Exhibit 2.1
UNITHOLDER PROTECTION RIGHTS AGREEMENT
THIS AGREEMENT made as of February 25, 2003.
B E T W E E N:
STRATEGIC ENERGY FUND (the "FUND") by its manager STRATEGIC
ENERGY MANAGEMENT CORP., in its capacity as manager of the
Fund
OF THE FIRST PART;
- and -
COMPUTERSHARE TRUST COMPANY OF CANADA, a trust company
incorporated under the laws of Canada, as Rights Agent (the
"RIGHTS AGENT")
OF THE SECOND PART;
- and -
STRATEGIC ENERGY MANAGEMENT CORP. ("STRATEGIC MANAGEMENT")
OF THE THIRD PART.
WHEREAS Strategic Management, the manager of the Fund, has determined
that it is advisable and in the best interests of the Fund to adopt a
unitholder protection rights plan (the "RIGHTS PLAN") to ensure, to the extent
possible, that all unitholders of the Fund are treated fairly in connection
with any take-over offer for the Fund;
AND WHEREAS in order to implement the Rights Plan Strategic Management
has:
(a) authorized and declared a distribution of one (1) right (a
"RIGHT") effective at the Record Time in respect of each Unit
outstanding at that time;
(b) authorized the issuance of one (1) Right in respect of each
Unit issued after the Record Time and prior to the earlier of
the Separation Time and the Expiration Time;
(c) authorized the issuance of Rights Certificates to holders of
Rights pursuant to the terms and subject to the conditions
set forth herein;
AND WHEREAS each Right entitles the holder thereof, after the
Separation Time, to purchase securities of the Fund pursuant to the terms and
subject to the conditions set forth herein;
AND WHEREAS the Fund desires to appoint the Rights Agent to act on
behalf of the Fund, and the Rights Agent is willing to so act, in connection
with the issuance, transfer, exchange and replacement of Rights Certificates,
the exercise of Rights and other matters referred to herein;
NOW THEREFORE in consideration of the premises and their respective
covenants and agreements set forth herein, the parties hereby agree as follows:
ARTICLE 1
INTERPRETATION
1.1 CERTAIN DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
indicated:
(a) "ACQUIRING PERSON" means any Person who is the Beneficial
Owner of 20% or more of the outstanding Units, but shall not
include:
(i) the Fund or any Subsidiary of the Fund;
(ii) any Person who becomes the Beneficial Owner of 20% or
more of the outstanding Units as a result of:
(A) a Unit Reduction;
(B) a Permitted Bid Acquisition;
(C) an Exempt Acquisition; or
(D) a Pro Rata Acquisition;
provided, however, that if a Person becomes the
Beneficial Owner of 20% or more of the outstanding
Units by reason of a Unit Reduction, a Permitted Bid
Acquisition, an Exempt Acquisition or a Pro Rata
Acquisition, and thereafter becomes the Beneficial
Owner of a number of additional Units exceeding 1%
of the number of Units outstanding (other than
pursuant to a Unit Reduction, a Permitted Bid
Acquisition, an Exempt Acquisition or a Pro Rata
Acquisition), then, as of the date that such Person
becomes the Beneficial Owner of such additional
Units, such Person shall become an "ACQUIRING
PERSON";
(iii) for the period of 10 days after the Disqualification
Date (as defined below), any Person who becomes the
Beneficial Owner of 20% or more of the outstanding
Units as a result of such Person becoming disqualified
from relying on Clause 1.1(d)(vii) solely because such
Person or the Beneficial Owner of such Units 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 of facts indicating that any Person is
making or has announced an intention to make a
Take-over Bid;
(iv) an underwriter or member of a banking or selling group
that becomes the Beneficial Owner of 20% or more of the
Units in connection with a bona fide distribution to
the public of securities; or
(v) a Person (a "GRANDFATHERED PERSON") who is the
Beneficial Owner of 20% or more of the outstanding
Units of the Fund 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 Units of the Fund that increases
its Beneficial Ownership of Units by more than 1% of
the number of Units outstanding, other than through a
Permitted Bid Acquisition or a Pro Rata Acquisition.
(b) "AFFILIATE", when used to indicate a relationship with a
specified Person, means a Person that directly, or indirectly
through one or more intermediaries, controls, or is
controlled by, or is under common control with, such
specified Person.
(c) "ASSOCIATE", when used to indicate a relationship with any
Person, means:
(i) any body corporate of which the Person beneficially
owns, directly or indirectly, voting securities
carrying more than 10 per cent of the voting rights
attached to all voting securities of the body corporate
for the time being outstanding;
(ii) any partner, spouse or child of that Person;
(iii) any fund or estate in which the Person has a
substantial beneficial interest or as to which the
Person serves as trustee or in a similar capacity;
(iv) any relative of the Person, where the relative has the
same home as the Person; or
(v) any relative of the spouse of the Person where the
relative has the same home as the Person.
(d) 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 the beneficial
owner;
(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 beneficial owner (whether such
right is exercisable immediately or after the
passage of time or upon the occurrence of a
contingency or payment of instalments 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), 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 instalments 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 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 by any
other Person with which such Person or any of such
Person's Affiliates is acting jointly or in concert
(other than pursuant to (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);
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
Securities Act or the Fund Indenture, except if such
power (or the arrangements relating thereto) is then
reportable under Section 101 of the Securities Act;
(vi) 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 in
connection with, or in order to participate in, a
public proxy solicitation made or to be made pursuant
to, and in accordance with, the applicable rules and
regulations referred to in Clause 1.1(d)(v), except if
such power (or the arrangements relating thereto) is
then reportable under Section 101 of the Securities
Act;
(vii) solely because such Person (hereinafter in this Clause
1.1(d)(vii) referred to as the "MANAGER"), being
principally engaged in the business of managing
investment funds for other Persons (which others, for
greater certainty, 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; and
(B) neither the Manager nor any Person acting jointly
or in concert with the Manager is then making a
Take-over Bid or has not then publicly announced an
intention to make a Take-over Bid, 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 Clause 1.1(d)(vii) and, in such
event, the Manager's Beneficial Ownership of securities
shall be determined without reference to this Clause
1.1(d)(vii); or
(viii)solely because such Person (hereinafter in this Clause
1.1(d)(viii) 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 is not then making a Take-over
Bid or has not then publicly announced an intention
to make a Take-over Bid, 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 Clause
1.1(d)(viii) and, in such event, the Trust Company's
Beneficial Ownership of securities shall be
determined without reference to this Clause
1.1(d)(viii);
(ix) 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
(x) solely because any such Person, any of such Person's
Affiliates or Associates or any other Person referred
to in paragraph (iii) of this definition has an
agreement, arrangement or understanding, whether or not
in writing (but other than of the nature otherwise
referred to in this Subsection 1.1(d)), with respect to
a matter or matters to come before a particular meeting
of unitholders.
For purposes of this Agreement, in determining the percentage
of the outstanding Units with respect to which a Person is or
is deemed to be the Beneficial Owner, all Units as to which
such Person is deemed the Beneficial Owner shall be deemed
outstanding.
(e) "BOARD OF DIRECTORS" means the board of directors of
Strategic Management;
(f) "BUSINESS DAY" means any day other than a Saturday, Sunday or
a day on which chartered banks in the City of Toronto are
authorized or obliged by law to close.
(g) "CLOSE OF BUSINESS" on any given date means the time on such
date (or, if such date is not a Business Day, the time on the
next succeeding Business Day) at which the office of the
transfer agent for the Units in the City of Toronto (or,
after the Separation Time, the office of the Rights Agent in
the City of Toronto), is closed to the public.
(h) "COMPETING PERMITTED BID" means a Take-over Bid made while
another Permitted Bid is in existence and that satisfies all
of the provisions of a Permitted Bid except that the
condition set forth in subparagraph 1.1(w)(ii) may provide
that the Units may be taken up or paid for on, and may not be
withdrawn after, a date which is not earlier than the later
of 35 days after the date of the Take-over Bid or the
earliest date on which Units may be taken up or paid for
under any other Permitted Bid that is then in existence for
the Units.
(i) "CONTROLLED" means, in determining whether a corporation is
deemed to be "CONTROLLED" by another Person or Persons, a
situation where a Person is controlled by another Person or
Persons in any manner whatsoever that results in control in
fact by that other Person or Persons, whether directly or
indirectly, and whether through share ownership, a trust, a
contract or otherwise, including in the case of control of a
corporation where:
(i) (A) 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 on behalf of the other Person or
Persons; and
(B) the votes carried by such securities are entitled,
if exercised, to elect a majority of the board of
directors of such corporation; or
(ii) the corporation is otherwise controlled by such other
Person or Persons;
and "CONTROL" and "CONTROLLING" shall be interpreted
accordingly.
(j) "ELECTION TO EXERCISE" has the meaning attributed thereto in
Clause 2.2(d)(i).
(k) "EXEMPT ACQUISITION" means a unit acquisition in respect of
which the Board of Directors has waived the application of
Section 3.1 pursuant to the provisions of Subsection 5.1(d)
or 5.1(e).
(l) "EXERCISE PRICE" means, as of any date, the price at which a
holder of a Right may purchase the securities issuable upon
exercise of one whole Right. Until adjustment thereof in
accordance with the terms hereof, the Exercise Price shall be
$60.00.
(m) "EXPIRATION TIME" means the earlier of (i) the Termination
Time, (ii) the Close of Business on the fifth anniversary of
the date of this Agreement, (iii) the Negative Vote Time, as
defined in Subsection 5.4(c) and (iv) the Approval Expiry
Time, as defined in Subsection 5.4(c).
(n) "EXPIRY DATE OF THE PERMITTED BID" means the date, which
shall not be less than 90 days following the date on which
the proper Take-over Bid documentation relating to such
Permitted Bid is sent to the unitholders of the Fund, which
is indicated in such documentation as the date until which
such Permitted Bid is open for acceptance.
(o) "FLIP-IN EVENT" means a transaction or event in or pursuant
to which any Person becomes an Acquiring Person.
(p) "FUND INDENTURE" means the amended and restated trust
indenture made as of April 11, 2002, as amended, between
Strategic Management and Computershare Trust Company of
Canada, as the same may be amended or replaced from time to
time.
(q) "INDEPENDENT UNITHOLDERS" means beneficial owners of Units,
other than (i) any Acquiring Person, (ii) any Offeror, (iii)
any Affiliate or Associate of any Acquiring Person or
Offeror, (iv) any Person acting jointly or in concert with
any Acquiring Person or Offeror or any Affiliate of any
Acquiring Person or Offeror, in each case in respect of Units
beneficially owned by such persons.
(r) "MARKET PRICE" per security of any securities on any date of
determination means the average of the daily closing prices
per security 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 Day not to be fully comparable with the
closing price on the Trading Day immediately preceding such
date of determination each such closing price so used shall
be appropriately adjusted in a manner analogous to the
applicable adjustment provided for in Section 2.3 in order to
make it fully comparable with the closing price on the
Trading Day immediately preceding such date of determination.
The closing price per security 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 asked prices for each of such
securities as reported by the principal Canadian stock
exchange (as determined by the Board of Directors) on
which such securities are listed or admitted to
trading;
(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 asked prices
for each of such securities as reported by the
principal national United States securities exchange
(as determined by the Board of Directors) on which such
securities are listed or admitted to trading;
(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 asked prices for each
of such securities in the over-the-counter market, as
quoted by any reporting system then in use (as
determined by the Board of Directors); or
(iv) if for any reason none of such prices is available on
such day or the securities are not listed or admitted
to trading on a Canadian stock exchange or a national
United States securities exchange or quoted by any such
reporting system, the average of the closing bid and
asked prices as furnished by a professional market
maker making a market in the securities selected by the
Board of Directors;
provided, however, that if for any reason none of such prices
is available on such day, the closing price per security of
such securities on such date means the fair value per
security of such securities on such date as determined by the
Board of Directors, after consultation with a nationally
recognized investment dealer or investment banker with
respect to the fair value per security of such securities.
The Market Price shall be expressed in Canadian dollars.
Notwithstanding the foregoing, where the Board is Directors
is satisfied that the Market Price of securities as
determined herein was affected by an anticipated or actual
Take-over Bid or by improper manipulation, the Board of
Directors may 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.
(s) "OFFER TO ACQUIRE" includes:
(i) an offer to purchase or a solicitation of an offer to
sell Units, or a public announcement of an intention to
make such an offer or solicitation; and
(ii) an acceptance of an offer to sell Units, 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.
(t) "OFFEROR" means a Person who has publicly announced an
intention to make, or who has made, a Take-over Bid,
including a Permitted Bid.
(u) "OFFEROR'S SECURITIES" means the aggregate of the Units
Beneficially Owned on the date of a Take-over Bid by an
Offeror.
(v) "OFFICER'S CERTIFICATE" of a Person shall mean a certificate
signed by the Chairman of the board of directors, the
President or any Vice President and by the Secretary, the
Treasurer, and Assistant Secretary or an Assistant Treasurer
of such Person.
(w) "PERMITTED BID" means a Take-over Bid made in compliance
with, and not on a basis which is exempt from or otherwise
not subject to, the provisions of Part XX of the Securities
Act and the rules and regulations thereunder (or such
comparable or successor laws or regulations as shall then be
in effect, or if all such provisions shall be repealed and
there shall be no comparable or successor laws then in
effect, pursuant to Part XX of the Securities Act as in
effect on the date of this Agreement) and in compliance with
all other applicable laws (including the securities laws and
regulations of all other relevant jurisdictions) and which is
also made in compliance with the following additional
provisions and conditions:
(i) the Take-over Bid shall be made for all of the Units to
all holders of record of Units wherever resident or
registered on the books of the Fund;
(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 Units
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 Units held by Independent Unitholders shall have
been deposited or tendered pursuant to the Take-over
Bid and not withdrawn;
(iii) unless the Take-over Bid is withdrawn in accordance
with applicable law, the Take-over Bid contains an
irrevocable and unqualified provision that Units may be
deposited pursuant to such Take-over Bid at any time
during the period of time described in Clause
1.1(w)(ii) and that any Units deposited pursuant to the
Take-over Bid may be withdrawn until taken up and paid
for;
(iv) the Take-over Bid contains an irrevocable and
unqualified provision that in the event that the
deposit condition set forth in Clause 1.1(w)(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 Units for not less than ten
Business Days from the date of such public
announcement; and
(v) the Offeror shall make arrangements reasonably required
by the Board of Directors to allow for the deposit in
acceptance of such Take-over Bid of units issued on
exercise of options held by employees of Strategic
Management or any Subsidiary of the same or any
successor entity thereto, including, without
limitation, directors, officers, executives, employees,
consultants, subsidiary entities of a director,
officer, executive or employee, consultant companies or
consultant partnerships of a consultant and RRSPs or
RRIFs established by or for a director, officer,
executive, employee or consultant or of which a
director, officer, executive, employee or consultant is
the beneficiary.
and the Board of Directors acting in good faith determines,
prior to the expiry of the Take-over Bid, that the Take-over
Bid complies with the provisions of this Subsection 1.1(w).
For purposes of this Agreement, if a Permitted Bid ceases to
be a Permitted Bid because it ceases to meet any or all of
the requirements mentioned above at any time, any acquisition
of Units made pursuant to such Permitted Bid, including any
acquisition of Units theretofore made, shall cease to be a
Permitted Bid Acquisition.
(x) "PERMITTED BID ACQUISITION" means an acquisition of Units
made pursuant to a Permitted Bid or a Competing Permitted Bid
made after the Board of Directors, acting in good faith, has
determined, that the Take-over Bid complies with the
provisions of Subsection 1.1(w) or 1.1(h), as applicable.
(y) "PERSON" includes any individual, firm, partnership,
association, trust, trustee, executor, administrator, legal
personal representative, government, governmental body or
authority, corporation or other incorporated or
unincorporated organization.
(z) "PRO RATA ACQUISITION" means an acquisition by a Person of
Units pursuant to (i) any distribution reinvestment plan or
unit purchase plan of the Fund, (ii) a unit distribution, a
unit split or other event pursuant to which such Person
becomes the Beneficial Owner of Units on the same pro rata
basis as all other holders of Units of the same class or
series, (iii) the exercise (including the grant) of rights
granted to such Person to purchase Units distributed to all
holders of Units pursuant to a bona fide rights offering
which complies with the requirements of all applicable
securities legislation or is made pursuant to a prospectus or
(iv) a distribution to the public of Units, or securities
convertible into or exchangeable for Units, made pursuant to
a prospectus or by way of a private placement completed in
accordance with applicable securities legislation; provided,
however, in the case of an acquisition referred to in
Subclauses (iii) or (iv), such acquisitions are made for not
more than such number of Units or of such securities as is
necessary for such Person to maintain the percentage of Units
it held immediately prior to the announcement of such rights
offering or distribution to the public or private placement,
as the case may be.
(aa) "RECORD TIME" means the Close of Business on February 25,
2003.
(bb) "REDEMPTION PRICE" has the meaning attributed thereto in
Subsection 5.1(a).
(cc) "REGULAR PERIODIC CASH DISTRIBUTION" means cash distributions
paid at regular intervals in any fiscal year of the Fund in
accordance with the Fund Indenture.
(dd) "RIGHTS CERTIFICATE" means the certificates representing the
Rights after the Separation Time which shall be substantially
in the form attached hereto as Exhibit A.
(ee) "SECURITIES ACT" means the Securities Act, R.S.O. 1990, c.
S.5, as amended, and the regulations made thereunder, as now
in effect or as the same may from time to time be amended,
re-enacted or replaced.
(ff) "SEPARATION TIME" means the Close of Business on the tenth
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 Fund or Strategic Management or any Subsidiary
thereof or any successor thereto) to commence, a
Take-over Bid (other than a Permitted Bid, so long as
such Take-over Bid continues to satisfy the
requirements of a Permitted Bid or a Competing
Permitted Bid);
or such earlier or later date as may from time to time be
determined by the Board of Directors, provided that:
(A) if any such Take-over Bid expires, is cancelled, is
terminated or is otherwise withdrawn prior to the
Separation Time, such offer shall be deemed, for
the purposes of this Subsection 1.1(ff), never to
have been made; and
(B) if the Board of Directors determines pursuant to
Subsection 5.1(d) or (e) to waive the application
of Section 3.1 to a Flip-in Event, the Separation
Time in respect of such Flip-in Event shall be
deemed never to have occurred.
(gg) "SPECIAL MEETING" means a special meeting of the holders of
Units called by the Board of Directors for the purpose of
ratifying the distribution and continued existence of the
Rights in accordance with Subsection 5.4(c) and any
adjournment(s) thereof.
(hh) "STOCK ACQUISITION DATE" means the first date of public
announcement (which for purposes of this definition includes,
without limitation, a report filed pursuant to Section 101 of
the Securities Act) of facts indicating that a Person has
become an Acquiring Person.
(ii) "STRATEGIC MANAGEMENT" means Strategic Energy Management
Corp.
(jj) "SUBSIDIARY" means a corporation which, in respect of another
corporation, is:
(i) 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) a Subsidiary of a corporation that is that other's
Subsidiary;
(kk) "TAKE-OVER BID" means an Offer to Acquire Units or other
securities which (assuming the Units or other securities
subject to the Offer to Acquire are acquired at the date of
the Offer to Acquire by the Person making the Offer to
Acquire), together with the Offeror's Securities, would
constitute in the aggregate 20% or more of the outstanding
Units at the date of the Offer to Acquire (including all
Units that may be acquired upon exercise of all rights of
conversion, exchange or purchase attaching to the other
securities).
(ll) "TERMINATION TIME" means the time at which the right to
exercise Rights shall terminate pursuant to Subsections
3.2(b) or 5.1(c).
(mm) "TRADING DAY", when used with respect to any securities,
means any day on which the principal Canadian or United
States securities exchange or quotation system (as determined
by the Board of Directors) on which such securities are
listed or admitted to trading or quotation is open for the
transaction of business or, if the securities are not listed
or admitted to trading or quotation on any Canadian or United
States securities exchange, a Business Day.
(nn) "TRUSTEE" means Computershare Trust Company of Canada in its
capacity as trustee of the Fund.
(oo) "UNITS" means the units of the Fund. For purposes of this
Agreement, the percentage of Units Beneficially Owned by any
Person shall be, and be deemed to be, the product determined
by the formula:
A
-
100 X B
where
A = the aggregate number of votes attaching
(or which would be attached) to the Units
Beneficially Owned by such Person; and
B = the aggregate number of votes attaching to all
outstanding Units.
Where any Person is deemed to Beneficially Own unissued
Units, such Units shall be deemed to be outstanding for the
purpose of both A and B above.
(pp) "UNIT REDUCTION" means an acquisition or redemption by the
Fund of Units which, by reducing the number of Units
outstanding, increases the proportionate number of Units
Beneficially Owned by any Person to 20% or more of the Units
or Units then outstanding.
1.2 ACTING JOINTLY OR IN CONCERT
For the purposes of this Agreement, whether Persons are acting jointly
or in concert is a question of fact in each circumstance. Notwithstanding the
foregoing, a Person shall be deemed to be acting jointly or in concert with
another Person if such Person is presumed to be acting jointly or in concert
with such other Person for purposes of Section 91 of the Securities Act.
Notwithstanding the foregoing, and for greater certainty, the phrase,
"acting jointly or in concert", wherever used in this Agreement, shall not
include conduct:
(a) unrelated to Units; or
(b) consisting solely of:
(i) voting or directing the vote of securities of the Fund
pursuant to a revocable proxy given in response to a
public proxy solicitation;
(ii) voting or directing the vote of securities of the Fund
in connection with or in order to participate in a
public proxy solicitation made or to be made; or
(iii) having an agreement, arrangement or understanding with
respect to a matter or matters to come before a
particular meeting of unitholders.
1.3 CURRENCY
All sums of money which are referred to in this Agreement are
expressed in lawful money of Canada.
1.4 NUMBER AND GENDER
Wherever the context so requires, terms used herein importing the
singular number only shall include the plural and vice versa and words
importing any one gender shall include all others.
1.5 SECTIONS AND HEADINGS
The division of this Agreement into Articles, Sections, Subsections,
Clauses and Subclauses and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement. The terms "this Agreement", "hereof", "hereunder" and similar
expressions refer to this Agreement and not to any particular Article, Section
or other portion hereof and include any agreement or instrument supplemental or
ancillary hereto. Unless something in the subject matter or context is
inconsistent therewith, references herein to Articles, Sections, Subsections,
Clauses and Subclauses are to Articles, Sections, Subsections, Clauses and
Subclauses of this Agreement.
1.6 STATUTORY REFERENCES
Unless the context otherwise requires, any reference herein to a
specific Section, Subsection, Clause or Rule of any act or regulation shall be
deemed to refer to the same as it may be renumbered, amended, re-enacted or
replaced or, if repealed and there shall be no replacement therefor, to the
same as it is in effect on the date of this Agreement.
ARTICLE 2
THE RIGHTS
2.1 THE RIGHTS; LEGEND ON UNIT CERTIFICATES
(a) Certificates representing Units that are issued and
outstanding at the later of: (i) the Record Time and (ii) the
date on which all regulatory approvals for this Agreement
have been received shall evidence one Right for each Unit
evidenced thereby, notwithstanding the absence of the legend
referred to below, until the earlier of (i) the Separation
Time and (ii) the Expiration Time. Certificates for Units
issued after the later of (i) the Record Time and (ii) the
date on which all regulatory approvals for this Agreement
have been received but prior to the earlier of (i) the
Separation Time and (ii) the Expiration Time shall also
evidence one Right for each Unit represented thereby.
(b) All such certificates for Units shall have impressed on,
printed on, written on or otherwise affixed to them the
following legend:
"Until the Separation Time (as defined in the Rights
Agreement referred to below), this certificate also
evidences and entitles the holder hereof to certain
Rights as set forth in a Unitholder Protection
Rights Agreement made as of February 25, 2003 (the
"Rights Agreement"), between Strategic Energy Fund
(the "Fund") by its manager, and Computershare Trust
Company of Canada (the "Rights Agent") and Strategic
Energy Management Corp., the terms of which are
incorporated herein by this reference and a copy of
which is on file at the principal office of
Strategic Energy Management Corp. Under certain
circumstances, as set forth in the Rights Agreement,
such Rights may be amended or redeemed, may expire,
may become void (if, in certain cases, they are
"Beneficially Owned" by an "Acquiring Person", as
such terms are defined in the Rights Agreement, or a
transferee thereof), or may be evidenced by separate
certificates and may no longer be evidenced by this
certificate. Strategic Energy Management Corp. will
mail, or arrange for the mailing of, a copy of the
Rights Agreement to the holder of this certificate
without charge promptly after the receipt of a
written request therefor."
Certificates representing Units issued and outstanding at the
Record Time shall also evidence one Right for each Unit
evidenced 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 will
entitle the holder thereof, after the Separation Time and
prior to the Expiration Time, to purchase one Unit for the
Exercise Price (which Exercise Price and number of Units are
subject to adjustment as set forth below). Notwithstanding
any other provision of this Agreement, any Rights held by the
Fund or Strategic Management or any Subsidiary thereof or any
successor thereto shall be void.
(b) Until the Separation Time, (i) the Rights shall not be
exercisable and no Right may be exercised and (ii) for
administrative purposes, each Right will be evidenced by the
certificate for the associated Unit registered in the name of
the holder thereof (which certificate shall be deemed to
represent a Rights Certificate) and will be transferable only
together with, and will be transferred by a transfer of, such
associated Unit.
(c) After the Separation Time and prior to the Expiration Time,
the Rights may be exercised and the registration and transfer
of the Rights shall be separate from and independent of
Units. Promptly following the Separation Time, the Rights
Agent will mail to each holder of record of Units 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), at such holder's
address as shown on the records of the Fund:
(i) 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 Strategic
Management may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or
as may be required to comply with any law or with any
rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange or quotation
system on which the Rights may from time to time be
listed or traded, or to conform to usage; and
(ii) a disclosure statement prepared by Strategic Management
describing the Rights.
(d) Rights may be exercised in whole or in part on any Business
Day after the Separation Time and prior to the Expiration
Time by submitting to the Rights Agent at its principal
office in the City of Toronto or any other office of the
Rights Agent designated for that purpose from time to time by
Strategic Management:
(i) the Rights Certificate evidencing such Rights, with an
Election to Exercise (an "ELECTION TO EXERCISE")
substantially in the form attached to the Rights
Certificate appropriately completed and duly executed
by the holder or his or her executors or administrators
or other legal personal representatives or his or her
or their attorney duly appointed by an instrument in
writing in form and executed in a manner satisfactory
to the Rights Agent; and
(ii) payment by certified cheque, bank draft or money order
payable to the order of Computershare Trust Company of
Canada, 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 Units in a
name other than that of the holder of the Rights being
exercised.
(e) Upon receipt of a Rights Certificate, with an Election to
Exercise appropriately completed and duly executed, which
does not indicate that such Right is void (or which is not
otherwise void) as provided by Subsection 3.1(b), accompanied
by payment as set forth in Clause 2.2(d)(ii), the Rights
Agent (unless otherwise instructed by Strategic Management)
will thereupon promptly:
(i) requisition from the transfer agent of the Units
certificates for the number of Units to be purchased
(the Fund hereby irrevocably agreeing to authorize such
transfer agent to comply with all such requisitions);
(ii) after receipt of such Unit certificates, deliver such
certificates to, or to the order of, the registered
holder of such Rights Certificate, registered in such
name or names as may be designated by such holder;
(iii) when appropriate, requisition from the Fund the amount
of cash, if any, to be paid in lieu of issuing
fractional Units;
(iv) after receipt of such cash, deliver such cash to, or to
the order of, the registered holder of the Rights
Certificate; and
(v) tender to the Fund all payments received on exercise of
the Rights.
(f) If the holder of any Rights exercises less than all the
Rights evidenced by such holder's Rights Certificate, a new
Rights Certificate evidencing the Rights remaining
unexercised will be issued by the Rights Agent to such holder
or to such holder's duly authorized assigns.
(g) The Fund covenants and agrees that it will:
(i) take all such action as may be necessary and within its
power to ensure that all Units delivered upon exercise
of Rights shall, at the time of delivery of the
certificates for such Units (subject to payment of the
Exercise Price and subject further to the provisions of
Subsection 3.1(b)), be duly and validly authorized,
executed, issued and delivered as fully paid and
non-assessable;
(ii) take all such action as may reasonably be considered to
be necessary and within its power to comply with any
applicable requirements of the Securities Act and the
securities legislation of each of the other provinces
and territories of Canada in connection with the
issuance and delivery of the Rights Certificates and
the issuance of any Units upon exercise of Rights;
(iii) use reasonable efforts to cause all Units issued upon
exercise of Rights to be listed upon issuance on the
stock exchange(s) where the Units may be listed at that
time;
(iv) pay when due and payable, any and all Canadian federal
and provincial taxes (not in the nature of income or
withholding taxes) and charges which may be payable in
respect of the original issuance or delivery of the
Rights Certificates or certificates for Units issued
upon exercise of Rights, provided that the Fund shall
not be required to pay any transfer tax or charge which
may be payable in respect of any transfer of Rights or
the issuance or delivery of certificates for Units
issued upon exercise of Rights in a name other than
that of the holder of the Rights being exercised; and
(v) cause to be reserved and kept available out of its
authorized and unissued Units the number of Units that,
as provided in this Agreement, will from time to time
be sufficient to permit the exercise in full of all
outstanding Rights.
2.3 ADJUSTMENTS TO EXERCISE PRICE; NUMBER OF RIGHTS
(a) 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.
(b) In the event that the Fund at any time after the Record Time
and prior to the Expiration Time:
(i) declares or pays a distribution on the Units payable in
Units (or other securities exchangeable for or
convertible into or giving a right to acquire Units)
other than pursuant to any distribution reinvestment
plan;
(ii) subdivides or changes the then outstanding Units into a
greater number of Units;
(iii) consolidates or changes the then outstanding Units into
a smaller number of Units; or
(iv) issues any Units (or other securities exchangeable for
or convertible into or giving a right to acquire Units)
in respect of, in lieu of, or in exchange for existing
Units, except as otherwise provided in this Section
2.3,
then
(A) the Exercise Price shall be adjusted so that the
Exercise Price in effect after such adjustment will
be equal to the Exercise Price in effect
immediately prior to such adjustment divided by the
number of Units (the "ADJUSTMENT FACTOR") that a
holder of one Unit immediately prior to such
distribution, subdivision, change, consolidation or
issuance would hold thereafter as a result thereof
(assuming the exercise of all such exchange or
conversion rights, if any); and
(B) in a case to which clause (ii) or (iii) applies or
if clause (i) or (iv) applies to an issue of
securities made after the Separation Time, the
number of Rights outstanding shall be adjusted so
that each Right held prior to such adjustment will
become that number of Rights equal to the
Adjustment Factor, and the adjusted number of
Rights will be deemed to be distributed among the
Units with respect to which the original Rights
were associated (if they remain outstanding) and
the units issued in respect of such distribution,
subdivision, change, consolidation or issuance, so
that each such Unit will have exactly one Right
associated with it.
In the event the Fund shall at any time after the Record Time
and prior to the Separation Time issue any Units otherwise
than in a transaction referred to in the preceding paragraph,
each such Unit so issued shall automatically have one new
Right associated with it, which Right shall be evidenced by
the certificate representing such Unit.
(c) In the event that the Fund at any time after the Record Time
and prior to the Expiration Time fixes a record date for the
making of a distribution to substantially all holders of
Units of rights or warrants entitling them (for a period
expiring within 45 calendar days after such record date) to
subscribe for or purchase Units (or securities convertible
into or exchangeable for or carrying a right to purchase or
subscribe for Units) at a price per Unit (or, in the case of
a security convertible into or exchangeable for or carrying a
right to purchase or subscribe for Units, having a
conversion, exchange or exercise price per unit (including
the price required to be paid to purchase such convertible or
exchangeable security or right)) less than 90 percent of the
Market Price per Unit on such record date, the Exercise Price
shall be adjusted. The Exercise Price in effect after such
record date will equal the Exercise Price in effect
immediately prior to such record date multiplied by a
fraction, of which the numerator shall be the number of Units
outstanding on such record date plus the number of Units
which the aggregate offering price of the total number of
Units 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 Unit and of which the denominator shall be
the number of Units outstanding on such record date plus the
number of additional Units to be offered for subscription or
purchase (or into which the convertible or exchangeable
securities or rights to be so offered are initially
convertible, exchangeable or exercisable). In case such
subscription price may be paid in a consideration part or all
of which will be in a form other than cash, the value of such
consideration shall be as determined by the Board of
Directors. To the extent that such rights or warrants are not
exercised prior to the expiration thereof, the Exercise Price
shall be readjusted on the expiration thereof to the Exercise
Price which would then be in effect based on the number of
Units (or securities convertible into or exchangeable for
Units) actually issued upon the exercise of such rights. For
purposes of this Agreement, the granting of the right to
purchase Units (whether from treasury units or otherwise)
pursuant to any distribution reinvestment plan and/or any
unit purchase plan providing for the reinvestment of
distributions or interest payable on securities of the Fund
and/or the investment of periodic optional payments and/or
employee benefit, stock option or similar plans (so long as
such right to purchase is in no case evidenced by the
delivery of rights or warrants by the Fund) shall not be
deemed to constitute an issue of rights or warrants by the
Fund; provided, however, that, in the case of any
distribution reinvestment plan or unit purchase plan, the
right to purchase Units is at a price per unit of not less
than 90 percent of the current market price per unit
(determined in accordance with such plans) of the Units.
(d) In the event that the Fund at any time after the Record Time
and prior to the Expiration Time fixes a record date for the
making of a distribution to substantially all holders of
Units of evidences of indebtedness or assets (other than a
Regular Periodic Cash Distribution or a distribution paid in
Units but including any distribution payable in securities
other than a distribution referred to in Subsection 2.3(b)(i)
or 2.3(b)(iv)) or rights or warrants entitling them to
subscribe for or purchase Units (or securities convertible
into or exchangeable for or carrying a right to purchase or
subscribe for Units) at a price per Unit (or, in the case of
a security convertible into or exchangeable for or carrying a
right to purchase or subscribe for Units, having a
conversion, exchange or exercise price per unit (including
the price required to be paid to purchase such convertible or
exchangeable security or right)) less than 90 percent of the
Market Price per Unit on such record date (excluding rights
or warrants referred to in Subsection 2.3(c)), the Exercise
Price in effect after such record date shall be equal to the
Exercise Price in effect immediately prior to such record
date less the fair market value (as determined by the Board
of Directors) of the portion of the assets, evidences of
indebtedness, rights or warrants so to be distributed
applicable to a Unit.
(e) Each adjustment made pursuant to this Section 2.3 shall be
made as of:
(i) the record or effective date for the applicable
distribution, subdivision, change, consolidation or
issuance, in the case of an adjustment made pursuant to
Subsection 2.3(b); and
(ii) the record date for the applicable distribution or
distribution, in the case of an adjustment made
pursuant to Subsection 2.3(c) or (d).
(f) In the event that the Fund shall at any time after the Record
Time and prior to the Separation Time issue any units of
capital (other than Units), or rights or warrants to
subscribe for or purchase any such units of capital, or
securities convertible into or exchangeable for any such
units of capital, in a transaction referred to in Clauses
2.3(b)(i) or (iv), if the Board of Directors determines that
the adjustments contemplated by Subsections 2.3(b), (c) and
(d) 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(b), (c) and (d), such
adjustments, rather than the adjustments contemplated by
Subsections 2.3(b), (c) and (d), shall be made. The Fund and
the Rights Agent and Strategic Management shall amend this
Agreement as appropriate to provide for such adjustments.
(g) Notwithstanding anything herein to the contrary, no
adjustment of the Exercise Price shall be required unless
such adjustment would require an increase or decrease of at
least one per cent in such Exercise Price; provided, however,
that any adjustments which by reason of this Subsection
2.3(g) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment. All
adjustments made pursuant to this Section 2.3 shall be made
to the nearest cent or to the nearest one ten-thousandth of a
Unit or a Right, as the case may be.
(h) All Rights originally issued by the Fund subsequent to any
adjustment made to an Exercise Price hereunder shall evidence
the right to purchase, at the adjusted Exercise Price, the
number of Units purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as
provided herein.
(i) Unless the Fund shall have exercised its election, as
provided in Subsection 2.3(j), upon each adjustment of an
Exercise Price as a result of the calculations made in
Subsections 2.3(c) and (d), each Right outstanding
immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted
Exercise Price, that number of Units obtained by:
(i) multiplying (A) the number of Units covered by a Right
immediately prior to this adjustment, by (B) the
relevant Exercise Price in effect immediately prior to
such adjustment of the relevant Exercise Price; and
(ii) dividing the product so obtained by the relevant
Exercise Price in effect immediately after such
adjustment of the relevant Exercise Price.
(j) Strategic Management on behalf of the Fund may elect prior to
or after the date of any adjustment of an Exercise Price to
adjust the number of Rights, in lieu of any adjustment in the
number of Units purchasable upon the exercise of a Right.
Each of the Rights outstanding after the adjustment in the
number of Rights shall be exercisable for the number of Units
for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become the number of
Rights obtained by dividing the relevant Exercise Price in
effect immediately prior to adjustment of the relevant
Exercise Price by the relevant Exercise Price in effect
immediately after adjustment of the relevant Exercise Price.
Strategic Management shall make a public announcement of its
election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time,
the amount of the adjustment to be made. This record date may
be the date on which the relevant Exercise Price is adjusted
or any day thereafter, but, if the Rights Certificates have
been issued, shall be at least 10 calendar days later than
the date of the public announcement. If Rights Certificates
have been issued, upon each adjustment of the number of
Rights pursuant to this Subsection 2.3(j), the Fund shall, as
promptly as practicable, cause to be distributed to holders
of record of Rights on such record date, Rights Certificates
evidencing, subject to Section 5.5, the additional Rights to
which such holders shall be entitled as a result of such
adjustment, or, at the option of Strategic Management, shall
cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held
by such holders prior to the date of adjustment, and upon
surrender thereof, if required by Strategic Management , new
Rights Certificates evidencing all the Rights to which such
holders shall be entitled after such adjustment. Rights
Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein and may
bear, at the option of the Fund, the relevant adjusted
Exercise Price and shall be registered in the names of
holders of record of Rights Certificates on the record date
specified in the public announcement.
(k) Irrespective of any adjustment or change in the Exercise
Price or the number of securities issuable upon exercise of
the Rights, the Rights Certificates theretofore and
thereafter issued may continue to express the Exercise Price
per Unit and the number of Units so issuable which were
expressed in the initial Rights Certificates issued
hereunder.
(l) In any case in which this Section 2.3 shall require that an
adjustment in an Exercise Price be made effective as of a
record date for a specified event, Strategic Management may
elect to defer until the occurrence of such event the
issuance to the holder of any Right exercised after such
record date of the number of Units and other securities of
the Fund, if any, issuable upon such exercise over and above
the number of Units and other securities of the Fund, if any,
issuable upon such exercise on the basis of the relevant
Exercise Price in effect prior to such adjustment; provided,
however, that Strategic Management shall deliver or cause to
be delivered to such holder a due ▇▇▇▇ or other appropriate
instrument evidencing such holder's right to receive such
additional Units (fractional or otherwise) or other
securities upon the occurrence of the event requiring such
adjustment.
(m) Notwithstanding anything in this Section 2.3 to the contrary,
Strategic Management 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 its good faith judgment the Board of
Directors shall determine to be advisable in order that any
(i) subdivision or consolidation of the Units, (ii) issuance
wholly for cash of any Units at less than the applicable
Market Price, (iii) issuance wholly for cash of any Units or
securities that by their terms are exchangeable for or
convertible into or give a right to acquire Units, (iv) stock
distributions or (v) issuance of rights, options or warrants
referred to in this Section 2.3, hereafter made by the Fund
to holders of its Units, subject to applicable taxation laws,
shall not be taxable to such unitholders.
(n) The Fund covenants and agrees that, after the Separation
Time, it will not, except as permitted by Section 5.1 or 5.4,
take (or permit any Subsidiary or successor entity of
Strategic Management 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.
(o) If an event occurs which would require an adjustment under
both this Section 2.3 and Section 3.1, the adjustment
provided for in this Section 2.3 shall be in addition to and
shall be made prior to, any adjustment required pursuant to
Section 3.1.
(p) Whenever an adjustment to the Exercise Price or a change in
the securities purchasable upon exercise of the Rights is
made pursuant to this Section 2.3, Strategic Management shall
promptly:
(i) file with the Rights Agent and with the transfer agent
for the Units a certificate specifying the particulars
of such adjustment or change; and
(ii) cause notice of the particulars of such adjustment or
change to be given to the holders of the Rights.
Failure to file such certificate or to cause such notice to
be given as aforesaid, or any defect therein, shall not
affect the validity of any such adjustment or change.
2.4 DATE ON WHICH EXERCISE IS EFFECTIVE
Each Person in whose name any certificate for Units is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder
of record of the Units represented thereby on, and such certificate shall be
dated, the date upon which the Rights Certificate evidencing such Rights was
duly surrendered (together with an appropriately completed and duly executed
Election to Exercise) and payment of the Exercise Price for such Rights (and
any applicable transfer taxes or charges payable by such Person hereunder) was
made in accordance with Subsection 2.2(d); provided, however, that if the date
of such surrender and payment is a date upon which the Unit transfer books of
the Fund are closed, such Person shall be deemed to have become the holder of
record of such units on, and such certificate shall be dated, the next
succeeding Business Day on which the Unit transfer books of the Fund are open.
2.5 EXECUTION, AUTHENTICATION, DELIVERY AND DATING OF RIGHTS CERTIFICATES
(a) The Rights Certificates shall be executed on behalf of Fund
by any two proper officers of Strategic Management. The
signature of any such two proper officers of Strategic
Management 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 Strategic Management shall bind the Fund,
notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the countersignature and
delivery of such Rights Certificates.
(b) Promptly following the Separation Time, Strategic Management
will notify the Rights Agent of such Separation Time and will
deliver Rights Certificates executed by Strategic Management
to the Rights Agent for countersignature and a disclosure
statement, and the Rights Agent will manually countersign
such Rights Certificates and mail such Rights Certificates to
the holders of the Rights pursuant to Subsection 2.2(c). No
Rights Certificate and statement shall be valid for any
purpose until countersigned by the Rights Agent as aforesaid.
(c) Each Rights Certificate shall be dated the date of
countersignature thereof.
2.6 REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE
(a) After the Separation Time, the Fund will cause to be kept a
register (the "RIGHTS REGISTER") in which, subject to such
reasonable regulations as it may prescribe, the Fund will
provide for the registration and transfer of Rights. The
Rights Agent is hereby appointed "Rights Registrar" for the
purpose of maintaining the Rights Register for the Fund and
registering Rights and transfers and exchanges of Rights as
herein provided. In the event that the Rights Agent shall
cease to be the Rights Registrar, the Rights Agent will have
the right to examine the Rights Register at all reasonable
times.
(b) After the Separation Time and prior to the Expiration Time,
upon surrender for registration of transfer or exchange of
any Rights Certificate, and subject to the provisions of
Subsection 2.6(d) and 3.1(b), Strategic Management will
execute, and the Rights Agent will countersign, deliver and
register, 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.
(c) All Rights issued upon any registration of transfer or
exchange of Rights Certificates shall be the valid
obligations of the Fund, and such Rights shall be entitled to
the same benefits under this Agreement as the Rights
surrendered upon such registration of transfer or exchange.
(d) Every Rights Certificate surrendered for registration of
transfer or exchange shall be duly endorsed, or be
accompanied by a written instrument of transfer in form
satisfactory to Strategic Management or the Rights Agent, as
the case may be, duly executed by the holder thereof or such
holder's attorney duly authorized in writing. As a condition
to the issuance of any new Rights Certificate under this
Section 2.6, the Fund may require the payment of a sum
sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Rights Agent)
connected therewith.
2.7 MUTILATED, DESTROYED, LOST AND STOLEN RIGHTS CERTIFICATES
(a) If any mutilated Rights Certificate is surrendered to the
Rights Agent prior to the Expiration Time, Strategic
Management 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 Fund and the Rights Agent
prior to the Expiration Time (i) evidence to their
satisfaction of the destruction, loss or theft of any Rights
Certificate and (ii) such security or indemnity as may be
required by them to save each of them and any of their agents
harmless, then, in the absence of notice to the Fund or the
Rights Agent that such Rights Certificate has been acquired
by a bona fide purchaser, Strategic Management shall execute
and upon the request of the Fund the Rights Agent shall
countersign and deliver, in lieu of any such destroyed, lost
or stolen Rights Certificate, a new Rights Certificate
evidencing the same number of Rights as did the Rights
Certificate so destroyed, lost or stolen.
(c) As a condition to the issuance of any new Rights Certificate
under this Section 2.7, the Fund may require the payment of a
sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Rights
Agent) connected therewith.
(d) Every new Rights Certificate issued pursuant to this Section
2.7 in lieu of any destroyed, lost or stolen Rights
Certificate shall evidence a contractual obligation of the
Fund, whether or not the destroyed, lost or stolen Rights
Certificate shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Agreement
equally and proportionately with any and all other Rights
duly issued hereunder.
2.8 PERSONS DEEMED OWNERS
Prior to due presentment of a Rights Certificate (or, prior to the
Separation Time, the associated Unit certificate) for registration of transfer,
the Fund and any agent of the Fund or, if so authorized by the Fund, the Rights
Agent may deem and treat the person in whose name such Rights Certificate (or,
prior to the Separation Time, such Unit 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 Rights means the registered holder of such Rights (or,
prior to the Separation Time, the associated Units).
2.9 DELIVERY AND CANCELLATION OF CERTIFICATES
All Rights Certificates surrendered upon exercise or for redemption,
or for 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 Fund may at any time
deliver to the Rights Agent for cancellation any Rights Certificates previously
countersigned and delivered hereunder which the Fund may have acquired in any
manner whatsoever, and all Rights Certificates so delivered shall be promptly
cancelled by the Rights Agent. No Rights Certificate shall be countersigned in
lieu of or in exchange for any Rights Certificates cancelled as provided in
this Section 2.9, except as expressly permitted by this Agreement. The Rights
Agent shall destroy all cancelled Rights Certificates and deliver a certificate
of destruction to the Fund.
2.10 AGREEMENT OF RIGHTS HOLDERS
Every holder of Rights, by accepting such Rights, consents and agrees
with the Fund and the Rights Agent and with every other holder of Rights that:
(a) such holder shall 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) prior to the Separation Time, each Right will be transferable
only together with, and will be transferred by a transfer of,
the associated Unit;
(c) after the Separation Time, the Rights will be transferable
only on the Rights Register as provided herein;
(d) prior to due presentment of a Rights Certificate (or, prior
to the Separation Time, the associated Unit certificate) for
registration of transfer, the Fund and any agent of the Fund
or, if so authorized by the Fund, the Rights Agent may deem
and treat the person in whose name the Rights Certificate
(or, prior to the Separation Time, the associated Unit
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 Unit certificate made by anyone other than
the Fund or the Rights Agent) for all purposes whatsoever,
and none of the Fund, Strategic Management and the Rights
Agent shall be affected by any notice to the contrary;
(e) such holder is not entitled to receive any fractional Rights
or fractional Units upon the exercise of Rights;
(f) without the approval of any holder of Rights and upon the
sole authority of the Board of Directors, this Agreement may
be supplemented or amended from time to time as provided
herein; and
(g) notwithstanding anything in this Agreement to the contrary,
the Rights Agent shall not have any liability to any holder
of a Right or any other Person as a result of its inability
to perform any of its obligations under this Agreement by
reason of any preliminary or permanent injunction or other
order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by a
governmental authority, prohibiting or otherwise restraining
performance of such obligations.
ARTICLE 3
ADJUSTMENTS TO THE RIGHTS
3.1 FLIP-IN EVENT
(a) Subject to Section 3.1(b) and Subsections 5.1(d) and 5.1(e),
and except as provided below, if prior to the Expiration Time
a Flip-In Event shall occur, each Right shall constitute,
effective at the Close of Business on the 10th day after the
Stock Acquisition Date, the right to purchase from the Fund,
upon exercise thereof in accordance with the terms hereof,
that number of Units 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
date of consummation or occurrence, or event, an event of a
type analogous to any of the events described in Section 2.3
shall have occurred with respect to such Units).
(b) Notwithstanding anything to the contrary in this Agreement,
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) (A) an Acquiring Person;
(B) any Affiliate or Associate of an Acquiring Person;
(C) any Person acting jointly or in concert with an
Acquiring Person or any of its Affiliates;
(D) any other Person whose securities are deemed to be
Beneficially Owned by an Acquiring Person
(each such Person being herein referred to as the
"INELIGIBLE UNITHOLDER"); or
(ii) a transferee, direct or indirect, of an Ineligible
Unitholder who becomes a transferee in a transfer,
whether or not for consideration, that the Board of
Directors has determined is part of a plan, arrangement
or scheme of an Ineligible Unitholder that has the
purpose or effect of avoiding Clause 3.1(b)(i),
shall become null and void without any further action, and
any holder of such Rights (including a transferee of, or
other successor to, such Rights, whether directly or
indirectly) shall thereafter have no right to exercise such
Rights under any provision of this Agreement and shall not
have thereafter any right whatsoever with respect to such
Rights, whether under any provision of this Agreement or
otherwise. The holder of any Rights represented by a Rights
Certificate which is submitted to the Rights Agent upon
exercise or for registration of transfer or exchange which
does not contain the necessary certifications set forth in
the Rights Certificate establishing that such Rights are not
void under this Subsection 3.1(b), shall be deemed to be an
Acquiring Person or other Ineligible Unitholder for the
purposes of this Subsection 3.1(b) and such Rights shall
become null and void.
(c) Any Rights Certificates that represent Rights Beneficially
Owned by a Person described in either Clause (i) or (ii) of
Subsection 3.1(b) 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 or other Ineligible Unitholder (as such terms
are defined in the Rights Agreement), including a
Person, or an Affiliate or Associate of a Person,
who was acting jointly or in concert with any of
them or any other Person whose securities are deemed
to be Beneficially Owned by such Acquiring Person.
This Rights Certificate and the Rights represented
hereby shall become void in the circumstances
specified in Subsection 3.1(b) of the Rights
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 Fund in
writing of if a holder fails to certify upon transfer or
exchange in the space provided on the Rights Certificate that
such holder is not a Person described in such legend.
(d) From and after the Separation Time, the Fund 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
Securities Act and any other applicable laws in respect of
the issue of Units upon the exercise of Rights in accordance
with this Agreement.
3.2 EXCHANGE OPTION
(a) In the event that the Board of Directors determines
that conditions exist which would eliminate or
otherwise materially diminish in any respect the
benefits intended to be afforded to the holders of
Rights pursuant to this Agreement, the Board of
Directors may, at its option and without seeking the
approval of the holders of Units or Rights, at any
time after a Flip-in Event has occurred, authorize
the Fund to issue or deliver in respect of each
Right which is not void pursuant to Subsection
3.1(b), either:
(i) in return for the Exercise Price and the Right, cash,
debt or equity securities or other assets (or a
combination thereof) having a cash value equal to twice
the Exercise Price; or
(ii) in return for the Right and without further charge,
subject to any amounts that may be required to be paid
under applicable law, cash, debt or equity securities
or other assets (or a combination thereof) having a
cash value equal to the Exercise Price,
in full and final settlement of all rights attaching to the
Rights, where in either case the value of such debt or equity
securities or other assets shall be determined by the Board
of Directors who may rely upon the advice of a nationally
recognized investment dealer or investment banker selected by
the Board of Directors. To the extent that the Board of
Directors determines that some action need be taken pursuant
to this Section 3.2, the Board of Directors may suspend the
exercisability of the Rights for a period of up to 90 days
following the date of the occurrence of the relevant Flip-in
Event in order to decide the appropriate form of distribution
to be made and to determine the value thereof. In the event
of any such suspension, Strategic Management shall notify the
Rights Agent and issue as promptly as practicable a public
announcement stating that the exercisability of the Rights
has been temporarily suspended.
(b) If the Board of Directors authorizes the exchange of debt or
equity securities or other assets (or a combination thereof)
for Rights pursuant to Subsection 3.2(a), 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
Subsection 3.2(a), Strategic Management 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 effected.
(c) The Fund 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
For clarification it is understood that nothing contained in this
Article 3 shall be considered to affect any obligations of the members 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 Units of Fund reject or accept any Take-over Bid or take
any other action (including, without limitation, the commencement, prosecution,
defence or settlement of any litigation and the submission of additional or
alternative Take-over Bids or other proposals to the Special Meeting) 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 Fund hereby appoints the Rights Agent to act as agent for
the Fund and the holders of Rights in accordance with the
terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Fund may from time to time
appoint such co-rights agents ("Co-Rights Agents") as it may
deem necessary or desirable subject to the prior approval of
the Rights Agent, not to be unreasonably withheld. In the
event the Fund appoints one or more Co-Rights Agents, the
respective duties of the Rights Agents and Co-Rights Agents
shall be as the Fund may determine with the approval of the
Rights Agent. The Fund agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it
hereunder (including the reasonable fees and disbursements of
any expert retained by the Rights Agent as provided in
Subsection 4.3(a)) and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance
of its duties hereunder. The Fund also agrees to indemnify
the Rights Agent, its officers, directors and employees for,
and to hold them harmless against, any loss, liability, cost,
claim, action, damage, suit 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 the costs and expenses of defending
against any claim of liability, which right to
indemnification will survive the termination of this
Agreement or the resignation or removal of the Rights Agent.
Strategic Management and/or the Fund 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. At any time, upon request, the Fund shall
provide to the Rights Agent an incumbency certificate with
respect to the then current directors of Strategic
Management.
(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 Units, Rights
Certificate, certificate for other securities of the Fund,
instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed
by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or
Persons.
(c) In the event of any disagreement arising regarding the terms
of this Agreement, the Rights Agent shall be entitled, at its
option, to refuse to comply with any and all demands
whatsoever until the dispute is settled either by written
agreement amongst the parties to this Agreement or by a court
of competent jurisdiction.
4.2 MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or amalgamated or with which it
may be consolidated, or any corporation resulting from any
merger, amalgamation or consolidation to which the Rights
Agent or any successor Rights Agent is a party, or any
corporation succeeding to the unitholder or stockholder
services business of the Rights Agent or any successor Rights
Agent, will be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto,
provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions
of Section 4.4 hereof. In case at the time such successor
Rights Agent succeeds to the agency created by this Agreement
any of the Rights Certificates have been countersigned but
not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver
such Rights Certificates so countersigned; and in case at
that time any of the Rights Certificates have not been
countersigned, any successor Rights Agent may countersign
such Rights Certificates either in the name of the
predecessor Rights Agent or in the name of the successor
Rights Agent; and in all such cases such Rights Certificates
will have the full force provided in the Rights Certificates
and in this Agreement.
(b) In case at any time the name of the Rights Agent is changed
and at such time any of the Rights Certificates shall have
been countersigned but not delivered, the Rights Agent may
adopt the countersignature under its prior name and deliver
Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights
Certificates either in its prior name or in its changed name;
and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this
Agreement.
4.3 DUTIES OF RIGHTS AGENT
The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the Fund 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 Fund), and the opinion of
such counsel will be full and complete authorization and
protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such
opinion; the Rights Agent may also with the approval of
Strategic Management (which approval shall not be
unreasonably withheld), consult with such other experts as
the Rights Agent shall consider necessary or appropriate to
properly carry out the duties and obligations imposed under
this Agreement and the Rights Agent shall be entitled to rely
in good faith on the advice of any such expert;
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent deems it necessary or desirable
that any fact or matter be proved or established by the Fund
prior to taking or suffering any action hereunder, such fact
or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by a person
believed by the Rights Agent to be a senior officer of
Strategic Management and delivered to the Rights Agent; and
such certificate will be full authorization to the Rights
Agent for any action taken or suffered in good faith by it
under the provisions of this Agreement in reliance upon such
certificate;
(c) The Rights Agent will be liable hereunder only for its own
negligence, bad faith or wilful misconduct;
(d) The Rights Agent will not be liable for or by reason of any
of the statements of fact or recitals contained in this
Agreement or in the certificates for Units or the Rights
Certificates (except its countersignature thereof) or be
required to verify the same, but all such statements and
recitals are and will be deemed to have been made by the Fund
only;
(e) The Rights Agent will not be under any responsibility in
respect of the validity of this Agreement or the execution
and delivery hereof (except the due authorization, execution
and delivery hereof by the Rights Agent) or in respect of the
validity or execution of any Unit certificate or Rights
Certificate (except its countersignature thereof); nor will
it be responsible for any breach by the Fund of any covenant
or condition contained in this Agreement or in any Rights
Certificate; nor will it be responsible for any change in the
exercisability of the Rights (including the Rights becoming
void pursuant to Subsection 3.1(b)) or any adjustment
required under the provisions of Section 2.3 or responsible
for the manner, method or amount of any such adjustment or
the ascertaining of the existence of facts that would require
any such adjustment (except with respect to the exercise of
Rights after receipt of the certificate contemplated by
Subsection 2.3(p) hereof describing any such adjustment); nor
will it by any act hereunder be deemed to make any
representation or warranty as to the authorization of any
Units to be issued pursuant to this Agreement or any Rights
or as to whether any Units will, when issued, be duly and
validly authorized, executed, issued and delivered and fully
paid and non-assessable;
(f) Each of the Fund and Strategic Management agrees that it will
perform, execute, acknowledge and deliver or cause to be
performed, executed, acknowledged and delivered all such
further and other acts, instruments, notices 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 with respect to the performance of its duties
hereunder from any Person designated in writing by Strategic
Management or the Fund, as applicable, and to apply to such
persons 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 person;
(h) The Rights Agent and any unitholder or stockholder, director,
officer or employee of the Rights Agent may buy, sell or deal
in Units, Rights or other securities of the Fund or become
pecuniarily interested in any transaction in which the Fund
may be interested, or contract with or lend money to the Fund
or otherwise act as fully and freely as though it were not
Rights Agent under this Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other capacity
for the Fund or for any other legal entity; and
(i) The Rights Agent may execute and exercise any of the rights
or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and
the Rights Agent will not be answerable or accountable for
any act, default, neglect or misconduct of any such attorneys
or agents or for any loss to the Fund resulting from any such
act, default, neglect or misconduct, provided reasonable care
was exercised in the selection and continued employment
thereof.
4.4 CHANGE OF RIGHTS AGENT
The Rights Agent may resign and be discharged from its duties under
this Agreement upon 30 days' notice (or such lesser notice as is acceptable to
the Fund) in writing mailed to the Fund and to the transfer agent of Units by
registered or certified mail, and to the holders of the Rights in accordance
with Section 5.8. Strategic Management may remove the Rights Agent upon 30 days
notice in writing, mailed to the Rights Agent and to the transfer agent of the
Units by registered or certified mail, and to the holders of the Rights in
accordance with Section 5.8. If the Rights Agent should resign or be removed or
otherwise become incapable of acting, Strategic Management will appoint a
successor to the Rights Agent. If Strategic Management fails to make such
appointment within a period of 30 days after such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of any Rights (which holder shall,
with such notice, submit such holder's Rights Certificate for inspection by
Strategic Management), then the resigning Rights Agent or the holder of any
Rights may apply to any court of competent jurisdiction for the appointment of
a new Rights Agent at the Fund's expense. Any successor Rights Agent, whether
appointed by Strategic Management or by such a court, shall be a corporation
incorporated under the laws of Canada or a province thereof. After appointment,
the successor Rights Agent will be vested with the same powers, rights, duties
and responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent upon receipt of all outstanding fees and
expenses owing any property at the time held by it hereunder, and execute and
deliver any further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such appointment, the Fund
will file notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Units, and mail a notice thereof in writing to the
holders of the Rights. Failure to give any notice provided for in this Section
4.4, however, or any defect therein, shall not affect the legality or validity
of the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
ARTICLE 5
MISCELLANEOUS
5.1 REDEMPTION AND WAIVER
(a) The Board of Directors may, at its option, at any time prior
to the occurrence of a Flip-in Event, elect that the Fund
redeem all but not less than all of the then outstanding
Rights at a redemption price of $0.00000001 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"). The redemption of the Rights by the Fund may be made
effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion
may establish.
(b) If an Offeror successfully completes a Permitted Bid or a
Competing Permitted Bid by having taken up and paid for not
less than 50 per cent of the Units held by Independent
Unitholders pursuant to Permitted Bid Acquisitions, the Board
of Directors shall, without further formality, be deemed to
have elected to redeem the Rights at the Redemption Price on
the Expiry Date of the Permitted Bid.
(c) If the Board of Directors elects or is deemed to have elected
that the Fund redeem the Rights, the right to exercise the
Rights will thereupon without further action and without
notice terminate and the only right thereafter of the holder
of a Right shall be to receive the Redemption Price. Within
10 days of the Board of Directors electing or being deemed to
have elected that the Fund redeem the Rights, Strategic
Management shall give notice of such redemption to the
holders of the then outstanding Rights. Each such notice of
redemption shall state the method by which the payment of the
Redemption Price shall be made.
(d) The Board of Directors may until the occurrence of a Flip-in
Event determine, upon prior written notice delivered to the
Rights Agent, to waive the application of Section 3.1 to any
particular Flip-in Event (which for greater certainty shall
not include the circumstances described in Subsection
5.1(e)); provided that if the Board of Directors waives the
application of Section 3.1 to a particular Flip-in Event
pursuant to this Subsection 5.1(d), subject to as provided
below the Board of Directors shall be deemed to have waived
the application of Section 3.1 to any other Flip-in Event
occurring by reason of any Take-over Bid which is made by
means of a take-over bid circular (i) prior to the granting
of such waiver, (ii) thereafter and prior to the expiry of
any Take-over Bid (as the same may be extended from time to
time) outstanding at the time of the granting of such waiver
or (iii) thereafter and prior to the expiry of any Take-over
Bid in respect of which a waiver is, or is deemed to have
been, granted under this Subsection 5.1(d); provided further
that if the first waiver pursuant to this Subsection 5.1(d)
is in respect of any bid which would have been a Permitted
Bid but for the absence of one or more of the elements of a
Permitted Bid set out in subclauses 1.1(w) (i), (ii), (iii)
or (iv) (the "WAIVED CONDITIONS"), any such second or further
waiver which is deemed to occur by reason of Subsection
5.1(d) shall only be deemed to occur if each such second or
further Take-over Bid would also be a Permitted Bid but for
the Waived Conditions.
(e) The Board of Directors may prior to the Close of Business on
the tenth 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
the Flip-in Event giving rise to the Stock Acquisition Date,
provided that the Acquiring Person has (i) reduced its
Beneficial Ownership of Units or (ii) has entered into a
contractual arrangement with the Fund, 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 events 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 that the Fund redeem all the outstanding Rights at the
Redemption Price. Without restricting the rights of the Board
of Directors to elect that the Fund redeem the Rights
pursuant to section 5.1(a) rather than pursuant to section
5.1(f), upon the Rights being redeemed pursuant to this
section 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 Units 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 EXPIRATION
No Person shall have any rights 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.
5.3 ISSUANCE OF NEW RIGHTS CERTIFICATES
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Fund may, at the option of Strategic Management,
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 units purchasable upon exercise of Rights made in accordance
with the provisions of this Agreement.
5.4 SHAREHOLDER APPROVAL; SUPPLEMENTS AND AMENDMENTS
(a) The Board of Directors may supplement, amend, vary, delete or
change this Agreement and/or the Rights without the approval
of any holders of Units or Rights (whether or not such action
would materially adversely affect the interests of the
holders of Rights generally) for any reason whatsoever,
including, without limitation, to correct or rectify any
ambiguities, defective or inconsistent provisions, errors,
mistakes or omissions or which may be required or advisable
to ensure the continuing compliance of this Agreement and/or
the Rights with any applicable legislation, policies, rules,
decisions, rulings, orders, national instruments or other
legal or regulatory requirements, where the Board of
Directors deems such action necessary or desirable.
Notwithstanding anything in this Section 5.4 to the contrary,
no such supplement, amendment, variation, deletion or change
shall be made to the provisions of Article 4 except with the
written concurrence of the Rights Agent to such supplement,
amendment, variation, deletion or change.
(b) Any such supplement, amendment, variation, deletion or change
shall be effective from the date of the resolution of the
Board of Directors adopting the same.
(c) The Board of Directors shall call and hold a Special Meeting
of holders of Units to consider and, if thought appropriate,
ratify the distribution and the continued existence of the
Rights and ratify this Agreement. The Special Meeting shall
be held on a date fixed by the Board of Directors, which date
shall be within six months of the date of this Agreement. The
Board of Directors shall fix a record date for determining
the holders of Units entitled to receive notice of the
Special Meeting in accordance with all applicable laws and
the Fund Indenture. Unless a majority of the votes cast by
the Independent Unitholders on such resolution are voted in
favour of the continued existence of the Rights and the
ratification of this Agreement, then immediately upon the
confirmation by the Chairman of such unitholders' meeting of
the result of the vote on such resolution (the "NEGATIVE VOTE
TIME"), without further formality, this Agreement and the
Rights shall terminate. For greater certainty, in the event
the Board of Directors fails to call and hold a Special
Meeting for the purposes, among others, specified in this
Subsection 5.4(c), this Agreement and the Rights shall
terminate at the Close of Business on that date which is six
months from the date of this Agreement (the "APPROVAL EXPIRY
TIME").
(d) Strategic Management shall notify the Rights Agent and the
holders of Rights of any supplement, amendment, variation,
deletion or change to this Agreement and/or the Rights made
by the Board of Directors pursuant to subsection 5.4(a) if
such supplement, amendment, variation, deletion or change
materially adversely affects the interests of the holders of
Rights generally, which notice shall be given as soon as
reasonably practicable following the date of the resolution
of the Board of Directors adopting the supplement, amendment,
variation, deletion or change.
5.5 FRACTIONAL RIGHTS AND FRACTIONAL UNITS
(a) The Fund shall not be required to issue fractions of Rights
or to distribute Rights Certificates which evidence
fractional Rights. After the Separation Time, there shall be
paid to the registered holders of the Rights Certificates
with regard to which fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the
Market Price of a whole Right in lieu of such fractional
Rights.
(b) The Fund shall not be required to issue fractional Units upon
exercise of the Rights or to distribute certificates which
evidence fractional Units. In lieu of issuing fractional
Units, the Fund shall pay to the registered holder of Rights
Certificates at the time such Rights are exercised as herein
provided, an amount in cash equal to the same fraction of the
Market Price of one Unit. The Rights Agent shall have no
obligation to make any payments in lieu of fractional Rights
unless the Fund shall have provided the Rights Agent with the
necessary funds to pay in full all amounts payable in
accordance with Section 2.2(e).
5.6 RIGHTS OF ACTION
Subject to the terms of this Agreement, 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; and any holder of any
Rights, without the consent of the Rights Agent or of the holder of any other
Rights may, on such holder's own behalf and for such holder's own benefit and
the benefit of other holders of Rights, enforce, and may institute and maintain
any suit, action or proceeding against the Fund to enforce, or otherwise act in
respect of, such holder's right to exercise such holder's Rights to which such
Person is entitled, in the manner provided in such holders Rights Certificate
and in this Agreement. Without limiting the foregoing or any remedies available
to the holders of Rights, it is specifically acknowledged that the holders of
Rights would not have an adequate remedy at law for any breach of this
Agreement and will be entitled to specific performance of the obligations
under, and injunctive relief against actual or threatened violations of, the
obligations of any Person subject to this Agreement.
5.7 HOLDER OF RIGHTS DEEMED NOT A UNITHOLDER
No holder, as such, of any Rights shall be entitled to vote, receive
distributions or be deemed for any purpose the holder of Units or any other
securities which may at any time be issuable on the exercise of such Rights,
nor shall anything contained herein or in any Rights Certificate be construed
to confer upon the holder of any Rights as such, any of the rights of a
unitholder of the Fund or any right to vote for the election of directors or
upon any matter submitted to unitholders at any meeting thereof, or to give or
withhold consent to any action, or to receive notice of meetings or other
actions affecting unitholders, or to receive distributions or subscription
rights or otherwise.
5.8 NOTICES
Notices or demands authorized or required by this Agreement to be
given or made by the Rights Agent, or by Strategic Management or by the holder
of any Rights to or on the Fund shall be sufficiently given or made if
delivered or sent by registered or certified mail, postage prepaid, or by
facsimile transmission addressed (until another address is filed in writing
with the Rights Agent and Strategic Management) as follows:
STRATEGIC ENERGY FUND
c/o Strategic Energy Management Corp.
Suite 2850, The Exchange Tower
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: Mr. ▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any such notice or demand shall be deemed to have been received, if
sent by facsimile, on the next Business Day following transmission or if sent
by registered or certified mail, on the fifth Business Day after the mailing
thereof, except in the case of interruption of regular mail service, in which
case such notice shall be sent by facsimile.
Any notice or demand authorized or required by this Agreement to be
given or made by the Fund or by Strategic Management or by the holder of any
Rights to or on the Rights Agent shall be sufficiently given or made if sent by
registered or certified mail, postage prepaid, addressed (until another address
is filed in writing with the Fund and Strategic Management) as follows:
COMPUTERSHARE TRUST COMPANY OF CANADA
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: Senior Manager, Client Services
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Any such notice or demand shall be deemed to have been received, if
sent by facsimile, on the next Business Day following transmission or if sent
by registered or certified mail, on the fifth Business Day after the mailing
thereof, except in the case of interruption of regular mail service, in which
case such notice shall be sent by facsimile.
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 or by the Fund
to or on Strategic Management shall be sufficiently given or made if delivered
or sent by registered or certified mail, postage prepaid, or by facsimile
transmission addressed (until another address is filed in writing with the
Rights Agent and the Fund) as follows:
STRATEGIC ENERGY MANAGEMENT CORP.
Suite 2850, The Exchange Tower
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: Mr. ▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any such notice or demand shall be deemed to have been received, if
sent by facsimile, on the next Business Day following transmission or if sent
by registered or certified mail, on the fifth Business Day after the mailing
thereof, except in the case of interruption of regular mail service, in which
case such notice shall be sent by facsimile.
Notices or demands authorized or required by this Agreement to be
given or made by the Fund or the Rights Agent or Strategic Management 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 on the Rights Register or, prior to the
Separation Time, on the registers of the Fund for the Units. Any notice which
is mailed in the manner herein provided shall be deemed given on the fifth
Business Day after the date of mailing thereof, whether or not the holder
receives the notice. In the event of any interruption of mail service, such
notice required or permitted to be given hereunder will be deemed to be
sufficiently given by advertisement of such notice in a newspaper of general
circulation in the City of Toronto.
5.9 COSTS OF ENFORCEMENT
The Fund agrees that if the Fund or any other Person the securities of
which are purchasable upon exercise of Rights fails to fulfil any of its
obligations pursuant to this Agreement, then the Fund or such Person will
reimburse the holder of any Rights for the costs and expenses (including legal
fees) incurred by such holder in actions to enforce his rights pursuant to any
Rights or this Agreement.
5.10 REGULATORY APPROVALS
Any obligation of the Fund 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 or stock exchange.
5.11 DECLARATION AS TO NON-CANADIAN
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 with the securities laws or comparable legislation of a
jurisdiction outside Canada, the Board of Directors acting in good faith may
take such actions as it may deem appropriate to ensure that such compliance is
not required, including without limitation establishing procedures for the
issuance to a Canadian resident fiduciary of Rights, or securities issuable on
exercise of Rights, the holding thereof in fund for the Persons entitled
thereto (but reserving to the fiduciary or to the fiduciary and the Fund, as
the Fund may determine, absolute discretion with respect thereto) and the sale
thereof and remittance of the proceeds of such sale, if any, to the Persons
entitled thereto. In no event shall the Fund 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
and any province or territory thereof and the United States of America in which
such issue or delivery would be unlawful without registration of the relevant
Persons or securities for such purposes.
5.12 SUCCESSORS
All the covenants and provisions of this Agreement by or for the
benefit of the Fund or the Rights Agent shall bind and inure 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 Fund, the Rights Agent and the holders of the Rights any legal
or equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Fund, 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 LANGUAGE
Les parties aux presentes ont exige que la presente convention ainsi
que tous les documents et avis qui s'y rattachent et/ou qui en decoulent soient
rediges en langue anglaise. The parties hereto have required that this
Agreement and all documents and notices related thereto and/or resulting
therefrom be drawn up in English.
5.16 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 but one and the same
instrument.
5.17 SEVERABILITY
If any Section, Subsection, paragraph, subparagraph, term or provision
hereof or the application thereof to any circumstance shall, in any
jurisdiction and to any extent, be invalid or unenforceable, such Section,
Subsection, paragraph, subparagraph, term or provision shall be ineffective as
to such jurisdiction to the extent of such invalidity or unenforceability
without invalidating or rendering unenforceable the remaining Sections,
Subsections, paragraphs, subparagraphs, terms and provisions hereof or the
application of such Section, Subsection, paragraph, subparagraph, term or
provision to circumstances other than those as to which it is held invalid or
unenforceable.
5.18 EFFECTIVE DATE
This Agreement is effective from the date hereof.
5.19 TIME OF THE ESSENCE
Time shall be of the essence hereof.
5.20 DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS
The Board of Directors shall have the exclusive power and authority to
administer and amend this Agreement in accordance with the terms hereof and to
exercise all rights and powers specifically granted hereunder to the Board of
Directors or Strategic Management, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to (i) interpret the provisions of this Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not to redeem the Rights or
to amend the Agreement, in accordance with the terms hereof). All such actions,
calculations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the
Board of Directors in good faith, shall (x) be final, conclusive and binding on
the Fund, the Rights Agent, the holders of the Rights, and all other parties
and (y) not subject the Board of Directors to any liability to the holders of
the Rights, or any other parties. All actions 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 any member of the Board of
Directors to any liability whatsoever to the holders of the Rights.
5.21 LIABILITY OF UNITHOLDERS
The obligations or liabilities, if any, of Strategic Management or the
Fund or the trustee of the Fund hereunder shall not be binding upon, nor shall
resort be had to the property of, any of the unitholders or annuitants of the
Fund and such obligations and liabilities shall not be binding upon such
unitholders or annuitants. The obligations or liabilities, if any, of Strategic
Management or the Fund or the trustee of the Fund hereunder shall be satisfied
only out of the property of the Fund and no resort may be had to the property
of any trustee, manager, officer or employee of the Fund or any director,
officer or employee of any manager or trustee of the Fund, including Strategic
Management. The obligations and liabilities hereunder, if any, of any trustee,
manager, officer or employee of the Fund or any director, officer or employee
of any manager or trustee of the Fund shall bind such obligor only to the
extent that such obligor is entitled to be indemnified by the Fund. The
provisions of this paragraph shall enure to the benefit of the heirs,
successors, assigns and personal representatives of the unitholders and
annuitants of the Fund and, to the extent necessary to provide effective
enforcement of such provisions, each of Strategic Management and the trustee of
the Fund is hereby acknowledged to be acting, and shall be entitled to act as,
manager and trustee, respectively, for the unitholders and annuitants of the
Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
STRATEGIC ENERGY FUND
by its manager, STRATEGIC ENERGY MANAGEMENT CORP.
Per:
---------------------------------------------
Per:
---------------------------------------------
COMPUTERSHARE TRUST COMPANY OF CANADA
Per:
---------------------------------------------
Per:
---------------------------------------------
STRATEGIC ENERGY MANAGEMENT CORP.
Per:
---------------------------------------------
Per:
---------------------------------------------
EXHIBIT A
[FORM OF RIGHTS CERTIFICATE]
Certificate No.______________________ ______________Rights
UNTIL THE SEPARATION TIME (AS DEFINED IN THE RIGHTS AGREEMENT REFERRED
TO BELOW), THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER
HEREOF TO CERTAIN RIGHTS AS SET FORTH IN A UNITHOLDER PROTECTION
RIGHTS AGREEMENT MADE AS OF FEBRUARY 25, 2003 (THE "RIGHTS
AGREEMENT"), BETWEEN STRATEGIC ENERGY FUND (THE "FUND") BY ITS
MANAGER, AND COMPUTERSHARE TRUST COMPANY OF CANADA, AS RIGHTS AGENT,
AND STRATEGIC ENERGY MANAGEMENT CORP., THE TERMS OF WHICH ARE
INCORPORATED HEREIN BY THIS REFERENCE AND A COPY OF WHICH IS ON FILE
AT THE PRINCIPAL OFFICE OF STRATEGIC ENERGY MANAGEMENT CORP. UNDER
CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, SUCH
RIGHTS MAY BE AMENDED OR REDEEMED, MAY EXPIRE, MAY BECOME VOID (IF, IN
CERTAIN CASES, THEY ARE "BENEFICIALLY OWNED" BY AN "ACQUIRING PERSON",
AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT, OR A TRANSFEREE
THEREOF), OR MAY BE EVIDENCED BY SEPARATE CERTIFICATES AND MAY NO
LONGER BE EVIDENCED BY THIS CERTIFICATE. STRATEGIC ENERGY MANAGEMENT
CORP. WILL MAIL, OR ARRANGE FOR THE MAILING OF, A COPY OF THE RIGHTS
AGREEMENT TO THE HOLDER OF THIS CERTIFICATE WITHOUT CHARGE PROMPTLY
AFTER THE RECEIPT OF A WRITTEN REQUEST THEREFOR.
RIGHTS CERTIFICATE
This certifies that ____________________________________ 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 Unitholder Protection Rights Agreement made as of February 25, 2003 (the
"Rights Agreement") between STRATEGIC ENERGY FUND (the "Fund"), by its manager,
and Strategic Energy Management Corp. and Computershare Trust Company of
Canada, a trust company incorporated under the laws of Canada, as Rights Agent
(the "Rights Agent", which term shall include any successor Rights Agent under
the Rights Agreement), to purchase from the Fund, at any time after the
Separation Time and prior to the Expiration Time (as such terms are defined in
the Rights Agreement), one fully paid unit of the Fund (a "Unit") at the
Exercise Price referred to below, upon presentation and surrender of this
Rights Certificate, together with the Form of Election to Exercise
appropriately completed and duly executed, to the Rights Agent at its principal
office in the City of Toronto. Until adjustment thereof in certain events as
provided in the Rights Agreement, the Exercise Price shall be $o per Right
(payable by bank draft, certified cheque or money order payable to the order of
Computershare Trust Company of Canada).
In certain circumstances described in the Rights Agreement, each Right
evidenced hereby may entitle the registered holder thereof to purchase or
receive assets, debt securities or units in the capital of the Fund other than
Units, or more or less than one Unit (or a combination thereof), all as
provided in the Rights Agreement.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Rights Agent, the Fund and the holders of the Rights Certificates. Copies of
the Rights Agreement are on file at the principal office of Strategic Energy
Management Corp. and are available upon written request.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office of the Rights Agent in the City of
Toronto, may be exchanged for another Rights Certificate or Rights Certificates
of like tenor evidencing an aggregate number of Rights equal to the aggregate
number of Rights evidenced by the Rights Certificate or Rights Certificates
surrendered. If this Rights Certificate shall be exercised in part, the
registered holder shall be entitled to receive, upon surrender hereof, another
Rights Certificate or Rights Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Fund at a redemption
price of $0.00000001 per Right, subject to adjustment in certain events, or
(ii) may be exchanged, at the option of the board of directors of Strategic
Energy Management Corp, for cash, debt or equity securities or other assets (or
a combination thereof). The Rights evidenced hereby may be terminated in
accordance with the provisions of the Rights Agreement.
No fractional Units will be issued upon the exercise of any Right or
Rights evidenced hereby, but in lieu thereof a cash payment will be made, as
provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive distributions or be deemed for any purpose the holder of Units
or any other securities which may at any time be issuable upon the exercise
hereof, nor shall anything contained in the Rights Agreement or herein be
construed to confer upon the holder hereof, as such, any of the rights of a
unitholder of the Fund or any right to vote upon any matter submitted to
unitholders at any meeting thereof, or to give or withhold consent to any
action, or to receive notice of any meeting or other actions affecting
unitholders (except as provided in the Rights Agreement), or to receive
distributions or subscription rights or otherwise, until the Rights evidenced
by this Rights Certificate shall have been exercised as provided in the 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 signature of the proper officers of the undersigned.
Date:____________________
STRATEGIC ENERGY MANAGEMENT CORP.
Per:
------------------------------------------------------
Authorized Signature
Per:
------------------------------------------------------
Authorized Signature
Countersigned:
COMPUTERSHARE TRUST COMPANY OF CANADA
Per:
------------------------------------------------------
Authorized Signature
[Continued on Reverse Side]
FORM OF ELECTION TO EXERCISE
TO: COMPUTERSHARE TRUST COMPANY OF CANADA
The undersigned hereby irrevocably elects to exercise
_______________________________ whole Rights represented by this Rights
Certificate to purchase the Units issuable upon the exercise of such Rights and
requests that certificates for such Units be issued in the name of and
delivered to:
-----------------------------------------------------------------
Name
-----------------------------------------------------------------
Address
-----------------------------------------------------------------
City and Province
-----------------------------------------------------------------
Social Insurance No. 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 No. or other taxpayer identification number
Date:
---------------------- --------------------------------------
Signature (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 Guaranteed
(THE FOLLOWING IS TO BE COMPLETED ONLY IF TRUE)
The undersigned hereby represents, for the benefit of the Fund and all
holders of Rights and Units, that the Rights evidenced by this Rights
Certificate are not and, to the knowledge of the undersigned, have never been,
Beneficially Owned by (i) an Acquiring Person, (ii) any Affiliate or Associate
of an Acquiring Person, (iii) any other Person acting jointly or in concert
with an Acquiring Person or any Affiliate of an Acquiring Person, or (iv) any
other Person whose securities are deemed to be Beneficially Owned by an
Acquiring Person. Capitalized terms shall have the meanings ascribed thereto in
the Rights Agreement.
Date:
---------------------- --------------------------------------
Signature (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 Guaranteed
NOTE: The signature of the person must be guaranteed by a major Canadian trust
company, Canadian chartered bank, or a member of the Securities Transfer Agents
Medallion Program (STAMP).
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
--------------------------------------------------------------------------
(Please print name and address of transferee)
________ {insert number} of the Rights represented by this Rights
Certificate, together with all right, title and interest therein.
Date:
---------------------- --------------------------------------
Signature (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 Guaranteed
(THE FOLLOWING IS TO BE COMPLETED ONLY IF TRUE)
The undersigned hereby represents, for the benefit of the Fund and all
holders of Rights and Units, that the Rights evidenced by this Rights
Certificate are not and, to the knowledge of the undersigned, have never been,
Beneficially Owned by (i) an Acquiring Person, (ii) any Affiliate or Associate
of an Acquiring Person, (iii) any other Person acting jointly or in concert
with an Acquiring Person or any Affiliate of an Acquiring Person, or (iv) any
other Person whose securities are deemed to be Beneficially Owned by an
Acquiring Person. Capitalized terms shall have the meanings ascribed thereto in
the Rights Agreement.
Date:
---------------------- --------------------------------------
Signature (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 Guaranteed
NOTE: Signature must be guaranteed by a major Canadian trust company, Canadian
chartered bank, or a member of the Securities Transfer Agents Medallion Program
(STAMP).
NOTICE
In the event that the certifications set forth above in the Forms of Election
to Exercise and Assignment are not completed, the Fund shall deem the
Beneficial Owner of the Rights represented by this Rights Certificate to be an
Acquiring Person or other Ineligible Unitholder and, accordingly, such Rights
shall be null and void. Capitalized terms shall have the meanings ascribed
thereto in the Rights Agreement.