SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
AMERICAN ECO CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
Ontario, Canada 52-1742490
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(State of Incorporation or organization) (I.R.S. Employer
Identification No.)
154 University Avenue
Toronto, Ontario M5H 3Y9
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(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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None None
Securities to be registered pursuant to Section 12(g) of the Act:
Rights to Purchase Common Shares
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(Title of Class)
<PAGE>
ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE
REGISTERED.
On April 9, 1998, the Board of Directors of American
Eco Corporation (the "Company") authorized the issuance,
effective at 12:01 a.m. (Toronto time) on April 20, 1998, of one
common share purchase right (a "Right") for each outstanding
common share, no par value, of the Company (a "Common Share"),
outstanding at such time (the "Record Time"). Each Right
entitles the registered holder to purchase from the Company one
Common Share at an initial purchase price equal to one-half of
the per share market price of the Common Shares, subject to
adjustment (the "Exercise Price"). The description and terms of
the Rights are set forth in the Shareholder Rights Plan
Agreement, dated as of April 9, 1998 (the "Rights Agreement"),
between the Company and The CIBC Mellon Trust Company as rights
agent.
Under the Rights Agreement, a bidder making a Permitted
Bid (as defined below) for the Common Shares may not take up any
shares before the close of business on the 90th day after the
date of the bid and unless, on such date, at least 50% of the
Common Shares not beneficially owned by the person making the bid
and certain related parties are deposited, in which case, a
public announcement of that fact must be made and the bid must be
extended for ten business days on the same terms. The Rights
Agreement is designed to encourage an offeror to proceed by way
of a Permitted Bid, or to approach the Board with a view to
negotiation by creating the potential for substantial dilution of
the offeror's position. The Permitted Bid provisions of the
Rights Agreement are to ensure that in any take-over bid all
shareholders are treated equally, receive the maximum available
value for their investment and are given adequate time to
properly assess the bid on a fully informed basis.
A Permitted Bid is defined in the Rights Agreement as a
take-over bid made by a take-over bid circular and which also
complies with the following requirements: (1) is made to all
holders of the Company's voting shares as registered on the books
of the Company; and (2) is open for at least 90 days and more
than 50% of the voting shares of the Company (other than shares
beneficially owned by the offeror and certain related parties)
are deposited under the bid and not withdrawn before any shares
may be taken up and paid for and if 50% of the voting shares of
the Company are so deposited and not withdrawn, an announcement
of such fact is made and the bid remains open for an additional
ten business days.
Although the Rights Agreement is currently effective
with a record date of April 20, 1998, the Rights Agreement, and
Rights issued in connection therewith, will terminate and will be
void and of no further force or effect unless confirmed by the
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shareholders of the Company within six months by the affirmative
vote of a majority of the votes cast by the shareholders in
person or by proxy. One proposal at the 1998 Annual and Special
Meeting of Shareholders to be held on May 28, 1998 will be
confirmation of the Rights Agreement.
Initially, the Rights will be evidenced, with respect
to any of the Common Share certificates outstanding as of the
Record Time, by such Common Share certificate. From and after
the Separation Time, the Rights will be exercisable and the
registration and transfer of Rights shall be separate from and
independent of the Common Shares. The Separation Time is the
close of business on the eighth trading day after the earlier to
occur of (i) the first date of public announcement by the Company
or an Acquiring Person (as defined below) that a person or group
of affiliated or associated persons (collectively, a "Person")
has acquired (other than pursuant to a Permitted Bid or certain
other exemptions under the Rights Agreement) beneficial ownership
of 20% or more of the outstanding Common Shares and any other
shares in the capital of the Company entitled to vote generally
in the election of directors (such Person being hereinafter
referred to as an "Acquiring Person" and such date being
hereinafter referred to as the "Stock Acquisition Date") or (ii)
the date of the commencement of or first public announcement of
an intention of any Person (other than the Company or any of its
subsidiaries) to commence a transaction the consummation of which
would result in such Person becoming an Acquiring Person (or such
later date as may be determined by action of the Board of
Directors of the Company).
Until the Separation Time (i) the Rights will be
evidenced by the certificates for Common Shares and will be
transferred with and only with such Common Share certificates,
(ii) new certificates for Common Shares issued after the Record
Time will contain a legend incorporating the Rights Agreement by
reference, and (iii) the surrender for transfer of any such
certificate for Common Shares outstanding on the Record Time will
also constitute the transfer of the Rights associated with the
Common Shares represented thereby. Promptly following the
Separation Time, separate certificates evidencing the Rights
("Rights Certificates") will be mailed to holders of record of
the Common Shares as of the close of the Separation Time and such
separate Rights Certificates alone will evidence the Rights.
The Rights are not exercisable until the Separation
Time and will expire (the "Expiration Time") on the earlier of
(i) the close of business on April 9, 2008, (ii) the time at
which the Rights are redeemed by the Company, or (iii) if a
Person has become an Acquiring Person, the time at which the
Rights (other than Rights which are void as described below) are
exchanged for Common Shares at an exchange ratio of one Common
Share per Right, as adjusted by the Company; provided, however,
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that the Rights Agreement and the Rights will terminate and will
be void and of no further force or effect unless (a) confirmed by
the shareholders of the Company within six months from April 9,
1998, and (b) reconfirmed by the shareholders of the Company at
every third annual meeting following the 1998 Annual and Special
Meeting of Shareholders.
The Exercise Price payable and the number of Common
Shares issuable upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution in the event of
(i) a stock dividend on, or a subdivision, consolidation or
change of, the Common Shares, (ii) the issuance of rights,
options or warrants to subscribe for or purchase Common Shares at
a price, or securities convertible into Common Shares at a
conversion price, less than the then current market price for the
Common Shares, or (iii) a distribution to all holders of the
Common Shares of evidences of indebtedness, cash (excluding
regular cash dividends or dividends payable in Common Shares),
assets or rights, options or warrants (other than those referred
to above).
With certain exceptions, no adjustment in the Purchase
Price will be required unless such adjustment would require an
increase or decrease of at least 1% in the Exercise Price. No
fractional Rights will be issued and, in lieu thereof, holders of
the Rights with regard to which such fractional Rights would
otherwise be issuable will be paid an amount in cash equal to the
same fraction of the current market value of a whole Right.
In the event that following the Stock Acquisition Date
(i) the Company consolidates with, or merges with and into, any
other person, (ii) any person consolidates with the Company, or
merges with and into the Company and the Company is the
continuing or surviving corporation of such merger and, in
connection therewith, all or part of the Common Shares are
changed into or exchanged for shares or other securities of any
other Person or cash or any other property, or (iii) the Company
sells or otherwise transfers in one or more transactions, assets
or earning power aggregating 50% or more of the assets or earning
power of the Company and its subsidiaries, taken as a whole, to
any other person, each holder of a Right, except Rights which
previously have been voided as indicated below, will thereafter
have the right to receive, upon exercise thereof at the then
current Exercise Price, that number of common shares of the other
person which at the time of such transaction will have a market
value equal to two times the Exercise Price of the Right for an
amount in cash equal to the Exercise Price.
In the event that any Person becomes an Acquiring
Person, each holder of a Right, other than Rights beneficially
owned by the Acquiring Person (which will thereafter be void),
will thereafter have the right to receive, upon exercise thereof
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at the then current Exercise Price, that number of Common Shares
having a market value equal to two times the Exercise Price of
the Right for an amount in cash equal to the Exercise Price.
Any Rights acquired or beneficially owned by any
Acquiring Person or certain related parties thereto will be void,
and any holder of such Rights will thereafter have no right to
exercise such Rights under any provision of the Rights Agreement.
At any time prior to the earlier of (i) the close of
business on the eighth trading day following the Stock
Acquisition Date, or (ii) the final Expiration Time, the Board of
Directors of the Company may redeem the then outstanding Rights
in whole, but not in part, at a price of $.0001 per Right,
subject to adjustment (the "Redemption Price"). Under certain
circumstances set forth in the Rights Agreement, the decision to
redeem would require the concurrence of a majority of the
Independent Directors (as defined in the Rights Agreement).
Immediately upon any redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the
holders of the Rights will be to receive the Redemption Price.
The Company may, from time to time, make amendments to
the Rights Agreement to correct clerical or typographical errors
or which are required to maintain the validity of the Rights
Agreement as a result of changes in applicable law. All other
amendments after the Company's 1998 Annual and Special Meeting of
Shareholders will require shareholder approval.
Issuance of the Common Shares upon exercise of the
Rights will be subject to any necessary registration requirements
and regulatory approvals. Until a Right shall be exercised, the
holder thereof, as such, will have no right as a shareholder of
the Company, including without limitation, the right to vote or
to receive dividends.
The Rights Agreement which specifies the terms of the
Rights and includes as Attachment 1 thereto a form of the Rights
Certificate is attached hereto as Exhibit 1 and is incorporated
herein by reference. The foregoing description of the Rights
does not purport to be complete and is qualified in its entirety
by reference to such Exhibit.
ITEM 2. EXHIBITS.
1. Rights Agreement, dated as of April 9, 1998, between
American Eco Corporation and The CIBC Mellon Trust
Company, which includes as Attachment 1 thereto the
form of a Rights Certificate.
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SIGNATURE
Pursuant to the requirements of Section 12 of the
Securities Exchange Act of 1934, the Registrant has duly caused
this Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized.
AMERICAN ECO CORPORATION
Dated: April 13, 1998 By: /s/ Michael E. McGinnis
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Name: Michael E. McGinnis
Title: Chairman, President and
Chief Executive Officer
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EXHIBIT INDEX
Exhibit Description
1. Rights Agreement, dated as of April 9, 1998,
between American Eco Corporation and The CIBC
Mellon Trust Company, which includes as
Attachment 1 thereto the form of a Rights
Certificate.
8
SHAREHOLDER RIGHTS PLAN AGREEMENT
DATED AS OF APRIL 9, 1998
BETWEEN
AMERICAN ECO CORPORATION
AND
THE CIBC MELLON TRUST COMPANY
AS RIGHTS AGENT
<PAGE>
SHAREHOLDER RIGHTS PLAN AGREEMENT
TABLE OF CONTENTS
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Page
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ARTICLE 1 - INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Certain Definitions . . . . . . . . . . . . . . . . . . . . . 1
1.2 Currency . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.3 Headings . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.4 Calculation of Number and Percentage of Beneficial Ownership
of Outstanding Voting Shares . . . . . . . . . . . . . . . 17
1.5 Acting Jointly or in Concert . . . . . . . . . . . . . . . 18
1.6 Gennerally Accepted Accounting Principles . . . . . . . . . 18
ARTICLE 2 - RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.1 Legend on Common Share Certificates . . . . . . . . . . . . 18
2.2 Initial Exercise Price . . . . . . . . . . . . . . . . . . 19
2.3 Adjustments to Exercise Price . . . . . . . . . . . . . . . 22
2.4 Corporation Covenants . . . . . . . . . . . . . . . . . . . 27
2.5 Consolidation, Merger or Sale or Transfer of
Assets or Earning Power . . . . . . . . . . . . . . . . . . 28
2.6 Date on Which Exercise Is Effective . . . . . . . . . . . . 31
2.7 Execution, Authentication, Delivery and Dating of Rights
Certificates . . . . . . . . . . . . . . . . . . . . . . . 31
2.8 Registration, Transfer and Exchange . . . . . . . . . . . . 32
2.9 Mutilated, Destroyed, Lost and Stolen Rights Certificates . 33
2.10 Persons Deemed Owners of Rights . . . . . . . . . . . . . . 33
2.11 Delivery and Cancellation of Certificates . . . . . . . . . 34
2.12 Agreement of Rights Holders . . . . . . . . . . . . . . . . 34
2.13 Rights Certificate Holder Not Deemed a Shareholder . . . . 35
ARTICLE 3 - ADJUSTMENTS TO THE RIGHTS . . . . . . . . . . . . . . . . 35
3.1 Flip-in Event . . . . . . . . . . . . . . . . . . . . . . . 35
3.2 Exchange Option . . . . . . . . . . . . . . . . . . . . . . 37
3.3 Fiduciary Duties of the Board of Directors of the
Corporation . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 4 - THE RIGHTS AGENT . . . . . . . . . . . . . . . . . . . . 38
4.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.2 Merger, Amalgamation or Consolidation or Change of Name of
Rights Agent . . . . . . . . . . . . . . . . . . . . . . . 39
4.3 Duties of Rights Agent . . . . . . . . . . . . . . . . . . 40
4.4 Change of Rights Agent . . . . . . . . . . . . . . . . . . 42
ARTICLE 5 - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 42
5.1 Redemption and Waiver . . . . . . . . . . . . . . . . . . . 42
5.2 Notice of Certain Events . . . . . . . . . . . . . . . . . 44
5.3 Expiration . . . . . . . . . . . . . . . . . . . . . . . . 45
5.4 Issuance of New Rights Certificates . . . . . . . . . . . . 46
5.5 Supplements and Amendments . . . . . . . . . . . . . . . . 46
5.6 Fractional Rights and Fractional Shares . . . . . . . . . . 47
5.7 Rights of Action . . . . . . . . . . . . . . . . . . . . . 48
5.8 Regulatory Approvals . . . . . . . . . . . . . . . . . . . 48
5.9 Declaration as to Non-Canadian and Non-U.S. Holders . . . . 48
5.10 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.11 Costs of Enforcement . . . . . . . . . . . . . . . . . . . 50
5.12 Successors . . . . . . . . . . . . . . . . . . . . . . . . 50
5.13 Benefits of this Agreement . . . . . . . . . . . . . . . . 50
5.14 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 50
5.15 Severability . . . . . . . . . . . . . . . . . . . . . . . 50
5.16 Effective Date . . . . . . . . . . . . . . . . . . . . . . 51
5.17 Reconfirmation . . . . . . . . . . . . . . . . . . . . . . 51
5.18 Determinations and Actions by the Board of Directors . . . 51
5.19 Time of the Essence . . . . . . . . . . . . . . . . . . . . 51
5.20 Regulatory Approvals . . . . . . . . . . . . . . . . . . . 51
5.21 Execution in Counterparts . . . . . . . . . . . . . . . . . 52
<PAGE>
SHAREHOLDER RIGHTS PLAN AGREEMENT
MEMORANDUM OF AGREEMENT dated as of April 9, 1998 between American ECO
Corporation (the "Corporation"), a corporation incorporated under the
Business Corporations Act (Ontario) and The CIBC Mellon Trust Company, a
trust company incorporated under the laws of Canada (the "Rights
Agent");
WHEREAS the Board of Directors of the Corporation has determined that it is
in the best interests of the Corporation to adopt a shareholder rights plan
to insure, to the extent possible, that all shareholders of the Corporation
are treated fairly in connection with any take-over bid for the
Corporation;
AND WHEREAS in order to implement the adoption of a shareholder rights plan
as established by this Agreement, the Board of Directors has:
(a) authorized the issuance, effective at 12:01 a.m. (Toronto time)
on the Effective Date (as hereinafter defined), of one Right (as
hereinafter defined) in respect of each Common Share (as
hereinafter defined) outstanding at 12:01 a.m. (Toronto time) on
the Effective Date (the "Record Time"); and
(b) authorized the issuance of one Right in respect of each Common
Share of the Corporation issued after the Record Time and prior
to the earlier of the Separation Time (as hereinafter defined)
and the Expiration Time (as hereinafter defined);
AND WHEREAS each Right entitles the holder thereof, after the Separation
Time, to acquire securities of the Corporation pursuant to the terms and
subject to the conditions set forth herein;
AND WHEREAS the Corporation desires to appoint the Rights Agent to act 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 (as hereinafter defined), the
exercise of Rights and other matters referred to herein;
NOW THEREFORE, in consideration of the premises and the respective
covenants and agreements set forth herein, and subject to such covenants
and agreements, the parties hereby agree as follows:
ARTICLE 1 - INTERPRETATION
1.1 CERTAIN DEFINITIONS
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For purposes of this Agreement, the following terms have the meanings
indicated:
(a) "ACQUIRING PERSON" shall mean any Person who, together with all
Affiliates and Associates of such Person, 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 employee benefit plan of the Corporation or any
Subsidiary of the Corporation, or any entity holding
Voting Shares for or pursuant to the terms of any such
plan;
(iii) any Person who becomes the Beneficial Owner of 20% or
more of the outstanding Voting Shares solely as a
result of one or any combination of (A) a Voting Share
Reduction, (B) Permitted Bid Acquisitions, (C) an
Exempt Acquisition, or (D) Pro Rata Acquisitions;
provided however that if a Person becomes the
Beneficial Owner of 20% or more of the outstanding
Voting Shares by reason of one or any combination of
the operation of (A), (B), (C) or (D) above and such
Person's Beneficial Ownership of Voting Shares
thereafter increases by more than 1% of the number of
Voting Shares outstanding (other than pursuant to one
or any combination of a Voting Share Reduction, a
Permitted Bid Acquisition, an Exempt Acquisition or a
Pro Rata Acquisition), then as of the date such Person
becomes the Beneficial Owner of such additional Voting
Shares, such Person shall become an "Acquiring Person";
(iv) for a period of ten days after the Disqualification
Date (as defined below), 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 Subsection 1.1(f)(vi)
solely because such Person or the Beneficial Owner of
such Voting Shares is making or has announced an
intention to make a Take-over Bid, either alone or by
acting jointly or in concert with any other Person.
For the purposes of this definition, "Disqualification
Date" means the first date of public announcement that
any Person is making or has announced an intention to
make a Take-over Bid;
(v) an underwriter or member of a banking or selling group
that becomes the Beneficial Owner of 20% or more of the
Voting Shares in connection with a distribution to the
public of securities of the Corporation pursuant to an
underwriting agreement with the Corporation; or
(vi) a Person (a "Grandfathered Person") who is the
Beneficial Owner of 20% or more of the outstanding
Voting Shares determined as at the Record Time,
provided however that this exception shall not be, and
shall cease to be, applicable to a Grandfathered Person
in the event that such Grandfathered Person shall,
after the Record Time, become the Beneficial Owner of
additional Voting Shares of the Corporation that
increases its Beneficial Ownership of Voting Shares by
more than 1% of the number of Voting Shares outstanding
as at the Record Time (other than pursuant to one or
any combination of a Voting Share Reduction, a
Permitted Bid Acquisition, an Exempt Acquisition or a
Pro Rata Acquisition);
(b) "AFFILIATE" when used to indicate a relationship with a Person
means a Person that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common
control with, such specified Person;
(c) "AGREEMENT" shall mean this shareholder rights plan agreement
dated as of April 9, 1998 between the Corporation and the Rights
Agent, as the same may be further amended or supplemented from
time to time; "hereof", "herein", "hereto" and similar
expressions mean and refer to this Agreement as a whole and not
to any particular part of this Agreement;
(d) "ANNUAL CASH DIVIDEND" shall mean cash dividends paid in any
fiscal year of the Corporation to the extent that such cash
dividends do not exceed, in the aggregate, 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 the
annual 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;
(e) "ASSOCIATE", when used to indicate a relationship with a Person
means:
(i) any body corporate, partnership or other organization
of which such specified Person is a director, officer
or partner;
(ii) any trust or other estate (A) in which such specified
Person has a beneficial interest and with whom such
specified Person is acting jointly or in concert, or
(B) in which such specified Person has a 10% or greater
Beneficial Ownership or beneficial interest, or (C) as
to which such specified Person serves as trustee or in
a similar fiduciary 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 applicable laws 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;
(iii) any relative of such specified Person or any person to
whom such specified Person is married, or any person
with whom such specified Person is living in a conjugal
relationship outside marriage, or any relative of such
spouse or other person who has the same home as such
specified Person;
(iv) any Person who is a director, officer, partner or
trustee of such specified Person or of any body
corporate, partnership or other organization (other
than the Corporation or any wholly-owned Subsidiary of
the Corporation) which is an Affiliate or Associate of
such specified Person;
(v) any body corporate of which such specified Person owns,
directly or indirectly, at law or in equity, shares or
securities currently convertible into or exchangeable
for shares carrying more than 10% of the voting rights
attaching to all voting shares of the body corporate
for the time being outstanding or a currently
exercisable option or right to purchase such shares or
such convertible or exchangeable securities; and
(vi) any Person who is an Associate within the meaning
ascribed to such term in (i) Rule 12b-2 of the General
Rules and Regulations under the 1934 Exchange Act as in
effect on the date hereof or (ii) the Securities Act
(Ontario) as in effect on the date hereof.
(f) A Person is deemed the "BENEFICIAL OWNER" and to have "BENEFICIAL
OWNERSHIP" of, and to "BENEFICIALLY OWN":
(i) any securities as to which such Person or any of such
Person's Affiliates or Associates is or may be deemed to be
the direct or indirect Beneficial Owner and, for this
purpose, a Person shall be deemed to be a Beneficial Owner
of all securities:
(A) owned by a partnership of which such Person or any of
such Person's Affiliates or Associates is a partner;
(B) owned by a trust of which such Person or any of such
Person's Affiliates or Associates is a beneficiary
(whether their interest in the trust is present or
future and/or vested or contingent);
(C) owned jointly or in common with others; and
(D) of which such Person or any of such Person's Affiliates
or Associates is deemed to be the Beneficial Owner
pursuant to the OBCA or the Securities Act (Ontario)
for the purposes of insider trading or take-over bids
or pursuant to Rule 13d-3 or 13d-5 under the 1934
Exchange Act, whether or not such laws or regulations
apply to such Person or such Person's Affiliates or
Associates and whether or not such beneficial owner or
deemed beneficial owner is the holder of record of such
securities;
(ii) any securities as to which such Person or any of such
Person's Affiliates or Associates has, directly or
indirectly:
(A) the right to become a Beneficial Owner within the
meaning of Subsection 1.1(f)(i) (whether such right is
exercisable immediately or after the passage of time or
upon the occurrence of a contingency or payment of
installments or otherwise) pursuant to any agreement,
arrangement, pledge or understanding or otherwise,
whether or not in writing (other than (1) customary
agreements with and between underwriters and/or banking
group and/or selling group members with respect to a
bona fide distribution to the public of securities, and
(2) 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 or upon
the exercise of conversion rights, exchange rights,
rights (other than the Rights), warrants or options or
otherwise; or
(B) the right to vote (whether such right is exercisable
immediately or after the passage of time or upon the
occurrence of a contingency or payment of installments
or otherwise) pursuant to any agreement, arrangement or
understanding or otherwise whether or not in writing
(other than (1) 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 (2) 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 Subsection 1.1(f)(i) or (ii) 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 whether or not in writing (other than (1)
customary agreements with and between underwriters
and/or banking group and/or selling group members with
respect to a bona fide distribution to the public of
securities, and (2) 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) with respect to or for the purpose of,
acquiring, holding, voting or disposing of any Voting
Shares or acquiring, holding or disposing of a
significant portion of the property or assets of the
Corporation or any Subsidiary of the Corporation
determined on the basis of a consolidation of the
accounts of the Corporation and its Subsidiaries and
any securities which are Beneficially Owned (within the
meaning of Clauses (i) or (ii) of this Subsection
1.1(f) by any Affiliate or Associate of such other
Person or any Person that is acting jointly or in
concert with, or has any agreement, arrangement or
understanding of the type referred to above with, such
other Person;
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 a tender or exchange offer or Take-over Bid made
by such Person or any of such Person's Affiliates or
Associates until the earlier of such deposited or tendered
security being accepted unconditionally for payment or
exchange or being taken up and paid for;
(v) solely because such Person or any of such Person's
Affiliates or Associates 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 made
pursuant to and in accordance with, the applicable rules and
regulations under the OBCA, the Securities Act (Ontario) and
the 1934 Exchange Act, except if such power (or the
arrangements relating thereto) is then reportable under
Section 101 of the Securities Act (Ontario) or under Item 6
of Schedule 13D under the 1934 Exchange Act;
(vi) solely because such Person (hereinafter in this Subsection
1.1(f)(vi) referred to as the "MANAGER"), being principally
engaged in the business of managing investment funds for
other Persons (which others may include and be limited to
one or more employee benefit plans or pension plans) who are
not Affiliates or Associates of the Manager and who do not
act jointly or in concert with the Manager as part of the
Manager's duties as agent for fully managed accounts, holds
or exercises voting or dispositive power over such security
and such voting or dispositive power over such security is
held in the ordinary course of such business in the
performance of the duties of the Manager for the account of
the other Person; provided however that:
(A) such security shall be deemed in such case to be
Beneficially Owned by such other Persons;
(B) the Manager does not, individually, Beneficially Own in
excess of five percent of the outstanding Voting
Shares, determined after giving effect to the
provisions of this Subsection 1.1(f)(vi); and
(C) the Manager has not participated in, has not made, does
not propose or intend to make and is not participating
in or making a recommendation in respect of, a Take-
over Bid or any plan or proposal relating thereto or
resulting therein, either alone or by acting jointly or
in concert with any other Person;
and provided further that notwithstanding the foregoing the
Board of Directors shall have the right to and may
determine, acting in good faith, that conditions exist which
should disentitle the Manager from relying on this
Subsection 1.1(f)(vi) and, in such event, the Manager's
Beneficial Ownership of securities shall be determined
without reference to this Subsection 1.1(f)(vi); or
(vii) solely because such Person (hereinafter in this
Subsection 1.1(f)(vii) referred to as the "TRUST
COMPANY") holds or exercises voting or dispositive
power over such securities provided that:
(A) 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 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 dispositive 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
(B) the Trust Company has not participated in, has not
made, does not propose or intend to make and is not
participating in, a Take-over Bid or any plan or
proposal relating thereto or resulting therein, either
alone or by acting jointly or in concert with any other
Person;
and provided further that notwithstanding the foregoing the
Board of Directors shall have the right to and may
determine, acting in good faith, that conditions exist which
should disentitle the Trust Company from relying on this
Subsection 1.1(f)(vii) and in such event the Trust Company's
Beneficial Ownership of securities shall be determined
without reference to this Subsection 1.1(f)(vii); or
(viii) solely because such Person is a client of the same
Manager as another Person on whose account the Manager
holds or exercises voting or dispositive 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 dispositive power
over such security; or
(ix) held for or pursuant to the terms of any employee benefit
plan, deferred profit sharing plan, stock participating plan
or trust for the benefit of employees of the Corporation or
any Subsidiary of the Corporation; or
(x) solely because any such Person, any of such Person's
Affiliates or Associates or any other Person referred to in
clause (iii) of this definition has an agreement,
arrangement or understanding, whether or not in writing (but
other than of the nature otherwise referred to in this
Subsection 1.1(f)), with respect to a shareholder proposal
or a matter or matters to come before a particular meeting
of shareholders, including the election of directors; or
(xi) issuable upon exercise of Rights at any time prior to the
occurrence of a Flip-in Event; or
(xii) issuable upon exercise of Rights from and after the
occurrence of a Flip-in Event, which Rights were
acquired by such Person or any of such Person's
Affiliates or Associates prior to the Separation Time
or pursuant to Section 2.1 ("Original Rights") or
pursuant to Subsection 2.3(e) in connection with an
adjustment made with respect to Original Rights.
For the purposes of this Agreement, in determining the
percentage of the outstanding Voting Shares with
respect to which a Person is or is deemed to be the
Beneficial Owner, all Voting Shares as to which such
Person is deemed the Beneficial Owner shall be deemed
outstanding.
(g) "BOARD OF DIRECTORS" shall mean the board of directors of the
Corporation or any duly constituted and empowered committee
thereof;
(h) "BUSINESS DAY" shall mean any day other than a Saturday, Sunday
or a day on which banking institutions in Toronto are authorized
or obligated by law to close;
(i) "CANADIAN DOLLAR EQUIVALENT" of any amount which is expressed in
United States Dollars shall mean, on any date, the Canadian
dollar equivalent of such amount determined by multiplying such
amount by the U.S. - Canadian Exchange Rate in effect on such
date;
(j) "CANADIAN - U.S. EXCHANGE RATE" shall mean, on any date, the
inverse of the U.S. - Canadian Exchange Rate in effect on such
date;
(k) "CLOSE OF BUSINESS" on any given date shall mean 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 principal transfer
office in Toronto of the transfer agent for the Common Shares of
the Corporation (or, after the Separation Time, the principal
transfer office in Toronto of the Rights Agent) is closed to the
public;
(l) "COMMON SHARES" shall mean the common shares in the capital of
the Corporation;
(m) "COMPETING PERMITTED BID" shall mean a Take-over Bid that:
(i) is made after a Permitted Bid has been made and prior
to the expiry of the Permitted Bid;
(ii) satisfies all components of the definition of a
Permitted Bid other than the requirements set out in
Subsection 1.1(ai)(ii) of the definition of a Permitted
Bid; and
(iii) contains, and the take-up and payment for securities
tendered or deposited is subject to, an irrevocable and
unqualified condition that no Voting Shares will be
taken up or paid for pursuant to the Take-over Bid
prior to the close of business on a date that is no
earlier than the later of: (A) the 60th day after the
date on which the earliest Permitted Bid which preceded
the Competing Permitted Bid was made; and (B) 21 days
after the date of the Take-over Bid constituting the
Competing Permitted Bid; and only if at the date that
the Voting Shares are to be taken up more than 50% of
the Voting Shares held by Independent Shareholders
shall have been deposited or tendered pursuant to the
Competing Permitted Bid and not withdrawn;
(n) "CONTROLLED" a corporation is "controlled" by another Person if:
(i) securities entitled to vote in the election of directors
carrying more than 50% of the votes for the election of
directors are held, directly or indirectly, by or for the
benefit of the other Person; and
(ii) the votes carried by such securities are entitled, if
exercised, to elect a majority of the board of directors of
such corporation; and "controls", "controlling" and "under
common control with" shall be interpreted accordingly;
(o) "CO-RIGHTS AGENTS" shall have the meaning ascribed thereto in
Subsection 4.1(a);
(p) "DISPOSITION DATE" shall have the meaning ascribed thereto in
Subsection 5.1(e);
(q) "DIVIDEND REINVESTMENT ACQUISITION" shall mean an acquisition of
Voting Shares pursuant to a Dividend Reinvestment Plan;
(r) "DIVIDEND REINVESTMENT PLAN" shall mean 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 Voting Shares;
(s) "ELECTION TO EXERCISE" shall have the meaning ascribed thereto in
Subsection 2.2(d)(ii);
(t) "EFFECTIVE DATE" shall mean April 20, 1998;
(u) "EXEMPT ACQUISITION" shall mean a share acquisition in respect of
which the Board of Directors has waived the application of
Section 3.1;
(v) "EXERCISE PRICE" shall mean, as of any date, the price at which a
holder may purchase securities issuable upon exercise of one
whole Right which, until adjustment thereof in accordance with
the terms hereof, shall be one-half of the then current Market
Price;
(w) "EXPANSION FACTOR" shall have the meaning ascribed thereto in
Subsection 2.3(a)(iv)(a);
(x) "EXPIRATION TIME" shall mean the close of business on that date
which is the earliest of the of termination of this Agreement
pursuant to Section 5.16 or, if this Agreement is confirmed
pursuant to Section 5.16, the date of termination of this
Agreement pursuant to Section 5.17 or, if this Agreement is
reconfirmed pursuant to Section 5.17, the close of business on
the tenth anniversary of the Effective Date;
(y) "FLIP-IN EVENT" shall mean a transaction in or pursuant to which
any Person becomes an Acquiring Person;
(z) "HOLDER" shall have the meaning ascribed thereto in Section 2.10;
(aa) "INDEPENDENT DIRECTORS" shall mean any member of the Board of
Directors of the Corporation, while such person is a member of
the Board of Directors, who is not an Acquiring Person, or an
Affiliate or Associate of an Acquiring Person, or a
representative or nominee of an Acquiring Person or of any such
Affiliate or Associate, and was a member of the Board of
Directors prior to the date hereof, and any successor of an
Independent Director while such successor is a member of the
Board of Directors, who is not an Acquiring Person or an
Affiliate or an Associate of an Acquiring Person or a
representative or nominee of an Acquiring Person or of any such
Affiliate or Associate and is recommended or elected to succeed
the Independent Director by a majority of the Independent
Directors;
(ab) "INDEPENDENT SHAREHOLDERS" shall mean holders of Voting Shares,
other than:
(i) any Acquiring Person;
(ii) any Offeror (other than any Person who, by virtue of
Subsection 1.1(f)(iii)(b), is not deemed to
Beneficially Own the Voting Shares held by such
Person);
(iii) any Affiliate or Associate of any Acquiring Person or
Offeror; any Person acting jointly or in concert with
any Acquiring Person or Offeror; and
(iv) any employee benefit plan, deferred profit sharing
plan, stock participation plan and any other similar
plan or trust for the benefit of employees of the
Corporation unless the beneficiaries of the plan or
trust direct the manner in which the Voting Shares are
to be voted or direct whether the Voting Shares are to
be tendered to a Take-over Bid;
(ac) "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 of a type analogous to any of the events
described in Section 2.3 hereof shall have caused the closing
prices used to determine the Market Price on any Trading Days not
to be fully comparable with the closing price on such date of
determination or, if the date of determination is not a Trading
Day, on the immediately preceding Trading Day, each such closing
price so used shall be appropriately adjusted in a manner
analogous to the applicable adjustment provided for in Section
2.3 hereof in order to make it fully comparable with the closing
price on such date of determination or if the date of
determination is not a Trading Day, on the immediately preceding
Trading Day. The closing price per share of any securities on
any date shall be:
(i) the closing board lot sale price or, in case no such
sale takes place on such date, the average of the
closing bid and ask prices for each of such securities
as reported by the principal Canadian stock exchange
(as determined by volume of trading) on which such
securities are listed or admitted to trading;
(ii) if for any reason none of such prices is available on
such day or the securities are not listed or posted for
trading on a Canadian stock exchange, the last sale
price or, in case no such sale takes place on such
date, the average of the closing bid and ask prices for
each of such securities as reported by the principal
national United States securities exchange (as
determined by volume of trading) on which such
securities are listed or admitted to trading;
(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 sale price
or, in case no sale takes place on such date, the
average of the high bid and low ask prices for each of
such securities in the over-the-counter market, as
quoted by any recognized reporting system then in use;
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
ask prices as furnished by a recognized professional
market maker making a market in the securities;
provided however that if for any reason none of such
prices is available on such day, the closing price per
share of such securities on such date means the fair
value per share of such securities on such date as
determined by a nationally recognized investment dealer
or investment banker. The Market Price shall be
expressed in Canadian dollars and, if initially
determined in respect of any day forming part of the 20
consecutive Trading Day period in question in United
States dollars, such amount shall be translated into
Canadian dollars on such date at the Canadian Dollar
Equivalent thereof. Notwithstanding the foregoing,
where the Board of Directors is satisfied that the
Market Price of securities as determined herein was
affected by an anticipated actual Take-over Bid or by
improper manipulation, the Board of Directors may
determine the Market Price of securities, such
determination to be based upon 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.
(ad) "1933 SECURITIES ACT" shall mean the Securities Act of 1933 of
the United States, as amended, and the rules and regulations
thereunder as now in effect or as the same may from time to time
be amended, re-enacted or replaced;
(ae) "1934 EXCHANGE ACT" shall mean the Securities Exchange Act of
1934 of the United States, as amended, and the rules and
regulations thereunder as now in effect or as the same may from
time to time be amended, re-enacted or replaced;
(af) "NOMINEE" shall have the meaning ascribed thereto in Subsection
2.2(c);
(ag) "OBCA" shall mean the Business Corporations Act, (Ontario) as
amended and the regulations made thereunder, and any comparable
or successor laws or regulations thereto;
(ah) "OFFER TO ACQUIRE" shall include:
(i) an offer to purchase or a solicitation of an offer to sell
Voting Shares, or a public announcement of an intention to
make such an offer or solicitation; and
(ii) an acceptance of an offer to sell Voting Shares, whether or
not such offer to sell has been solicited; or any
combination thereof, and the Person accepting an offer to
sell shall be deemed to be making an Offer to Acquire to the
Person that made the offer to sell;
(ai) "OFFEROR" shall mean a Person who has announced and has not
withdrawn, an intention to make or who has made and has not
withdrawn, a Take-over Bid, other than a Person who has completed
a Permitted Bid, a Competing Permitted Bid or an Exempt
Acquisition;
(aj) "OFFEROR'S SECURITIES" shall mean Voting Shares Beneficially
Owned by an Offeror on the date of the Offer to Acquire;
(ak) "PERMITTED BID" shall mean a Take-over Bid made by an Offeror by
way of take-over bid circular which also complies with the
following additional provisions:
(i) the Take-over Bid is made to all holders of Voting
Shares as registered on the books of the Corporation,
other than the Offeror;
(ii) the Take-over Bid contains, and the take-up and payment
for securities tendered or deposited is subject to, an
irrevocable and unqualified provision that no Voting
Shares will be taken up or paid for pursuant to the
Take-over Bid prior to the close of business on the
date which is not less than 90 days following the date
of the Take-over Bid and only if at such date more than
50% of the Voting Shares held by Independent
Shareholders shall have been deposited or tendered
pursuant to the Take-over Bid and not withdrawn;
(iii) unless the Take-over Bid is withdrawn, the Take-over
Bid contains an irrevocable and unqualified provision
that Voting Shares may be deposited pursuant to such
Take-over Bid at any time during the period of time
described in Subsection (ai)(ii) and that any Voting
Shares deposited pursuant to the Take-over Bid may be
withdrawn until taken up and paid for; and
(iv) the Take-over Bid contains an irrevocable and
unqualified provision that in the event that the
deposit condition set forth in Subsection (ai)(ii) is
satisfied the Offeror will make a public announcement
of that fact and the Take-over Bid will remain open for
deposits and tenders of Voting Shares for not less than
ten Business Days from the date of such public
announcement;
(al) "PERMITTED BID ACQUISITION" shall mean an acquisition of Voting
Shares made pursuant to a Permitted Bid or a Competing Permitted
Bid;
(am) "PERSON" shall include any individual, firm, partnership,
association, trust, body corporate, corporation, unincorporated
organization, syndicate, governmental entity or other entity;
(an) "PRO RATA ACQUISITION" shall mean an acquisition by a Person of
Voting Shares pursuant to:
(i) a Dividend Reinvestment Acquisition;
(ii) a stock dividend, stock split or other event in respect
of securities of the Corporation of one or more
particular classes or series pursuant to which such
Person becomes the Beneficial Owner of Voting Shares on
the same pro rata basis as all other holders of
securities of the particular class, classes or series;
(iii) the acquisition or the exercise by the Person of only
those rights to purchase Voting Shares distributed to
that Person in the course of a distribution to all
holders of securities of the Corporation of one or more
particular classes or series pursuant to a rights
offering or pursuant to a prospectus; or
(iv) a distribution 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 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;
(ao) "RECORD TIME" shall have the meaning set forth in the second
whereas clause;
(ap) "RIGHT" shall mean a right to purchase a Common Share of the
Corporation upon the terms and subject to the conditions set
forth in this Agreement;
(aq) "RIGHTS CERTIFICATE" shall mean the certificates representing the
Rights after the Separation Time, which shall be substantially in
the form attached hereto as Attachment 1;
(ar) "RIGHTS REGISTER" shall have the meaning ascribed thereto in
Subsection 2.8(a);
(as) "SECTION 2.5 EVENT" shall have the meaning ascribed thereto in
Subsection 2.5;
(at) "SECURITIES ACT" shall mean the Securities Act, Ontario as
amended and the regulations thereunder and any comparable or
successor laws or regulations thereto;
(au) "SEPARATION TIME" shall mean the close of business on the eighth
Trading Day after the earlier of:
(i) the Stock Acquisition Date; and
(ii) the date of the commencement of or first public announcement
of the intent of any Person (other than the Corporation or
any Subsidiary of the Corporation) to commence a Take-over
Bid (other than a Permitted Bid or a Competing Permitted
Bid), or such later time as may be determined by the Board
of Directors, provided that, (A) if any Take-over Bid
referred to in this Subsection (au)(ii) expires, is
cancelled, terminated or otherwise withdrawn prior to the
Separation Time, such Take-over Bid shall be deemed, for the
purposes of this definition, never to have been made; and
(B) if the Board of Directors determines 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.
(av) "STOCK ACQUISITION DATE" shall mean the first date of public
announcement (which, for purposes of this definition, shall
include, without limitation, a report filed pursuant to section
101 of the Securities Act, Ontario or Section 13(d) of the 1934
Exchange Act) by the Corporation or an Acquiring Person stating
that an Acquiring Person has become such;
(aw) "SUBSIDIARY" a corporation shall be deemed to be a Subsidiary of
another corporation if:
(i) it is controlled by:
(A) that other; or
(B) that other and one or more corporations each of which
is controlled by that other; or
(C) 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;
(ax) "TAKE-OVER BID" shall mean an Offer to Acquire Voting Shares or
securities convertible into Voting Shares if, assuming that the
Voting Shares or convertible securities subject to the Offer to
Acquire are acquired and are Beneficially Owned at the date of
such Offer to Acquire by the Person making such Offer to Acquire,
such Voting Shares (including Voting Shares that may be acquired
upon conversion of securities convertible into Voting Shares)
together with the Offeror's Securities, constitute in the
aggregate 20% or more of the outstanding Voting Shares at the
date of the Offer to Acquire;
(ay) "TRADING DAY", when used with respect to any securities, shall
mean a day on which the principal Canadian or United States stock
exchange or quotation system (including NASDAQ) on which such
securities are listed or admitted for trading is open for the
transaction of business or if the securities are not listed or
admitted for trading on any Canadian stock exchange, a Business
Day;
(az) "U.S.- CANADIAN EXCHANGE RATE" shall mean, 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 calculated
in such manner as may be determined by the Board of
Directors from time to time acting in good faith;
(ba) "U.S. DOLLAR EQUIVALENT" of any amount which is expressed in
Canadian dollars shall mean, 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;
(bb) "VOTING SHARE REDUCTION" shall mean an acquisition or redemption
by the Corporation of Voting Shares which, by reducing the number
of Voting Shares outstanding, increases the proportionate number
of Voting Shares Beneficially Owned by any Person to 20% or more
of the Voting Shares then outstanding; and
(bc) "VOTING SHARES" shall mean the Common Shares and any other shares
in the capital of the Corporation entitled to vote generally in
the election of directors.
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,
Clauses, Paragraphs, Subparagraphs or other portions hereof and the
insertion of headings, subheadings and a table of contents are for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
1.4 CALCULATION OF NUMBER AND PERCENTAGE OF BENEFICIAL OWNERSHIP OF
---------------------------------------------------------------
OUTSTANDING VOTING SHARES
-------------------------
For purposes of this Agreement, the percentage of Voting Shares
Beneficially Owned by a Person, shall be and shall be deemed to be the
product (expressed as a percentage) determined by the formula: 100 x A
---
B
Where A = the number of votes for the election of all directors
generally attaching to the Voting Shares Beneficially
Owned by such Person; and
B = the number of votes for the election of directors
generally attaching to all outstanding Voting Shares.
Where any Person is deemed to Beneficially Own unissued Voting Shares, such
Voting Shares shall be deemed to be outstanding for the purpose of
calculating the percentage of Voting Shares Beneficially Owned by such
Person.
1.5 ACTING JOINTLY OR IN CONCERT
----------------------------
For the purposes hereof, a Person is acting jointly or in concert with
every Person who acquires or offers to acquire Voting Shares as a result of
any agreement, commitment or understanding, whether formal or informal,
with the first Person or any Associate or Affiliate thereof (other than
customary agreements with and between underwriters and/or banking group
members and/or selling group members with respect to a public offering or
private placement of securities or pledges of securities in the ordinary
course of business).
1.6 GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
----------------------------------------
Wherever in this Agreement reference is made to generally accepted
accounting principles, such reference shall be deemed to be the
recommendations at the relevant time of the Canadian Institute of Chartered
Accountants or the American Institute of Certified Public Accountants'
Accounting Principles Board and the Financial Accounting Standards Board,
as the case may be, 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 purposes 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 - RIGHTS
2.1 LEGEND ON COMMON SHARE CERTIFICATES
-----------------------------------
Certificates representing Common Shares which are issued after the Record
Time but prior to the earlier of the Separation Time and the Expiration
Time, shall also evidence one Right for each Common Share represented
thereby 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 Shareholder Rights
Agreement referred to below), this certificate also evidences rights
of the holder described in a Shareholder Rights Plan Agreement dated
as of April 9, 1998 (the "Shareholder Rights Agreement") between
American ECO Corporation (the "Corporation") and The CIBC Mellon Trust
Company, the terms of which are incorporated herein by reference and a
copy of which is on file at the head office of the Corporation. Under
certain circumstances set out in the Shareholder Rights Agreement, the
rights 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
Shareholder 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
or after the Record Time shall also evidence one Right for each Common
Share represented thereby, notwithstanding the absence of the foregoing
legend, until the close of business on the earlier of the Separation Time
and the Expiration Time.
2.2 INITIAL EXERCISE PRICE; EXERCISE OF RIGHTS; DETACHMENT OF RIGHTS
----------------------------------------------------------------
(a) Subject to adjustment as herein set forth, each Right shall
entitle the holder thereof, from and after the Separation Time
and prior to the Expiration Time, to purchase one Common Share
for the Exercise Price (and the Exercise Price and number of
Common Shares are subject to adjustment as set forth below).
Notwithstanding any other provision of this Agreement, any Rights
held by the Corporation or any of its Subsidiaries shall be void.
(b) Until the Separation Time:
(i) the Rights shall not be exercisable and no Right may be
exercised; and
(ii) each Right shall be evidenced by the certificate for the
associated Common Share registered in the name of the holder
thereof (which certificate shall also be deemed to represent
a Rights Certificate) and shall be transferable only
together with, and shall be transferred by a transfer of,
such associated Common Share.
(c) From and after the Separation Time and prior to the Expiration
Time:
(i) the Rights shall be exercisable; and
(ii) the registration and transfer of Rights shall be separate
from and independent of Common Shares.
Promptly following the Separation Time, the Corporation shall prepare
and the Rights Agent shall mail to each holder of record of Common
Shares 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):
(a) a Rights Certificate appropriately completed, representing
the number of Rights held by such holder at the Separation
Time and having such marks of identification or designation
and such legends, summaries or endorsements printed thereon
as the Corporation may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as
may be required to comply with any law, rule or regulation
or with any rule or regulation of any self-regulatory
organization, stock exchange or quotation system on which
the Rights may from time to time be listed or traded, or to
conform to usage; and
(b) a disclosure statement describing the Rights, provided that
a Nominee shall be sent the materials provided for in (a)
and (b) in respect of all Common Shares of the Corporation
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:
(i) the Rights Certificate evidencing such Rights;
(ii) an election to exercise such Rights (an "Election to
Exercise") substantially in the form attached to the Rights
Certificate appropriately completed and 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
(iii) payment by certified cheque, banker's 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, together with a completed
Election to Exercise executed in accordance with Subsection
2.2(d)(ii), which does not indicate that such Right is null and
void as provided by Subsection 3.1(b), and payment as set forth
in Subsection 2.2(d)(iii), the Rights Agent (unless otherwise
instructed by the Corporation in the event that the Corporation
is of the opinion that the Rights cannot be exercised in
accordance with this Agreement) will thereupon promptly:
(i) requisition from the transfer agent certificates
representing the number of such Common Shares to be
purchased (the Corporation hereby irrevocably authorizing
its transfer agent to comply with all such requisitions);
(ii) when appropriate, requisition from the Corporation the
amount of cash to be paid in lieu of issuing fractional
Common Shares;
(iii) after receipt of the certificates referred to in
Subsection 2.2(e)(i), deliver the same to or upon the
order of the registered holder of such Rights
Certificates, registered in such name or names as may
be designated by such holder;
(iv) when appropriate, after receipt, deliver the cash referred
to in Subsection 2.2(e)(ii) to or to the order of the
registered holder of such Rights Certificate; and
(v) tender to the Corporation all payments received on exercise
of the Rights.
(f) In case the holder of any Rights shall exercise less than all the
Rights evidenced by such holder's Rights Certificate, a new
Rights Certificate evidencing the Rights remaining unexercised
(subject to the provisions of Subsection 5.5(a)) will be issued
by the Rights Agent to such holder or to such holder's duly
authorized assigns.
(g) The Corporation covenants and agrees that it shall:
(i) take all such action as may be necessary and within its
power to ensure that all Common Shares delivered upon
exercise of Rights shall, at the time of delivery of
the certificates for Common Shares (subject to payment
of the Exercise Price), be duly and validly authorized,
executed, issued and delivered as fully paid and non-
assessable;
(ii) take all such action as may be necessary and within its
power to comply with the requirements of the OBCA, the
Securities Act and the securities laws or comparable
legislation of each of the provinces of Canada and any
other applicable law, rule or regulation, in connection
with the issuance and delivery of the Rights
Certificates and the issuance of any Common Shares upon
exercise of Rights, including for greater certainty and
without limitation, registration of the Common Shares
under the 1933 Securities Act;
(iii) use reasonable efforts to cause all Common Shares
issued upon exercise of Rights to be listed on the
stock exchanges on which such Common Shares were traded
immediately prior to the Stock Acquisition Date;
(iv) cause to be reserved and kept available out of the
authorized and unissued Common Shares, the number of
Common Shares that, as provided in this Agreement, will
from time to time be sufficient to permit the exercise
in full of all outstanding Rights;
(v) pay when due and payable, if applicable, any and all
Canadian and United States federal, provincial and
municipal transfer taxes and charges (not including any
income or capital taxes of the holder or exercising
holder or any liability of the Corporation to withhold
tax) which may be payable in respect of the original
issuance or delivery of the Rights Certificates or
certificates for Common Shares to be issued upon
exercise of any Rights, provided that the Corporation
shall not be required to pay any transfer tax or charge
which may be payable in respect of any transfer
involved in the transfer or delivery of Rights
Certificates or the issuance or delivery of
certificates for Common Shares in a name other than
that of the holder of the Rights being transferred or
exercised; and
(vi) after the Separation Time, except as permitted by
Section 5.1, 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 shall
diminish substantially or otherwise eliminate the
benefits intended to be afforded by the Rights.
2.3 ADJUSTMENTS TO EXERCISE PRICE; NUMBER OF RIGHTS
-----------------------------------------------
The Exercise Price, the number and kind of securities subject to purchase
upon exercise of each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 2.3.
(a) If the Corporation shall at any time after the date of this
Agreement:
(i) declare or pay a dividend on Common Shares payable in
Common Shares (or other securities exchangeable for or
convertible into or giving a right to acquire Common
Shares or other securities of the Corporation) other
than pursuant to any Dividend Reinvestment Plan;
(ii) subdivide or change the then outstanding Common Shares
into a greater number of Common Shares;
(iii) consolidate or change the then outstanding Common
Shares into a smaller number of Common Shares; or
(iv) issue any Common Shares (or other securities
exchangeable for or convertible into or giving a right
to acquire Common Shares or other securities of the
Corporation) in respect of, in lieu of or in exchange
for existing Common Shares 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 in
the manner set forth below.
If the Exercise Price and number of Rights outstanding are to be
adjusted:
(a) the Exercise Price in effect after such adjustment shall be
equal to the Exercise Price in effect immediately prior to
such adjustment divided by the number of Common Shares (or
other capital stock) (the "EXPANSION FACTOR") that a holder
of one Common Share immediately prior to such dividend,
subdivision, change, consolidation or issuance would hold
thereafter as a result thereof; and
(b) each Right held prior to such adjustment shall become that
number of Rights equal to the Expansion Factor;
and the adjusted number of Rights shall be deemed to be
distributed among the Common Shares with respect to which the
original Rights were associated (if they remain outstanding) and
the shares issued in respect of such dividend, subdivision,
change, consolidation or issuance, so that each such Common Share
(or other capital stock) shall have exactly one Right associated
with it. For greater certainty, if the securities purchasable
upon exercise of Rights are to be adjusted, the securities
purchasable upon exercise of each Right after such adjustment
shall be the securities that a holder of the securities
purchasable upon exercise of one Right immediately prior to such
dividend, subdivision, change, consolidation or issuance would
hold thereafter as a result of such dividend, subdivision,
change, consolidation or issuance. If, after the Record Time and
prior to the Expiration Time, the Corporation shall issue any
shares other than Common Shares in a transaction of the type
described in Subsection 2.3(a)(i) or (iv), such shares 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. If Corporation shall at any time
after the Record Time and prior to the Separation Time issue any
Common Shares other than in a transaction referred to in this
Subsection 2.3(a), each such Common Share so issued shall
automatically have one new Right associated with it, which Right
shall be evidenced by the certificate representing such
associated Common Share.
(b) If the Corporation shall at any time after the Record Time and
prior to the Separation Time fix a Record Time 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 Time) 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 Time shall be determined by
multiplying the Exercise Price in effect immediately prior to
such Record Time by a fraction:
(i) the numerator of which shall be the number of Common Shares
outstanding on such Record Time, plus the number of Common
Shares that the aggregate offering price of the total number
of Common Shares so to be offered (and/or the aggregate
initial conversion, exchange or exercise price of the
convertible 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 Time, 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).
In case such subscription price may be paid by delivery of
consideration, part or all of which may be in a form other than
cash, the 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 Rights. Such
adjustment shall be made successively whenever such a Record Time
is fixed, and in the event that such rights, options or warrants
are not so issued, or if issued, are not exercised prior to the
expiration thereof, the Exercise Price shall be readjusted to the
Exercise Price which would then be in effect if such Record Time
had not been fixed, or to the Exercise Price which would be in
effect based upon the number of Common Shares (or securities
convertible into, or exchangeable or exercisable for Common
Shares) actually issued upon the exercise of such rights, options
or warrants, as the case may be.
For the purposes of this Agreement, the granting of the right to
purchase Common Shares (whether from treasury or otherwise)
pursuant to the Dividend Reinvestment Plan or any employee
benefit, stock option or similar plans shall be deemed not to
constitute an issue of rights, options or warrants by the
Corporation; provided however that, in all such cases, the right
to purchase Common Shares is at a price per share of not less
than 95% 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 Time for the making of
a distribution to all holders of Common Shares (including any
such distribution made in connection with a merger or
amalgamation) of evidences of indebtedness, cash (other than an
annual cash dividend or a dividend referred to in Section
2.3(a)(i), but including any dividend payable in other securities
of the Corporation), assets or rights, options or warrants
(excluding those referred to in Subsection 2.3(b)), the Exercise
Price to be in effect after such Record Time shall be determined
by multiplying the Exercise Price in effect immediately prior to
such Record Time by a fraction:
(i) the numerator of which shall be the Market Price per Common
Share on such Record Time, 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.
Such adjustments shall be made successively whenever such a
Record Time 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
Time had not been fixed.
(d) Notwithstanding anything herein to the contrary, no adjustment in
the Exercise Price shall be required unless such adjustment would
require an increase or decrease of at least one per cent in the
Exercise Price; provided however that any adjustments which by
reason of this Subsection 2.3(d) are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment. All calculations under Section 2.3 shall be made to
the nearest cent or to the nearest ten-thousandth of a share.
Notwithstanding the first sentence of this Subsection 2.3(d), any
adjustment required by Section 2.3 shall be made no later than
the earlier of:
(i) three years from the date of the transaction which gives
rise to such adjustment; or
(ii) the Expiration Date.
(e) If the Corporation shall at any time after the Record Time and
prior to the Separation Time issue any shares (other than Common
Shares) or rights, options or warrants to subscribe for or
purchase any such shares or securities convertible into or
exchangeable for any such capital stock, in a transaction
referred to in Subsection 2.3(a)(i) or (iv), if the Board of
Directors acting in good faith determines that the adjustments
contemplated by Subsections 2.3(a), (b) and (c) in connection
with such transaction will not appropriately protect the
interests of the holders of Rights, the Board of Directors may
determine what other adjustments to the Exercise Price, number of
Rights and/or securities purchasable upon exercise of Rights
would be appropriate and notwithstanding Subsections 2.3(a), (b)
and (c), such adjustments, rather than the adjustments
contemplated by Subsections 2.3(a), (b) and (c), shall be made.
Subject to the prior consent of the holders of the Voting Shares
or the Rights obtained as set forth in Subsection 5.5(b) or (c),
the Corporation and the Rights Agent shall have authority to
amend this Agreement as appropriate to provide for such
adjustments.
(f) Each Right originally issued by the Corporation subsequent to any
adjustment made to the Exercise Price hereunder shall evidence
the right to purchase, at the adjusted Exercise Price, the number
of Common Shares purchasable from time to time hereunder upon
exercise of a Right immediately prior to such issue, all subject
to further adjustment as provided herein.
(g) Irrespective of any adjustment or change in the Exercise Price or
the number of Common Shares issuable upon the exercise of the
Rights, the Rights Certificates theretofore and thereafter issued
may continue to express the Exercise Price per Common Share and
the number of Common Shares which were expressed in the initial
Rights Certificates issued hereunder.
(h) In any case in which this Section 2.3 shall require that an
adjustment in the Exercise Price shall be made effective as of a
Record Time 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 Time the number
of Common Shares and other securities of the Corporation, if any,
issuable upon such exercise over and above the number of Common
Shares and other securities of the Corporation, if any, issuable
upon such exercise on the basis of the Exercise Price in effect
prior to such adjustment; provided however that the Corporation
shall deliver to such holder an appropriate instrument evidencing
such holder's right to receive such additional shares (fractional
or otherwise) or other securities upon the occurrence of the
event requiring such adjustment.
(i) Notwithstanding anything contained in this Section 2.3 to the
contrary, the Corporation shall be entitled to make such
reductions in the Exercise Price, in addition to those
adjustments expressly required by this Section 2.3, as and to the
extent that in their good faith judgment the Board of Directors
shall determine to be advisable, in order that any:
(i) consolidation or subdivision of Common Shares;
(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.
2.4 CORPORATION COVENANTS
---------------------
(a) The Corporation covenants and agrees that, after the Separation
Time, it shall not, except as permitted or contemplated by
Sections 3.1, 3.2, 5.1 and 5.5, take (nor shall it permit any of
its Subsidiaries 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.
(b) The Corporation covenants and agrees that it shall not, at any
time after the Separation Time:
(i) consolidate with any other Person (other than a
Subsidiary of the Corporation in a transaction which
complies with Subsection 2.4(a)),
(ii) merge with or into any other Person (other than a
Subsidiary of the Corporation in a transaction which
complies with Subsection 2.4(a)), or
(iii) sell or transfer (or permit any of its Subsidiaries to
sell or transfer), in one or more transactions, assets
or earning power aggregating more than 50% of the
assets or earning power of the Corporation and its
Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Corporation and/or any of its
Subsidiaries in one or more transactions each of which
complies with Subsection 2.4(a)):
if
(A) at the time of or immediately after such consolidation,
merger or sale there are any rights, warrants or other
instruments or securities outstanding or agreements in
effect which would substantially diminish or otherwise
eliminate the benefits intended to be afforded by the
Rights; or
(B) prior to, simultaneously with or immediately after such
consolidation, merger or sale, the shareholders of the
Person who constitutes, or would constitute, the
"Principal Party" for the purposes of Subsection 2.5(a)
shall have received a distribution of Rights previously
owned by such Person or any of its Affiliates and
Associates.
2.5 CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING POWER
--------------------------------------------------------------------
(a) In the event that, following the Stock Acquisition Date (or a
date that would have been the Stock Acquisition Date but for
Subsections 5.1(d) and (e)), directly or indirectly (a "SECTION
2.5 EVENT"):
(i) the Corporation shall consolidate with, or merge with
or into, any other Person (other than a Subsidiary of
the Corporation in a transaction which complies with
Subsection 2.4(a)) and the Corporation shall not be the
continuing or surviving corporation of such
consolidation or merger;
(ii) any Person (other than a Subsidiary of the Corporation
in a transaction which complies with Subsection 2.4(a))
shall consolidate, merge with or into the Corporation
and the Corporation shall be the continuing or
surviving corporation of such consolidation or merger
and, in connection with such consolidation or merger,
all or part of the Common Shares shall be changed into
or exchanged for shares or other securities of any
other Person or cash or any other property; or
(iii) the Corporation shall sell or otherwise transfer (or
one or more of its Subsidiaries shall sell or otherwise
transfer), in one or more transactions, assets or
earning power aggregating more than 50% of the assets
or earning power of the Corporation and its
Subsidiaries (taken as a whole) to any other Person
(other than the Corporation or any of its Subsidiaries
in one or more transactions each of which complies with
Subsection 2.4(a)),
then and in each such case proper provision shall be made so
that;
(iv) each holder of a Right (except as provided in
Subsection 3.1(b)) shall thereafter have the right to
receive, upon the exercise thereof at the then current
Exercise Price in accordance with the terms of this
Agreement, such number of validly issued, fully paid,
nonassessable and freely tradable Common Shares of the
Principal Party (as hereinafter defined), not subject
to any liens, encumbrances, rights of call or first
refusal, or other adverse claims as shall be equal to
the result obtained by;
(A) multiplying the then current Exercise Price by the
number of Common Shares for which a Right is
exercisable then immediately prior to the first
occurrence of a Section 2.5 Event (or, if a Flip-in
Event has occurred prior to the first occurrence of a
Section 2.5 Event, multiplying the number of such
shares for which a Right was exercisable immediately
prior to the first occurrence of a Flip-in Event by the
Exercise Price in effect immediately prior to such
first occurrence), and dividing that product (which,
following the first occurrence of a Section 2.5 Event,
shall be referred to as the "Exercise Price" for each
Right and for all purposes of this Agreement) by;
(B) 50% of the current Market Price per share of the Common
Shares of such Principal Party (determined in the
manner described in Subsection 1.1(ac)) on the date of
consummation of such consolidation, merger, sale or
transfer;
(v) the Principal Party shall thereafter be liable for, and
shall assume, by virtue of such Section 2.5 Event, all
the obligations and duties of the Corporation pursuant
to this Agreement;
(vi) the term "Corporation" shall thereafter be deemed to
refer to such Principal Party, it being specifically
intended that the provisions of Section 3.1 shall
thereafter apply to such Principal Party; and
(vii) such Principal Party shall take such steps in
connection with such consummation as may be necessary
to assure that the provisions hereof shall thereafter
be applicable, as nearly as reasonably may be, in
relation to its Common Shares thereafter deliverable
upon the exercise of the Rights.
(b) "Principal Party" shall mean;
(i) in the case of any transaction described in Subsection
2.5(a)(i) or (ii), the Person that is the issuer of any
securities into which Common Shares of the Corporation
are converted in such merger or consolidation and if no
securities are so issued the Person that is the other
party to the merger or consolidation; and
(ii) in the case of any transaction described in Subsection
2.5(a)(iii), the Person that is the party receiving the
greatest portion of the assets or earning power
transferred pursuant to such transaction or
transactions;
provided however that in any such case,
(iii) if the Common Shares of such Person are not at such
time and have not been continuously over the preceding
12-month period registered under Section 12 of the 1934
Exchange Act, and such Person is a direct or indirect
Subsidiary of another corporation the Common Shares of
which are and have been so registered, "Principal
Party" shall refer to such other corporation; and
(iv) in case such Person is a Subsidiary, directly or
indirectly, of more than one corporation, the Common
Shares of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever
of such corporations is the issuer of the Common Shares
having the greatest market value.
(c) The Corporation shall not consummate any Section 2.5 Event unless
the Principal Party shall have a sufficient number of authorized
Common Shares which are neither outstanding nor reserved for
issuance to permit the exercise in full of the Rights in
accordance with this Section 2.5 and unless prior thereto the
Corporation and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing
for the terms set forth in Subsections 2.5(a) and (b) and further
providing that, as soon as practicable after the date of any
consolidation, merger or sale of assets mentioned in Subsection
2.5(a), the Principal Party;
(i) shall prepare and file a registration statement under the
1933 Securities Act with respect to the Rights and the
securities purchasable upon exercise of the Rights on an
appropriate form, will use its best efforts to cause such
registration statement to become effective as soon as
practicable after such filing and will use its best efforts
to cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of
the 1933 Securities Act) until the Expiration Time; and
(ii) will deliver to holders of the Rights historical financial
statements for the Principal Party and each of its
Affiliates which comply in all respects with the
requirements for registration on Form 10 under the 1934
Exchange Act.
The provisions of this Section 2.5 shall similarly apply to
successive Section 2.5 Events. In the event that a Section 2.5
Event shall occur at any time after the occurrence of a Flip-in
Event, the Rights which have not theretofore been exercised shall
thereafter become exercisable in the manner described in
Subsection 2.5(a).
In no event shall the Rights Agent have any liability in respect
of any such Principal Party transactions, including, without
limitation, the propriety thereof. The Rights Agent may rely and
be fully protected in relying upon a certification of the
Corporation stating that the provisions of this Section 2.5 have
been fulfilled. Notwithstanding anything in this Agreement to
the contrary, the prior written consent of the Rights Agent must
be obtained in connection with any supplemental agreement which
alters the rights or duties of the Rights Agent.
2.6 DATE ON WHICH EXERCISE IS EFFECTIVE
-----------------------------------
Each Person in whose name any certificate for Common Shares or other
securities, if applicable, is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Common
Shares or other securities, if applicable, represented thereon and such
certificate shall be dated the date upon which the Rights Certificate
evidencing such Rights was duly surrendered in accordance with Subsection
2.2(d) (together with a duly completed Election to Exercise) and payment of
the Exercise Price for such Rights (and any applicable transfer taxes and
other governmental charges payable by the exercising holder hereunder) was
made; provided however that if the date of such surrender and payment is a
date upon which the Common Share transfer books of the Corporation are
closed, such Person shall be deemed to have become the record holder of
such shares on and such certificate shall be dated, the next succeeding
Business Day on which the Common Share transfer books of the Corporation
are open.
2.7 EXECUTION, AUTHENTICATION, DELIVERY AND DATING OF RIGHTS CERTIFICATES
---------------------------------------------------------------------
(a) The Rights Certificates shall be executed on behalf of the
Corporation by its Chairman of the Board, President or any Vice-
President and by its Corporate Secretary or any Assistant
Secretary. The signature of any of these officers on the Rights
Certificates may be manual or facsimile. Rights Certificates
bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Corporation shall
bind the Corporation, notwithstanding that such individuals or
any of them have ceased to hold such offices either before or
after the countersignature and delivery of such Rights
Certificates.
(b) Promptly after the Corporation learns of the Separation Time, the
Corporation will notify the Rights Agent of such Separation Time
and will deliver Rights Certificates executed by the Corporation
to the Rights Agent for countersignature and the Rights Agent
shall manually countersign (in a manner satisfactory to the
Corporation) and send such Rights Certificates to the holders of
the Rights pursuant to Subsection 2.2(c) hereof. No Rights
Certificate shall be valid for any purpose until countersigned by
the Rights Agent as aforesaid.
(c) Each Rights Certificate shall be dated the date of
countersignature thereof.
2.8 REGISTRATION, TRANSFER AND EXCHANGE
-----------------------------------
(a) The Corporation shall cause to be kept a register (the "RIGHTS
REGISTER") in which, subject to such reasonable regulations as it
may prescribe, the Corporation shall 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. In the event
that the Rights Agent shall cease to be the Rights Registrar, the
Rights Agent shall have the right to examine the Rights Register
at all reasonable times. After the Separation Time and prior to
the Expiration Time, upon surrender for registration of transfer
or exchange of any Rights Certificate, and subject to the
provisions of Subsection 2.8(c), the Corporation shall execute,
and the Rights Agent shall 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.
(b) All Rights issued upon any registration of transfer or exchange
of Rights Certificates shall be the valid obligations of the
Corporation, and such Rights shall be entitled to the same
benefits under this Agreement as the Rights surrendered upon such
registration of transfer or exchange.
(c) Every Rights Certificate surrendered for registration of transfer
or exchange shall be duly endorsed or be accompanied by a written
instrument of transfer in form satisfactory to the Corporation or
the Rights Agent, as the case may be, duly executed by the holder
thereof or such holder's attorney duly authorized in writing. As
a condition to the issuance of any new Rights Certificate under
this Section 2.8, the Corporation may require the payment of a
sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses
(including the reasonable fees and expenses of the Rights Agent)
connected therewith.
(d) Neither the Rights Agent nor the Corporation shall be obligated
to take any action whatsoever with respect to the transfer of any
surrendered Rights Certificate until the holder shall have
completed and signed the certificate contained in the form of
assignment on the reverse side of such Rights Certificate and
shall have provided such additional evidence of the identity of
the Beneficial Owner, Affiliates or Associates of such Beneficial
Owner or holder, or of any other Person with which such holder or
any of such holder's Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing) for the
purpose of acquiring, holding, voting or disposing of securities
of the Corporation as the Corporation shall reasonably request.
2.9 MUTILATED, DESTROYED, LOST AND STOLEN RIGHTS CERTIFICATES
---------------------------------------------------------
(a) If any mutilated Rights Certificate is surrendered to the Rights
Agent prior to the Expiration Time, the Corporation shall execute
and the Rights Agent shall countersign and deliver in exchange
therefor a new Rights Certificate evidencing the same number of
Rights as did the Rights Certificate so surrendered.
(b) If there shall be delivered to the Corporation and the Rights
Agent prior to the Expiration Time:
(i) evidence to their reasonable satisfaction of the
destruction, loss or theft of any Rights Certificate; and
(ii) such security or indemnity as may be reasonably required by
them to save each of them and any of their agents harmless;
then in the absence of notice to the Corporation or the Rights
Agent that such Rights Certificate has been acquired by a bona
fide purchaser, the Corporation shall execute and upon the
Corporation's request, the Rights Agent shall countersign and
deliver, in lieu of any such destroyed, lost or stolen Rights
Certificate, a new Rights Certificate evidencing the same number
of Rights as did the Rights Certificate so destroyed, lost or
stolen.
(c) As a condition to the issuance of any new Rights Certificate
under this Section 2.9, the Corporation may require the payment
of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses
(including the reasonable fees and expenses of the Rights Agent)
connected therewith.
(d) Every new Rights Certificate issued pursuant to this Section 2.9
in lieu of any destroyed, lost or stolen Rights Certificate shall
evidence the contractual obligation of the Corporation, whether
or not the destroyed, lost or stolen Rights Certificate shall be
at any time enforceable by anyone and shall be entitled to all
the benefits of this Agreement equally and proportionately with
any and all other Rights duly issued hereunder.
2.10 PERSONS DEEMED OWNERS OF RIGHTS
-------------------------------
The Corporation, the Rights Agent and any agent of the Corporation or the
Rights Agent may deem and treat the Person in whose name a Rights
Certificate (or, prior to the Separation Time, the associated Common Share
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby for all purposes whatsoever. As used in this Agreement,
unless the context otherwise requires, the term "holder" of any Right shall
mean the registered holder of such Right (or, prior to the Separation Time,
of the associated Common Share).
2.11 DELIVERY AND CANCELLATION OF CERTIFICATES
-----------------------------------------
All Rights Certificates surrendered upon exercise or for redemption,
registration of transfer or exchange shall, if surrendered to any Person
other than the Rights Agent, be delivered to the Rights Agent and, in any
case, shall be promptly cancelled by the Rights Agent. The Corporation may
at any time deliver to the Rights Agent for cancellation any Rights
Certificates previously countersigned and delivered hereunder which the
Corporation may have acquired in any manner whatsoever and all Rights
Certificates so delivered shall be promptly cancelled by the Rights Agent.
No Rights Certificate shall be countersigned in lieu of or in exchange for
any Rights Certificates cancelled as provided in this Section 2.11, except
as expressly permitted by this Agreement. The Rights Agent shall, subject
to applicable laws, destroy all cancelled Rights Certificates and shall
deliver a certificate of destruction to the Corporation.
2.12 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 shall be
transferable only together with and shall be transferred by a
transfer of, the associated Common Share certificate representing
such Right;
(c) that after the Separation Time, the Rights Certificates shall be
transferable only on the Rights Register as provided herein;
(d) that prior to due presentment of a Rights Certificate (or, prior
to the Separation Time, the associated Common Share certificate)
for registration of transfer, the Corporation, the Rights Agent
and any agent of the Corporation or the Rights Agent may deem and
treat the Person in whose name the Rights Certificate (or, prior
to the Separation Time, the associated Common Share certificate)
is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or
writing on such Rights Certificate or the associated Common Share
certificate made by anyone other than the Corporation or the
Rights Agent) for all purposes whatsoever, and neither the
Corporation nor the Rights Agent shall be affected by any notice
to the contrary;
(e) that such holder of Rights has waived his right to receive any
fractional Rights or any fractional shares or other securities
upon exercise of a Right (except as provided herein); and
(f) that, subject to the provisions of Section 5.5, without the
approval of any holder of Rights or Voting Shares and upon the
sole authority of the Board of Directors, acting in good faith,
this Agreement may be supplemented or amended from time to time
to cure any ambiguity or to correct or supplement any provision
contained herein which may be inconsistent with the intent of
this Agreement or is otherwise defective, as provided herein.
2.13 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 be deemed or confer upon the holder of any
Right or Rights Certificate, as such, any right, title, benefit or
privilege of a holder of Common Shares or any other shares or securities of
the Corporation or any right to vote at any meeting of shareholders of the
Corporation whether for the election of directors or otherwise or upon any
matter submitted to holders of Common Shares or any other shares of the
Corporation at any meeting thereof, or to give or withhold consent to any
action of the Corporation, or to receive notice of any meeting or other
action affecting any holder of Common Shares or any other shares of the
Corporation except as expressly provided herein, or to receive dividends,
distributions or subscription rights, or otherwise, until the Right or
Rights evidenced by Rights Certificates shall have been duly exercised in
accordance with the terms and provisions hereof.
ARTICLE 3 - ADJUSTMENTS TO THE RIGHTS
3.1 FLIP-IN EVENT
-------------
(a) Subject to Subsection 3.1(b) and Section 5.1, in the event that
prior to the Expiration Time a Flip-in Event shall occur, each
Right shall constitute, effective at the close of business on the
eighth Trading Day after the Stock Acquisition Date, the right to
purchase from the Corporation, upon exercise thereof in
accordance with the terms hereof, that number of Common Shares
having an aggregate Market Price on the date of consummation or
occurrence of such Flip-in Event equal to twice the Exercise
Price for an amount in cash equal to the Exercise Price (such
right to be appropriately adjusted in a manner analogous to the
applicable adjustment provided for in Section 2.3 in the event
that after such consummation or occurrence, an event of a type
analogous to any of the events described in Section 2.3 shall
have occurred).
(b) Notwithstanding anything in this Agreement to the contrary, upon
the occurrence of any Flip-in Event, any Rights that are or were
Beneficially Owned on or after the earlier of the Separation Time
or the Stock Acquisition Date by:
(i) an Acquiring Person (or any Affiliate or Associate of an
Acquiring Person or any Person acting jointly or in concert
with an Acquiring Person or any Affiliate or Associate of an
Acquiring Person); or
(ii) a transferee of Rights, directly or indirectly, from 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 Affiliate or Associate of an
Acquiring Person), where such transferee becomes a
transferee concurrently with or subsequent to the Acquiring
Person becoming such in a transfer that the Board of
Directors 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 Affiliate or
Associate of an Acquiring Person), that has the purpose or
effect of avoiding 3.1(b)(i);
shall become null and void without any further action and any
holder of such Rights (including transferees) shall thereafter
have no right to exercise such Rights under any provision of this
Agreement and further shall thereafter not have any other rights
whatsoever with respect to such Rights, whether under any
provision of this Agreement or otherwise.
(c) From and after the Separation Time, the Corporation shall do all
such acts and things as shall be necessary and within its power
to ensure compliance with the provisions of this Section 3.1,
including without limitation, all such acts and things as may be
required to satisfy the requirements of the OBCA, the Securities
Act and the securities laws or comparable legislation of each of
the provinces of Canada and of the United States and each of the
states thereof in respect of the issue of Common Shares upon the
exercise of Rights in accordance with this Agreement.
(d) Any Rights Certificate that represents Rights Beneficially Owned
by a Person described in either 3.1(b)(i) or (ii) or transferred
to any nominee of any such Person and any Rights Certificate
issued upon transfer, exchange, replacement or adjustment of any
other Rights Certificate referred to in this sentence, shall
contain the following legend:
The Rights represented by this Rights Certificate were issued to
a Person who was an Acquiring Person or an Affiliate or an
Associate of an Acquiring Person (as such terms are defined in
the Shareholder Rights Plan Agreement) or a Person who was acting
jointly or in concert with an Acquiring Person or an Affiliate or
Associate of an Acquiring Person. This Rights Certificate and
the Rights represented hereby are void or shall become void in
the circumstances specified in Subsection 3.1 (b) of the
Shareholder Rights Plan Agreement.
Provided however that the Rights Agent shall not be under any
responsibility to ascertain the existence of facts that would require
the imposition of such legend but shall impose such legend only if
instructed to do so by the Corporation in writing or if a holder fails
to certify upon transfer or exchange in the space provided on the Rights
Certificate that such holder is not a Person described on such legend.
3.2 EXCHANGE OPTION
---------------
(a) The Board of Directors of the Corporation may, at its option, and
without seeking the approval of the holders of Common Shares or
Rights (provided that there are then Independent Directors in
office and a majority of the Independent Directors concur), at
any time and from time to time on or after a Flip-in Event has
occurred, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have
become void pursuant to the provisions of Section 3.1) for Common
Shares at an exchange ratio of one Common Share per Right,
appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the date of this Agreement
(such exchange ratio being hereinafter referred to as the
"EXCHANGE RATIO").
(b) Immediately upon the action of the Board of Directors of the
Corporation ordering the exchange of any Rights pursuant to
Subsection 3.2(a) and without any further action and without any
notice, the right to exercise such Rights shall terminate and the
only right thereafter of a holder of such Rights shall be to
receive that number of Common Shares equal to the number of such
Rights held by such holder multiplied by the Exchange Ratio. The
Corporation shall promptly give public notice along with
simultaneous written notice to the Rights Agent, of any such
exchange, provided however that the failure to give or any defect
in such notice shall not affect the validity of such exchange.
The Corporation shall promptly mail a notice of any such exchange
to all of the holders of such Rights at their last addresses as
they appear upon the register books of the Rights Agent. Any
notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which the
exchange will be affected and in the event of any partial
exchange the number of Rights which will be exchanged. Any
partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become void pursuant to
the provisions of Subsection 3.1(b)) held by each holder of
Rights.
(c) In an exchange pursuant to this Section 3.2, the Corporation, at
its option, may substitute for Common Shares exchangeable for a
Right (i) "common share equivalents", (ii) cash, (iii) debt or
equity securities of the Corporation, (iv) other assets, or (v)
any combination of the foregoing, having an aggregate value which
a majority of the Independent Directors and the Board of
Directors of the Corporation shall have determined in good faith
to be equal to the current Market Price of one Common Share
(determined pursuant to Subsection 1.1(ac)) on the Trading Date
immediately preceding the date of exchange pursuant to this
Section 3.2.
(d) If the Board of Directors authorizes the exchange of debt or
equity securities or other assets (or a combination thereof) for
Rights pursuant to Subsections 3.2(a) to (c), then, without any
further action or notice, the right to exercise the Rights will
terminate and the only right thereafter of a holder of Rights
shall be to receive such debt or equity securities or other
assets (or a combination thereof) in accordance with the exchange
formula authorized by the Board of Directors. Within 10 Business
Days after the Board of Directors has authorized the exchange of
debt or equity securities or other assets (or a combination
thereof) for Rights pursuant to Subsections 3.2(a) to (c), the
Corporation shall give notice of such exchange to the holders of
such Rights. Each such notice of exchange will state the method
by which the exchange of debt or equity securities or other
assets (or a combination thereof) for Rights will be affected
and shall state that Rights Certificates must be surrendered to
the Rights Agent as a condition precedent to the receipt of
such debt or equity securities or other assets.
(e) 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, 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
-------------------------------------------------------------
It is understood that nothing contained in this Article 3 shall be
considered to affect the obligations of the Board of Directors to exercise
their 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 of the Corporation reject or accept any Take-over Bid or take
any other action (including, without limitation, the commencement,
prosecution, defence or settlement of any litigation) with respect to any
Take-over Bid that the Board of Directors believes is necessary or
appropriate in the exercise of the fiduciary duties of its members.
ARTICLE 4 - THE RIGHTS AGENT
4.1 GENERAL
-------
(a) The Corporation hereby appoints the Rights Agent to act as agent
for the Corporation and the holders of the Rights in accordance
with the terms and conditions hereof and the Rights Agent hereby
accepts such appointment. The Corporation may from time to time
appoint such Co-Rights Agents ("CO-RIGHTS AGENTS") as it may deem
necessary or desirable, subject to the prior written consent of
the Rights Agent. In the event the Corporation appoints one or
more Co-Rights Agents, the respective duties of the Rights
Agent and Co-Rights Agents shall be as the Corporation may
determine with the written approval of the Rights Agent and the
Co-Rights Agent. The Corporation agrees to pay all reasonable
fees and expenses of the Rights Agent in respect of the
performance of its duties under this Agreement. The Corporation
also agrees to indemnify the Rights Agent, its officers,
directors, employees and agents for and to hold it harmless
against, any loss, liability or expense, incurred without
negligence, bad faith or wilful misconduct on the part of the
Rights Agent, for anything done or omitted by the Rights Agent
in connection with the acceptance and administration of this
Agreement, including legal costs and expenses, which right to
indemnification shall survive the termination of this Agreement
or the resignation or removal of the Rights Agent.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it
in connection with its administration of this Agreement in
reliance upon any certificate for Common Shares, Rights
Certificate, certificate for other securities of the Corporation,
instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it
to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons.
The Corporation shall inform the Rights Agent in a reasonably timely
manner of events which may materially affect the administration of this
Agreement by the Rights Agent and, at any time upon such request shall
provide to the Rights Agent an incumbency certificate certifying the
current officers of the Corporation.
4.2 MERGER, AMALGAMATION OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS
-----------------------------------------------------------------
AGENT
-----
(a) Any corporation into which the Rights Agent may be merged or
amalgamated or with which it may be consolidated, or any
corporation resulting from any merger, amalgamation, statutory
arrangement or consolidation to which the Rights Agent is a
party, or any corporation succeeding to the shareholder or
stockholder services business of the Rights Agent, shall 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 will
be eligible for appointment as a successor Rights Agent under the
provisions of Section 4.4. In case at the time such successor
Rights Agent succeeds to the agency created by this Agreement any
of the Rights Certificates have been countersigned but not
delivered, any successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and may deliver
such Rights Certificates so countersigned; and in case at that
time any of the Rights have not been countersigned, any successor
Rights Agent may countersign such Rights Certificates in the name
of the predecessor Rights Agent or in the name of the successor
Rights Agent; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certificates and
in this Agreement.
(b) In case at any time the name of the Rights Agent is changed and
at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and shall deliver Rights
Certificates so countersigned; and in case at that time any of
the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in
the prior name or in its changed name; and in all such cases such
Rights Certificates shall have the full force provided in the
Rights Certificates and in this Agreement.
4.3 DUTIES OF RIGHTS AGENT
----------------------
The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, all of which the
Corporation and the holders of certificates for Common Shares and the
holders of Rights Certificates, by their acceptance thereof, shall be
bound:
(a) the Rights Agent may retain and consult with legal counsel
(who may be legal counsel for the Corporation) and the opinion
of such counsel shall be full and complete authorization and
protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such
opinion and the Rights Agent may also consult with such
experts as the Rights Agent shall consider necessary or
appropriate to properly carry out the duties and obligations
imposed under this Agreement at the expense of the Corporation
and the Rights Agent shall be entitled to act and rely 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 shall be herein
specifically prescribed) may be deemed to be conclusively proved
and established by a certificate signed by a Person believed by
the Rights Agent to be the Chairman of the Board, President or
Chief Financial Officer of the Corporation and delivered to the
Rights Agent; and such certificate shall 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 shall be liable hereunder for its own
negligence, bad faith or wilful misconduct;
(d) the Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or
in the certificates for Common Shares or the Rights Certificates
(except its countersignature thereof) or shall be required to
verify the same, but all such statements and recitals are and
shall be deemed to have been made by the Corporation only;
(e) the Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery
hereof (except the due authorization, execution and delivery
hereof by the Rights Agent) or in respect of the validity or
execution of any certificate for a Common Share or Rights
Certificate (except its countersignature thereof); nor shall it
be responsible for any breach by the Corporation of any covenant
or condition contained in this Agreement or in any Rights
Certificate; nor shall it be responsible for any change in the
exerciseability of the Rights (including the Rights becoming void
pursuant to Subsection 3.1(b) hereof or being exchanged pursuant
to Section 3.2) or any adjustment required under the provisions
of Section 2.3 hereof or responsible for the manner, method or
amount of any such adjustment or ascertaining 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 shall 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 shall, when issued, be
duly and validly authorized, executed, issued and delivered and
fully paid and nonassessable;
(f) the Corporation agrees that it shall perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement;
(g) the Rights Agent is hereby authorized and directed to accept
instructions in writing with respect to the performance of its
duties hereunder from any individual believed by the Rights Agent
to be the Chairman of the Board, President or Chief Financial
Officer of the Corporation, and to apply to such individuals for
advice or instructions in connection with its duties, and it
shall not be liable for any action taken or suffered by it in
good faith in accordance with instructions of any such
individual;
(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
may become pecuniarily interested in any transaction in which the
Corporation may be interested, or contract with or lend money to
the Corporation or otherwise act as fully and freely as though it
were not the Rights Agent under this Agreement. Nothing herein
shall preclude the Rights Agent from acting in any other capacity
for the Corporation or for any other legal entity; 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 shall not be answerable or accountable for any act,
default, neglect or misconduct of any such attorneys or agents or
for any loss to the Corporation resulting from any such act,
default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
4.4 CHANGE OF RIGHTS AGENT
----------------------
The Rights Agent may resign and be discharged from its duties under this
Agreement upon 60 days' notice (or such lesser notice as is acceptable to
the Corporation) in writing mailed to the Corporation and to each transfer
agent of Common Shares by registered or certified mail. The Corporation
may remove the Rights Agent upon 60 days' notice in writing, mailed to the
Rights Agent and to each transfer agent of the Common Shares by registered
or certified mail. If the Rights Agent should resign or be removed or
otherwise become incapable of acting, the Corporation shall appoint a
successor to the Rights Agent. If the Corporation fails to make such
appointment within a period of 60 days after such removal or after it has
been notified in writing of such resignation or incapacity by the resigning
or incapacitated Rights Agent, then by prior written notice to the
Corporation, the resigning Rights Agent or the holder of any Rights (which
holder shall, with such notice, submit such holder's Rights Certificate, if
any, for inspection by the Corporation), may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent at the
Corporation's expense. Any successor Rights Agent, whether appointed by
the Corporation or by such a court, shall be a corporation incorporated
under the laws of Canada. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities
as if it had been originally named as Rights Agent without further act
or deed; but the predecessor Rights Agent upon receipt of all outstanding
fees and expenses 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 shall file notice thereof in writing with the predecessor
Rights Agent and each transfer agent of the Common Shares and mail a notice
thereof in writing to the holders of the Rights in accordance with Section
5.10. Failure to give any notice provided for in this Section 4.4,
however, or any defect therein, shall not affect the legality or validity
of the resignation or removal of the Rights Agent or the appointment of any
successor Rights Agent, as the case may be.
ARTICLE 5 - MISCELLANEOUS
5.1 REDEMPTION AND WAIVER
---------------------
(a) The Board of Directors may, at its option, at any time prior to
the earlier of (i) the Close of Business on the eighth Trading
Day following the Stock Acquisition Date (or if the Stock
Acquisition Date shall have occurred prior to the Record Time,
the Close of Business on the eighth Trading Day following the
Record Time), or (ii) the final Expiration Time, elect to redeem
all but not less than all of the then outstanding Rights at a
redemption price of $0.0001 per Right appropriately adjusted in a
manner analogous to the applicable adjustment provided for in
Section 2.3 in the event that an event of the type analogous to
any of the events described in Section 2.3 shall have occurred
(such redemption price being herein referred to as the
"REDEMPTION PRICE"), and the Corporation may, at its option, pay
the Redemption Price with either its Common Shares (valued at
their Market Price on the date of the redemption) or cash or
other assets; provided, however, that if the Board of Directors
of the Corporation authorizes redemption of the Rights in either
of the circumstances set forth in clauses (A) or (B) below then
there must be Independent Directors in office and such
authorization shall require the concurrence of a majority of
the Independent Directors; (A) such authorization occurs on or
after the Stock Acquisition Date, or (B) such authorization
occurs on or after the date of a change (resulting from a
proxy or consent solicitation) in a majority of the Board of
Directors in office at the commencement of such solicitation
if any Person who is a participant in such solicitation has
stated (or if upon the commencement of such solicitation a
majority of the Board of Directors has determined in good faith)
that such Person (or any of its Affiliates or Associates)
intends to take, or may consider taking, any action which would
result in such Person becoming an Acquiring Person or which
would cause the occurrence of a Flip-in Event or a Section 2.5
Event. Notwithstanding anything contained in this Agreement
to the contrary, the Rights shall not be exercisable after the
first occurrence of a Flip-in Event until such time as the
Corporation's right of redemption hereunder has expired. 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) In deciding whether or not to exercise the Corporation's right of
redemption hereunder, the Board of Directors shall act in good
faith, in a manner they reasonably believe to be in the best
interests of the Corporation and with such care, including
reasonable inquiry, skill and diligence, as a person of ordinary
prudence would use under similar circumstances, and they may
consider the long-term and short-term effects of any action upon
employees, customers and creditors of the Corporation and upon
communities in which offices or other establishments of the
Corporation are located, and all other pertinent factors.
(c) Immediately upon the action of the Board of Directors of the
Corporation electing to or being deemed to have elected to redeem
the Rights, and without any further action and without any
notice, the right to exercise the Rights shall terminate and the
only right thereafter of the holders of Rights shall be to
receive the Redemption Price for each Right held. Within 10 days
after the action of the Board of Directors electing to or being
deemed to have elected to redeem the Rights, the Corporation
shall give written notice of such redemption to the holders of
the then outstanding Rights in accordance with Section 5.10 and
to the Rights Agent. Each such notice of redemption shall state
the method by which the payment of the Redemption Price shall
be made. Failure to give any notice provided for in this
Subsection, however, or any defect therein, shall not affect the
legality or validity of the redemption. Neither the Corporation
nor any of its Affiliates or Associates may 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, and other
than in connection with the repurchase of Common Shares prior
to the Separation Time.
(d) The Board of Directors may waive the application of Section 3.1
to any particular Flip-in Event, provided there must be
Independent Directors in office and such waiver and authorization
shall have been approved by a majority of Independent Directors
prior to the eighth Trading Day after the Stock Acquisition
Date.
(e) The Board of Directors may prior to the Close of Business on the
eighth Trading Day following the Stock Acquisition Date
determine, upon prior written notice delivered to the Rights
Agent, to waive or to agree to waive the application of Section
3.1 to that Flip-in Event, provided that the Acquiring Person has
(i) reduced its Beneficial Ownership of Voting Shares, or (ii)
has entered into a contractual arrangement with the Corporation,
acceptable to the Board of Directors, to do so within 30 days of
the date on which such contractual arrangement is entered into
(the expiry of which period is herein referred to as the
"DISPOSITION DATE"), such that at the time the waiver becomes
effective pursuant to this Subsection 5.1(e) such Person is no
longer an Acquiring Person. In the event of such a waiver
becoming effective, for the purposes of this Agreement, such
Flip-in Event shall be deemed not to have occurred. Without
limiting the generality of the foregoing, 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) Where a Take-over Bid or other event giving rise to a Separation
Time, is withdrawn or otherwise terminated after the Separation
Time has occurred and prior to the occurrence of a Flip-in Event,
or in any other circumstances 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. Without restricting
the rights of the Board of Directors to elect to redeem the
Rights pursuant to Subsection 5.1(a) rather than pursuant to
Subsection 5.1(f), upon the Rights being redeemed pursuant to
this Subsection 5.1(f), all of 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 events giving rise to the
Separation Time shall be deemed not to have occurred.
5.2 NOTICE OF CERTAIN EVENTS
------------------------
In case the Corporation shall propose at any time following the Separation
Time:
(a) to pay any dividend payable in stock of any class to the holders
of Common Shares or to make any other distribution to the holders
of Common Shares (other than a regular periodic cash dividend),
or
(b) to offer to the holders of Common Shares rights or warrants to
subscribe for or to purchase any additional Common Shares or
shares of stock of any class or any other securities, rights or
options, or
(c) to effect any reclassification of Common Shares (other than a
reclassification involving only the subdivision of outstanding
Common Shares), or
(d) to effect any consolidation or merger into or with any other
Person (other than a Subsidiary of the Corporation in a
transaction which complies with Subsection 2.4(a)), or to effect
any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or
more transactions, of more than 50% of the assets or earning
power of the Corporation and its Subsidiaries (taken as a whole)
to, any other Person (other than the Corporation and/or any of
its Subsidiaries in one or more transactions each of which
complies with Subsection 2.4(a)), or
(e) to effect the liquidation, dissolution or winding up of the
Corporation,
then, in each such case, the Corporation shall give to the Rights
Agent and to each holder of a Right, in accordance with Section 5.10 a
notice of such proposed action, which shall specify the Record Time
for the purposes of such stock dividend, distribution of rights or
Rights, or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution, or winding up is to
take place and the date of participation therein by the holders of the
Common Shares, if any such date is to be fixed, and such notice shall
be so given in the case of any action covered by clause (a) or (b)
above at least 20 days prior to the Record Time for determining
holders of Common Shares for purposes of such action, and in the case
of any such other action, at least 20 days prior to the date of the
taking of such proposed action or the date of participation therein by
the holders of Common Shares, whichever shall be the earlier.
In case a Flip-In Event shall occur, then, in any such case, the
Corporation shall as soon as practicable thereafter give to the Rights
Agent and to each holder of a Right, to the extent feasible and in
accordance with Section 5.10, a notice of the occurrence of such
event, which shall specify the event and the consequences of the event
to holders of Rights under Subsection 3.1(a) and all references in the
preceding paragraph to Common Shares shall be deemed to thereafter
refer to other securities.
5.3 EXPIRATION
----------
No Person shall have any rights whatsoever pursuant to this Agreement or in
respect of any Right after the Expiration Time, except the Rights Agent as
specified in Subsection 4.1(a) hereof.
5.4 ISSUANCE OF NEW RIGHTS CERTIFICATES
-----------------------------------
Notwithstanding any of the provisions of this Agreement or the Rights to
the contrary, the Corporation may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by the Board
of Directors to reflect any adjustment or change in the number or kind or
class of securities purchasable upon exercise of Rights made in accordance
with the provisions of this Agreement.
5.5 SUPPLEMENTS AND AMENDMENTS
--------------------------
(a) The Corporation may make amendments to this Agreement to correct
any clerical or typographical error or which are required to
maintain the validity of this Agreement as a result of any change
in any applicable legislation or regulations thereunder. The
Corporation may, prior to the date of the shareholders' meeting
referred to in Section 5.16, 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 5.5 to the contrary, no such supplement
or amendment shall be made to the provisions of Article 4 except
with the written concurrence of the Rights Agent to such
supplement or amendment.
(b) Subject to Section 5.5(a), the Corporation may, with the prior
consent of the holders of Voting Shares obtained as set forth
below, at any time prior to 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 authorized by the affirmative vote of a majority of
the votes cast by Independent Shareholders present or represented
at and entitled to be voted at a meeting of the holders of Voting
Shares duly called and held in compliance with applicable laws
and the articles and by-laws of the Corporation.
(c) The Corporation may, with the prior consent of the holders of
Rights, at any time on or after the Stock Acquisition Date,
amend, vary or delete any of the provisions of this Agreement and
the Rights (whether or not such action would materially adversely
affect the interests of the holders of Rights generally),
provided that no such amendment, variation or deletion shall be
made to the provisions of Article 4 except with the written
concurrence of the Rights Agent thereto. 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 be voted 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 vote of the holders of Rights present or
represented at and entitled to be voted at a meeting of the
holders of Rights and representing a majority of the votes cast
in respect thereof. For the purposes hereof, each outstanding
Right (other than Rights which are void pursuant to the
provisions hereof) shall be entitled to one vote, and the
procedures for the calling, holding and conduct of the meeting
shall be those, as nearly as may be, which are provided in the
Corporation's by-laws and the OBCA with respect to meetings of
shareholders of the Corporation.
(e) Any amendments made by the Corporation to this Agreement pursuant
to Subsection 5.5(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 5.5(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 5.5(d), confirm or reject such amendment.
Any such amendment shall be effective from the date of the resolution
of the Board of Directors adopting such amendment, until it is
confirmed or rejected or until it ceases to be effective (as described
in the next sentence) and where such amendment is confirmed it
continues in effect in the form so confirmed. If such amendment is
rejected by the shareholders or the holders of Rights or is not
submitted to the shareholders or holders of Rights as required, then
such amendment shall cease to be effective from and after the
termination of the 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.
5.6 FRACTIONAL RIGHTS AND FRACTIONAL SHARES
---------------------------------------
(a) The Corporation shall not be required to issue fractions of
Rights or to distribute Rights Certificates which evidence
fractional Rights. After the Separation Time, in lieu of issuing
fractional Rights, the Corporation shall pay to the holders of
record of the Rights Certificates (provided the Rights
represented by such Rights Certificates are not void pursuant to
the provisions of Subsection 3.1(b), at the time such fractional
Rights would otherwise be issuable), an amount in cash equal to
the fraction of the Market Price of one whole Right that the
fraction of a Right that would otherwise be issuable is of one
whole Right.
(b) The Corporation shall not be required to issue fractions of
Common Shares upon exercise of Rights or to distribute
certificates which evidence fractional Common Shares. In lieu of
issuing fractional Common Shares, the Corporation shall pay to
the registered holders of Rights Certificates, at the time such
Rights are exercised as herein provided, an amount in cash equal
to the fraction of the Market Price of one Common Share that the
fraction of a Common Share that would otherwise be issuable upon
the exercise of such Right is of one whole Common Share at the
date of such exercise.
5.7 RIGHTS OF ACTION
----------------
Subject to the terms of this Agreement, all rights of action in respect of
this Agreement, other than rights of action vested solely in the Rights
Agent, are vested in the respective holders of the Rights. Any holder of
Rights, without the consent of the Rights Agent or of the holder of any
other Rights, on such holder's own behalf and for such holder's own benefit
and the benefit of other holders of Rights, may enforce, and may institute
and maintain any suit, action or proceeding against the Corporation to
enforce such holder's right to exercise such holder's Rights, or Rights to
which such holder is entitled, in the manner provided in such holder's
Rights 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 shall 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.
5.8 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, or any requisite filings with, any governmental or regulatory
authority, and without limiting the generality of the foregoing, necessary
approvals of The Toronto Stock Exchange and other exchanges shall be
obtained, such as to the issuance of Common Shares upon the exercise of
Rights under Subsection 2.2(d).
5.9 DECLARATION AS TO NON-CANADIAN AND NON-U.S. HOLDERS
---------------------------------------------------
If in the opinion of the Board of Directors (who may rely upon the advice
of counsel) any action or event contemplated by this Agreement would
require compliance by the Corporation with the securities laws or
comparable legislation of a jurisdiction outside Canada or the United
States, the Board of Directors acting in good faith shall take such actions
as it may deem appropriate to ensure such compliance. In no event shall
the Corporation or the Rights Agent be required to issue or deliver Rights
or securities issuable on exercise of Rights to persons who are citizens,
residents or nationals of any jurisdiction other than Canada or the United
States, in which such issue or delivery would be unlawful without
registration of the relevant Persons or securities for such purposes.
5.10 NOTICES
-------
(a) Notices or demands authorized or required by this Agreement to be
given or made by the Rights Agent or by the holder of any Rights
to or on the Corporation shall be sufficiently given or made if
delivered, sent by registered or certified mail, postage prepaid
(until another address is filed in writing with the Rights Agent)
or sent by facsimile or other form of recorded electronic
communication, charges prepaid and confirmed in writing, as
follows:
American ECO Corporation
154 University Avenue
Suite 200
Toronto, Ontario
M5H 3Y9
Attention: Mr. J. C. Pennie
Telecopy No. (416) 340-2457
(b) Notices or demands authorized or required by this Agreement to be
given or made by the Corporation or by the holder of any Rights
to or on the Rights Agent shall be sufficiently given or made if
delivered, sent by registered or certified mail, postage prepaid
(until another address is filed in writing with the Corporation),
or sent by facsimile or other form of recorded electronic
communication, charges prepaid and confirmed in writing, as
follows:
CIBC Mellon Trust Company
393 University Avenue
5th Floor
Toronto, Ontario
M5G 2M7
Attention: Assistant Vice-President, Client Services
Telecopy No. (416) 813-4555
(c) Notices or demands authorized or required by this Agreement to be
given or made by the Corporation or the Rights Agent to or on the
holder of any Rights shall be sufficiently given or made if
delivered or sent by first class mail, postage prepaid, addressed
to such holder at the address of such holder as it appears upon
the register of the Rights Agent or, prior to the Separation
Time, on the register of the Corporation for its Common Shares.
Any notice which is mailed or sent in the manner herein provided
shall be deemed given, whether or not the holder receives the
notice.
(d) Any notice given or made in accordance with this Section 5.10
shall be deemed to have been given and to have been received on
the day of delivery, if so delivered, on the third Business Day
(excluding each day during which there exists any general
interruption of postal service due to strike, lockout or other
cause) following the mailing thereof, if so mailed, and on the
day of telegraphing, telecopying or sending of the same by other
means of recorded electronic communication (provided such sending
is during the normal business hours of the addressee on a
Business Day and if not, on the first Business Day thereafter).
Each of the Corporation and the Rights Agent may from time to
time change its address for notice by notice to the other given
in the manner aforesaid.
5.11 COSTS OF ENFORCEMENT
--------------------
The Corporation agrees that if the Corporation fails to fulfil any of its
obligations pursuant to this Agreement, then the Corporation shall
reimburse the holder of any Rights for the costs and expenses (including
legal fees) incurred by such holder to enforce his rights pursuant to any
Rights or this Agreement.
5.12 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.
5.13 BENEFITS OF THIS AGREEMENT
--------------------------
Nothing in this Agreement shall be construed to give to any Person other
than the Corporation, the Rights Agent and the holders of the Rights any
legal or equitable right, remedy or claim under this Agreement; further,
this Agreement shall be for the sole and exclusive benefit of the
Corporation, the Rights Agent and the holders of the Rights.
5.14 GOVERNING LAW
-------------
This Agreement and each Right issued hereunder shall be deemed to be a
contract made under the laws of the Province of Ontario and for all
purposes shall be governed by and construed in accordance with the laws of
such Province applicable to contracts to be made and performed entirely
within such Province.
5.15 SEVERABILITY
------------
If any term or provision hereof or the application thereof to any
circumstance shall, in any jurisdiction and to any extent, be invalid or
unenforceable, such term or provision shall be ineffective only as to such
jurisdiction and to the extent of such invalidity or unenforceability in
such jurisdiction without invalidating or rendering unenforceable or
ineffective the remaining terms and provisions hereof in such jurisdiction
or the application of such term or provision in any other jurisdiction or
to circumstances other than those as to which it is specifically held
invalid or unenforceable.
5.16 EFFECTIVE DATE
--------------
This Agreement is effective and in full force and effect in accordance with
its terms from and after the Effective Date. At the first annual meeting
of holders of Voting Shares of the Corporation following the Effective
Date, the Corporation shall request confirmation of this Agreement by the
holders of its Voting Shares. If this Agreement is not confirmed by a
majority of the votes cast in person or by proxy by holders of Voting
Shares who vote in respect of confirmation of this Agreement at such
meeting, then this Agreement and all outstanding Rights shall terminate and
be void and of no further force and effect on and from the close of
business on the date of termination of such meeting.
5.17 RECONFIRMATION
--------------
Notwithstanding the confirmation of this Agreement pursuant to Section
5.16, this Agreement must be reconfirmed by a resolution passed by a
majority of greater than 50% of the votes cast by all holders of Voting
Shares who vote in respect of such reconfirmation at every third annual
meeting following the 1998 annual meeting. If the Agreement is not so
reconfirmed or is not presented for reconfirmation at such annual meeting,
the Agreement and all outstanding Rights shall terminate and be void and of
no further force and effect on and from the date of termination of the
annual meeting; provided that termination shall not occur if a Flip-in
Event has occurred (other than a Flip-in Event which has been waived
pursuant to Subsection 5.1(a), (d) or (e) hereof), prior to the date upon
which this Agreement would otherwise terminate pursuant to this Section
5.17.
5.18 DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS
----------------------------------------------------
The Board of Directors, upon the advice of counsel, shall have the
exclusive power and authority to administer this Agreement and to exercise
all rights and powers specifically granted to the Board of Directors or the
Corporation as may be necessary or advisable in the administration of this
Agreement. All such actions, calculations and determinations (including
all omissions with respect to the foregoing) which are done or made by the
Board of Directors, in good faith, shall not subject the Board of Directors
or any director of the Corporation to any liability to the holders of the
Rights.
5.19 TIME OF THE ESSENCE
-------------------
Time shall be of the essence of this Agreement.
5.20 REGULATORY APPROVALS
--------------------
Any obligation of the Corporation or action or event contemplated by this
Agreement, or any amendment to this Agreement, shall be subject to the
receipt of any requisite approval or consent from any governmental or
regulatory authority. Without limiting the generality of the foregoing,
the Corporation shall use its reasonable commercial efforts to:
(a) file, as soon as practicable following the first occurrence of a
Flip-in Event, or as soon as required by law, as the case may be,
a registration statement under the 1933 Securities Act and any
such documentation as may be required to be filed under the
Securities Act (Ontario) (and the securities legislation in all
other applicable provinces of Canada) with respect to the
securities purchasable upon exercise of the Rights on an
appropriate form,
(b) cause such registration statement to become effective as soon as
practicable after such filing, and
(c) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the 1933
Securities Act) until the earlier of:
(i) the date as of which the Rights are no longer exercisable
for such securities, and
(ii) the Expiration Time.
The Corporation shall also take such action as may be appropriate under the
blue sky laws of the various states. The Corporation may temporarily
suspend, for a period of time not to exceed 90 days after the date set
forth in Subsection 5.20(a), the exercisability of the Rights in order to
prepare and file such registration statement and permit it to become
effective. Upon any such suspension, the Corporation shall issue a public
announcement and shall give simultaneous written notice to the Rights Agent
stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement and notice to the Rights Agent
at such time as the suspension is no longer in effect. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction unless the requisite qualifications in such
jurisdiction shall have been obtained.
5.21 EXECUTION IN COUNTERPARTS
-------------------------
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original and
all such counterparts shall together constitute one and the same
instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
AMERICAN ECO CORPORATION
By: /s/ Michael E. McGinnis
--------------------------------
Chairman of the Board, President
and Chief Executive Officer
By: /s/ Bruce D. Tobecksen
--------------------------------
Senior Vice President and Chief
Financial Officer
THE CIBC MELLON TRUST COMPANY
By: /s/ B.M. Cornish
--------------------------------
Authorized Officer
By: /s/ Joyce Whitelaw
--------------------------------
Authorized Officer
<PAGE>
ATTACHMENT 1
AMERICAN ECO CORPORATION
SHAREHOLDER RIGHTS PLAN AGREEMENT
[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 SUBSECTION 3.1(b) OF THE SHAREHOLDER RIGHTS PLAN AGREEMENT), RIGHTS
BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR CERTAIN RELATED PARTIES, OR
TRANSFEREES OF AN ACQUIRING PERSON OR CERTAIN RELATED PARTIES, MAY BECOME
VOID.
RIGHTS CERTIFICATE
This certifies that _____________, or registered assigns, is the registered
holder of the number of Rights set forth above, each of which entitles the
registered holder thereof, subject to the terms, provisions and conditions
of the Shareholder Rights Plan Agreement, dated as of April 9, 1998, as the
same may be amended or supplemented from time to time (the "Shareholder
Rights Agreement"), between American ECO Corporation, a corporation duly
incorporated under the Business Corporations Act, Ontario (the
"Corporation") and The CIBC Mellon Trust Company, a trust company
incorporated under the laws of the United States (the "RIGHTS AGENT")
(which term shall include any successor Rights Agent under the Shareholder
Rights Agreement), to purchase from the Corporation at any time after the
Separation Time (as such term is defined in the Shareholder Rights
Agreement) and prior to the Expiration Time (as such term is defined in the
Shareholder 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 with the Form of
Election to Exercise (in the form provided hereinafter) duly executed and
submitted to the Rights Agent at its principal office in any of the cities
of ____________ or to the principal office of ___________ in ___________.
The Exercise Price per Right shall initially be one-half of the then
current Market Price (as such term is defined in the Shareholder Rights
Agreement) and shall be subject to adjustment in certain events as provided
in the Shareholder Rights Agreement.
This Rights Certificate is subject to all of the terms and provisions of
the Shareholder Rights Agreement, which terms and provisions are
incorporated herein by reference and made a part hereof and to which
Shareholder 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 Shareholder Rights Agreement are
on file at the registered office of the Corporation.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at any of the offices of the Rights Agent designated for such
purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing an aggregate number of
Rights equal to the aggregate number of Rights evidenced by the Rights
Certificate or Rights Certificates surrendered. If this Rights Certificate
shall be exercised in part, the registered holder shall be entitled to
receive, upon surrender hereof, another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.
In certain circumstances described in the Rights Agreement, each Right
evidenced hereby may entitle the registered holder thereof to purchase or
to receive assets, debt securities or shares in the capital of the
Corporation other than Common Shares, or more or less than one Common Share
(or a combination thereof), all as provided in the Rights Agreement. In
certain circumstances described in the Rights Agreement, this Rights
Certificate and the Rights represented hereby may become null and void.
No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Common Shares
or of any other securities which may at any time be issuable upon the
exercise hereof, nor shall anything contained in the Shareholder Rights
Agreement or herein be construed to confer upon the holder hereof, as such,
any of the Rights of a shareholder of the Corporation or any right to vote
for the election of directors or upon any matter submitted to shareholders
at any meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in the Shareholder Rights Agreement), or
to receive dividends or subscription rights, or otherwise, until the Rights
evidenced by this Rights Certificate shall have been exercised as provided
in the Shareholder Rights Agreement.
This 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:
-------------------------
AMERICAN ECO CORPORATION
By: By:
------------------------- --------------------------
Countersigned:
.
By:
-------------------------
<PAGE>
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer
the Rights Certificate.) FOR VALUE RECEIVED ____________________ hereby
sells, assigns and transfers unto
-------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
(Please print name and address of transferee.)
the Rights represented by this Rights Certificate, together with all right,
title and interest therein, and does hereby irrevocably constitute and
appoint __________________, as attorney, to transfer the within Rights on
the books of the Corporation, with full power of substitution.
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 or the United States, or a commercial bank or trust
company having an office or correspondent in Canada or the United States.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CERTIFICATE
(To be completed if true.)
The undersigned party transferring Rights hereunder, hereby represents, for
the benefit of all holders of Rights and Common Shares, that the Rights
evidenced by this Rights Certificate are not, and, to the knowledge of the
undersigned, have never been, Beneficially Owned by an Acquiring Person or
an Affiliate or Associate thereof or a Person acting jointly or in concert
with an Acquiring Person or an Affiliate or Associate thereof. Capitalized
terms shall have the meaning ascribed thereto in the Shareholder Rights
Agreement.
-----------------------------------
Signature
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(To be attached to each Rights Certificate.)
<PAGE>
FORM OF ELECTION TO EXERCISE
(To be exercised by the registered holder if such holder desires to
exercise the Rights Certificate.)
TO:
-----------------------------------------
The undersigned hereby irrevocably elects to exercise
______________________ whole Rights represented by the attached Rights
Certificate to purchase the Common Shares or other securities, if
applicable, issuable upon the exercise of such Rights and requests that
certificates for such securities be issued in the name of:
-----------------------------------------------------------------
(Name)
-----------------------------------------------------------------
(Address)
-----------------------------------------------------------------
(City and Province)
-----------------------------------------------------------------
Social Insurance Number or other taxpayer identification number.
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
---------------------------------------------------------------------------
(Name)
---------------------------------------------------------------------------
(Address)
---------------------------------------------------------------------------
(City and Province)
---------------------------------------------------------------------------
Social Insurance Number or other taxpayer identification number.
Dated:
----------------------------------------------------------------------
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, the United States or a commercial bank or trust company
having an office or correspondent in Canada or the United States.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
CERTIFICATE
(To be completed if true.)
The undersigned party exercising Rights hereunder, hereby represents, for
the benefit of all holders of Rights and Common Shares, that the Rights
evidenced by this Rights Certificate are not, and, to the knowledge of the
undersigned, have never been, Beneficially Owned by an Acquiring Person or
an Affiliate or Associate thereof or a Person acting jointly or in concert
with an Acquiring Person or an Affiliate or Associate thereof. Capitalized
terms shall have the meaning ascribed thereto in the Shareholder Rights
Agreement.
---------------------------------------------
Signature
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(To be attached to each Rights Certificate.)
<PAGE>
NOTICE
In the event the certification set forth above in the Forms of Assignment
and 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. No Rights Certificates shall
be issued in exchange for a Rights Certificate owned or deemed to have been
owned by an Acquiring Person or an Affiliate or Associate thereof, or by a
Person acting jointly or in concert with an Acquiring Person or an
Affiliate or Associate thereof.
