of the obligations of any Person subject to, this
Agreement.

 

5.7                               Regulatory Approvals

 

Any obligation of the Corporation or action or event contemplated by
this Agreement shall be subject to the receipt of any requisite approval or
consent from any governmental or regulatory authority, including without
limiting the generality of the foregoing, any necessary approvals of the
Toronto Stock Exchange, or any other applicable stock exchange or market.

 

5.8                               Notice of Proposed Actions

 

In case the Corporation shall propose 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 Flip-in Event,
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 taking of such
proposed action by the Corporation.

 

5.9                               Notices

 

(a)                                 Notices or demands authorized
or required by this Agreement to be given or made by the Rights Agent or by the
holder of any Rights to or on the Corporation shall be sufficiently given or
made if delivered, sent by registered or certified mail, postage prepaid (until
another address is filed in writing with the Rights Agent), or sent by
facsimile or other form of recorded electronic communication, charges prepaid
and confirmed in writing, as follows:

 

	
   

  	
  DragonWave Inc.

  
	
   

  	
  411 Legget Drive

  
	
   

  	
  Suite 600

  
	
   

  	
  Ottawa, ON 
  K2K 3C9

  
	
   

  	
  Canada

  
	
   

  	
   

  
	
   

  	
  Attention:

  	
  Chief Executive
  Officer

  
	
   

  	
  Fax No.:

  	
  (613)
  599-4265

  
	
   

  	
   

  
	
   

  	
  with a copy
  to:

  
	
   

  	
   

  
	
   

  	
  Fraser
  Milner Casgrain LLP

  
	
   

  	
  99 Bank
  Street, Suite 1420

  
	
   

  	
  Ottawa, Ontario  K1P 1H4

  

 

44

 

	
   

  	
  Attention:

  	
  Tom
  Houston/Andrea Johnson

  
	
   

  	
  Fax No.:

  	
  (613)
  783-9690

  

 

(b)                                 Notices or demands authorized
or required by this Agreement to be given or made by the Corporation or by the
holder of any Rights to or on the Rights Agent shall be sufficiently given or
made if delivered, sent by registered or certified mail, postage prepaid (until
another address is filed in writing with the Corporation), or sent by facsimile
or other form of recorded electronic communication, charges prepaid and
confirmed in writing, as follows:

 

	
   

  	
  Computershare
  Investor Services Inc.

  
	
   

  	
  100
  University Avenue

  
	
   

  	
  9th Floor

  
	
   

  	
  Toronto,
  Ontario M5J 2Y1

  
	
   

  	
   

  
	
   

  	
  Attention:

  	
  Senior
  Manager, Client Services

  
	
   

  	
  Fax No..:

  	
  (416) 981-9800

  

 

(c)                                  Notices or demands authorized
or required by this Agreement to be given or made by the Corporation or the
Rights Agent to or on the holder of any Rights shall be sufficiently given or
made if delivered or sent by first class mail, postage prepaid, addressed to
such holder at the address of such holder as it appears upon the register of
the Rights Agent or, prior to the Separation Time, on the register of the
Corporation for its Common Shares. Any notice which is mailed or sent in the
manner herein provided shall be deemed given, whether or not the holder
receives the notice.

 

(d)                                 Any notice given or made in
accordance with this Section 5.9 shall be deemed to have been given and to
have been received on the day of delivery, if so delivered, on the third
Business Day (excluding each day during which there exists any general
interruption of postal service due to strike, lockout or other cause) following
the mailing thereof, if so mailed, and on the day of telegraphing, telecopying
or sending of the same by other means of recorded electronic communication
(provided such sending is during the normal business hours of the addressee on
a Business Day and if not, on the first Business Day thereafter). Each of the
Corporation and the Rights Agent may from time to time change its address for
notice by notice to the other given in the manner aforesaid.

 

5.10                        Compliance
with Anti-Money Laundering Legislation

 

The Rights Agent shall retain the right not to act and shall not be
liable for refusing to act if, due to a lack of information or for any other
reason whatsoever, the Rights Agent reasonably determines that such an act
might cause it to be in non-compliance with any applicable anti-money
laundering or anti-terrorist legislation, regulation or guideline.  Further, should the Rights Agent reasonably
determine at any time that its acting under this Agreement has resulted in it
being in non-compliance with any applicable anti-money laundering or
anti-terrorist legislation, 

 

45

 

regulation or guideline, then it shall have the right
to resign on 10 days’ written notice to the Corporation, provided: (i) that
the Rights Agent’s written notice shall describe the circumstances of such
non-compliance; and (ii) that if such circumstances are rectified to the
Rights Agent’s satisfaction within such 10 day period, then such resignation
shall not be effective.

 

5.11                        Privacy
Legislation

 

The parties acknowledge that federal and/or provincial legislation that
addresses the protection of individual’s personal information (collectively, “Privacy
Laws”) applies to obligations and activities under this Agreement.  Despite any other provision of this
Agreement, neither party will take or direct any action that would contravene,
or cause the other to contravene, applicable Privacy Laws.  The Corporation will, prior to transferring
or causing to be transferred personal information to the Rights Agent, obtain
and retain required consents of the relevant individuals to the collection, use
and disclosure of their personal information, or will have determined that such
consents either have previously been given upon which the parties can rely or
are not required under the Privacy Laws. 
The Rights Agent will use commercially reasonable efforts to ensure that
its services hereunder comply with Privacy Laws.

 

5.12                        Costs
of Enforcement

 

The Corporation agrees that if the Corporation fails to fulfil any of
its obligations pursuant to this Agreement, then the Corporation will reimburse
the holder of any Rights for the costs and expenses (including legal fees)
incurred by such holder, on a solicitor and his own client basis, to enforce
his rights pursuant to any Rights or this Agreement.

 

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; further, this
Agreement shall be for the sole and exclusive benefit of the Corporation, the
Rights Agent and the holders of the Rights.

 

5.15                        Governing Law

 

This Agreement and each Right issued hereunder shall be deemed to be a
contract made under the laws of the Province of Ontario and for all purposes
shall be governed by and construed in accordance with the laws of such Province
applicable to contracts to be made and performed entirely within such Province.

 

46

 

5.16                        Severability

 

If any term or provision hereof or the application thereof to any
circumstance shall, in any jurisdiction and to any extent, be invalid or
unenforceable, such term or provision shall be ineffective only as to such
jurisdiction and to the extent of such invalidity or unenforceability in such
jurisdiction without invalidating or rendering unenforceable or ineffective the
remaining terms and provisions hereof in such jurisdiction or the application
of such term or provision in any other jurisdiction or to circumstances other
than those as to which it is specifically held invalid or unenforceable.

 

5.17                        Effective Date and Shareholder Confirmation

 

(a)                                 This Agreement is effective
from the date hereof; provided that unless this Agreement is confirmed by
resolution passed by a majority of the votes cast by Independent Shareholders
present in person or voting by proxy at a meeting of shareholders of the
Corporation to be held not later than July 29, 2009, the Rights Plan, this
Agreement and all outstanding Rights shall terminate and be void and of no
further force and effect from the close of business on July 29, 2009.

 

(b)                                At the annual
meeting of shareholders of the Corporation held in 2012 and every third
anniversary thereafter, the Board of Directors may submit a resolution
ratifying the continued existence of this Agreement (as it may be amended or
restated) to the Independent Shareholders for their consideration and approval.
If no such resolution is submitted to any such meeting or the resolution is not
passed by a majority of the votes cast by Independent Shareholders present in
person or voting by proxy, then immediately following the meeting if no such
resolution was submitted or upon confirmation by the chair of such meeting of
the result of the vote on such resolution, without further formality, the
Rights Plan, this Agreement and all outstanding rights shall terminate and be
void and of no further force and effect; provided that termination shall not
occur if a Flip-in Event has occurred (other than a Flip-in Event in respect of
which the application of Section 3.1 has been waived pursuant to Section 5.1)
prior to the time at which this Agreement would otherwise terminate pursuant to
this Subsection 5.17(b).

 

5.18                        Determinations and Actions by the Board of
Directors

 

All actions, calculations and determinations (including all omissions
with respect to the foregoing) which are done or made or approved by the Board
of Directors in connection herewith, in good faith, shall not subject the Board
of Directors or any director of the Corporation to any liability to the holders
of the Rights.

 

5.19                        Declaration as to Non-Canadian 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 by the Corporation with the securities laws or comparable
legislation of a jurisdiction outside Canada, the Board of Directors acting in
good faith shall take such actions as it may deem appropriate to ensure such 

 

47

 

compliance. 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 in which such issue or delivery would be
unlawful without registration of the relevant Persons or securities for such
purposes.

 

5.20                        Time of the Essence

 

Time shall be of the essence in this Agreement.

 

5.21                        Execution in Counterparts

 

This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and
all such counterparts shall together constitute one and the same instrument.

 

IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.

 

 

	
   

  	
  DRAGONWAVE
  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  (signed)

  
	
   

  	
  Name:

  	
  Peter Allen

  
	
   

  	
  Title:

  	
  President
  and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  COMPUTERSHARE INVESTOR SERVICES INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  (signed)

  
	
   

  	
  Name:

  	
  Florence
  Smith

  
	
   

  	
  Title:

  	
  Professional,
  Client Services

  
	
   

  	
   

  	
  Computershare
  Investor Services Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  (signed)

  
	
   

  	
  Name:

  	
  Mary
  Ann Sombir

  
	
   

  	
  Title:

  	
  Professional, Client Services

  
	
   

  	
   

  	
  Computershare Investor Services Inc.

  

 

48

 

ATTACHMENT
1

 

FORM OF RIGHTS CERTIFICATE

 

COMPUTERSHARE INVESTOR SERVICES INC.

 

SHAREHOLDER
RIGHTS PLAN AGREEMENT

 

	
  Certificate
  No.

  	
  Rights

  

 

THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF THE CORPORATION, AND AMENDMENT OR TERMINATION ON THE TERMS SET FORTH
IN THE SHAREHOLDER RIGHTS PLAN AGREEMENT. UNDER CERTAIN CIRCUMSTANCES
(SPECIFIED IN SUBSECTION 3.1(b) OF THE SHAREHOLDER RIGHTS PLAN
AGREEMENT), RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR CERTAIN RELATED
PARTIES, OR TRANSFEREES OF AN ACQUIRING PERSON OR CERTAIN RELATED PARTIES, MAY BECOME
VOID.

 

RIGHTS CERTIFICATE

 

This certifies that  , or registered assigns, is the
registered holder of the number of Rights set forth above, each of which
entitles the registered holder thereof, subject to the terms, provisions and
conditions of the Shareholder Rights Plan Agreement, dated as of January                                                , 2009, as the same may be
amended or supplemented from time to time (the “Shareholder
Rights Plan Agreement”), between DragonWave Inc., a corporation
incorporated under the laws of Canada (the “Corporation”),
and Computershare Investor Services Inc., a trust company incorporated under
the laws of Canada (the “Rights Agent”)
(which term shall include any successor rights agent under the Shareholder
Rights Plan Agreement), to purchase from the Corporation at any time after the
Separation Time (as such term is defined in the Shareholder Rights Plan
Agreement) and prior to the Expiration Time (as such term is defined in the
Shareholder Rights Plan Agreement), one fully paid common share of the
Corporation (a “Common Share”) at the Exercise
Price referred to below, upon presentation and surrender of this Rights
Certificate with the Form of Election to Exercise (in the form provided
hereinafter) duly executed and submitted to the Rights Agent at its principal
office in Toronto, Ontario. Until adjustment thereof in certain events as
provided in the Shareholder Rights Plan Agreement, the Exercise Price shall be:

 

(a)                                  until the Separation Time, an
amount equal to three times the Market Price (as such term is defined in the
Shareholder Rights Plan Agreement), from time to time, per Common Share; and

 

(b)                                 from and after the Separation
Time, an amount equal to three times the Market Price, as at the Separation
Time, per Common Share

 

(payable by certified cheque, banker’s draft, money
order or wire transfer payable to the order of the Corporation).

 

 

In certain circumstances described in the Shareholder
Rights Plan Agreement, each Right evidenced hereby may entitle the registered
holder thereof to purchase or receive assets, debt securities or shares in the
capital of the Corporation other than Common Shares, or more or less than one
Common Share, all as provided in the Shareholder Rights Plan Agreement.

 

This Rights Certificate is subject to all of the terms
and provisions of the Shareholder Rights Plan Agreement, which terms and
provisions are incorporated herein by reference and made a part hereof and to
which Shareholder Rights Plan Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Rights Agent, the Corporation and the holders of
the Rights Certificates. Copies of the Shareholder Rights Plan Agreement are on
file at the registered office of the Corporation and are available upon
request.

 

This Rights Certificate, with or without other Rights
Certificates, upon surrender at any of the offices of the Rights Agent
designated for such purpose, may be exchanged for another Rights Certificate or
Rights Certificates of like tenor and date evidencing an aggregate number of
Rights equal to the aggregate number of Rights evidenced by the Rights
Certificate or Rights Certificates surrendered. If this Rights Certificate
shall be exercised in part, the registered holder shall be entitled to receive,
upon surrender hereof, another Rights Certificate or Rights Certificates for
the number of whole Rights not exercised.

 

Subject to the provisions of the Shareholder Rights
Plan Agreement, the Rights evidenced by this Rights Certificate may be, and
under certain circumstances are required to be, redeemed by the Corporation at
a redemption price of $0.001 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 Shareholder Rights Plan Agreement.

 

No holder of this Rights Certificate, as such, shall
be entitled to vote or receive dividends or be deemed for any purpose the
holder of Common Shares or of any other securities which may at any time be
issuable upon the exercise hereof, nor shall anything contained in the
Shareholder Rights Plan 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 meetings or other actions affecting
shareholders (except as provided in the Shareholder Rights Plan 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 Shareholder Rights Plan Agreement.

 

This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.

 

2

 

WITNESS the facsimile signature of the proper
officer of the Corporation.

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DRAGONWAVE INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
  Countersigned:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  COMPUTERSHARE
  INVESTOR SERVICES INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Authorized
  Signature

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Authorized Signature

  

 

3

 

FORM OF ASSIGNMENT

 

(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)

 

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, and does hereby
irrevocably constitute and appoint                         ,
as attorney, to transfer the within Rights on the books of the Corporation,
with full power of substitution.

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Please print name of Signatory)

  

 

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.)

 

Signatures must be guaranteed by a Canadian chartered
bank, a Canadian trust company, a member firm of a recognized stock exchange in
Canada, a member of a registered national securities exchange in the United
States, or a member of the Securities Transfer Association Medallion (STAMP)
Program.

 

CERTIFICATE

 

(To be
completed if true.)

 

The undersigned party transferring Rights hereunder,
hereby represents, for the benefit of all holders of Rights and Common Shares,
that the Rights evidenced by this Rights Certificate are not, and, to the
knowledge of the undersigned, have never been, Beneficially Owned by an
Acquiring Person or an Affiliate or Associate thereof or a Person acting
jointly or in concert with any of the foregoing. Capitalized terms shall have
the meaning ascribed thereto in the Shareholder Rights Plan Agreement.

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Please print name of Signatory)

  

 

 

(To be attached
to each Rights Certificate.)

 

 

FORM OF ELECTION TO EXERCISE

 

(To be executed by the registered
holder if such holder desires to exercise the Rights Certificate.)

 

TO:         Computershare
Investor Services Inc.

 

The undersigned hereby irrevocably elects
to exercise                       whole Rights represented by the
attached Rights Certificate to purchase the Common Shares or other securities,
if applicable, issuable upon the exercise of such Rights and requests that
certificates for such securities be issued in the name of:

 

	
   

  
	
  (Name)

  
	
   

  
	
   

  
	
  (Address)

  
	
   

  
	
   

  
	
  (City and Province)

  
	
   

  
	
   

  
	
  Social Insurance Number or other taxpayer identification number.

  

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Please print name of Signatory)

  

 

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 Number or other taxpayer identification number.

  

 

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Please print name of Signatory)

  

 

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.)

 

Signatures
must be guaranteed by a Canadian chartered bank, a Canadian trust company, a
member firm of a recognized stock exchange in Canada, a member of a registered
national securities exchange in the United States, or a member of the
Securities Transfer Association Medallion (STAMP) Program.

 

CERTIFICATE

 

(To be
completed if true.)

 

The undersigned party exercising Rights hereunder,
hereby represents, for the benefit of all holders of Rights and Common Shares,
that the Rights evidenced by this Rights Certificate are not, and, to the
knowledge of the undersigned, have never been, Beneficially Owned by an
Acquiring Person or an Affiliate or Associate thereof or a Person acting
jointly or in concert with any of the foregoing. Capitalized terms shall have
the meaning ascribed thereto in the Shareholder Rights Plan Agreement.

 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Please print name of Signatory)

  

 

 

(To be
attached to each Rights Certificate.)

 

2

 

NOTICE

 

In the event the certification set forth above in the
Forms of Assignment and Election to Exercise is not completed, the Corporation
will deem the Beneficial Owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Shareholder Rights Plan Agreement). No Rights Certificates shall
be issued in exchange for a Rights Certificate owned or deemed to have been
owned by an Acquiring Person or an Affiliate or Associate thereof, or by a
Person acting jointly or in concert with an Acquiring Person or an Affiliate or
Associate thereof.

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