SHAREHOLDERS RIGHTS PLAN AGREEMENT
DATED AS OF
MAY 19, 1999
BETWEEN
CENTURION ENERGY INTERNATIONAL INC.
AND
MONTREAL TRUST COMPANY OF CANADA
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TABLE OF CONTENTS
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ARTICLE 1
INTERPRETATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
1.1 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
1.2 Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
1.3 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
1.4 References to Agreement . . . . . . . . . . . . . . . . . . . . . . . . -14-
1.5 Grandfathered Person . . . . . . . . . . . . . . . . . . . . . . . . . -15-
1.6 Calculation of Number and Percentage of Beneficial Ownership
of Outstanding Voting Shares. . . . . . . . . . . . . . . . . . -15-
1.7 Acting Jointly or in Concert . . . . . . . . . . . . . . . . . . . . . -16-
1.8 Generally Accepted Accounting Principles . . . . . . . . . . . . . . . -16-
ARTICLE 2
THE RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
2.1 Legend on Common Share Certificates . . . . . . . . . . . . . . . . . . -16-
2.2 Initial Exercise Price; Exercise of Rights; Detachment of Rights. . . . -17-
2.3 Adjustments to Exercise Price; Number of Rights . . . . . . . . . . . . -20-
2.4 Date on Which Exercise is Effective . . . . . . . . . . . . . . . . . . -24-
2.5 Execution, Authentication, Delivery and Dating of Rights Certificates . -24-
2.6 Registration, Registration of Transfer and Exchange . . . . . . . . . . -25-
2.7 Mutilated, Destroyed, Lost and Stolen Rights Certificates . . . . . . . -26-
2.8 Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . -26-
2.9 Delivery and Cancellation of Certificates . . . . . . . . . . . . . . . -26-
2.10 Agreement of Rights Holders . . . . . . . . . . . . . . . . . . . . . . -27-
2.11 Rights Certificate Holder not Deemed a Shareholder. . . . . . . . . . . -28-
ARTICLE 3
ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS . . . . -28-
3.1 Flip-in Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
3.2 Exchange Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . -30-
3.3 Fiduciary Duties of the Board of Directors of the Corporation . . . . . -31-
ARTICLE 4
THE RIGHTS AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -31-
4.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -31-
4.2 Merger or Amalgamation or Change of Name of Rights Agent. . . . . . . . -32-
4.3 Duties of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . -32-
4.4 Change of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . -34-
ARTICLE 5
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -35-
5.1 Redemption and Waiver . . . . . . . . . . . . . . . . . . . . . . . . . -35-
5.2 Expiration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -36-
5.3 Issuance of New Rights Certificates . . . . . . . . . . . . . . . . . . -36-
5.4 Supplements and Amendments . . . . . . . . . . . . . . . . . . . . . . -36-
5.5 Fractional Rights and Fractional Shares . . . . . . . . . . . . . . . . -38-
5.6 Rights of Action . . . . . . . . . . . . . . . . . . . . . . . . . . . -38-
5.7 Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . -39-
5.8 Unlawful Distributions . . . . . . . . . . . . . . . . . . . . . . . . -39-
5.9 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -39-
5.10 Costs of Enforcement. . . . . . . . . . . . . . . . . . . . . . . . . . -40-
5.11 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -40-
5.12 Benefits of this Agreement . . . . . . . . . . . . . . . . . . . . . . -40-
5.13 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -41-
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5.14 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -41-
5.15 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . -41-
5.16 Determinations and Actions by the Board of Directors . . . . . . . . . -41-
5.17 Time of the Essence . . . . . . . . . . . . . . . . . . . . . . . . . . -41-
5.18 Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . -42-
5.19 Language . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -42-
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THIS SHAREHOLDERS RIGHTS PLAN AGREEMENT made as of the 19th day of May, 1999.
BETWEEN:
CENTURION ENERGY INTERNATIONAL INC., a corporation amalgamated
under the Business Corporations Act (Alberta),
(hereinafter referred to as the "Corporation")
OF THE FIRST PART
- and -
MONTREAL TRUST COMPANY OF CANADA, a trust company incorporated
under the laws of Canada
(hereinafter referred to as the "Rights Agent")
OF THE SECOND PART
WHEREAS the Board of Directors has determined that it is in the best interests
of the Corporation and all of its shareholders to adopt a shareholder protection
rights plan;
AND WHEREAS in order to implement the adoption of a shareholder protection
rights plan the Board of Directors has:
1. authorized the issuance and distribution of one Right in respect of each
Common Share outstanding at the Record Time; and
2. authorized the issuance of one Right in respect of each Common Share
issued after the Record Time and prior to the earlier of the Separation
Time and the Expiration Time;
AND WHEREAS each Right entitles the holder thereof, after the Separation Time,
to purchase securities or other assets of the Corporation pursuant to the terms
and subject to the conditions set forth herein; and
AND WHEREAS the Corporation desires to appoint the Rights Agent to act 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, the parties hereby agree as follows:
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ARTICLE 1
INTERPRETATION
1.1 Certain Definitions
In this Agreement:
a. "ACQUIRING PERSON" means any Person who is the Beneficial Owner of 20%
or more of the outstanding Voting Shares; provided, however, that the
term "ACQUIRING PERSON" shall not include:
i. the Corporation or any Subsidiary of the Corporation;
ii. any Person who becomes the Beneficial Owner of 20% or more of the
outstanding Voting Shares as a result of any one or more Voting
Share Reductions, Permitted Bid Acquisitions, Exempt Acquisitions
or Pro Rata Acquisitions; provided that if a Person shall become
the Beneficial Owner of 20% or more of the outstanding Voting
Shares by reason of any one or more Voting Share Reductions,
Permitted Bid Acquisitions, Exempt Acquisitions or Pro Rata
Acquisitions and, if thereafter, such Person, while such Person
is the Beneficial Owner of 20% or more of the outstanding Voting
Shares, becomes the Beneficial Owner of additional Voting Shares
which result in an increase of such Person's Beneficial Ownership
of Voting Shares by more than 1% of the number of such Voting
Shares outstanding as at the time of the acquisition (other than
pursuant to one or more Permitted Bid Acquisitions, Exempt
Acquisitions or Pro Rata Acquisitions), then, as of the date such
Person becomes the Beneficial Owner of such additional
outstanding Voting Shares, such Person shall be an "Acquiring
Person";
iii. for the period of ten days after the Disqualification Date, any
Person who becomes the Beneficial Owner of 20% or more of the
outstanding Voting Shares as a result of such Person becoming
disqualified from relying on paragraph 1.1(d)(viii) solely
because such Person makes or proposes to make a Take-over Bid
alone or acting jointly or in concert with any other Person; or
iv. an underwriter or member of a banking or selling group that
becomes the Beneficial Owner of 15% or more of the outstanding
Voting Shares in connection with a bona fide distribution to the
public of securities;
b. "AFFILIATE", when used to indicate a relationship with a specified
Person, means a Person that, directly or indirectly (including through
one or more intermediaries), controls, is controlled by or is under
common control with, such specified Person;
c. "ASSOCIATE", when used to indicate a relationship with a specified
Person, means:
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i. any body corporate of which such specified Person owns at law or
in equity shares or securities currently convertible into or
exchangeable for shares carrying more than 10% of the voting
rights exercisable with respect to the election of directors
under all circumstances or by reason of the occurrence of an
event that has occurred and is continuing, or a currently
exercisable option or right to purchase such shares or such
convertible or exchangeable securities, and with whom such
specified Person is acting jointly or in concert;
ii. any partner of such specified Person;
iii. any trust or estate in which such specified Person has a
beneficial interest and with whom such specified Person is acting
jointly or in concert, or in which such specified Person has a
50% or greater beneficial interest or in respect of which such
specified Person serves as a trustee or in a similar capacity
provided, however, that a Person shall not be an Associate of a
trust by reason only of the fact that such Person serves as
trustee or in a similar capacity in relation to such trust if
such Person is duly licensed to carry on the business of a trust
company under the laws of Canada or any province thereof or if
the ordinary business of such Person includes the management of
investment funds for unaffiliated investors and such Person acts
as trustee or in a similar capacity in relation to such trust in
the ordinary course of such business;
iv. a spouse of such specified Person or any Person of the same or
opposite sex with whom such specified Person is living in a
conjugal relationship outside marriage or a child of such
specified Person; and
v. any relative of such specified Person or of a spouse or other
Person mentioned in paragraph 1.1(c)(iv), if that relative has
the same residence as such specified Person;
d. A Person shall be 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 is the direct or indirect owner at law or in equity
and, for the purpose of this subclause i. a Person shall be
deemed to be the Beneficial Owner of all securities:
(1) owned by a partnership of which the Person is a partner;
(2) owned by a trust of which the Person has a beneficial
interest and which is acting jointly or in concert with that
Person or of which the Person has a 50% or greater
beneficial interest;
(3) owned jointly or in common with others; and
(4) which are directly or indirectly owned at law or in equity
by an Associate of such Person;
ii. any securities as to which such Person or any or of such Person's
Affiliates or Associates has or shares, directly or indirectly:
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(1) the right to acquire (whether such right is exercisable
immediately or after the lapse or passage of time and
whether or not on condition or the occurrence of any
contingency or otherwise) pursuant to any agreement,
arrangement, pledge or understanding (whether or not in
writing) (other than customary agreements with and between
underwriters and banking group or selling group members with
respect to a bona fide public offering of securities and
other than pledges of securities in the ordinary course of
business that meet all of the conditions specified in Rule
13d-3(d)-(3) under the 1934 Exchange Act other than the
condition in Rule 13d-3(d)(3)(ii) and other than a pledge
agreement with a registered securities dealer relating to
the extension of credit for purchases of securities on
margin in the ordinary course of the dealer's business), or
upon the exercise of any conversion right, exchange right,
purchase right (other than a Right), warrant or option, or
otherwise; or
(2) the right to vote (whether such right is exercisable
immediately or after the lapse or passage of time and
whether or not on condition or the occurrence of any
contingency or otherwise), pursuant to any agreement,
arrangement, pledge or understanding (whether or not in
writing), or otherwise (other than pledges of securities in
the ordinary course of business that meet all of the
circumstances specified in Rule 13-3(d)(3) under the 1934
Exchange Act other than the condition in Rule
13d-3(d)(3)(ii) and other than a pledge agreement with a
registered securities dealer relating to the extension of
credit for purchases of securities on margin in the ordinary
course of the dealer's business); and
iii. any securities which are Beneficially Owned within the meaning of
paragraphs (i) or (ii) of this definition by any other Person
with which such Person or any of such Person's Affiliates or
Associates is acting jointly or in concert or has any agreement,
arrangement, or understanding, other than a pledge, (whether or
not in writing) (other than customary agreements with and between
underwriters and banking group or selling group members with
respect to a bona fide public offering of such securities) with
respect to or for the purpose of acquiring, holding, voting or
disposing of any Voting Shares;
provided, however, that a Person shall not be deemed the "BENEFICIAL
OWNER" or to have "BENEFICIAL OWNERSHIP" of, or to "BENEFICIALLY OWN",
any security:
iv. solely because such security has been deposited or tendered
pursuant to any Take-over Bid made by such Person, any of such
Person's Affiliates or Associates or any other Person referred to
in paragraph (iii) or (iv) of this definition until such
deposited or tendered security has been unconditionally accepted
for payment or exchange or taken up and paid for, whichever shall
first occur;
v. solely because such Person, any of such Person's Affiliates or
Associates or any other Person referred to in paragraph (iii) of
this definition has or shares the power to vote or direct the
voting of such security pursuant to a revocable proxy given in
response to a public proxy solicitation;
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vi. solely because such Person, any of such Person's Affiliates or
Associates or any other Person referred to in paragraph (iii) of
this definition has or shares the power to vote or direct the
voting of such security in connection with or in order to
participate in a public proxy solicitation;
vii. solely because any such Person, any of such Person's Affiliates
or Associates or any other Person referred to in paragraph (iii)
of this definition has an agreement, arrangement or understanding
(whether or not in writing) with respect to a shareholder
proposal or a matter or matters to come before a meeting of
shareholders, including the election of directors;
viii.solely because such Person, any of such Person's Affiliates or
Associates or any other Person referred to in paragraph (iii) of
this definition holds or exercises voting or despositive power
over such security provided that:
(1) the ordinary business of such Person (the "INVESTMENT
MANAGER") includes the management of investment funds for
others (which others, for greater certainty, may include and
be limited to one or more employee benefit plans or pension
plans) and such voting or despositive power over such
security is held in the ordinary course of such business in
the performance of the duties of the Investment Manager for
the account of any other Person (the "Client");
(2) such Person (the "TRUST COMPANY") is licensed to carry on
the business of a trust company under applicable law 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 voting or despositive power over such security in
the ordinary course of such duties for the estate of any
such deceased or incompetent Person or for such other
accounts; and
(3) the Investment Manager or the Trust Company, as the case may
be, does not make or propose to make a Take-over Bid by
means of a take-over bid circular or any other means, 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 acting jointly
or in concert with any other Person;
ix. solely because such Person is a Client of the same Investment
Manager as another Person on whose account the Investment Manager
holds or exercises voting or despositive power over such
security, or solely because such Person is an Estate Account or
an Other Account of the same Trust Company as another Person on
whose account the Trust Company holds or exercises voting or
despositive power over such security;
x. solely because such Person, any of such Person's Affiliates or
Associates or any other Person referred to in paragraph (iii) of
this definition would be the Beneficial Owner as defined in
paragraphs (i) to (iii) of this definition of such security
provided that such Person is:
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(1) a Crown agent or agency; or
(2) the administrator or the trustee of one or more pension
funds or plans registered under the laws of Canada or any
Province thereof;
and such securities are held solely for the purposes of its
activity as a Person described in (A) or (B) above, provided that
such Person (1)(a) is precluded by its governing legislation from
owning more than 30% of the shares of any company including the
Corporation or (b) where not so precluded, is generally so
precluded and in such event does not own more than 30% of the
shares of the Corporation; (2) holds its Voting Shares for
investment purposes; and (3) is not acting jointly or in concert
with any other Person. For greater certainty, and without
limitation to the generality of Clause 5.14, if for any reason
the existence of this paragraph (x) of this definition is
judicially determined to affect the validity or enforceability of
this Agreement, it is the expressed desire of the parties to this
Agreement that this paragraph (x) of this definition be severed
from the balance of this Agreement and that in such circumstances
the provisions of Subsection 5.1(e) shall apply mutatis mutandis
and the reference therein to the 10 days shall be read to be 45
days or such later date as the Board of Directors may determine;
e. "BOARD OF DIRECTORS" means the board of directors of the Corporation
or any duly constituted and empowered committee thereof;
f. "BUSINESS CORPORATIONS ACT" means the Business Corporations Act
(Alberta), S.A. 1981, c. B-15, as amended from time to time, and the
regulations made thereunder, as in effect on the date of this
Agreement or as the same may be amended, re-enacted or replaced by any
comparable or successor laws or regulations thereto;
g. "BUSINESS DAY" means any day other than a Saturday, Sunday or a day on
which banking institutions in Calgary, Alberta are authorized or
obligated by law to close;
h. "CANADIAN DOLLAR EQUIVALENT" of any amount which is expressed in
United States dollars means, on any date, the Canadian dollar
equivalent of such amount determined by multiplying such amount by the
U.S. - Canadian Exchange Rate on such date;
i. "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 Calgary office of the principal transfer
agent for the Common Shares (or, after the Separation Time, the
Calgary office of the Rights Agent) is closed to the public;
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j. "COMMON SHARES" means the common shares without par value in the
capital of the Corporation and any other shares in the capital of the
Corporation into which such shares may be subdivided, consolidated,
reclassified or changed; provided, however, that "COMMON SHARES", when
used with reference to any Person other than the Corporation, shall
mean the class or classes of shares (or similar equity interest) with
the greatest per share voting power entitled to vote generally in the
election of all directors of such other Person or the equity
securities or other equity interest having power (whether or not
exercised) to control or direct the management of such other Person;
if such other Person is a Subsidiary of another Person, "such other
Person" as used herein shall mean the Person or Persons which
ultimately control such first-mentioned Person;
k. "COMPETING PERMITTED BID" means a Take-over Bid made while another
Permitted Bid is in existence and that satisfies all of the provisions
of a Permitted Bid except that the condition set forth in subparagraph
1.1(ag)(ii)(1)(a) may provide that the Voting Shares may be taken up
or paid for on a date which is not earlier than the later of 21 days
after the date of the Take-over Bid or the earliest date on which
Voting Shares may be taken up or paid for under any other Permitted
Bid that is then in existence for the Voting Shares;
l. "CONTROLLED": a corporation shall be deemed to be "controlled" by
another Person or Persons if:
i. securities entitled to vote in the election of directors carrying
more than 50 percent of the votes for the election of directors
are held, directly or indirectly, by or for the benefit of the
other Person or Persons; 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 "CONTROL", "CONTROLS" and "CONTROLLING" shall be interpreted
accordingly;
m. "CO-RIGHTS AGENTS" has the meaning ascribed thereto in subsection
4.1(a);
n. "DISQUALIFICATION DATE" means the first date of public announcement
(which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 141 or 142 of the
Securities Act (Alberta), Section 101 of the Securities Act (Ontario)
or Section 13(d) under the 1934 Exchange Act) that any Person has made
or proposes to make a Take-over Bid alone or acting jointly or in
concert with any other Person;
o. "DIVIDEND REINVESTMENT ACQUISITION" means an acquisition of Voting
Shares pursuant to a Dividend Reinvestment Plan;
p. "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 shares of any class of the
Corporation;
ii. proceeds of redemption of shares 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;
q. "ELECTION TO EXERCISE" has the meaning ascribed thereto in subsection
2.2(d);
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r. "EXEMPT ACQUISITION" means a share acquisition in respect of which the
Board of Directors has waived the application of Section 3.1 pursuant
to the provisions of subsection 5.1(d) or 5.1(e) or which was made on
or prior to the date of this Agreement;
s. "EXERCISE PRICE" means the price at which a holder may purchase the
securities issuable upon exercise of one whole Right and, until
adjustment thereof in accordance with the terms hereof, the Exercise
Price shall be equal to the greater of: (i) ten ($10.00) dollars; and
(ii) an amount equal to two (2) times the Market Price of the Common
Shares determined on the last day of the preceding calendar month;
t. "EXPANSION FACTOR" has the meaning ascribed thereto in subsection
2.3(a);
u. "EXPIRATION TIME" means the earlier of:
i. the Termination Time; or
ii. the close of business on May 19, 2004;
v. "FLIP-IN EVENT" means a transaction in or pursuant to which any Person
becomes or may become an Acquiring Person;
w. "HOLDER" has the meaning ascribed thereto in Section 2.8;
x. "INDEPENDENT SHAREHOLDERS" means holders of Voting Shares other than:
i. any Acquiring Person;
ii. any Offeror;
iii. any Associate or Affiliate of any Acquiring Person or Offeror;
iv. any Person acting jointly or in concert with any Acquiring
Person, any Offeror or any Associate or Affiliate of any
Acquiring Person or Offeror; and
v. any employee benefit plan, deferred profit sharing plan, stock
participation plan or trust for the benefit of employees of the
Corporation or any Subsidiary of the Corporation but excluding in
any event a plan or trust in respect of which the employee
directs the manner in which Voting Shares are to be voted and
directs whether the Voting Shares are to be tendered to a
Take-over Bid;
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y. "MARKET PRICE" per share of any securities on any date of
determination shall mean 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
analogous to any of the events described in Section 2.3 shall have
caused the closing price in respect of any Trading Day used to
determine the Market Price not to be fully comparable with the closing
price on such date of determination or, if the date of determination
is not a Trading Day, on the immediately preceding Trading Day, each
such closing price so used shall be appropriately adjusted in a manner
analogous to the applicable adjustment provided for in Section 2.3 in
order to make it fully comparable with the closing price on such date
of determination or, if the date of determination is not a Trading
Day, on the immediately preceding Trading Day. The closing price per
share of any securities on any date shall be:
i. the closing board lot sale price or, if no such sale takes place
on such date, the average of the closing bid and asked prices, as
reported by the principal Canadian stock exchange (as determined
by the Board of Directors) on which such securities are listed or
admitted to trading; or
ii. if for any reason none of such prices is available on such day or
the securities are not listed or admitted to trading on a
Canadian stock exchange, the closing board lot sale price or, if
no such sale takes place on such date, the average of the closing
bid and asked prices, as reported by the principal national
United States securities exchange (as determined by the Board of
Directors) on which such securities are listed or admitted to
trading; 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 a national United States securities
exchange, the last quoted price, or if not so quoted, the average
of the high bid and low asked prices for each share of such
securities in the over-the-counter market, as reported by any
reporting system then in use (as determined by the Board of
Directors); or
iv. 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 a national United States securities
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 by the
Board of Directors;
provided, however, that if for any reason none of such prices is
available on any such date, the closing price per share of such
securities on such date shall mean the fair value per share of such
securities on such date as determined in good faith by the Board of
Directors, after consultation with a nationally or internationally
recognized Canadian 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 twenty (20)
consecutive Trading Day period in United States dollars, such amount
shall be translated into Canadian dollars at the Canadian Dollar
Equivalent thereof on the relevant Trading Day.
Notwithstanding the foregoing, where the Board of Directors is
satisfied that the Market Price of securities as determined herein was
affected by an anticipated or actual Take-over Bid or by improper
manipulation, the Board of Directors may, acting in good faith,
determine the Market Price of securities, such determination to be
based on a finding as to the price at which a holder of securities of
that class could reasonably have expected to dispose of his securities
immediately prior to the relevant date excluding any change in price
reasonably attributable to the anticipated or actual Take-over Bid or
to the improper manipulation;
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z. "1933 SECURITIES ACT" means the Securities Act of 1933 of the United
States, as amended, and the rules and regulations thereunder, as in
effect on the date of this Agreement or as the same may be amended,
re-enacted or replaced by any comparable or successor laws or
regulations thereto;
aa. "1934 EXCHANGE ACT" means the Securities Exchange Act of 1934 of the
United States, as amended, and the rules and regulations thereunder,
as in effect on the date of this Agreement or as the same may be
amended, re-enacted or replaced by any comparable or successor laws or
regulations thereto;
ab. "NOMINEE" has the meaning ascribed thereto in subsection 2.2(c);
ac. "OFFER TO ACQUIRE" shall include:
i. an offer to purchase, or a solicitation of an offer to sell,
Voting Shares, and
ii. an acceptance of an offer to sell Voting Shares, whether or not
such offer to sell has been solicited,
or any combination thereof, and the Person accepting an offer to sell
shall be deemed to be making an Offer to Acquire to the Person that
made the offer to sell;
ad. "OFFEROR" means a Person who has announced an intention to make or who
has made a Take-over Bid;
ae. "OFFEROR'S SECURITIES" means the Voting Shares Beneficially Owned by
an Offeror on the date of an Offer to Acquire;
af. "ORDINARY COURSE DIVIDENDS" means cash dividends paid in any fiscal
year of the Corporation to the extent that such cash dividends, in the
aggregate, do not exceed the greatest of:
i. 200% of the aggregate amount of cash dividends declared payable
by the Corporation on its Common Shares in its immediately
preceding fiscal year;
ii. 300% of the arithmetic mean of the aggregate amounts of cash
dividends declared payable by the Corporation on its Common
Shares in its three immediately preceding fiscal years; and
iii. 100% of the aggregate consolidated net income of the Corporation,
before extraordinary items, for its immediately preceding fiscal
year;
ag. "PERMITTED BID" means a Take-over Bid made by an Offeror by way of a
Take-over Bid circular which also complies with the following
additional provisions:
i. the Take-over Bid is made for all of the Voting Shares (other
than those Voting Shares owned by the Offeror) by sending a
Take-over Bid circular to all holders of record of Voting Shares
wherever resident as registered on the books of the Corporation,
other than the Offeror;
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ii. the Take-over Bid contains, and the take up and payment for
securities tendered or deposited thereunder shall be subject to,
an irrevocable and unqualified provision that:
(1) no Voting Shares will be taken up or paid for pursuant to
the Take-over Bid:
(a) prior to the close of business on the 45th day
following the date of the Take-over Bid; and
(b) if less than 50% of the Voting Shares held by
Independent Shareholders have been deposited pursuant
to the Take-over Bid and not withdrawn;
(2) unless the Take-over Bid is withdrawn in accordance with
applicable law, Voting Shares may be deposited pursuant to
such Take-over Bid at any time during the period described
in subparagraph (ii)(1)(a) of this definition and that any
Voting Shares deposited pursuant to the Take-over Bid may be
withdrawn until taken up and paid for; and
(3) if more than 50% of the voting Shares held by Independent
Shareholders have been deposited pursuant to a Take-over Bid
and not withdrawn, the Offeror will make a public
announcement of that fact and the Take-over Bid will remain
open for deposits and tenders of Voting Shares for not less
than ten Business Days from the date of such public
announcement;
ah. "PERMITTED BID ACQUISITION" means an acquisition made pursuant to a
Permitted Bid or a Competing Permitted Bid;
ai. "PERSON" shall include any individual, firm, partnership, association,
trust, trustee, executor, administrator, legal personal
representative, body corporate, corporation, unincorporated
organization, syndicate or other entity;
aj. "PRO RATA ACQUISITION" means an acquisition by a Person of Beneficial
Ownership of Voting Shares as a result of: a Dividend Reinvestment
Acquisition; a stock dividend, a stock split or other event pursuant
to which a Person becomes Beneficial Owner of Voting Shares on the
same pro rata basis as all other holders of Voting Shares; the
acquisition or exercise by such Person of rights to purchase Voting
Shares distributed to such Person in the course of a distribution to
all holders of Voting Shares pursuant to a bona fide rights offering
or pursuant to a prospectus; or a distribution to the public of Voting
Shares or securities convertible into or exchangeable for Voting
Shares (and the conversion or exchange of such convertible or
exchangeable securities), made pursuant to a prospectus or a
distribution by way of a private placement; provided that the Person
does not thereby acquire a greater percentage of such Voting Shares,
or securities convertible into or exchangeable for Voting Shares, so
offered than the Person's percentage of Voting Shares Beneficially
Owned immediately prior to such acquisition;
ak. "RECORD TIME" means 5:00 p.m. (Calgary time) on May 19, 1999;
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al. "REDEMPTION PRICE" has the meaning ascribed thereto in subsection
5.1(a);
am. "RIGHT" means a right to purchase a Common Share, upon the terms and
subject to the conditions set forth in this Agreement;
an. "RIGHTS CERTIFICATE" has the meaning ascribed thereto in subsection
2.2(c) and shall be in substantially the form of Exhibit A to this
Agreement;
ao. "RIGHTS REGISTER" has the meaning ascribed thereto in subsection
2.6(a);
ap. "SECURITIES ACT (ALBERTA)" shall mean the Securities Act, S.A. 1981,
c. S-6.1, as amended, and the regulations thereunder, as in effect on
the date of this Agreement or as the same may be amended, re-enacted
or replaced by any comparable or successor laws or regulations
thereto;
aq. "SECURITIES ACT (ONTARIO)" shall mean the Securities Act, R.S.O. 1990,
c. S.5, as amended, and the regulations thereunder, as in effect on
the date of this Agreement or as the same may be amended, re-enacted
or replaced by any comparable or successor laws or regulations
thereto;
ar. "SEPARATION TIME" means 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 Competing Permitted Bid);
or such earlier or later time as may be determined by the Board of
Directors, provided that:
(1) if any Take-over Bid referred to in paragraph (ii) of this
definition expires, or is canceled, terminated or otherwise
withdrawn prior to the Separation Time, such Take-over Bid
shall be deemed, for the purposes of this definition, never
to have been made; and
(2) if the Board of Directors determines pursuant to subsection
5.1(d) or (e) to waive the application of Section 3.1 to a
Flip-in Event, the Separation Time in respect of such
Flip-in Event shall be deemed never to have occurred;
as. "SPECIAL MEETING" means a special meeting of the holders of Voting
Shares called by the Board of Directors for the purpose of:
i. ratifying the distribution and the continued existence of the
Rights in accordance with subsection 5.4(f); or
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ii. approving an amendment, variation or rescission of any of the
provisions of this Agreement pursuant to subsections 5.4(b),
5.4(c) or 5.4(e);
at. "STOCK ACQUISITION DATE" means the first date of public announcement
(which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 141 of the Securities
Act (Alberta), Section 101 of the Securities Act (Ontario) or Section
13(d) of the 1934 Exchange Act) by the Corporation or an Acquiring
Person indicating that a Person has become an Acquiring Person;
au. "SUBSIDIARY": a corporation shall be deemed to be a Subsidiary of
another corporation if:
i. it is controlled by:
(1) that other; or
(2) that other and one or more corporations each of which is
controlled by that other; or
(3) two or more corporations each of which is controlled by that
other; or
ii. it is a Subsidiary of a corporation that is that other's
Subsidiary;
av. "TAKE-OVER BID" means an Offer to Acquire Voting Shares or other
securities if, assuming the Voting Shares or other securities subject
to the Offer to Acquire are acquired at the date of the Offer to
Acquire by the Person making the Offer to Acquire, such Voting Shares
(including all Voting Shares that may be acquired upon exercise of all
rights of conversion, exchange or purchase attaching to the other
securities) together with the Offeror's Securities would constitute in
the aggregate 20% or more of the outstanding Voting Shares at the date
of the Offer to Acquire;
aw. "TERMINATION TIME" means the time at which the right to exercise
Rights shall terminate pursuant to Section 3.2 or 5.1;
ax. "TRADING DAY", when used with respect to any securities, means a day
on which the principal Canadian stock exchange or U.S. securities
exchange on which such securities are listed or admitted to trading is
open for the transaction of business or, if the securities are not
listed or admitted to trading on any Canadian stock exchange or U.S.
securities exchange, a Business Day;
ay. "U.S. - CANADIAN EXCHANGE RATE" means, on any date:
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;
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az. "U.S. DOLLAR EQUIVALENT" of any amount which is expressed in Canadian
dollars means, on any date, the United States dollar equivalent of
such amount determined by multiplying such amount by the Canadian-U.S.
Exchange Rate in effect on such date;
ba. "VOTING SHARES" means the Common Shares and any other shares of
capital stock or voting interests of the Corporation entitled to vote
generally in the election of all directors; and
bb. "VOTING SHARE REDUCTION" means an acquisition or redemption by the
Corporation or a Subsidiary of the Corporation of Voting Shares which,
by reducing the number of Voting Shares outstanding or which may be
voted, increases the proportionate number of Voting Shares
Beneficially Owned by such Person to 15% or more of the outstanding
Voting Shares.
1.2 Currency
All sums of money which are referred to in this Agreement are expressed in
lawful money of Canada, unless otherwise specified.
1.3 Headings
The division of this Agreement into Articles, Sections, subsections, paragraphs
and subparagraphs 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 References to Agreement
References to "this Agreement", "hereto", "herein", "hereby", "hereunder",
"hereof" and similar expressions refer to this Agreement, as amended or
supplemented from time to time, and not to any particular Article, Section,
subsection, paragraph, subparagraph or other provision hereof and include any
and every instrument supplemental or ancillary hereto. Unless the context
otherwise requires, references in this Agreement to an Article, Section,
subsection, paragraph, subparagraph or Exhibit by number, letter or otherwise
refer to the Article, Section, subsection, paragraph, subparagraph or Exhibit,
respectively, bearing that designation in this Agreement
1.5 Grandfathered Person
For the purposes of determining whether a Person is an Acquiring Person and
interpreting the definition of "Acquiring Person", a Person shall not be and
shall not be deemed to be an Acquiring Person if such Person (a "Grandfathered
Person"):
a. is the Beneficial Owner of more than 20% of the outstanding Voting
Shares determined as at the Record Time, or
b. becomes the Beneficial Owner of more than 20% of the outstanding
Voting Shares after the Record Time and such Person's Beneficial
Ownership of Voting Shares does not exceed the number of Voting Shares
Beneficially Owned by such Person immediately prior to the Record Time
by more than 1% of the issued and outstanding Voting Shares as at the
Record Time;
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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 additional Voting
Shares constituting 5% or more of the outstanding Voting Shares otherwise than
pursuant to one or more Permitted Bid Acquisitions, Exempt Acquisitions or Pro
Rata Acquisitions, provided further, however, that such Grandfathered Person
shall not become an Acquiring Person as a result of one or more Voting Share
Reductions; and provided further that, if this exception shall cease to be
applicable to a Grandfathered Person as aforesaid, such a Grandfathered Person
shall be and shall be deemed to be an Acquiring Person as at and from the time
that this exception shall not be so applicable.
1.6 Calculation of Number and Percentage of Beneficial Ownership of Outstanding
Voting Shares
For purposes of this Agreement:
a. in determining the percentage of outstanding Voting Shares
Beneficially Owned by any Person, all unissued Voting Shares as to
which such Person is deemed the Beneficial Owner shall be deemed to be
outstanding; and
b. the percentage of outstanding Voting Shares Beneficially Owned by any
Person shall be and be deemed to be the product determined by the
formula:
100 x A
-
B
where:
A. = the number of votes for the election of all directors generally
attaching to the outstanding Voting Shares Beneficially Owned by
such Person; and
B. = the number of votes for the election of all directors generally
attaching to all outstanding Voting Shares.
1.7 ACTING JOINTLY OR IN CONCERT
For the purposes of this Agreement, whether Persons are acting jointly or in
concert is a question of fact in each circumstance, however, a Person shall be
deemed to be acting jointly or in concert with another Person if such Person
would be deemed to be acting jointly or in concert with such other Person for
purposes of section 131.1 of the Securities Act (Alberta) or section 91 of the
Securities Act (Ontario), as such Sections exist on the date of this Agreement.
Notwithstanding the foregoing, and for greater certainty, the phrase, "acting
jointly or in concert", wherever used in this Agreement, shall not include
conduct:
a. unrelated to Voting Shares of the Corporation; or
b. consisting solely of:
i. voting or directing the vote of securities of the Corporation
pursuant to a revocable proxy given in response to a public proxy
solicitation;
ii. voting or directing the vote of securities of the Corporation in
connection with or in order to participate in a public proxy
solicitation made or to be made; or
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iii. having an agreement, arrangement or understanding with respect to
a shareholder proposal or a matter or matters to come before a
meeting of shareholders, including the election of directors.
1.8 GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
Wherever in this Agreement reference is made to generally accepted accounting
principles, such reference shall be deemed to be the recommendations at the
relevant time of the Canadian Institute of Chartered Accountants, or any
successor institute, applicable on a consolidated basis (unless otherwise
specifically provided herein to be applicable on an unconsolidated basis) as at
the date on which a calculation is made or required to be made in accordance
with generally accepted accounting principles. Where the character or amount of
any asset or liability or item of revenue or expense is required to be
determined, or any consolidation or other accounting computation is required to
be made for the purpose of this Agreement or any document, such determination or
calculation shall, to the extent applicable and except as otherwise specified
herein or as otherwise agreed in writing by the parties, be made in accordance
with generally accepted accounting principles applied on a consistent basis.
ARTICLE 2
THE RIGHTS
2.1 LEGEND ON COMMON SHARE CERTIFICATES
Certificates representing Common Shares issued after the Record Time but prior
to the earlier of the Separation Time and the Expiration Time shall evidence, in
addition to the Common Shares, one Right for each Common Share evidenced thereby
and shall have impressed on, printed on, written on or otherwise affixed to them
the following legend:
Until the Separation Time (as defined in the Rights Agreement referred to
below), this certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Shareholder Rights Plan Agreement, dated
as of May 19, 1999 (the "Rights Agreement"), between Centurion Energy
International Inc. (the "Corporation") and Montreal Trust Company of
Canada, as rights agent, as amended from time to time, the terms of which
are incorporated herein by reference and a copy of which may be inspected
during normal business hours at the principal office of the Corporation.
Under certain circumstances as set out in the Rights Agreement, the Rights
may be amended, redeemed, may expire, may become null and void 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 Rights 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 at the
Record Time shall also evidence one Right for each Common Share evidenced
thereby, notwithstanding the absence of the foregoing legend, until the earlier
of the Separation Time and the Expiration Time.
2.2 INITIAL EXERCISE PRICE; EXERCISE OF RIGHTS; DETACHMENT OF RIGHTS
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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, for the Exercise Price, one Common
Share. 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 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 the Rights shall be separate
from and independent of Common Shares.
Promptly following the Separation Time, the Corporation will prepare
and the Rights Agent will mail or arrange to be mailed to each holder
of record of Rights as of the Separation Time (other than an Acquiring
Person and, in respect of any Rights Beneficially Owned by such
Acquiring Person which are not held of record by such Acquiring
Person, the holder of record of such Rights (a "Nominee")), at such
holder's address as shown by the records of the Corporation (the
Corporation hereby agreeing to furnish copies of such records to the
Rights Agent for this purpose):
(1) a rights certificate ("Rights Certificate") representing the
number of Rights held by such holder at the Separation Time
and having such markers 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, regulation or
judicial or administrative order 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
(2) a disclosure statement describing the Rights;
provided that a Nominee shall be sent the materials provided for in
paragraphs (1) and (2) above in respect of all Common Shares held of
record by it which are not Beneficially Owned by an Acquiring Person.
d. Rights may be exercised in whole or in part on any Business Day after
the Separation Time and prior to the Expiration Time by submitting to
the Rights Agent at its principal office in the city of Calgary or
Toronto the Rights Certificate evidencing such Rights together with:
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i. an election to exercise such Rights (an "Election to Exercise")
substantially in the form attached to the Rights Certificate duly
completed and executed by the holder or his executors or
administrators or other personal representatives or his or their
legal attorney duly appointed by an instrument in writing in form
and executed in a manner satisfactory to the Rights Agent; and
ii. payment in cash or by certified cheque, bank draft or money order
payable to the order of the Corporation, of a sum equal to the
Exercise Price multiplied by the number of Rights being exercised
and a sum sufficient to cover any transfer tax or charge which
may be payable in respect of any transfer involved in the
transfer or delivery of Rights Certificates or the issuance or
delivery of certificates for Common Shares in a name other than
that of the holder of the Rights being exercised.
e. Upon receipt of a Rights Certificate, which is accompanied by a
completed Election to Exercise that does not indicate that such Right
is null and void as provided by subsection 3.1(b) and payment as set
forth in subsection 2.2(d), the Rights Agent (unless otherwise
instructed by the Corporation if the Corporation is of the opinion
that the Rights cannot be exercised in accordance with this Agreement)
will thereupon promptly:
i. requisition from the transfer agent for the Common Shares
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. after receipt of such certificate, deliver the same to or upon
the order of the registered holder of such Rights Certificate,
registered in such name or names as may be designated by such
holder,
iii. when appropriate, requisition from the Corporation the amount of
cash to be paid in lieu of issuing fractional Common Shares,
iv. when appropriate, after receipt of such cash, deliver the same to
or to the order of the registered holder of the Rights
Certificate, and
v. tender to the Corporation all payments received on exercise of
the Rights.
f. If the holder of any Rights shall exercise less than all the Rights
evidenced by such holder's Rights Certificate, a new Rights
Certificate evidencing the Rights remaining unexercised (subject to
Section 5.5) 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 securities delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such
securities (subject to payment of the Exercise Price), be duly
and validly authorized, executed, issued and delivered as fully
paid and non-assessable;
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ii. take all such action as may be necessary and within its power to
comply with any applicable requirements of the Business
Corporations Act, the Securities Act (Alberta), the Securities
Act (Ontario) and any other applicable law in connection with the
issuance and delivery of the Rights, the Rights Certificates and
the issuance of any securities upon exercise of Rights;
iii. use reasonable efforts to cause all securities issued upon
exercise of Rights to be listed on the stock exchanges on which
the 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 classes of securities, the number of securities 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 any and all Canadian and, if applicable,
United States, federal, provincial and state 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
form Common Shares, 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 securities in a name other than that of the
holder of the Rights being transferred or exercised; and
vi. after the Separation Time 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; NUMBERS 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. If Corporation shall at any time after the Record Time and prior to
the Expiration Time:
i. declare or pay a dividend on its Common Shares payable in Common
Shares (or other securities exchangeable for or convertible into
or giving a right to acquire Common Shares) other than pursuant
to any optional stock dividend program;
ii. subdivide or change the outstanding Common Shares into a greater
number of Common Shares;
iii. combine or change the outstanding Common Shares into a smaller
number of Common Shares; or
iv. issue any Common Shares (or other securities exchangeable for or
convertible into or giving a right to acquire Common Shares) in
respect of, in lieu of or in exchange for existing Common Shares;
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except as otherwise provided in this Section 2.3, 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 such that:
(1) if the Exercise Price and number of Rights outstanding are
to be adjusted;
(a) 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,
combination or issuance would hold thereafter as a
result thereof; and
(b) 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, combination or issuance, so
that each such Common Share (or other capital stock) will
have exactly one Right associated with it; and
(2) 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, combination or issuance would hold thereafter as a
result thereof.
If after the Record Time and prior to the Expiration Time the
Corporation shall issue any securities other than Common Shares in a
transaction of a type described in paragraphs 2.3(a)(i) or (iv), such
securities shall be treated herein as nearly equivalent to Common
Shares as may be practicable and appropriate under the circumstances
and the Corporation and the Rights Agent agree to amend this Agreement
in order to effect such treatment.
b. If 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 securities convertible
into or exchangeable for or carrying a right to purchase Common
Shares) at a price per Common Share (or, if a security convertible
into or exchangeable for or carrying a right to purchase or subscribe
for Common Shares having a conversion, exchange or exercise price,
including the price required to be paid to purchase such convertible
or exchangeable security or right per share) less than the Market
Price per Common Share on such record date, the Exercise Price to be
in effect after such record date shall be adjusted to that price
determined by multiplying the Exercise Price in effect immediately
prior to such record date by a fraction:
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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 to be so offered (and/or the aggregate initial conversion,
exchange or exercise price of the convertible or exchangeable
securities or rights so to be offered, including the price
required to be paid to purchase such convertible or exchangeable
securities or rights) would purchase at such Market Price per
Common Share; and
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 or exchangeable securities or rights so to
be offered are initially convertible, exchangeable or
exercisable).
If such subscription price may be paid by delivery of consideration,
part or all of which may be in a form other than cash, the value of
such consideration shall be as determined in good faith by the Board
of Directors, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent
and the holders of the Rights. Such adjustment shall be made
successively whenever such a record date is fixed, and in the event
that such rights or warrants are not so issued, the Exercise Price
shall be adjusted to be the Exercise Price which would then be in
effect if such record date had not been fixed.
For purposes of this Agreement, the granting of the right to purchase
Common Shares (whether from treasury shares or otherwise) pursuant to
any dividend or interest reinvestment plan and/or any Common Share
purchase plan providing for the reinvestment of dividends or interest
payable on securities of the Corporation and/or the investment of
periodic optional payments and/or employee benefit, stock option or
similar plans (so long as such right to purchase is in no case
evidenced by the delivery of rights or warrants) shall not be deemed
to constitute an issue of rights or warrants by the Corporation;
provided, however, that, in the case of any Dividend Reinvestment
Plan, the right to purchase Common Shares is at a price per share of
not less than 90 percent of the current market price per share
(determined as provided in such plans) of the Common Shares.
c. If the Corporation shall at any time after the Record Time and prior
to the Separation Time fix a record date for a distribution to all
holders of Common Shares (including any such distribution made in
connection with a merger or amalgamation in which the Corporation is
the continuing corporation) of evidences of indebtedness, cash (other
than an ordinary course dividend or a dividend referred to in
paragraph 2.3(a)(i)), assets, rights or warrants (excluding those
referred to in subsection 2.3(b)), 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 Market Price per Common Share
on such record date, less the fair market value (as determined in
good faith by the Board of Directors, whose determination shall
be described in a statement filed with the Rights Agent and shall
be binding on the Rights Agent and the holders of Rights), on a
per share basis, of the portion of the cash, assets, evidences of
indebtedness, rights, options or warrants so to be distributed;
and
ii. the denominator of which shall be such Market Price per Common
Share.
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Such adjustments shall be made successively whenever such a record
date is fixed, and in the event that such a distribution is not so
made, the Exercise Price shall be adjusted to be the Exercise Price
which would have been in effect if such record date had not been
fixed.
d. Each adjustment made pursuant to this Section 2.3 shall be made as of:
i. the payment or effective date for the applicable dividend,
subdivision, change, combination or issuance, in the case of an
adjustment made pursuant to subsection (a) above; and
ii. the record date for the applicable distribution, in the case of
an adjustment made pursuant to subsection (b) or (c) above,
subject to readjustment to reverse the same if such distribution
shall not be made.
e. 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 percent in the Exercise Price;
provided, however, that any adjustments which by reason of this
subsection 2.3(e) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment. All calculations
under this Section 2.3 shall be made to the nearest cent or to the
nearest hundredth of a share. Notwithstanding the first sentence of
this subsection 2.3(e), any adjustment required by this Section 2.3
shall be made no later than the earlier of: (i) three years from the
date of the transaction which mandates such adjustments; and (ii) the
Termination Date. 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,
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.
f. If 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 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 paragraph
(a)(i) or (a)(iv) above, if the Board of Directors acting in good
faith determines that the adjustments contemplated by subsections (a),
(b) and (c) above in connection with such transaction will not
appropriately protect the interests of the holders of Rights, the
Corporation 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 (a), (b)
and (c) above, such adjustments, rather than the adjustments
contemplated by subsections (a), (b) and (c) above, shall be made. The
Corporation and the Rights Agent shall amend this Agreement as
appropriate to provide for such adjustments.
g. 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, all subject to further adjustment as provided herein.
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h. 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 issued before and after such adjustment or change
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.
i. 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 securities upon the occurrence of
the event requiring such adjustment.
j. Notwithstanding anything in this Section 2.3 to the contrary, the
Corporation shall be entitled to make such reductions in the Exercise
Price, in addition to those adjustments expressly required by this
Section 2.3, as and to the extent that the Board of Directors shall in
good faith determine to be advisable in order that any (i)
consolidation or subdivision of the Common Shares, (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 shall not be taxable to such
shareholders.
k. The Corporation covenants and agrees that, after the Separation Time,
it will not, except as permitted by Section 5.1 or Section 5.3, take
(or permit any Subsidiary of the Corporation to take) any action if at
the time such action is taken it is reasonably foreseeable that such
action will diminish substantially or otherwise eliminate the benefits
intended to be afforded by the Rights.
l. If an event occurs which would require an adjustment under both this
Section 2.3 and Section 3.1, the adjustment provided for in this
Section 2.3 shall be in addition to and shall be made prior to, any
adjustment required pursuant to Section 3.1.
m. If the Corporation shall at any time after the Record Time and prior
to the earlier of the Separation Time and the Expiration Time issue
any Common Shares other than in a transaction referred to in
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 share.
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2.4 DATE ON WHICH EXERCISE IS EFFECTIVE
Each Person in whose name any certificate for Common Shares or other securities,
property or assets, if applicable, is issued upon the exercise of Rights shall
for all purposes be deemed, to have become the holder of record of the Common
Shares or other securities, property or assets, if applicable, represented
thereby on, and such certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered (together with a duly
completed Election to Exercise) and payment of the Exercise Price for such
Rights (and any applicable transfer taxes and other 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 Common Shares or other securities,
property or assets 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 any two of its officers or directors. The signature of any of these
officers or directors 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 or
directors of the Corporation shall bind the Corporation
notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the countersignature and delivery of such
Rights Certificates.
b. Promptly after the Corporation learns of the Separation Time, the
Corporation will notify the Rights Agent in writing of such Separation
Time and will deliver Rights Certificates executed by the Corporation
to the Rights Agent for countersignature, and the Rights Agent shall
manually countersign and send such Rights Certificates to the holders
of the Rights pursuant to subsection 2.2(c). No Rights Certificate
shall be valid for any purpose until countersigned by the Rights Agent
as aforesaid.
c. Each Rights Certificate shall be dated the date of countersignature
thereof.
2.6 REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE
a. After the Separation Time, the Corporation will cause to be kept a
register (the "RIGHTS REGISTER") in which, subject to such reasonable
regulations as it may prescribe, the Corporation will provide for the
registration and transfer of Rights. The Rights Agent is hereby
appointed 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. If the Rights Agent
shall cease to be the Rights Registrar, the Rights Agent will have the
right to examine the Rights Register at all reasonable times.
b. After the Separation Time and prior to the Expiration Time, upon
surrender for registration of transfer or exchange of any Rights
Certificate, and subject to the provisions of subsections 2.6(d) and
3.1(b), the Corporation will execute, and the Rights Agent will
manually 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.
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c. All Rights issued upon any registration of transfer or exchange of
Rights Certificates shall be valid obligations of the Corporation, and
such Rights shall be entitled to the same benefits under this
Agreement as the Rights surrendered upon such registration of transfer
or exchange.
d. Every Rights Certificate surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Corporation or the
Rights Agent, as the case may be, duly executed by the holder thereof
or such holder's attorney duly authorized in writing. As a condition
to the issuance of any new Rights Certificate under this Section 2.6,
the Corporation may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the
Rights Agent) 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 the Rights
Certificate so surrendered.
b. If there shall be delivered to the Corporation and the Rights Agent
prior to the Expiration Time:
i. evidence to their reasonable satisfaction of the destruction,
loss or theft of any Rights Certificate; and
ii. such security or indemnity as may be reasonably required by them
in their sole discretion 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 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 by the Corporation.
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2.8 PERSONS DEEMED OWNERS
The Corporation, the Rights Agent and any agent of the Corporation or the Rights
Agent may deem and treat the Person in whose name a Rights Certificate (or,
prior to the Separation Time, the associated Common Share certificate) is
registered as the absolute owner thereof and the Rights evidenced thereby for
all purposes whatsoever. As used in this Agreement, unless the context
otherwise requires, the term "HOLDER" of any Rights shall mean the registered
holder of such Rights (or, prior to the Separation Time, the associated Common
Shares).
2.9 DELIVERY AND CANCELLATION OF CERTIFICATES
All Rights Certificates surrendered upon exercise or for redemption,
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 canceled 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 canceled by the Rights Agent. No Rights Certificate shall be
countersigned in lieu of or in exchange for any Rights Certificates canceled as
provided in this Section 2.9, except as expressly permitted by this Agreement.
The Rights Agent shall destroy all canceled Rights Certificates and deliver a
certificate of destruction to the Corporation.
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;
c. that after the Separation Time, the Rights Certificate will be
transferable only upon registration of the transfer 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 upon exercise of a Right
except as provided herein;
f. that, without the approval of any holder of Rights and upon the sole
authority of the Board of Directors acting in good faith, this
Agreement may be supplemented or amended from time to time pursuant to
and as provided herein; and
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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 any preliminary or permanent injunction or other order,
decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, or
any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise
restraining performance of such obligation.
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 of the rights, titles, benefits or privileges 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 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 or securities 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 IN THE EVENT OF CERTAIN TRANSACTIONS
3.1 FLIP-IN EVENT
a. Subject to subsection 3.1(b), Section 3.2 and subsections 5.1(d) and
5.1(e), if prior to the Expiration Time a Flip-in Event occurs, each
Right shall constitute, effective at the close of business on the
tenth Trading Day after the Stock Acquisition Date, on and after such
occurrence the right to purchase from the Corporation, upon payment of
the Exercise Price and otherwise exercising such Right 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 event that after the Stock Acquisition Date an
event of a type analogous to any of the events described in Section
2.3 have occurred).
b. Notwithstanding anything in this Agreement to the contrary, upon the
occurrence of any Flip-in Event, any Rights that are or were
Beneficially Owned on or after the earlier of the Separation Time and
the Stock Acquisition Date by:
i. an Acquiring Person (or any Affiliate or Associate of an
Acquiring Person or any Person acting jointly or in concert with
an Acquiring Person or any Associate or Affiliate of an Acquiring
Person); or
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ii. a transferee of Rights, direct or indirect, of an Acquiring
Person (or of any Affiliate or Associate of an Acquiring Person
or of any Person acting jointly or in concert with an Acquiring
Person or any Associate or Affiliate of an Acquiring Person) who
becomes a transferee in a transfer that the Board of Directors
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 Person acting jointly or in concert with an
Acquiring Person or any Associate or Affiliate of an Acquiring
Person), that has the purpose or effect of avoiding paragraph
3.1(b)(i);
shall become null and void without any further action, and any holder
of such Rights (including any transferee of, or other successor to,
such Rights, whether directly or indirectly) shall not have any right
whatsoever to exercise such Rights under any provision of this
Agreement and shall not have thereafter any right whatsoever with
respect to such Rights, whether under any provision of this Agreement
or otherwise. The holder of any Rights represented by a Rights
Certificate which is submitted to the Rights Agent upon exercise or
for registration of transfer or exchange which does not contain the
necessary certifications set forth in the Rights Certificate
establishing that such Rights are not void under this subsection
3.1(b) shall be deemed to be an Acquiring Person for the purposes of
this subsection 3.1(b) and such Rights shall become null and void.
c. Any Rights Certificate that represents Rights Beneficially Owned by a
Person described in either paragraph 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
Beneficially Owned by a Person who was an Acquiring Person or an
Affiliate or an Associate of an Acquiring Person (as such terms
are defined in the Rights Agreement) or by a Person acting
jointly or in concert with any of them. This Rights Certificate
and the Rights represented hereby are void in the circumstances
specified in subsection 3.1(b) of the Rights Agreement.
provided that the Rights Agent shall not be under any responsibility
to ascertain the existence of facts that would require the imposition
of such legend but shall be required to impose such legend only if
instructed to do so in writing by the Corporation or if a holder fails
to certify upon transfer or exchange in the space provided on the
Rights Certificate that such holder is not a Person described in
either paragraph 3.1(b)(i) or (ii).
d. In the event that there shall not be sufficient Common Shares
authorized for issuance to permit the exercise in full of the Rights
in accordance with this Section 3.1, the Corporation shall take all
such action as may be necessary to authorize additional Common Shares
for issuance upon the exercise of the Rights, failing which the Board
of Directors shall consider the exercise of the options set forth in
Section 3.2.
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e. 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 and the Securities Act
(Alberta) and any other applicable law in respect of the issue of
Common Shares upon the exercise of Rights in accordance with this
Agreement.
3.2 EXCHANGE OPTION
a. Subject to receipt by the Corporation of the written consent of The
Toronto Stock Exchange, if the Board of Directors acting in good faith
shall determine that conditions exist which would eliminate or
otherwise materially diminish in any respect the benefits intended to
be afforded to the holders of Rights pursuant to this Agreement the
Board of Directors may, at its option and without seeking the approval
of holders of Common Shares or Rights, at any time after a Flip-in
Event has occurred, authorize the Corporation to issue or deliver in
respect of each Right which is not void pursuant to subsection 3.1(b),
either:
i. in return for the Exercise Price and the Right, debt, equity or
other securities or property or assets (or a combination thereof)
having a value equal to twice the Exercise Price; or
ii. in return for the Right, subject to any amounts that may be
required to be paid under applicable law, cash, debt, equity or
other securities or property or assets (or a combination thereof)
having a value equal to the Exercise Price;
in full and final settlement of all rights attaching to the Rights;
provided that the value of any debt, equity or other securities or
properties or assets shall be determined by a nationally or
internationally recognized Canadian firm of investment dealers or
investment bankers selected by the Board of Directors. To the extent
that the Board of Directors determines in good faith that some action
need be taken pursuant to this Section 3.2, the Board of Directors may
suspend the exercisability of the Rights for a period of up to ninety
days following the date of the occurrence of the relevant Flip-in
Event in order to decide the appropriate form of distribution to be
made and to determine the value thereof. In the event of any such
suspension, the Corporation shall notify the Rights Agent and issue as
promptly as practicable a public announcement stating that the
exercisability of the Rights has been temporarily suspended.
b. If the Board of Directors authorizes the exchange of debt, equity or
other securities or property or assets (or a combination thereof)
pursuant to subsection 3.2(a), without any further action or notice
the only right thereafter of a holder of Rights shall be to receive
upon due exercise of the Rights such debt, equity or other securities
or property or assets (or a combination thereof) in accordance with
the determination of the Board of Directors. Within 10 Business Days
after the Board of Directors has authorized the exchange of such debt,
equity or other securities or property or assets (or a combination
thereof) pursuant to subsection 3.2(a), the Corporation shall give
notice of such exchange to the holders of Rights in accordance with
Section 5.9. Each such notice will state the method by which the
exchange of debt, equity or other securities or property or assets (or
a combination thereof) for Rights will be effected.
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c. If there shall not be sufficient securities authorized but unissued to
permit the exchange in full of such Rights pursuant to this Section
3.2, the Corporation shall take all such action as may be necessary to
authorize additional securities for issuance upon the exchange of
Rights.
d. The Corporation shall not be required to issue fractions of securities
or to distribute certificates evidencing fractional securities. In
lieu of issuing such fractional securities, subject to subsection
5.5(b), there shall be paid to the registered holders of Rights to
whom such fractional securities would otherwise be issuable, an amount
in cash equal to the same fraction of the Market Price of a whole
security.
3.3 FIDUCIARY DUTIES OF THE BOARD OF DIRECTORS OF THE CORPORATION
Nothing contained in this Article 3 shall be considered to affect the obligation
of the Board of Directors to exercise its fiduciary duties. Without limiting
the generality of the foregoing, nothing contained herein shall be construed to
suggest or imply that the Board of Directors shall not be entitled to recommend
that holders of the Voting Shares reject or accept any Take-over Bid or take any
other action (including, without limitation, the commencement, prosecution,
defence or settlement of any litigation and the submission of additional or
alternative Take-over Bids or other proposals to the shareholders of the
Corporation with respect to any Take-over Bid) that the Board of Directors
believes is necessary or appropriate in the exercise of its fiduciary duties.
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. In the event the
Corporation appoints one or more Co-Rights Agents, the respective
duties of the Rights Agents and the Co-Rights Agents shall be as the
Corporation may determine. 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 reasonable fees
and disbursements of any expert retained by the Rights Agent. The
Corporation also agrees to indemnify the Rights Agent for, and to hold
it harmless against, any loss, liability, costs, claims, actions,
damages or expenses, incurred without negligence, bad faith or wilful
default on the part of the Rights Agent, for anything done or suffered
or omitted by the Rights Agent in connection with the acceptance,
execution and administration of this Agreement and the performance of
its duties hereunder, including the costs and expenses of defending
against any claim of liability, which right to indemnification will
survive the termination of this Agreement or the resignation of the
Rights Agent.
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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 acceptance, execution and administration of this
Agreement in reliance upon any certificate for Voting Shares or Common
Shares, or any Rights Certificate or certificate for other securities
of the corporation, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to
be genuine and to be signed, executed and, where necessary, verified
or acknowledged, by the proper Person or Persons.
c. The Corporation shall inform the Rights Agent in a reasonably timely
manner of events which may materially affect the administration of
this Agreement by the Rights Agent.
4.2 MERGER OR AMALGAMATION OR CHANGE OF NAME OF RIGHTS AGENT
a. Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or amalgamated or with which it may be consolidated, or any
corporation resulting from any merger, amalgamation, statutory arrangement
or consolidation to which the Rights Agent or any successor Rights Agent is
a party, or any corporation succeeding to the shareholder or stockholder
services business of the Rights Agent or any successor Rights Agent, will
be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of
the parties hereto, provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section
4.4. If at the time any successor Rights Agent succeeds to the agency
created by this Agreement any of the Right Certificates have been
countersigned but not delivered, any such successor Rights Agent may adopt
the countersignature of the predecessor Rights Agent and deliver such
Rights Certificates so countersigned; and if at that time any of the Right
Certificates have not been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such
cases such Right Certificates will have the full force provided in the
Right Certificates and in this Agreement.
b. If at any time the name of the Rights Agent is changed and at such time any
of the Right Certificates shall have been countersigned but not delivered,
the Rights Agent may adopt the countersignature under its prior name and
deliver Right Certificates so countersigned; and if at that time any of the
Right Certificate shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificates shall have the
full force provided in the Right Certificates and in this Agreement.
4.3 DUTIES OF RIGHTS AGENT
The Rights Agent undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the Corporation and the
holders of Right Certificates, by their acceptance thereof, shall be bound:
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a. the Rights Agent may consult with legal counsel (who may be legal counsel
for the Corporation) and the opinion of such counsel will be full and
complete authorization and protection to the Rights Agent as to any action
taken, suffered or omitted by it in good faith and in accordance with such
opinion; the Rights Agent may also, with the approval of the Corporation
(such approval not to be unreasonably withheld), consult with such other
experts as the Rights Agent shall consider necessary or appropriate to
properly carry out the duties and obligations imposed under this Agreement
and the Rights Agent shall be entitled to rely in good faith on the advice
of any such expert;
b. whenever in the performance of its duties under this Agreement the Rights
Agent deems it necessary or desirable that any fact or matter be proved or
established by the Corporation prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by a Person believed by the Rights
Agent to be the Chairman, the President or any Vice President, or the
Secretary or 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 negligence, bad
faith or wilful default;
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 Voting Shares or 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 authorization, execution and delivery
hereof (except the due authorization, execution and delivery hereof by the
Rights Agent) or in respect of the validity or execution of any Common
Share certificate or Rights Certificate (except its countersignature
thereof); nor will it be responsible for any breach by the Corporation of
any covenant or condition contained in this Agreement or in any Rights
Certificate; nor will it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void pursuant
to subsection 3.1(b)) or any adjustment required under the provisions of
Section 2.3 or be 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 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 written
instructions with respect to the performance of its duties hereunder from
any person believed by the Rights Agent to be the Chairman of the Board,
President, a Vice President or the Secretary or any Assistant Secretary of
the Corporation, and to apply to such individual 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 reliance upon instructions of any
such individual;
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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 financially 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 30 days' notice (or such lesser notice as is acceptable to the
Corporation) in writing delivered or mailed to the Corporation and to each
transfer agent of Common Shares by registered or certified mail and to the
holders of the Rights in accordance with Section 5.9. 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 registered or certified mail and
to the holders of the Rights in accordance with Section 5.9. If the Rights Agent
should resign or be removed or otherwise become incapable of acting, the
Corporation will appoint a successor to the Right 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 the resigning Rights Agent or the
holder of any Rights may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Corporation or by such a court, shall be a corporation
incorporated under the laws of Canada or a province thereof authorized to carry
on the business of a trust company. 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 upon payment of its outstanding fees and expenses the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Corporation will file notice thereof in
writing with the predecessor Rights Agent and each transfer agent of the Common
Shares and give notice to the holders of the Rights in accordance with Section
5.9. Failure to give any notice provided for in this Section 4.4, however, or
any defect therein, shall not affect the legality or validity of the resignation
or removal of the Rights Agent or the appointment of the successor Rights Agent,
as the case may be.
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ARTICLE 5
MISCELLANEOUS
5.1 REDEMPTION AND WAIVER
a. The Board of Directors acting in good faith may, at its option, at any
time prior to the occurrence of a Flip-in Event, elect to redeem all
but not less than all of the then outstanding Rights at a redemption
price of $0.0001 per Right appropriately adjusted in a manner
analogous to the applicable adjustment provided for in Section 2.3 if
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"). The redemption of the Rights
by the Board of Directors may be made effective at such time, on such
basis and with such conditions as the Board of Directors in its sole
discretion may establish.
b. If the Board of Directors elects or is deemed to have elected to
redeem the Rights, the right to exercise the Rights will thereupon,
without further action and without notice, terminate and the only
right thereafter of the holders of Rights shall be to receive the
Redemption Price.
c. Within 10 days after the Board of Directors electing or having been
deemed to have elected to redeem the Rights, the Corporation shall
give notice of redemption to the holders of the Rights in accordance
with Section 5.9. 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 that specifically set forth in
this Section 5.1 or other than in connection with the purchase of
Common Shares prior to the Separation Time.
d. The Board of Directors may prior to the occurrence of a Flip-in Event
determine, upon prior written notice to the Rights Agent, to waive the
application of Section 3.1 to any particular Flip-in Event.
e. The Board of Directors may waive the application of Section 3.1 in
respect to 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 that such a waiver is granted by the Board of Directors, such
Stock Acquisition Date shall be deemed not to have occurred. Any such
waiver pursuant to subsection 5.1(e) must be on the condition that
such Person, within ten 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.
f. If a Person makes a Permitted Bid or a Competing Permitted Bid
pursuant to which more than 50 per cent of the then outstanding Voting
Shares (other than those Voting Shares Beneficially Owned by the
Persons making the Permitted Bid or the Competing Permitted Bid, at
the date of the Permitted Bid or the Competing Permitted Bid) are
taken up and paid for by such Person, then the Board of Directors
shall, immediately upon the consummation of such acquisition, without
further formality, be deemed to have elected to redeem the Rights at
the Redemption Price on the expiry date of the Permitted Bid or
Competing Permitted Bid, as the case may be.
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g. Where a Take-over Bid that is not a Permitted Bid or Competing
Permitted Bid 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.
h. Upon the Rights being redeemed pursuant to subsection 5.1(g), 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.
5.2 EXPIRATION
No Person shall have any rights whatsoever pursuant to or arising out of this
Agreement or in respect of any Right after the Expiration Time, except the
Rights Agent as specified in subsections 4.1(a) and (b).
5.3 ISSUANCE OF NEW RIGHTS CERTIFICATES
Notwithstanding any of the provisions of this Agreement or of the Rights to the
contrary, the Corporation may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by the Board of Directors to
reflect any adjustment or change in the number or kind or class of shares
purchasable upon exercise of Rights made in accordance with the provisions of
this Agreement.
5.4 SUPPLEMENTS AND AMENDMENTS
a. Without the approval of any holders of Voting Shares or Rights, the
Corporation may make amendments to this Agreement to correct any
clerical or typographical error or which are required to maintain the
validity of the Agreement as a result of any change in any applicable
legislation or regulations thereunder. The Corporation may, prior to
the date of the shareholders' meeting referred to in Section 5.4(f),
supplement or amend this Agreement 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 supplement or amendment shall be made to the provisions
of Article 4 except with the written concurrence of the Rights Agent
to such change, supplement or amendment.
b. Subject to subsection 5.4(a), the Corporation may, with the prior
consent of the holders of Voting Shares obtained as set forth below,
at any time before the Separation Time, amend, vary or rescind any of
the provisions of this Agreement and the Rights (whether or not such
action would materially adversely affect the interests of the holders
of Rights generally). Such consent shall be deemed to have been given
if the action requiring such approval is approved by the affirmative
vote of a majority of the votes cast by Independent Shareholders
represented in person or by proxy at the Special Meeting.
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c. The Corporation may, with the prior consent of the holders of Rights
obtained as set forth below, at any time after the Stock Acquisition
Date amend, vary or rescind any of the provisions of this Agreement
and the Rights (whether or not such action would materially adversely
affect the interests of the holders of Rights generally), 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. Such consent shall be deemed to have been given
if such amendment, variation or deletion is authorized by the
affirmative votes of the holders of Rights present or represented at
and entitled to vote at a meeting of the holders and representing 50%
plus one of the votes cast in respect thereof.
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 and
entitled to vote 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
regulation 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 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 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.
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f. In conjunction with the Corporation's next annual general meeting of
shareholders, the Board of Directors shall call and hold a Special
Meeting of holders of Voting Shares to consider and, if thought
appropriate, ratify the distribution and the continued existence of
the Rights. The Special Meeting shall be held on a date fixed by the
Board of Directors, which date shall be no later than that date which
is one year after the date of this Agreement. The Board of Directors
shall fix a record date for determining the holders of Voting Shares
entitled to receive notice of the Special Meeting in accordance with
all applicable laws and the articles and by-laws of the Corporation.
Unless a majority of the votes cast on such resolution are voted in
favour of the continued existence of the Rights, then the Board of
Directors shall immediately upon the confirmation by the Chairman of
such shareholders' meeting of the result of the vote on such
resolution, without further formality, be deemed to have elected to
redeem the Rights at the Redemption Price.
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. In
lieu of such fractional Rights, there shall be paid to the registered
holders of the Rights Certificates with regard to which such
fractional Rights would otherwise be issuable an amount in cash equal
to the same fraction of the Market Price of a whole Right determined
on the date on which such fractional Right would otherwise be
issuable.
b. The Corporation shall not be required to issue fractions of Common
Shares upon exercise of the Rights or to distribute certificates which
evidence fractional Common Shares. Fractions of Common Shares may, at
the election of the Corporation, be evidenced by scrip certificates or
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 same fraction of the Market Price of one Common Share at the date
of such exercise.
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 registered holders of the Rights; and any registered
holder of any rights, without the consent of the Rights Agent or of the
registered 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 in
the manner provided in such holder's Rights Certificate and in this Agreement.
Without limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement and will be
entitled to specific performance of the obligations under, and injunctive relief
against actual or threatened violations of the obligations of any person subject
to, this Agreement.
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, and, without limitation, all
necessary approvals of The Toronto Stock Exchange shall be obtained, to the
issuance of Common Shares upon the exercise of Rights under subsection 2.2(d).
Notwithstanding any provision of this Agreement to the contrary, any amendment
to this Agreement will be subject to the prior written consent of The Toronto
Stock Exchange.
5.8 UNLAWFUL DISTRIBUTIONS
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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
may take such actions as it may deem appropriate to ensure that such compliance
is not required, including, without limitation, establishing procedures for the
issuance to a Canadian resident trustee of Rights or securities issuable on
exercise of Rights, the holding thereof in trust for the Persons entitled
thereto (but reserving to the trustee or to the trustee and the Corporation, as
the Corporation may determine, absolute investment discretion with respect
thereto) and the sale thereof and remittance of proceeds of such sale, if any,
to the Persons entitled thereto. In no event shall the Corporation or the
Rights Agent be required to issue or deliver Rights or securities issuable on
exercise of Rights to Persons who are citizens, residents or nationals of any
jurisdiction other than Canada, in which such issue or delivery would be
unlawful without registration of the relevant Persons or securities for such
purposes. Notwithstanding the foregoing, to the extent that the issuance or
delivery of the Rights or securities issuable on exercise of Rights to Persons
who are citizens, residents or nationals of any such jurisdiction in which such
issue or delivery would be so unlawful, such Rights or securities shall be
issued and delivered to such Persons to the extent the same may be so issued and
delivered in reliance upon applicable exemptions from registration requirements
in such jurisdictions.
5.9 NOTICES
Any notice or demand authorized or required by this Agreement to be given or
made by the Rights Agent or by the holder of any Rights to or on the Corporation
shall be sufficiently given or made if delivered or sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Rights Agent) as follows:
CENTURION ENERGY INTERNATIONAL INC.
800, 205 - 5th Avenue S.W.
Calgary, Alberta
T2P 2V7
ATTENTION: PRESIDENT
Any such notice or demand shall be deemed to have been received if delivered, on
the date of delivery, or if sent by prepaid first class mail, on the fifth
Business Day after mailing thereof, except in the interruption of regular mail
service, in which case such notice shall be delivered.
Any notice or demand authorized or required by this Agreement to be given or
made by the Corporation or by the holder of any Rights to or on the Rights Agent
shall be sufficiently given or made if delivered or sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Corporation) as follows:
MONTREAL TRUST COMPANY OF CANADA
6th Floor
530 - 8th Avenue S.W.
Calgary, Alberta
T2P 3S8
ATTENTION: CORPORATE SERVICES DIVISION
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Any such notice or demand shall be deemed to have been received if delivered, on
the date of delivery, or if sent by prepaid first class mail, on the fifth
Business Day after mailing thereof, except in the interruption of regular mail
service, in which case such notice shall be delivered.
Any notice or demand 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 in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. In the event of any interruption of mail service,
such notice required or permitted to be given hereunder will be deemed to be
sufficiently given by advertisement of such notice in daily newspapers published
in each of the cities of Calgary and Toronto.
5.10 COSTS OF ENFORCEMENT
The Corporation agrees that if the Corporation or any other Person the
securities of which are purchasable upon exercise of Rights fails to fulfil any
of its obligations pursuant to this Agreement, then the Corporation or such
Person will reimburse the holder of any Rights for the costs and expenses
(including legal fees) incurred by such holder in actions to enforce his rights
pursuant to any Rights or this Agreement.
5.11 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.
5.12 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; but this Agreement shall
be for the sole and exclusive benefit of the Corporation, the Rights Agent and
the holders of the Rights.
5.13 GOVERNING LAW
This Agreement and each Right issued hereunder shall be deemed to be a contract
made under the laws of the Province of Alberta 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.
5.14 SEVERABILITY
If any Section, subsection, paragraph, subparagraph or other provision hereof or
the application hereof to any circumstances or any right hereunder shall, in any
jurisdiction and to any extent, be invalid or unenforceable, such Section,
subsection, paragraph, subparagraph or other provision or such right 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 Sections, subsections, paragraphs,
subparagraphs and other provisions hereof or rights hereunder in such
jurisdiction or the application of such Section, subsection, paragraph,
subparagraph or other provision or rights hereunder in any other jurisdiction or
to circumstances other than those as to which it is specifically held invalid or
unenforceable.
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5.15 EFFECTIVE DATE
This Agreement is effective and in full force and effect in accordance with its
terms from the date hereof. If this Agreement is not approved, ratified and
confirmed by resolution passed by a majority of votes cast by Independent
Shareholders who vote in respect of the ratification, approval and confirmation
of this Agreement at a meeting to be held no later than November 11, 1999 then
this agreement and all outstanding Rights shall be of no further force and
effect from the earlier of: (a) the date of such meeting; and (b) November 11,
1999.
5.16 DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS
The Board of Directors shall have the power and authority to administer and
amend this Agreement and to exercise all rights and powers specifically granted
hereunder to the Board of Directors or the Corporation, or as may be necessary
or advisable in the administration of this Agreement, including, without
limitation, the right and power to interpret the provisions of this Agreement
and to make all calculations and determinations deemed necessary or advisable
for the administration of this Agreement (including a determination to redeem or
not to redeem the Rights or to amend this Agreement in accordance with the terms
hereof). All such actions, calculations and determinations (including, for
purposes of paragraph ii. below, all omissions with respect to the foregoing)
which are done or made by the Board of Directors, in good faith, shall: (i) be
final, conclusive and binding on the Corporation, the Rights Agent, the holders
of the Rights and all other parties, provided that no amendment to this
Agreement shall be binding on the Rights Agent unless the Rights Agent shall
have agreed in writing to such amendment; and (ii) not subject the Board of
Directors or any director of the Corporation to any liability to the holders of
the Rights.
5.17 TIME OF THE ESSENCE
Time shall be of the essence in this Agreement.
5.18 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.
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5.19 LANGUAGE
Les parties aux pr sentes ont exig que la pr sente convention ainsi que tous
les documents et avis qui s'y rattachent et/ou que en d coulent soient redig s
en langue anglaise. The parties hereto have required that this Agreement and
all documents and notices related thereto and/or resulting therefrom be drawn up
in English.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.
CENTURION ENERGY INTERNATIONAL INC.
Per:
-----------------------------------------
Per:
-----------------------------------------
MONTREAL TRUST COMPANY OF CANADA
Per:
-----------------------------------------
Per:
-----------------------------------------
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EXHIBIT A
[FORM OF RIGHTS CERTIFICATE]
Certificate No. __________ Rights
THE RIGHTS ARE SUBJECT TO TERMINATION ON THE TERMS SET FORTH IN THE SHAREHOLDER
RIGHTS PLAN AGREEMENT. UNDER CERTAIN CIRCUMSTANCES (SPECIFIED IN SECTION 3.1(b)
OF THE SHAREHOLDER RIGHTS PLAN AGREEMENT), RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR TRANSFEREES OF AN ACQUIRING PERSON OR ITS AFFILIATES OR
ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE SHAREHOLDER RIGHTS PLAN AGREEMENT)
OR ANY PERSON ACTING JOINTLY OR IN CONCERT WITH ANY OF THEM 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 the 19th day of
May, 1999 (the "Rights Agreement") between Centurion Energy International Inc.,
a corporation amalgamated under the Business Corporations Act (the
"Corporation") and Montreal Trust Company of Canada, a trust company, as rights
agent (the "Rights Agent") (which term shall include any successor Rights Agent
under the Rights Agreement), to purchase from the Corporation at any time after
the Separation Time (as such term is defined in the Rights Agreement) and prior
to the Expiration Time (as such term is defined in the Rights Agreement), one
fully paid common share of the Corporation (a "Common Share") at the Exercise
Price referred to below, upon presentation and surrender of this Rights
Certificate together with the Form of Election to Exercise duly executed and
submitted to the Rights Agent at its principal office in either of the cities of
Calgary or Toronto. Until adjustment thereof in certain events as provided in
the Rights Agreement, the Exercise Price is equal to the greater of: (i) ten
($10.00) dollars; and (ii) an amount equal to two (2) times the Market Price of
the Common Shares determined on the last day of the preceding calendar month.
In certain circumstances described in the Rights Agreement, each Right evidenced
hereby may entitle the registered holder thereof to purchase or receive
securities of an entity other than the Corporation, assets, debt, equity or
other securities or property or assets of the Corporation, or more or less than
one Common Share (or a combination thereof), all as provided in the Rights
Agreement.
The Rights Certificate is subject to all of the terms, provisions and conditions
of the Rights Agreement which terms, provisions and conditions are hereby
incorporated herein by reference and made a part thereof and to which Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Rights Agent, the Corporation and the holders of the Rights Certificates.
Copies of the Rights Agreement are on file at the principal office of the
Corporation and are available upon written request.
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The 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 the 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. No fractional Common Shares will be issued upon the exercise of
any Rights evidenced hereby, but in lieu thereof a cash payment will be made as
provided in the Rights Agreement.
Subject to the provisions of the Rights Agreement, the Rights evidenced by this
Certificate may be redeemed by the Corporation at a redemption price of $0.0001
per Right, subject to adjustment in certain events, under certain circumstances
at its option.
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 Rights Agreement or herein be construed to
confer upon the holder hereof, as such, any of the rights of a shareholder of
the Corporation or any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting shareholders (except as provided in the Rights Agreement), or
to receive dividends or subscription rights, or otherwise, until the Rights
evidenced by this Rights Certificate shall have been exercised as provided in
the Rights Agreement.
The Rights Certificate shall not be valid or obligatory for any purpose until it
shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Corporation and
its corporate seal.
DATE: CENTURION ENERGY INTERNATIONAL INC.
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Per:
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Per:
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Countersigned:
MONTREAL TRUST COMPANY OF CANADA
Per:
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Authorized Signature
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<PAGE>
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer
the Rights Certificates)
FOR VALUE RECEIVED hereby sells, assigns and transfers unto
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(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 attorney, to transfer the within Rights
------------------------------
Certificate on the books of the within-named Corporation, with full power of
substitution.
DATE:
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SIGNATURE
Signature Guarantee: (Signature must correspond to name as written upon the
face of this Rights Certificate in every particular,
without alteration or enlargement or any change
whatsoever).
Signature must be guaranteed by a member firm of a stock exchange in Canada, a
registered national securities exchange in the United States, a member of the
Investment Dealers Association of Canada or National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in Canada or the United States.
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(To be completed by the assignor if true)
The undersigned hereby represents, for the benefit of all holders of Rights and
Common Shares, that the Rights evidenced by this Rights Certificate are not,
and, to the knowledge of the undersigned, have never been, Beneficially Owned by
an Acquiring Person or an Affiliate or Associate thereof or by any Person acting
jointly or in concert therewith. Capitalized terms shall have the meaning
ascribed thereto in the Rights Agreement.
-----------------------------------------
SIGNATURE
-----------------------------------------
(PLEASE PRINT NAME OF SIGNATOR)
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FORM OF ELECTION TO EXERCISE
TO:
-------------------------------------
The undersigned hereby irrevocably elects to exercise whole
------------------
Rights represented by the Rights Certificate to purchase the Common Shares
issuable upon the exercise of such Rights and requests that certificates for
such shares be issued in the name of:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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Address
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Social Insurance, Social Security or Other Taxpayer Identification Number
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights shall be
registered in the name of and delivered to:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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Address
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Social Insurance, Social Security or Other Taxpayer Identification Number
Dated:
--------------------------- -----------------------------------------
Signature
Signature Guaranteed: (Signature must correspond to name as written upon the
face of this Rights Certificate in every particular,
without alteration or enlargement or any change
whatsoever)
Signature must be guaranteed by a member firm of a recognized stock exchange in
Canada, a registered national securities exchange in the United States, a member
of the Investment Dealers Association of Canada or National Association of
Securities Dealers, Inc. or a commercial bank or trust company having an office
or correspondent in Canada or the United States.
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<PAGE>
--------------------------------------------------------------------------------
(TO BE COMPLETED BY EXERCISOR IF TRUE)
The undersigned hereby represents, for the benefit of all holders of Rights and
Common Shares, that the Rights evidenced by this Rights Certificate are not,
and, to the knowledge of the undersigned, have never been, Beneficially Owned by
an Acquiring Person or an Affiliate or Associate thereof or by any Person acting
jointly or in concert therewith. Capitalized terms shall have the meaning
ascribed thereto in the Rights Agreement.
-----------------------------------------
SIGNATURE
-----------------------------------------
(PLEASE PRINT NAME OF SIGNATOR)
NOTICE
In the event the Certificate set forth above in the applicable Forms of
Assignment or Election 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 and, in the case of an
Assignment, will affix a legend to that effect on any Rights Certificates issued
in exchange for this Rights Certificate. Capitalized terms shall have the
meaning ascribed thereto in the Rights Agreement.
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<PAGE>
