EXHIBIT 4.1
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AMENDED AND RESTATED
SHAREHOLDER RIGHTS PLAN AGREEMENT
DATED AS OF APRIL 28, 2004
BETWEEN
ENCANA CORPORATION
AND
CIBC MELLON TRUST COMPANY
AS RIGHTS AGENT
▇▇▇▇▇▇▇ ▇▇▇▇▇ LLP
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AMENDED AND RESTATED SHAREHOLDER RIGHTS PLAN AGREEMENT
TABLE OF CONTENTS
ARTICLE 1 - INTERPRETATION.....................................................1
1.1 CERTAIN DEFINITIONS...................................................1
1.2 CURRENCY.............................................................13
1.3 HEADINGS.............................................................13
1.4 CALCULATION OF NUMBER AND PERCENTAGE OF BENEFICIAL OWNERSHIP
OF OUTSTANDING VOTING SHARES.........................................13
1.5 ACTING JOINTLY OR IN CONCERT.........................................13
1.6 GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.............................13
ARTICLE 2 - THE RIGHTS........................................................14
2.1 ISSUE OF RIGHTS AND CONVERTIBLE RIGHTS; LEGEND ON
COMMON SHARE CERTIFICATES............................................14
2.2 INITIAL EXERCISE PRICE; EXERCISE OF RIGHTS; DETACHMENT OF RIGHTS.....14
2.3 ADJUSTMENTS TO EXERCISE PRICE; NUMBER OF RIGHTS......................17
2.4 DATE ON WHICH EXERCISE IS EFFECTIVE..................................21
2.5 EXECUTION, AUTHENTICATION, DELIVERY AND DATING OF RIGHTS
CERTIFICATES.........................................................21
2.6 REGISTRATION, TRANSFER AND EXCHANGE..................................22
2.7 MUTILATED, DESTROYED, LOST AND STOLEN RIGHTS CERTIFICATES............22
2.8 PERSONS DEEMED OWNERS OF RIGHTS......................................23
2.9 DELIVERY AND CANCELLATION OF CERTIFICATES............................23
2.10 AGREEMENT OF RIGHTS HOLDERS..........................................24
2.11 RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER...................24
ARTICLE 3 - ADJUSTMENTS TO THE RIGHTS.........................................25
3.1 FLIP-IN EVENT........................................................25
ARTICLE 4 - THE RIGHTS AGENT..................................................26
4.1 GENERAL..............................................................26
4.2 MERGER, AMALGAMATION OR CONSOLIDATION OR CHANGE OF NAME
OF RIGHTS AGENT......................................................27
4.3 DUTIES OF RIGHTS AGENT...............................................27
4.4 CHANGE OF RIGHTS AGENT...............................................29
ARTICLE 5 - MISCELLANEOUS.....................................................29
5.1 REDEMPTION AND WAIVER................................................29
5.2 EXPIRATION...........................................................31
5.3 ISSUANCE OF NEW RIGHTS CERTIFICATES..................................31
5.4 SUPPLEMENTS AND AMENDMENTS...........................................31
5.5 FRACTIONAL RIGHTS AND FRACTIONAL SHARES..............................33
5.6 RIGHTS OF ACTION.....................................................33
5.7 REGULATORY APPROVALS.................................................33
5.8 DECLARATION AS TO NON-CANADIAN OR NON-U.S. HOLDERS...................33
5.9 NOTICES..............................................................34
5.10 COSTS OF ENFORCEMENT.................................................35
5.11 SUCCESSORS...........................................................35
5.12 BENEFITS OF THIS AGREEMENT...........................................35
5.13 GOVERNING LAW........................................................35
5.14 SEVERABILITY.........................................................35
5.15 COMING INTO EFFECT...................................................35
5.16 RECONFIRMATION.......................................................35
5.17 DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS.................36
5.18 TIME OF THE ESSENCE..................................................36
ii
5.19 EXECUTION IN COUNTERPARTS............................................36
ARTICLE 6 - CONVERTIBLE RIGHTS................................................36
6.1 CONVERTIBLE SHARE CERTIFICATES.......................................36
6.2 CONVERSION OF CONVERTIBLE RIGHTS.....................................36
6.3 PERSONS DEEMED OWNERS................................................36
6.4 AGREEMENT OF CONVERTIBLE RIGHTS HOLDERS..............................37
ATTACHMENT 1.........................................................38
FORM OF ASSIGNMENT...................................................40
FORM OF ELECTION TO EXERCISE.........................................41
CERTIFICATE..........................................................42
NOTICE...............................................................42
AMENDED AND RESTATED SHAREHOLDER RIGHTS PLAN AGREEMENT
MEMORANDUM OF AGREEMENT dated as of April 28, 2004 and between EnCana
Corporation (formerly, PanCanadian Energy Corporation) (the "Corporation"), a
corporation incorporated under the CANADA BUSINESS CORPORATIONS ACT and CIBC
Mellon Trust Company, a trust company incorporated under the laws of Canada (the
"Rights Agent") which amends and restates the agreement dated as of July 30,
2001 and as previously amended and restated as of September 13, 2001 between
such parties;
WHEREAS in connection with the completion of the Plan of Arrangement
pursuant to the Arrangement Agreement, the Board of Directors determined that it
was in the best interests of the Corporation to adopt a shareholder rights plan
to ensure, to the extent possible, that all shareholders of the Corporation are
treated fairly in connection with any take-over bid for the Corporation;
AND WHEREAS the Corporation and the Rights Agent entered into a
Shareholder Rights Plan Agreement dated as of July 30, 2001 and amended and
restated as of September 13, 2001 (the "Original Agreement") which was approved
by the shareholders of the Corporation at the special meeting held on September
26, 2001;
AND WHEREAS the Original Agreement is to be in place for a period of
ten years from July 30, 2001, subject to the Agreement being reconfirmed by the
shareholders of the Corporation every three years after the annual meeting of
shareholders of theCrporation in 2001;
AND WHEREAS the Corporation and the Rights Agent wish to effect certain
amendments to update and restate the Original Agreement in its entirety to be on
the terms and conditions and in the form of this Agreement to take effect
immediately upon receipt of approval of the shareholders of the Corporation and
the reconfirmation of this Agreement by the shareholders of the Corporation at
the annual and special meeting of shareholders held on April 28, 2004 or any
adjournment or postponement thereof;
AND WHEREAS each Right entitles the holder thereof, after the
Separation Time, to purchase securities of the Corporation pursuant to the terms
and subject to the conditions set forth herein;
AND WHEREAS the Corporation desires to confirm its appointment of the
Rights Agent to act on behalf of the Corporation and the holders of Rights and
Convertible Rights, and the Rights Agent is willing to continue to so act, in
connection with the issuance, transfer, exchange and replacement of Rights
Certificates, the exercise of Rights and Convertible Rights and other matters
referred to herein;
NOW THEREFORE, in consideration of the premises and the respective
covenants and agreements set forth herein, and subject to such covenants and
agreements, the parties hereby agree as follows:
ARTICLE 1
INTERPRETATION
1.1 CERTAIN DEFINITIONS
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 Voting Shares
provided, however, that the term "Acquiring Person" shall not
include:
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(i) the Corporation or any Subsidiary of the Corporation;
(ii) any Person who becomes the Beneficial Owner of 20% or
more of the outstanding Voting Shares as a result of
one or any combination of (A) a Voting Share
Reduction, (B) Permitted Bid Acquisitions, (C) an
Exempt Acquisition or (D) Pro Rata Acquisitions;
provided, however, that if a Person becomes the
Beneficial Owner of 20% or more of the outstanding
Voting Shares by reason of one or any combination of
the operation of (A), (B), (C) or (D) above and such
Person's Beneficial Ownership of Voting Shares
thereafter increases by more than 1.0% of the number
of Voting Shares outstanding (other than pursuant to
one or any combination of a Voting Share Reduction, a
Permitted Bid Acquisition, an Exempt Acquisition or a
Pro Rata Acquisition), then as of the date such
Person becomes the Beneficial Owner of such
additional Voting Shares, such Person shall become an
"Acquiring Person";
(iii) for a period of ten days after the Disqualification
Date (as defined below), any Person who becomes the
Beneficial Owner of 20% or more of the outstanding
Voting Shares as a result of such Person becoming
disqualified from relying on Paragraph 1.1(g)(v)
solely because such Person or the Beneficial Owner of
such Voting Shares is making or has announced an
intention to make a Take-over Bid, either alone or by
acting jointly or in concert with any other Person.
For the purposes of this definition,
"Disqualification Date" means the first date of
public announcement that any Person is making or has
announced an intention to make a Take-over Bid;
(iv) an underwriter or member of a banking or selling
group that becomes the Beneficial Owner of 20% or
more of the Voting Shares in connection with a
distribution of securities of the Corporation;
(v) a Person (a "Grandfathered Person") who is the
Beneficial Owner of 20% or more of the outstanding
Voting Shares of the Corporation determined as at the
Record Time, provided, however, that this exception
shall not be, and shall cease to be, applicable to a
Grandfathered Person in the event that such
Grandfathered Person shall, after the Record Time,
become the Beneficial Owner of additional Voting
Shares of the Corporation that increases its
Beneficial Ownership of Voting Shares by more than 1%
of the number of Voting Shares outstanding as at the
Record Time (other than pursuant to one or any
combination of a Voting Share Reduction, a Permitted
Bid Acquisition, an Exempt Acquisition or a Pro Rata
Acquisition); or
(vi) on or prior to the Effective Date, Canadian Pacific
Limited or any of its Affiliates or the owner of the
initial Common Share of the Corporation.
(b) "AFFILIATE" when used to indicate a relationship with a
Person, means a Person that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or
is under common control with, such specified Person;
(c) "AGREEMENT" means the shareholder rights plan agreement dated
as of July 30, 2001 between the Corporation and the Rights
Agent, as amended and restated as of September 13, 2001 and as
of April 28, 2004 and as the same may be further amended or
supplemented from time to time; "hereof", "herein", "hereto"
and similar expressions mean and refer to this Agreement as a
whole and not to any particular part of this Agreement;
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(d) "ANNUAL CASH DIVIDEND" means cash dividends paid in any fiscal
year of the Corporation to the extent that such cash dividends
do not exceed, in the aggregate, the greatest of:
(i) 200 per cent of the aggregate amount of cash
dividends declared payable by the Corporation on its
Common Shares in its immediately preceding fiscal
year;
(ii) 300 per cent of the arithmetic mean of the aggregate
amounts of the annual cash dividends declared payable
by the Corporation on its Common Shares in its three
immediately preceding fiscal years; and
(iii) 100 per cent of the aggregate consolidated net income
of the Corporation, before extraordinary items, for
its immediately preceding fiscal year;
(e) "ARRANGEMENT AGREEMENT" means the Arrangement Agreement made
as of July 30, 2001 among the Corporation, Canadian Pacific
Limited, Canadian Pacific Railway Limited, CP Ships Limited,
FHR Investments Inc., Fording Arrangement Inc., Canadian
Pacific Railway Company, CP Ships Holdings Inc., Canadian
Pacific Hotels & Resorts Inc., Fording Inc. and PanCanadian
Petroleum Limited providing for the implementation of the Plan
of Arrangement;
(f) "ASSOCIATE" means, when used to indicate a relationship with a
specified Person, a spouse of that Person, any Person of the
same or opposite sex with whom that Person is living in a
conjugal relationship outside marriage, a child of that Person
or a relative of that Person if that relative has the same
residence as that Person;
(g) A Person shall be deemed the "BENEFICIAL OWNER" of, and to
have "BENEFICIAL OWNERSHIP" of, and to "BENEFICIALLY OWN",
(i) any securities as to which such Person or any of such
Person's Affiliates or Associates is the owner at law
or in equity;
(ii) any securities as to which such Person or any of such
Person's Affiliates or Associates has the right to
become the owner at law or in equity (whether such
right is exercisable immediately or within a period
of 60 days thereafter and whether or not on condition
or the happening of any contingency or the making of
any payment) pursuant to any agreement, arrangement,
pledge or understanding, whether or not in writing
(other than (x) customary agreements with and between
underwriters and/or banking group members and/or
selling group members with respect to a public
offering or private placement of securities and (y)
pledges of securities in the ordinary course of
business), or upon the exercise of any conversion
right, exchange right, share purchase right (other
than the Rights), warrant or option; or
(iii) any securities which are Beneficially Owned within
the meaning of Clauses 1.1(g)(i) and (ii) by any
other Person with whom such Person is acting jointly
or in concert;
provided, however, that a Person shall not be deemed the
"BENEFICIAL OWNER" of, or to have "BENEFICIAL OWNERSHIP" of,
or to "BENEFICIALLY OWN", any security:
(iv) where such security has been agreed to be deposited
or tendered pursuant to a Lock-up Agreement or is
otherwise deposited to any Take-over Bid made by such
Person, made by any of such Person's Affiliates or
Associates or made by
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any other Person acting jointly or in concert with
such Person until such deposited or tendered security
has been taken up or paid for, whichever shall first
occur;
(v) where such Person, any of such Person's Affiliates or
Associates or any other Person acting jointly or in
concert with such Person holds such security provided
that:
(A) the ordinary business of any such Person (the
"Investment Manager") includes the management
of mutual funds or investment funds for others
(which others, for greater certainty, may
include or be limited to one or more employee
benefit plans or pension plans) and such
security is held by the Investment Manager in
the ordinary course of such business in the
performance of such Investment Manager's
duties for the account of any other Person (a
"Client"), including the acquisition or
holding of securities in a non-discretionary
account held on behalf of a Client by a broker
or dealer registered under applicable
securities laws;
(B) such Person (the "Trust Company") is licensed
to carry on the business of a trust company
under applicable laws and, as such, acts as
trustee or administrator or in a similar
capacity in relation to the estates of
deceased or incompetent Persons (each an
"Estate Account") or in relation to other
accounts (each an "Other Account") and holds
such security in the ordinary course of such
duties for such Estate Account or for such
Other Accounts;
(C) such Person is established by statute for
purposes that include, and the ordinary
business or activity of such Person (the
"Statutory Body") includes, the management of
investment funds for employee benefit plans,
pension plans, insurance plans or various
public bodies;
(D) such Person (the "Administrator") is the
administrator or trustee of one or more
pension funds or plans (a "Plan"), or is a
Plan, registered or qualified under the laws
of Canada or any Province thereof or the laws
of the United States of America or any State
thereof; or
(E) such Person (the "Crown Agent") is a Crown
agent or agency;
provided, in any of the above cases, that the
Investment Manager, the Trust Company, the Statutory
Body, the Administrator, the Plan or the Crown Agent,
as the case may be, is not then making a Take-over
Bid or has not then announced an intention to make a
Take-over Bid alone or acting jointly or in concert
with any other Person, other than an Offer to Acquire
Voting Shares or other securities (x) pursuant to a
distribution by the Corporation, (y) by means of a
Permitted Bid or (z) by means of ordinary market
transactions (including prearranged trades entered
into in the ordinary course of business of such
Person) executed through the facilities of a stock
exchange or organized over-the-counter market;
(vi) where such Person is (A) a Client of the same
Investment Manager as another Person on whose account
the Investment Manager holds such security, (B) an
Estate Account or an Other Account of the same Trust
Company as another Person on whose account the Trust
Company holds such security or (C) a Plan
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with the same Administrator as another Plan on whose
account the Administrator holds such security;
(vii) where such Person is (A) a Client of an Investment
Manager and such security is owned at law or in
equity by the Investment Manager, (B) an Estate
Account or an Other Account of a Trust Company and
such security is owned at law or in equity by the
Trust Company or (C) a Plan and such security is
owned at law or in equity by the Administrator of the
Plan; or
(viii) where such Person is a registered holder of such
security as a result of carrying on the business of,
or acting as a nominee of, a securities depositary;
(h) "BOARD OF DIRECTORS" means the board of directors of the
Corporation or any duly constituted and empowered committee
thereof;
(i) "BUSINESS DAY" means any day other than a Saturday, Sunday or
a day on which banking institutions in Calgary are authorized
or obligated by law to close;
(j) "CBCA" means the CANADA BUSINESS CORPORATIONS ACT, R.S.C.
1985, C. 44, as amended, and the regulations made thereunder,
and any comparable or successor laws or regulations thereto;
(k) "CANADIAN DOLLAR EQUIVALENT" of any amount which is expressed
in United States Dollars means, on any date, the Canadian
dollar equivalent of such amount determined by multiplying
such amount by the U.S. - Canadian Exchange Rate in effect on
such date;
(l) "CANADIAN - U.S. EXCHANGE RATE" means, on any date, the
inverse of the U.S. - Canadian Exchange Rate in effect on such
date;
(m) "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 principal transfer
office in Calgary of the transfer agent for the Common Shares
(or, after the Separation Time, the principal transfer office
in Calgary of the Rights Agent) is closed to the public;
(n) "COMMON SHARES" means the common shares in the capital of the
Corporation;
(o) "COMPETING PERMITTED BID" means a Take-over Bid that:
(i) is made after a Permitted Bid has been made and prior
to the expiry of the Permitted Bid;
(ii) satisfies all components of the definition of a
Permitted Bid other than the requirements set out in
Subparagraph 1.1(nn)(ii)(A) of the definition of a
Permitted Bid; and
(iii) contains, and the take-up and payment for securities
tendered or deposited is subject to, an irrevocable
and unqualified condition that no Voting Shares will
be taken up or paid for pursuant to the Take-over Bid
prior to the close of business on a date that is no
earlier than the later of: (A) the 60th day after the
date on which the earliest Permitted Bid which
preceded the Competing Permitted Bid was made; and
(B) 35 days after the date of the Take-over Bid
constituting the Competing Permitted Bid;
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(p) "CONTROLLED" a Person is "controlled" by another Person or two
or more other Persons acting jointly or in concert if:
(i) in the case of a body corporate, securities entitled
to vote in the election of directors of such body
corporate carrying more than 50% of the votes for the
election of directors are held, directly or
indirectly, by or for the benefit of the other Person
or Persons and the votes carried by such securities
are entitled, if exercised, to elect a majority of
the board of directors of such body corporate; or
(ii) in the case of a Person which is not a body
corporate, more than 50% of the voting or equity
interests of such entity are held, directly or
indirectly, by or for the benefit of the other Person
or Persons;
and "controls", "controlling" and "under common control with"
shall be interpreted accordingly;
(q) "CONVERTIBLE RIGHT" means a right to receive a Right upon the
terms and subject to the conditions set forth in this
Agreement;
(r) "CONVERTIBLE SHARES" means the voting convertible shares in
the capital of the Corporation, each of which is convertible
into one Common Share, referred to in the Plan of Arrangement;
(s) "CO-RIGHTS AGENTS" has the meaning ascribed thereto in
Subsection 4.1(a);
(t) "DISPOSITION DATE" has the meaning ascribed thereto in
Subsection 5.1(h);
(u) "DIVIDEND REINVESTMENT ACQUISITION" means an acquisition of
Voting Shares pursuant to a Dividend Reinvestment Plan;
(v) "DIVIDEND REINVESTMENT PLAN" means a regular dividend
reinvestment or other plan of the Corporation made available
by the Corporation to holders of its securities or holders of
securities of a Subsidiary where such plan permits the holder
to direct that some or all of:
(i) dividends paid in respect of shares of any class of
the Corporation or a Subsidiary;
(ii) proceeds of redemption of shares of the Corporation
or a Subsidiary;
(iii) interest paid on evidences of indebtedness of the
Corporation or a Subsidiary; or
(iv) optional cash payments;
be applied to the purchase from the Corporation of Voting
Shares;
(w) "ELECTION TO EXERCISE" has the meaning ascribed thereto in
Paragraph 2.2(d)(ii);
(x) "EFFECTIVE DATE" means the date the Plan of Arrangement takes
effect;
(y) "EXEMPT ACQUISITION" means a share acquisition in respect of
which the Board of Directors has waived the application of
Section 3.1 pursuant to the provisions of Subsections 5.1(a)
or (h);
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(z) "EXERCISE PRICE" means, as of any date, the price at which a
holder may purchase the securities issuable upon exercise of
one whole Right which, until adjustment thereof in accordance
with the terms hereof, shall be five times the weighted
average trading price of the Common Shares during the first
five consecutive trading days on which the Common Shares trade
on the TSX;
(aa) "EXPANSION FACTOR" has the meaning ascribed thereto in
Paragraph 2.3(a)(x);
(bb) "EXPIRATION TIME" means the close of business on that date
which is the earlier of the date of termination of this
Agreement pursuant to Section 5.15 or, if this Agreement is
confirmed pursuant to Section 5.15, the date of termination of
this Agreement pursuant to Section 5.16 or, if this Agreement
is reconfirmed pursuant to Section 5.16, the close of business
on the tenth anniversary following the Record Time;
(cc) "FLIP-IN EVENT" means a transaction or other event, including
the occurrence of the Effective Date, in or pursuant to which
any Person becomes an Acquiring Person;
(dd) "HOLDER" has the meaning ascribed thereto in Section 2.8;
(ee) "INDEPENDENT SHAREHOLDERS" means holders of Voting Shares,
other than:
(i) any Acquiring Person;
(ii) any Offeror (other than any Person who, by virtue of
Paragraph 1.1(g)(v), is not deemed to Beneficially
Own the Voting Shares held by such Person);
(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; and
(v) any employee benefit plan, deferred profit sharing
plan, stock participation plan and any other similar
plan or trust for the benefit of employees of the
Corporation or a Subsidiary unless the beneficiaries
of the plan or trust direct the manner in which the
Voting Shares are to be voted or withheld from voting
or direct whether the Voting Shares are to be
tendered to a Take-over Bid;
(ff) "LOCK-UP AGREEMENT" means an agreement between an Offeror, any
of its Affiliates or Associates or any other Person acting
jointly or in concert with the Offeror and a Person (the
"Locked-up Person") who is not an Affiliate or Associate of
the Offeror or a Person acting jointly or in concert with the
Offeror whereby the Locked-up Person agrees to deposit or
tender the Voting Shares held by the Locked-up Person to the
Offeror's Take-over Bid or to any Take-over Bid made by any of
the Offeror's Affiliates or Associates or made by any other
Person acting jointly or in concert with the Offeror (the
"Subject Bid") provided that:
(i) the agreement permits the Locked-up Person to
withdraw the Voting Shares from the agreement in
order to tender or deposit the Voting Shares to
another Take-over Bid or to support another
transaction that in either case will provide greater
value to the Locked-up Person than the Subject Bid;
or
(ii) (a) the agreement permits the Locked-up Person to
withdraw the Voting Shares from the agreement in
order to tender or deposit the Voting Shares to
another Take-over Bid or to support another
transaction that contains an offering price for each
Voting Share that exceeds by as much as or more than
a specified amount (the "Specified Amount") the
offering price for
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each Voting Share contained in or proposed to be
contained in the Subject Bid; and (b) the agreement
does not by its terms provide for a Specified Amount
that is greater than 7% of the offering price
contained in or proposed to be contained in the
Subject Bid;
and, for greater clarity, an agreement may contain a
right of first refusal or require a period of delay
to give an offeror an opportunity to match a higher
price in another Take-over Bid or other similar
limitation on a Locked-up Person as long as the
Locked-up Person can accept another bid or tender to
another transaction; and
(iii) no "break-up" fees, "top-up" fees, penalties,
expenses or other amounts that exceed in the
aggregate the greater of:
(A) 2 1/2% of the price or value of the
consideration payable under the Subject Bid to
the Locked-up Person; and
(B) 50% of the amount by which the price or value
of the consideration payable under another
Take-over Bid or transaction to the Locked-up
Person exceeds the price or value of the
consideration that such Locked-up Person would
have received under the Subject Bid;
shall be payable by such Locked-up Person pursuant to
the agreement in the event such Locked-up Person
fails to deposit or tender the Voting Shares to the
Subject Bid or withdraws the Voting Shares previously
tendered thereto in order to deposit or tender such
Voting Shares to another Take-over Bid or support
another transaction.
(gg) "MARKET PRICE" per share of any securities on any date of
determination means the average of the daily closing prices
per share of the securities (determined as described below) on
each of the 20 consecutive Trading Days through and including
the Trading Day immediately preceding such date; provided,
however, that if an event of a type analogous to any of the
events described in Section 2.3 hereof shall have caused the
closing prices used to determine the Market Price on any
Trading Days not to be fully comparable with the closing price
on the date of determination or, if the date of determination
is not a Trading Day, on the immediately preceding Trading
Day, each closing price so used shall be appropriately
adjusted in a manner analogous to the applicable adjustment
provided for in Section 2.3 hereof in order to make it fully
comparable with the closing price on the date of determination
or, if the date of determination is not a Trading Day, on the
immediately preceding Trading Day. The closing price per share
of any securities on any date shall be:
(i) the closing board lot sale price or, in case no such
sale takes place on such date, the average of the
closing bid and asked prices for each of the
securities as reported by the principal Canadian
stock exchange (as determined by volume of trading)
on which the securities are listed or admitted to
trading;
(ii) if for any reason none of such prices is available on
such day or the securities are not listed or admitted
to trading on a Canadian stock exchange, the last
sale price or, in case no such sale takes place on
the date, the average of the closing bid and asked
prices for each of the securities as reported by the
principal national United
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States securities exchange (as determined by volume
of trading) on which the 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 the securities in the over-the-counter
market, as quoted by any recognized reporting system
then in use; or
(iv) if for any reason none of such prices is available on
such day or the securities are not listed or admitted
to trading on a Canadian stock exchange or a national
United States securities exchange or quoted by any
reporting system, the average of the closing bid and
asked prices as furnished by a recognized
professional market maker making a market in the
securities;
provided, however, that if for any reason none of such prices
is available on such day, the closing price per share of the
securities on such date means the fair value per share of the
securities on such date as determined by an internationally
recognized investment dealer or investment banker; provided
further that if an event of a type analogous to any of the
events described in Section 2.3 hereof has caused any price
used to determine the Market Price on any Trading Day not to
be fully comparable with the price as so determined on the
Trading Day immediately preceding such date of determination,
each price so used shall be appropriately adjusted in a manner
analogous to the applicable adjustment provided for in Section
2.3 hereof in order to make it fully comparable with the price
on the Trading Day immediately preceding such date of
determination. The Market Price shall be expressed in Canadian
dollars and, if initially determined in respect of any day
forming part of the 20 consecutive Trading Day period in
question in United States dollars, such amount shall be
translated into Canadian dollars on that date at the Canadian
Dollar Equivalent thereof;
(hh) "1933 SECURITIES ACT" means the SECURITIES ACT of 1933 of the
United States, as amended, and the rules and regulations
thereunder, as now in effect or as the same may from time to
time be amended, re-enacted or replaced;
(ii) "1934 EXCHANGE ACT" means the SECURITIES EXCHANGE ACT of 1934
of the United States, as amended, and the rules and
regulations thereunder as now in effect or as the same may
from time to time be amended, re-enacted or replaced;
(jj) "NOMINEE" has the meaning ascribed thereto in Subsection
2.2(c);
(kk) "OFFER TO ACQUIRE" includes:
(i) an offer to purchase or a solicitation of an offer to
sell Voting Shares; and
(ii) an acceptance of an offer to sell Voting Shares,
whether or not such offer to sell has been solicited;
or any combination thereof, and the Person accepting an offer
to sell shall be deemed to be making an Offer to Acquire to
the Person that made the offer to sell;
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(ll) "OFFEROR" means a Person who has announced, and has not
withdrawn, an intention to make or who has made, and has not
withdrawn, a Take-over Bid, other than a Person who has
completed a Permitted Bid, a Competing Permitted Bid or an
Exempt Acquisition;
(mm) "OFFEROR'S SECURITIES" means Voting Shares Beneficially Owned
by an Offeror on the date of the Offer to Acquire;
(nn) "PERMITTED BID" means a Take-over Bid made by an Offeror by
way of take-over bid circular which also complies with the
following additional provisions:
(i) the Take-over Bid is made to all holders of Voting
Shares as registered on the books of the Corporation,
other than the Offeror;
(ii) the Take-over Bid contains, and the take-up and
payment for securities tendered or deposited is
subject to, an irrevocable and unqualified provision
that no Voting Shares will be taken up or paid for
pursuant to the Take-over Bid:
(A) prior to the close of business on the date
which is not less than 60 days following the
date of the Take-over Bid; and
(B) only if at such date more than 50% of the
Voting Shares held by Independent Shareholders
shall have been deposited or tendered pursuant
to the Take-over Bid and not withdrawn;
(iii) unless the Take-over Bid is withdrawn, the Take-over
Bid contains an irrevocable and unqualified provision
that Voting Shares may be deposited pursuant to such
Take-over Bid at any time during the period of time
described in Subparagraph 1.1(nn)(ii)(A) and that any
Voting Shares deposited pursuant to the Take-over Bid
may be withdrawn until taken up and paid for; and
(iv) unless the Take-over Bid is withdrawn, the Take-over
Bid contains an irrevocable and unqualified provision
that in the event that the deposit condition set
forth in Subparagraph 1.1(nn)(ii)(B) is satisfied the
Offeror will make a public announcement of that fact
and the Take-over Bid will remain open for deposits
and tenders of Voting Shares for not less than ten
Business Days from the date of such public
announcement;
(oo) "PERMITTED BID ACQUISITION" means an acquisition of Voting
Shares made pursuant to a Permitted Bid or a Competing
Permitted Bid;
(pp) "PERSON" includes any individual, firm, partnership,
association, trust, trustee, executor, administrator, legal
personal representative, body corporate, corporation,
unincorporated organization, syndicate, governmental entity or
other entity;
(qq) "PLAN OF ARRANGEMENT" means the Plan of Arrangement set forth
as Appendix A to the Arrangement Agreement, as amended from
time to time;
(rr) "PRO RATA ACQUISITION" means an acquisition by a Person of
Voting Shares pursuant to:
(i) a Dividend Reinvestment Acquisition;
(ii) a stock dividend, stock split or other event in
respect of securities of the Corporation of one or
more particular classes or series pursuant to which
such
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Person becomes the Beneficial Owner of Voting Shares
on the same pro rata basis as all other holders of
securities of the particular class, classes or
series;
(iii) the acquisition or the exercise by the Person of only
those rights to purchase Voting Shares distributed to
that Person in the course of a distribution to all
holders of securities of the Corporation of one or
more particular classes or series pursuant to a
rights offering or pursuant to a prospectus, provided
that the Person does not thereby acquire a greater
percentage of such Voting Shares so distributed than
the Person's percentage of Voting Shares Beneficially
Owned immediately prior to such acquisition; or
(iv) a distribution of Voting Shares, or securities
convertible into or exchangeable for Voting Shares
(and the conversion or exchange of such convertible
or exchangeable securities), made pursuant to a
prospectus or by way of a private placement, provided
that the Person does not thereby acquire a greater
percentage of such Voting Shares, or securities
convertible into or exchangeable for Voting Shares,
so offered than the Person's percentage of Voting
Shares Beneficially Owned immediately prior to such
acquisition;
(ss) "RECORD TIME" has the meaning ascribed thereto in Subsection
2.1(a);
(tt) "REDEMPTION PRICE" has the meaning ascribed thereto in
Subsection 5.1(b);
(uu) "RIGHT" means a right to purchase a Common Share upon the
terms and subject to the conditions set forth in this
Agreement;
(vv) "RIGHTS CERTIFICATE" means the certificates representing the
Rights after the Separation Time, which shall be substantially
in the form attached hereto as Attachment 1;
(ww) "RIGHTS REGISTER" has the meaning ascribed thereto in
Subsection 2.6(a);
(xx) "RIGHTS REGISTRAR" has the meaning ascribed thereto in
Subsection 2.6(a);
(yy) "SECURITIES ACT" means the SECURITIES ACT, S.A. 1991, c.S-6.1,
as amended, and the regulations thereunder, and any comparable
or successor laws or regulations thereto;
(zz) "SEPARATION TIME" means the close of business on the tenth
Trading Day after the earlier of:
(i) the Stock Acquisition Date;
(ii) the date of the commencement of or first public
announcement of the intent of any Person (other than
the Corporation or any Subsidiary of the Corporation)
to commence a Take-over Bid (other than a Permitted
Bid or a Competing Permitted Bid), or such later time
as may be determined by the Board of Directors,
provided that, if any Take-over Bid referred to in
this Clause (ii) expires, is cancelled, terminated or
otherwise withdrawn prior to the Separation Time,
such Take-over Bid shall be deemed, for the purposes
of this definition, never to have been made; and
(iii) the date on which a Permitted Bid or Competing
Permitted Bid ceases to be such;
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(aaa) "STOCK ACQUISITION DATE" means the first date of public
announcement (which, for purposes of this definition, shall
include, without limitation, a report filed pursuant to
Section 141 of the SECURITIES ACT or Section 13(d) of the 1934
EXCHANGE ACT) by the Corporation or an Acquiring Person that
an Acquiring Person has become such;
(bbb) "SUBSIDIARY" a corporation is a Subsidiary of another
corporation if:
(i) it is controlled by:
(A) that other; or
(B) that other and one or more corporations, each
of which is controlled by that other; or
(C) two or more corporations, each of which is
controlled by that other; or
(ii) it is a Subsidiary of a corporation that is that
other's Subsidiary;
(ccc) "TAKE-OVER BID" means an Offer to Acquire Voting Shares, or
securities convertible into Voting Shares if, assuming that
the Voting Shares or convertible securities subject to the
Offer to Acquire are acquired and are Beneficially Owned at
the date of such Offer to Acquire by the Person making such
Offer to Acquire, such Voting Shares (including Voting Shares
that may be acquired upon conversion of securities convertible
into Voting Shares) together with the Offeror's Securities,
constitute in the aggregate 20% or more of the outstanding
Voting Shares at the date of the Offer to Acquire;
(ddd) "TSX" means the Toronto Stock Exchange;
(eee) "TRADING DAY", when used with respect to any securities, means
a day on which the principal Canadian stock exchange on which
such securities are listed or admitted to trading is open for
the transaction of business or, if the securities are not
listed or admitted to trading on any Canadian stock exchange,
a Business Day;
(fff) "U.S.-CANADIAN EXCHANGE RATE" means, on any date:
(i) if on such date the Bank of Canada sets an average
noon spot rate of exchange for the conversion of one
United States dollar into Canadian dollars, such
rate; and
(ii) in any other case, the rate for such date for the
conversion of one United States dollar into Canadian
dollars calculated in such manner as may be
determined by the Board of Directors from time to
time acting in good faith;
(ggg) "U.S. DOLLAR EQUIVALENT" of any amount which is expressed in
Canadian dollars means, on any date, the United States dollar
equivalent of the amount determined by multiplying the amount
by the Canadian-U.S. Exchange Rate in effect on such date;
(hhh) "VOTING SHARE REDUCTION" means an acquisition or redemption by
the Corporation of Voting Shares which, by reducing the number
of Voting Shares outstanding, increases the proportionate
number of Voting Shares Beneficially Owned by any Person to
20% or more of the Voting Shares then outstanding; and
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(iii) "VOTING SHARES" means the Common Shares and any other shares
in the capital of the Corporation entitled to vote generally
in the election of all directors.
1.2 CURRENCY
All sums of money which are referred to in this Agreement are expressed
in lawful money of Canada, unless otherwise specified.
1.3 HEADINGS
The division of this Agreement into Articles, Sections, Subsections,
Paragraphs, Subparagraphs or other portions hereof and the insertion of
headings, subheadings and a table of contents are for convenience of reference
only and shall not affect the construction or interpretation of this Agreement.
1.4 CALCULATION OF NUMBER AND PERCENTAGE OF BENEFICIAL OWNERSHIP OF
OUTSTANDING VOTING SHARES
For purposes of this Agreement, the percentage of Voting Shares
Beneficially Owned by any Person, shall be and be deemed to be the product
(expressed as a percentage) determined by the formula:
100 x A/B
where:
A = the number of votes for the election of all directors
generally attaching to the Voting Shares Beneficially Owned by
such Person; and
B = the number of votes for the election of all directors
generally attaching to all outstanding Voting Shares.
Where any Person is deemed to Beneficially Own unissued Voting Shares, such
Voting Shares shall be deemed to be outstanding for the purpose of calculating
the percentage of Voting Shares Beneficially Owned by such Person.
1.5 ACTING JOINTLY OR IN CONCERT
For the purposes hereof, a Person is acting jointly or in concert with
every Person who, as a result of any agreement, commitment or understanding,
whether formal or informal, with the first Person or any Affiliate thereof,
acquires or offers to acquire Voting Shares (other than customary agreements
with and between underwriters and/or banking group members and/or selling group
members with respect to a public offering or private placement of securities or
pledges of securities in the ordinary course of business).
1.6 GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
Wherever in this Agreement reference is made to generally accepted
accounting principles, such reference shall be deemed to be the recommendations
at the relevant time of the Canadian Institute of Chartered Accountants, or any
successor institute, applicable on a consolidated basis (unless otherwise
specifically provided herein to be applicable on an unconsolidated basis) as at
the date on which a calculation is made or required to be made in accordance
with generally accepted accounting principles. Where the character or amount of
any asset or liability or item of revenue or expense is required to be
determined, or any consolidation or other accounting computation is required to
be made for the purpose of this Agreement or any document, such determination or
calculation shall, to the extent applicable and
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except as otherwise specified herein or as otherwise agreed in writing by the
parties, be made in accordance with generally accepted accounting principles
applied on a consistent basis.
ARTICLE 2
THE RIGHTS
2.1 ISSUE OF RIGHTS AND CONVERTIBLE RIGHTS; LEGEND ON COMMON
SHARE CERTIFICATES
(a) One Right has been issued, effective at 12:01 a.m. (Calgary
time) on July 30, 2001, in respect of each Common Share
outstanding at 12:01 a.m. (Calgary time) on July 30, 2001 (the
"Record Time") and one Right shall be issued in respect of
each Common Share issued after the Record Time and prior to
the earlier of the Separation Time and the Expiration Time;
(b) One Convertible Right shall be issued on the Effective Date in
respect of each Convertible Share issued pursuant to the Plan
of Arrangement; and
(c) Certificates representing Common Shares which are issued after
the Record Time but prior to the earlier of the Separation
Time and the Expiration Time, shall also evidence one Right
for each Common Share represented thereby and shall have
impressed on, printed on, written on or otherwise affixed to
them, prior to the date hereof the legend set forth in
Subsection 2.1(c) of the Original Agreement, which legend
shall be deemed to be amended for all purposes to read the
same as the legend set forth below, and after the date hereof
the following legend:
Until the Separation Time (defined in the Agreement
below), this certificate also evidences the holder's
rights described in a Shareholder Rights Plan
Agreement dated as of July 30, 2001, as amended and
restated as of September 13, 2001 and as further
amended and restated as of April 28, 2004 and as such
may from time to time be amended, restated, varied or
replaced (the "Agreement") between EnCana Corporation
(formerly, PanCanadian Energy Corporation) (the
"Corporation") and CIBC Mellon Trust Company (the
"Rights Agent"), the terms of which are incorporated
herein and a copy of which is available on demand
without charge. Under certain circumstances set out
in the Agreement, the rights may expire, may become
null and void or may be evidenced by separate
certificates and no longer evidenced by this
certificate.
Certificates representing Common Shares that are issued and outstanding
at the Record Time shall also evidence one Right for each Common Share
represented thereby, notwithstanding the absence of the foregoing legend, until
the close of business on the earlier of the Separation Time and the Expiration
Time.
2.2 INITIAL EXERCISE PRICE; EXERCISE OF RIGHTS; DETACHMENT OF RIGHTS
(a) Subject to adjustment as herein set forth, each Right will
entitle the holder thereof, from and after the Separation Time
and prior to the Expiration Time, to purchase one Common Share
for the Exercise Price (and the Exercise Price and number of
Common Shares are subject to adjustment as set forth below).
Notwithstanding any other provision of this Agreement, any
Rights held by the Corporation or any of its Subsidiaries
shall be void.
(b) Until the Separation Time:
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(i) the Rights shall not be exercisable and no Right may
be exercised; and
(ii) each Right will be evidenced by the certificate for
the associated Common Share of the Corporation
registered in the name of the holder thereof (which
certificate shall also be deemed to represent a
Rights Certificate) and will be transferable only
together with, and will be transferred by a transfer
of, such associated Common Share.
(c) From and after the Separation Time and prior to the Expiration
Time:
(i) the Rights shall be exercisable; and
(ii) the registration and transfer of Rights shall be
separate from and independent of Common Shares of the
Corporation.
Promptly following the Separation Time, the Corporation will
prepare and the Rights Agent will mail to each holder of
record of Common Shares as of the Separation Time (other than
an Acquiring Person and, in respect of any Rights Beneficially
Owned by such Acquiring Person which are not held of record by
such Acquiring Person, the holder of record of such Rights (a
"Nominee")), and to each holder of Convertible Shares (other
than an Acquiring Person or the Nominee of an Acquiring
Person) at such holder's address as shown by the records of
the Corporation (the Corporation hereby agreeing to furnish
copies of such records to the Rights Agent for this purpose):
(x) a Rights Certificate appropriately completed,
representing the number of Rights held by such holder
at the Separation Time and having such marks of
identification or designation and such legends,
summaries or endorsements printed thereon as the
Corporation may deem appropriate and as are not
inconsistent with the provisions of this Agreement,
or as may be required to comply with any law, rule or
regulation or with any rule or regulation of any
self-regulatory organization, stock exchange or
quotation system on which the Rights may from time to
time be listed or traded, or to conform to usage; and
(y) a disclosure statement prepared by the Corporation
describing the Rights,
provided that a Nominee shall be sent the materials provided
for in (x) and (y) in respect of all Common Shares or
Convertible Shares of the Corporation held of record by it
which are not Beneficially Owned by an Acquiring Person.
(d) Rights may be exercised, in whole or in part, on any Business
Day after the Separation Time and prior to the Expiration Time
by submitting to the Rights Agent:
(i) the Rights Certificate evidencing such Rights;
(ii) an election to exercise such Rights (an "Election to
Exercise") substantially in the form attached to the
Rights Certificate appropriately completed and
executed by the holder or his executors or
administrators or other personal representatives or
his or their legal attorney duly appointed by an
instrument in writing in form and executed in a
manner satisfactory to the Rights Agent; and
(iii) payment by certified cheque, banker's draft or money
order payable to the order of the Corporation, of a
sum equal to the Exercise Price multiplied by the
number of Rights being exercised and a sum sufficient
to cover any transfer tax or
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governmental charge which may be payable in respect
of any transfer involved in the transfer or delivery
of Rights Certificates or the issuance or delivery of
certificates for Common Shares in a name other than
that of the holder of the Rights being exercised.
(e) Upon receipt of a Rights Certificate, together with a
completed Election to Exercise executed in accordance with
Paragraph 2.2(d)(ii), which does not indicate that such Right
is null and void as provided by Subsection 3.1(b), and payment
as set forth in Paragraph 2.2(d)(iii), the Rights Agent
(unless otherwise instructed by the Corporation in the event
that the Corporation is of the opinion that the Rights cannot
be exercised in accordance with this Agreement) will thereupon
promptly:
(i) requisition from the transfer agent certificates
representing the number of such Common Shares to be
purchased (the Corporation hereby irrevocably
authorizing its transfer agent to comply with all
such requisitions);
(ii) when appropriate, requisition from the Corporation
the amount of cash to be paid in lieu of issuing
fractional Common Shares in accordance with
Subsection 5.5(b);
(iii) after receipt of the certificates referred to in
Paragraph 2.2(e)(i), deliver the same to or upon the
order of the registered holder of such Rights
Certificates, registered in such name or names as may
be designated by such holder;
(iv) when appropriate, after receipt, deliver the cash
referred to in Paragraph 2.2(e)(ii) to or to the
order of the registered holder of such Rights
Certificate; and
(v) tender to the Corporation all payments received on
exercise of Rights.
(f) In case the holder of any Rights shall exercise less than all
the Rights evidenced by such holder's Rights Certificate, a
new Rights Certificate evidencing the Rights remaining
unexercised (subject to the provisions of Subsection 5.5(a))
will be issued by the Rights Agent to such holder or to such
holder's duly authorized assigns.
(g) The Corporation covenants and agrees that it will:
(i) take all such action as may be necessary and within
its power to ensure that all Common Shares delivered
upon exercise of Rights shall, at the time of
delivery of the certificates for such Common Shares
(subject to payment of the Exercise Price), be duly
and validly authorized, executed, issued and
delivered as fully paid and non-assessable;
(ii) take all such action as may be necessary and within
its power to comply with the requirements of the
CBCA, the SECURITIES ACT, the securities laws or
comparable legislation of each of the provinces of
Canada, the 1933 SECURITIES ACT and the 1934 EXCHANGE
ACT and the rules and regulations thereunder and any
other applicable law, rule or regulation, in
connection with the issuance and delivery of the
Rights Certificates and the issuance of any Common
Shares upon exercise of Rights;
(iii) use reasonable efforts to cause all Common Shares
issued upon exercise of Rights to be listed on the
TSX or other principal stock exchanges on which such
Common Shares were traded immediately prior to the
Stock Acquisition Date;
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(iv) cause to be reserved and kept available out of the
authorized and unissued Common Shares, the number of
Common Shares that, as provided in this Agreement,
will from time to time be sufficient to permit the
exercise in full of all outstanding Rights;
(v) pay when due and payable, if applicable, any and all
federal, provincial and municipal transfer taxes and
charges (not including any income or capital taxes of
the holder or exercising holder or any liability of
the Corporation to withhold tax) which may be payable
in respect of the original issuance or delivery of
the Rights Certificates, or certificates for Common
Shares to be issued upon exercise of any Rights,
provided that the Corporation shall not be required
to pay any transfer tax or charge which may be
payable in respect of any transfer involved in the
transfer or delivery of Rights Certificates or the
issuance or delivery of certificates for Common
Shares in a name other than that of the holder of the
Rights being transferred or exercised; and
(vi) after the Separation Time, except as permitted by
Section 5.1, not take (or permit any Subsidiary to
take) any action if at the time such action is taken
it is reasonably foreseeable that such action will
diminish substantially or otherwise eliminate the
benefits intended to be afforded by the Rights.
2.3 ADJUSTMENTS TO EXERCISE PRICE; NUMBER OF RIGHTS
The Exercise Price, the number and kind of securities subject to
purchase upon exercise of each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 2.3.
(a) In the event the Corporation shall at any time after the date
of this Agreement:
(i) declare or pay a dividend on Common Shares payable in
Common Shares (or other securities exchangeable for
or convertible into or giving a right to acquire
Common Shares or other securities of the Corporation)
other than pursuant to any optional stock dividend
program;
(ii) subdivide or change the then outstanding Common
Shares into a greater number of Common Shares;
(iii) consolidate or change the then outstanding Common
Shares into a smaller number of Common Shares; or
(iv) issue any Common Shares (or other securities
exchangeable for or convertible into or giving a
right to acquire Common Shares or other securities of
the Corporation) in respect of, in lieu of or in
exchange for existing Common Shares except as
otherwise provided in this Section 2.3,
the Exercise Price and the number of Rights outstanding, or,
if the payment or effective date therefor shall occur after
the Separation Time, the securities purchasable upon exercise
of Rights shall be adjusted as of the payment or effective
date in the manner set forth below.
If the Exercise Price and number of Rights outstanding are to be
adjusted:
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(x) the Exercise Price in effect after such adjustment
will be equal to the Exercise Price in effect
immediately prior to such adjustment divided by the
number of Common Shares (or other capital stock) (the
"Expansion Factor") that a holder of one Common Share
immediately prior to such dividend, subdivision,
change, consolidation or issuance would hold
thereafter as a result thereof; and
(y) each Right held prior to such adjustment will become
that number of Rights equal to the Expansion Factor,
and the adjusted number of Rights will be deemed to be
distributed among the Common Shares with respect to which the
original Rights were associated (if they remain outstanding)
and the shares issued in respect of such dividend,
subdivision, change, consolidation or issuance, so that each
such Common Share (or other capital stock) will have exactly
one Right associated with it.
For greater certainty, if the securities purchasable upon
exercise of Rights are to be adjusted, the securities
purchasable upon exercise of each Right after such adjustment
will be the securities that a holder of the securities
purchasable upon exercise of one Right immediately prior to
such dividend, subdivision, change, consolidation or issuance
would hold thereafter as a result of such dividend,
subdivision, change, consolidation or issuance.
If, after the Record Time and prior to the Expiration Time,
the Corporation shall issue any shares of capital stock other
than Common Shares in a transaction of a type described in
Paragraph 2.3(a)(i) or (iv), shares of such capital stock
shall be treated herein as nearly equivalent to Common Shares
as may be practicable and appropriate under the circumstances
and the Corporation and the Rights Agent agree to amend this
Agreement in order to effect such treatment. If an event
occurs which would require an adjustment under both this
Section 2.3 and Subsection 3.1(a) hereof, 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
Subsection 3.1(a) hereof. Adjustments pursuant to Subsection
2.3(a) shall be made successively, whenever an event referred
to in Subsection 2.3(a) occurs.
In the event the Corporation shall at any time after the
Record Time and prior to the Separation Time issue any Common
Shares otherwise than in a transaction referred to in this
Subsection 2.3(a), each such Common Share so issued shall
automatically have one new Right associated with it, which
Right shall be evidenced by the certificate representing such
associated Common Share.
(b) In the event the Corporation shall at any time after the
Record Time and prior to the Separation Time fix a record date
for the issuance of rights, options or warrants to all holders
of Common Shares entitling them (for a period expiring within
45 calendar days after such record date) to subscribe for or
purchase Common Shares (or securities convertible into or
exchangeable for or carrying a right to purchase Common
Shares) at a price per Common Share (or, if a security
convertible into or exchangeable for or carrying a right to
purchase or subscribe for Common Shares, having a conversion,
exchange or exercise price, including the price required to be
paid to purchase such convertible or exchangeable security or
right per share) less than the Market Price per Common Share
on such record date, the Exercise Price to be in effect after
such record date shall be determined by multiplying the
Exercise Price in effect immediately prior to such record date
by a fraction:
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(i) the numerator of which shall be the number of Common
Shares outstanding on such record date, plus the
number of Common Shares that the aggregate offering
price of the total number of Common Shares so to be
offered (and/or the aggregate initial conversion,
exchange or exercise price of the convertible or
exchangeable securities or rights so to be offered,
including the price required to be paid to purchase
such convertible or exchangeable securities or
rights) would purchase at such Market Price per
Common Share; and
(ii) the denominator of which shall be the number of
Common Shares outstanding on such record date, plus
the number of additional Common Shares to be offered
for subscription or purchase (or into which the
convertible or exchangeable securities or rights so
to be offered are initially convertible, exchangeable
or exercisable).
In case such subscription price may be paid by delivery of
consideration, part or all of which may be in a form other
than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors, whose
determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent and the
holders of Rights. Such adjustment shall be made successively
whenever such a record date is fixed, and in the event that
such rights, options or warrants are not so issued, or if
issued, are not exercised prior to the expiration thereof, the
Exercise Price shall be readjusted to the Exercise Price which
would then be in effect if such record date had not been
fixed, or to the Exercise Price which would be in effect based
upon the number of Common Shares (or securities convertible
into, or exchangeable or exercisable for Common Shares)
actually issued upon the exercise of such rights, options or
warrants, as the case may be.
For purposes of this Agreement, the granting of the right to
purchase Common Shares (whether from treasury or otherwise)
pursuant to any Dividend Reinvestment Plan or any employee
benefit, stock option or similar plans shall be deemed not to
constitute an issue of rights, options or warrants by the
Corporation; provided, however, that, in all such cases, the
right to purchase Common Shares is at a price per share of not
less than 95 per cent of the current market price per share
(determined as provided in such plans) of the Common Shares.
(c) In the event the Corporation shall at any time after the
Record Time and prior to the Separation Time fix a record date
for the making of a distribution to all holders of Common
Shares (including any such distribution made in connection
with a merger or amalgamation) of evidences of indebtedness,
cash (other than an annual cash dividend or a dividend
referred to in Paragraph 2.3(a)(i), but including any dividend
payable in other securities of the Corporation other than
Common Shares), assets or rights, options or warrants
(excluding those referred to in Subsection 2.3(b)), the
Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect
immediately prior to such record date by a fraction:
(i) the numerator of which shall be the Market Price per
Common Share on such record date, less the fair
market value (as determined in good faith by the
Board of Directors, whose determination shall be
described in a statement filed with the Rights Agent
and shall be binding on the Rights Agent and the
holders of Rights), on a per share basis, of the
portion of the cash, assets, evidences of
indebtedness, rights, options or warrants so to be
distributed; and
(ii) the denominator of which shall be such Market Price
per Common Share.
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Such adjustments shall be made successively whenever such a
record date is fixed, and in the event that such a
distribution is not so made, the Exercise Price shall be
adjusted to be the Exercise Price which would have been in
effect if such record date had not been fixed.
(d) Notwithstanding anything herein to the contrary, no adjustment
in the Exercise Price shall be required unless such adjustment
would require an increase or decrease of at least one per cent
in the Exercise Price; provided, however, that any adjustments
which by reason of this Subsection 2.3(d) are not required to
be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under Section 2.3
shall be made to the nearest cent or to the nearest
ten-thousandth of a share. Notwithstanding the first sentence
of this Subsection 2.3(d), any adjustment required by Section
2.3 shall be made no later than the earlier of:
(i) three years from the date of the transaction which
gives rise to such adjustment; or
(ii) the Expiration Date.
(e) In the event the Corporation shall at any time after the
Record Time and prior to the Separation Time issue any shares
of capital stock (other than Common Shares), or rights,
options or warrants to subscribe for or purchase any such
capital stock, or securities convertible into or exchangeable
for any such capital stock, in a transaction referred to in
Paragraphs 2.3(a)(i) or (iv), if the Board of Directors acting
in good faith determines that the adjustments contemplated by
Subsections 2.3(a), (b) and (c) in connection with such
transaction will not appropriately protect the interests of
the holders of Rights, the Board of Directors may determine
what other adjustments to the Exercise Price, number of Rights
and/or securities purchasable upon exercise of Rights would be
appropriate and, notwithstanding Subsections 2.3(a), (b) and
(c), such adjustments, rather than the adjustments
contemplated by Subsections 2.3(a), (b) and (c), shall be
made. The Corporation and the Rights Agent shall have
authority to amend this Agreement in accordance with
Subsections 5.4(b) and 5.4(c), as the case may be, to provide
for such adjustments.
(f) Each Right originally issued by the Corporation subsequent to
any adjustment made to the Exercise Price hereunder shall
evidence the right to purchase, at the adjusted Exercise
Price, the number of Common Shares purchasable from time to
time hereunder upon exercise of a Right immediately prior to
such issue, all subject to further adjustment as provided
herein.
(g) Irrespective of any adjustment or change in the Exercise Price
or the number of Common Shares issuable upon the exercise of
the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Exercise Price per Common
Share and the number of Common Shares which were expressed in
the initial Rights Certificates issued hereunder.
(h) In any case in which this Section 2.3 shall require that an
adjustment in the Exercise Price be made effective as of a
record date for a specified event, the Corporation may elect
to defer until the occurrence of such event the issuance to
the holder of any Right exercised after such record date the
number of Common Shares and other securities of the
Corporation, if any, issuable upon such exercise over and
above the number of Common Shares and other securities of the
Corporation, if any, issuable upon such exercise on the basis
of the Exercise Price in effect prior to such adjustment;
provided, however, that the
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Corporation shall deliver to such holder an appropriate
instrument evidencing such holder's right to receive such
additional shares (fractional or otherwise) or other
securities upon the occurrence of the event requiring such
adjustment.
(i) Notwithstanding anything contained in this Section 2.3 to the
contrary, the Corporation shall be entitled to make such
reductions in the Exercise Price, in addition to those
adjustments expressly required by this Section 2.3, as and to
the extent that in their good faith judgment the Board of
Directors determines to be advisable, in order that any:
(i) consolidation or subdivision of Common Shares;
(ii) issuance (wholly or in part for cash) of Common
Shares or securities that by their terms are
convertible into or exchangeable for Common Shares;
(iii) stock dividends; or
(iv) issuance of rights, options or warrants referred to
in this Section 2.3,
hereafter made by the Corporation to holders of its Common
Shares, shall not be taxable to such shareholders.
(j) Whenever an adjustment to an Exercise Price or a change in the
securities purchasable upon exercise of the Rights is made
pursuant to this Section 2.3, the Corporation shall promptly:
(i) file with the Rights Agent and with the transfer
agent for the Corporation 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 Common Shares or other
securities, if applicable, is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of the Common Shares or
other securities, if applicable, represented thereon, and such certificate shall
be dated the date upon which the Rights Certificate evidencing such Rights was
duly surrendered in accordance with Subsection 2.2(d) (together with a duly
completed Election to Exercise) and payment of the Exercise Price for such
Rights (and any applicable transfer taxes and other governmental charges payable
by the exercising holder hereunder) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Common Share
transfer books of the Corporation are closed, such Person shall be deemed to
have become the record holder of such shares on, and such certificate shall be
dated, the next succeeding Business Day on which the Common Share transfer books
of the Corporation are open.
2.5 EXECUTION, AUTHENTICATION, DELIVERY AND DATING OF RIGHTS CERTIFICATES
(a) The Rights Certificates shall be executed on behalf of the
Corporation by its Chairman of the Board, President or any
Vice-President and by its Corporate Secretary or any Assistant
Secretary under the corporate seal of the Corporation
reproduced thereon. The
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signature of any of these officers on the Rights Certificates
may be manual or by facsimile. Rights Certificates bearing the
manual or facsimile signatures of individuals who were at any
time the proper officers of the Corporation shall bind the
Corporation, notwithstanding that such individuals or any of
them have ceased to hold such offices either before or after
the countersignature and delivery of such Rights Certificates.
(b) Promptly after the Corporation learns of the Separation Time,
the Corporation will notify the Rights Agent of such
Separation Time and will deliver Rights Certificates executed
by the Corporation to the Rights Agent for countersignature,
and the Rights Agent shall countersign (manually or by
facsimile signature in a manner satisfactory to the
Corporation) and send such Rights Certificates to the holders
of the Rights pursuant to Subsection 2.2(c) hereof. No Rights
Certificate shall be valid for any purpose until countersigned
by the Rights Agent as aforesaid.
(c) Each Rights Certificate shall be dated the date of
countersignature thereof.
2.6 REGISTRATION, TRANSFER AND EXCHANGE
(a) The Corporation will cause to be kept a register (the "Rights
Register") in which, subject to such reasonable regulations as
it may prescribe, the Corporation will provide for the
registration and transfer of Rights. The Rights Agent is
hereby appointed registrar for the Rights (the "Rights
Registrar") for the purpose of maintaining the Rights Register
for the Corporation and registering Rights and transfers of
Rights as herein provided and the Rights Agent hereby accepts
such appointment. In the event that the Rights Agent shall
cease to be the Rights Registrar, the Rights Agent will have
the right to examine the Rights Register at all reasonable
times.
After the Separation Time and prior to the Expiration Time,
upon surrender for registration of transfer or exchange of any
Rights Certificate, and subject to the provisions of
Subsection 2.6(c), the Corporation will execute, and the
Rights Agent will countersign and deliver, in the name of the
holder or the designated transferee or transferees, as
required pursuant to the holder's instructions, one or more
new Rights Certificates evidencing the same aggregate number
of Rights as did the Rights Certificates so surrendered.
(b) All Rights issued upon any registration of transfer or
exchange of Rights Certificates shall be the valid obligations
of the Corporation, and such Rights shall be entitled to the
same benefits under this Agreement as the Rights surrendered
upon such registration of transfer or exchange.
(c) Every Rights Certificate surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied
by a written instrument of transfer satisfactory in form to
the Corporation or the Rights Agent, as the case may be, duly
executed by the holder thereof or such holder's attorney duly
authorized in writing. As a condition to the issuance of any
new Rights Certificate under this Section 2.6, the Corporation
may require the payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in relation
thereto and any other expenses (including the reasonable fees
and expenses of the Rights Agent) connected therewith.
2.7 MUTILATED, DESTROYED, LOST AND STOLEN RIGHTS CERTIFICATES
(a) If any mutilated Rights Certificate is surrendered to the
Rights Agent prior to the Expiration Time, the Corporation
shall execute and the Rights Agent shall countersign
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and deliver in exchange therefor a new Rights Certificate
evidencing the same number of Rights as did the Rights
Certificate so surrendered.
(b) If there shall be delivered to the Corporation and the Rights
Agent prior to the Expiration Time:
(i) evidence to their reasonable satisfaction of the
destruction, loss or theft of any Rights Certificate;
and
(ii) such security or indemnity as may be reasonably
required by them to save each of them and any of
their agents harmless;
then, in the absence of notice to the Corporation or the
Rights Agent that such Rights Certificate has been acquired by
a BONA FIDE purchaser, the Corporation shall execute and upon
the Corporation's request the Rights Agent shall countersign
and deliver, in lieu of any such destroyed, lost or stolen
Rights Certificate, a new Rights Certificate evidencing the
same number of Rights as did the destroyed, lost or stolen
Rights Certificate.
(c) As a condition to the issuance of any new Rights Certificate
under this Section 2.7, the Corporation may require the
payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto
and any other expenses (including the reasonable fees and
expenses of the Rights Agent) connected therewith.
(d) Every new Rights Certificate issued pursuant to this Section
2.7 in lieu of any destroyed, lost or stolen Rights
Certificate shall evidence the contractual obligation of the
Corporation, whether or not the destroyed, lost or stolen
Rights Certificate shall be at any time enforceable by anyone,
and shall be entitled to all the benefits of this Agreement
equally and proportionately with any and all other Rights duly
issued hereunder.
2.8 PERSONS DEEMED OWNERS OF RIGHTS
The Corporation, the Rights Agent and any agent of the Corporation or
the Rights Agent may deem and treat the Person in whose name a Rights
Certificate (or, prior to the Separation Time, the associated Common Share
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby for all purposes whatsoever. As used in this Agreement, unless
the context otherwise requires, the term "holder" of any Rights shall mean the
registered holder of such Rights (or, prior to the Separation Time, of the
associated Common Shares).
2.9 DELIVERY AND CANCELLATION OF CERTIFICATES
All Rights Certificates surrendered upon exercise or for redemption,
registration of transfer or exchange shall, if surrendered to any Person other
than the Rights Agent, be delivered to the Rights Agent and, in any case, shall
be promptly cancelled by the Rights Agent. The Corporation may at any time
deliver to the Rights Agent for cancellation any Rights Certificates previously
countersigned and delivered hereunder which the Corporation may have acquired in
any manner whatsoever, and all Rights Certificates so delivered shall be
promptly cancelled by the Rights Agent. No Rights Certificate shall be
countersigned in lieu of or in exchange for any Rights Certificates cancelled as
provided in this Section 2.9, except as expressly permitted by this Agreement.
The Rights Agent shall, subject to applicable laws, and its ordinary business
practices, destroy all cancelled Rights Certificates and deliver a certificate
of destruction to the Corporation.
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2.10 AGREEMENT OF RIGHTS HOLDERS
Every holder of Rights, by accepting the same, consents and agrees with
the Corporation and the Rights Agent and with every other holder of Rights:
(a) to be bound by and subject to the provisions of this
Agreement, as amended from time to time in accordance with the
terms hereof, in respect of all Rights held;
(b) that prior to the Separation Time, each Right will be
transferable only together with, and will be transferred by a
transfer of, the associated Common Share certificate
representing such Right;
(c) that after the Separation Time, the Rights Certificates will
be transferable only on the Rights Register as provided
herein;
(d) that prior to due presentment of a Rights Certificate (or,
prior to the Separation Time, the associated Common Share
certificate) for registration of transfer, the Corporation,
the Rights Agent and any agent of the Corporation or the
Rights Agent may deem and treat the Person in whose name the
Rights Certificate (or, prior to the Separation Time, the
associated Common Share certificate) is registered as the
absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on such
Rights Certificate or the associated Common Share certificate
made by anyone other than the Corporation or the Rights Agent)
for all purposes whatsoever, and neither the Corporation nor
the Rights Agent shall be affected by any notice to the
contrary;
(e) that such holder of Rights has waived his right to receive any
fractional Rights or any fractional shares or other securities
upon exercise of a Right (except as provided herein);
(f) that, subject to the provisions of Section 5.4, without the
approval of any holder of Rights or Voting Shares and upon the
sole authority of the Board of Directors, acting in good
faith, this Agreement may be supplemented or amended from time
to time to cure any ambiguity or to correct or supplement any
provision contained herein which may be inconsistent with the
intent of this Agreement or is otherwise defective, as
provided herein; and
(g) notwithstanding anything in this Agreement to the contrary,
neither the Corporation nor the Rights Agent shall have any
liability to any holder of a Right or any other Person as a
result of its inability to perform any of its obligations
under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court
of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining
performance of such obligation.
2.11 RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER
No holder, as such, of any Rights or Rights Certificate shall be
entitled to vote, receive dividends or be deemed for any purpose whatsoever the
holder of any Common Share or any other share or security of the Corporation
which may at any time be issuable on the exercise of the Rights represented
thereby, nor shall anything contained herein or in any Rights Certificate be
construed or deemed or confer upon the holder of any Right or Rights
Certificate, as such, any right, title, benefit or privilege of a holder of
Common Shares or any other shares or securities of the Corporation or any right
to vote at any meeting of shareholders of the Corporation whether for the
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election of directors or otherwise or upon any matter submitted to holders of
Common Shares or any other shares of the Corporation at any meeting thereof, or
to give or withhold consent to any action of the Corporation, or to receive
notice of any meeting or other action affecting any holder of Common Shares or
any other shares of the Corporation except as expressly provided herein, or to
receive dividends, distributions or subscription rights, or otherwise, until the
Right or Rights evidenced by Rights Certificates shall have been duly exercised
in accordance with the terms and provisions hereof.
ARTICLE 3
ADJUSTMENTS TO THE RIGHTS
3.1 FLIP-IN EVENT
(a) Subject to Subsection 3.1(b) and Section 5.1, if prior to the
Expiration Time a Flip-in Event occurs, each Right shall
constitute, effective at the close of business on the tenth
Trading Day after the Stock Acquisition Date, the right to
purchase from the Corporation, upon exercise thereof in
accordance with the terms hereof, that number of Common Shares
having an aggregate Market Price on the date of consummation
or occurrence of such Flip-in Event equal to twice the
Exercise Price for an amount in cash equal to the Exercise
Price (such right to be appropriately adjusted in a manner
analogous to the applicable adjustment provided for in Section
2.3 in the event that after such consummation or occurrence,
an event of a type analogous to any of the events described in
Section 2.3 shall have occurred).
(b) Notwithstanding anything in this Agreement to the contrary,
upon the occurrence of any Flip-in Event, any Rights that are
or were Beneficially Owned on or after the earlier of the
Separation Time or the Stock Acquisition Date by:
(i) an Acquiring Person (or any Affiliate or Associate of
an Acquiring Person or any Person acting jointly or
in concert with an Acquiring Person or any Affiliate
or Associate of an Acquiring Person); or
(ii) a transferee of Rights, directly or indirectly, from
an Acquiring Person (or any Affiliate or Associate of
an Acquiring Person or any Person acting jointly or
in concert with an Acquiring Person or any Affiliate
or Associate of an Acquiring Person), where such
transferee becomes a transferee concurrently with or
subsequent to the Acquiring Person becoming such in a
transfer that the Board of Directors has determined
is part of a plan, arrangement or scheme of an
Acquiring Person (or any Affiliate or Associate of an
Acquiring Person or any Person acting jointly or in
concert with an Acquiring Person or any Affiliate or
Associate of an Acquiring Person), that has the
purpose or effect of avoiding Paragraph 3.1(b)(i),
shall become null and void without any further action, and any
holder of such Rights (including transferees) shall thereafter
have no right to exercise such Rights under any provision of
this Agreement and further shall thereafter not have any other
rights whatsoever with respect to such Rights, whether under
any provision of this Agreement or otherwise.
(c) From and after the Separation Time, the Corporation shall do
all such acts and things as shall be necessary and within its
power to ensure compliance with the provisions of this Section
3.1, including without limitation, all such acts and things as
may be required to satisfy the requirements of the CBCA, the
SECURITIES ACT and the securities laws or
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comparable legislation of each of the provinces of Canada and
of the United States and each of the states thereof in respect
of the issue of Common Shares upon the exercise of Rights in
accordance with this Agreement.
(d) Any Rights Certificate that represents Rights Beneficially
Owned by a Person described in either Paragraph 3.1(b)(i) or
(ii) or transferred to any nominee of any such Person, and any
Rights Certificate issued upon transfer, exchange, replacement
or adjustment of any other Rights Certificate referred to in
this sentence, shall contain the following legend:
The Rights represented by this Rights Certificate
were issued to a Person who was an Acquiring Person
or an Affiliate or an Associate of an Acquiring
Person (as such terms are defined in the Shareholder
Rights Plan Agreement) or a Person who was acting
jointly or in concert with an Acquiring Person or an
Affiliate or Associate of an Acquiring Person. This
Rights Certificate and the Rights represented hereby
are void or shall become void in the circumstances
specified in Subsection 3.1(b) of the Shareholder
Rights Plan Agreement.
provided, however, that the Rights Agent shall not be under any
responsibility to ascertain the existence of facts that would require
the imposition of such legend but shall impose such legend only if
instructed to do so by the Corporation in writing or if a holder fails
to certify upon transfer or exchange in the space provided on the
Rights Certificate that such holder is not a Person described in such
legend.
ARTICLE 4
THE RIGHTS AGENT
4.1 GENERAL
(a) The Corporation hereby appoints the Rights Agent to act as
agent for the Corporation and the holders of the Rights and
the Convertible Rights in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such
appointment. The Corporation may from time to time appoint
such co-Rights Agents ("Co-Rights Agents") as it may deem
necessary or desirable, subject to the approval of the Rights
Agent. In the event the Corporation appoints one or more
Co-Rights Agents, the respective duties of the Rights Agent
and Co-Rights Agents shall be as the Corporation may
determine, with the approval of the Rights Agent and the
Co-Rights Agent. The Corporation agrees to pay all reasonable
fees and expenses of the Rights Agent in respect of the
performance of its duties under this Agreement. The
Corporation also agrees to indemnify the Rights Agent for, and
to hold it harmless against, any loss, liability, or expense,
incurred without negligence, bad faith or wilful misconduct on
the part of the Rights Agent, for anything done or omitted by
the Rights Agent in connection with the acceptance and
administration of this Agreement, including 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.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or
omitted by it in connection with its administration of this
Agreement in reliance upon any certificate for Common Shares
or Convertible Shares, Rights Certificate, certificate for
other securities of the Corporation, instrument of assignment
or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, opinion,
statement, or other paper or document believed by it to be
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genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons.
(c) The Corporation shall inform the Rights Agent in a reasonably
timely manner of events which may materially affect the
administration of this Agreement by the Rights Agent and, at
any time upon request, shall provide to the Rights Agent an
incumbency certificate certifying the then current officers of
the Corporation.
4.2 MERGER, AMALGAMATION OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT
(a) Any corporation into which the Rights Agent may be merged or
amalgamated or with which it may be consolidated, or any
corporation resulting from any merger, amalgamation, statutory
arrangement or consolidation to which the Rights Agent is a
party, or any corporation succeeding to the shareholder or
stockholder services business of the Rights Agent, will be the
successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 4.4 hereof. If,
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, the successor Rights
Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Rights Certificates so countersigned;
and if, at that time, any of the Rights have not been
countersigned, any successor Rights Agent may countersign such
Rights Certificates in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all
such cases such Rights Certificates will have the full force
provided in the Rights Certificates and in this Agreement.
(b) If, at any time, the name of the Rights Agent is changed and
at such time any of the Rights Certificates have been
countersigned but not delivered, the Rights Agent may adopt
the countersignature under its prior name and deliver Rights
Certificates so countersigned; and if, at that time, any of
the Rights Certificates have not been countersigned, the
Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such
cases such Rights Certificates shall have the full force
provided in the Rights Certificates and in this Agreement.
4.3 DUTIES OF RIGHTS AGENT
The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, all of which the Corporation
and the holders of certificates for Common Shares and Convertible Shares and the
holders of Rights Certificates, by their acceptance thereof, shall be bound:
(a) the Rights Agent, at the expense of the Corporation, may
consult with and retain legal counsel (who may be legal
counsel for the Corporation) and such other experts as it
reasonably considers necessary to perform its duties
hereunder, and the opinion of such counsel or other expert
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;
(b) whenever in the performance of its duties under this
Agreement, the Rights Agent deems it necessary or desirable
that any fact or matter be proved or established by the
Corporation prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof
is specifically prescribed herein) is deemed to be
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conclusively proved and established by a certificate signed by
a Person believed by the Rights Agent to be the Chairman of
the Board, President, Chief Executive Officer, Chief Financial
Officer, any Vice-President, Treasurer, Corporate Secretary,
or any Assistant Secretary of the Corporation and 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 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 Common Shares or Convertible Shares
or the Rights Certificates (except its countersignature
thereof) or be required to verify the same, but all such
statements and recitals are and will be deemed to have been
made by the Corporation only;
(e) the Rights Agent will not have any responsibility in respect
of the validity of this Agreement or the execution and
delivery hereof (except the due authorization, execution and
delivery hereof by the Rights Agent) or in respect of the
validity or execution of any certificate for a Common Share or
a Convertible Share or Rights Certificate (except its
countersignature thereof); nor will it be responsible for any
breach by the Corporation of any covenant or condition
contained in this Agreement or in any Rights Certificate; nor
will it be responsible for any change in the exerciseability
of the Rights (including the Rights becoming void pursuant to
Subsection 3.1(b) hereof) or any adjustment required under the
provisions of Section 2.3 hereof or responsible for the
manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights
after receipt of the certificate contemplated by Section 2.3
describing any such adjustment); nor is it deemed by any act
hereunder to make any representation or warranty as to the
authorization of any Common Shares or Convertible Shares to be
issued pursuant to this Agreement or any Rights or Convertible
Rights or as to whether any Common Shares or Convertible
Shares will, when issued, be duly and validly authorized,
executed, issued and delivered and fully paid and
non-assessable;
(f) the Corporation agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by
the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement;
(g) the Rights Agent is hereby authorized and directed to accept
instructions in writing with respect to the performance of its
duties hereunder from any individual believed by the Rights
Agent to be the Chairman of the Board, President, Chief
Executive Officer, Chief Financial Officer, any
Vice-President, Treasurer, Corporate Secretary or any
Assistant Secretary of the Corporation, and to apply to such
individuals for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or
suffered by it in good faith in accordance with instructions
of any such individual;
(h) the Rights Agent and any shareholder or stockholder, director,
officer or employee of the Rights Agent may buy, sell or deal
in Common Shares, Convertible Shares, Rights, Convertible
Rights or other securities of the Corporation or become
pecuniarily interested in any transaction in which the
Corporation may be interested, or contract with or lend money
to the Corporation or otherwise act as fully and freely as
though it were not Rights
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Agent under this Agreement and nothing herein shall preclude
the Rights Agent from acting in any other capacity for the
Corporation or for any other legal entity; and
(i) the Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and
the Rights Agent will not be answerable or accountable for any
act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Corporation resulting from any
such act, default, neglect or misconduct, provided reasonable
care was exercised in the selection and continued employment
thereof.
4.4 CHANGE OF RIGHTS AGENT
The Rights Agent may resign and be discharged from its duties under
this Agreement upon 60 days' notice (or such lesser notice as is acceptable to
the Corporation) in writing mailed to the Corporation and to each transfer agent
of Common Shares and Convertible Shares by registered or certified mail. The
Corporation may remove the Rights Agent upon 60 days' notice in writing, mailed
to the Rights Agent and to each transfer agent of the Common Shares and
Convertible Shares by registered or certified mail. If the Rights Agent should
resign or be removed or otherwise become incapable of acting, the Corporation
will appoint a successor to the Rights Agent. If the Corporation fails to make
such appointment within a period of 60 days after removal or after it has been
notified in writing of the resignation or incapacity by the resigning or
incapacitated Rights Agent, then by prior written notice to the Corporation the
resigning Rights Agent or the holder of any Rights or Convertible Rights (which
holder shall, with such notice, submit such holder's Rights Certificate, if any,
for inspection by the Corporation), may apply to a court of competent
jurisdiction for the appointment of a new Rights Agent, at the Corporation's
expense. Any successor Rights Agent, whether appointed by the Corporation or by
such a court, shall be a corporation incorporated under the laws of Canada or a
province thereof authorized to carry on the business of a trust company in the
Province of Alberta. 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, upon receipt of all outstanding fees and expenses
owing to it, shall deliver and transfer to the successor Rights Agent any
property at the time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment, the Corporation will file notice thereof
in writing with the predecessor Rights Agent and each transfer agent of the
Common Shares and Convertible Shares and mail a notice thereof in writing to the
holders of the Rights and Convertible Shares in accordance with Section 5.9.
Failure to give any notice provided for in this Section 4.4, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of any successor Rights Agent, as
the case may be.
ARTICLE 5
MISCELLANEOUS
5.1 REDEMPTION AND WAIVER
(a) The Board of Directors acting in good faith may, until the
occurrence of a Flip-in Event, upon prior written notice
delivered to the Rights Agent, waive the application of
Section 3.1 to a particular Flip-in Event that would result
from a Take-over Bid made by way of take-over bid circular to
all holders of Voting Shares (which for greater certainty
shall not include the circumstances described in Subsection
5.1(h)); 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(a), 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-
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over Bid which is made by means of a take-over bid circular to
all holders of Voting Shares prior to the expiry of any
Take-over Bid (as the same may be extended from time to time)
in respect of which a waiver is, or is deemed to have been,
granted under this Subsection 5.1(a).
(b) Subject to the prior consent of the holders of the Voting
Shares or the Rights as set forth in Subsections 5.4(b) or
(c), the Board of Directors acting in good faith may, at its
option, at any time prior to the provisions of Section 3.1
becoming applicable as a result of the occurrence of a Flip-in
Event, elect to redeem all but not less than all of the
outstanding Rights and Convertible Rights at a redemption
price of $0.000001 per Right or Convertible Right
appropriately adjusted in a manner analogous to the applicable
adjustment provided for in Section 2.3 if an event of the type
analogous to any of the events described in Section 2.3 shall
have occurred (such redemption price being herein referred to
as the "Redemption Price").
(c) Where, pursuant to a Permitted Bid, a Competing Permitted Bid
or an Exempt Acquisition under Subsection 5.1(a), a Person
acquires outstanding Voting Shares, other than Voting Shares
Beneficially Owned by such Person at the date of the Permitted
Bid, the Competing Permitted Bid or the Exempt Acquisition
under Subsection 5.1(a), then the Board of Directors shall
immediately upon the consummation of such acquisition without
further formality and without any approval under Subsection
5.4(b) or (c) be deemed to have elected to redeem the Rights
and Convertible Rights at the Redemption Price.
(d) Where a Take-over Bid that is not a Permitted Bid Acquisition
is withdrawn or otherwise terminated after the Separation Time
has occurred and prior to the occurrence of a Flip-in Event,
the Board of Directors may elect to redeem all the outstanding
Rights and Convertible Rights at the Redemption Price.
(e) If the Board of Directors is deemed under Subsection 5.1(c) to
have elected, or elects under either of Subsection 5.1(b) or
(d), to redeem the Rights and Convertible Rights, the right to
exercise the Rights and Convertible Rights will thereupon,
without further action and without notice, terminate and the
only right thereafter of the holders of Rights and Convertible
Rights shall be to receive the Redemption Price.
(f) Within ten days after the Board of Directors is deemed under
Subsection 5.1(c) to have elected, or elects under Subsections
5.1(b) or (d), to redeem the Rights and Convertible Rights,
the Corporation shall give notice of redemption to the holders
of the then outstanding Rights and Convertible Rights by
mailing such notice to each such holder at his last address as
it appears upon the registry books of the Rights Agent or,
prior to the Separation Time, on the registry books of the
transfer agent for the Voting Shares or Convertible Shares.
Any notice which is mailed in the manner provided herein shall
be deemed given, whether or not the holder receives the
notice. Each notice of redemption will state the method by
which the payment of the Redemption Price will be made.
(g) Upon the Rights and Convertible Rights being redeemed pursuant
to Subsection 5.1(d), all the provisions of this Agreement
shall continue to apply as if the Separation Time had not
occurred and Rights Certificates representing the number of
Rights and Convertible Rights held by each holder of record of
Common Shares and Convertible Shares as of the Separation Time
had not been mailed to each such holder and for all purposes
of this Agreement the Separation Time shall be deemed not to
have occurred and the Rights shall remain attached to the
outstanding Common Shares and the Convertible Rights shall
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remain attached to the Convertible Shares, subject to and in
accordance with the provisions of this Agreement.
(h) The Board of Directors may waive the application of Section
3.1 in respect of the occurrence of any Flip-in Event if the
Board of Directors has determined within ten Trading Days
following a Stock Acquisition Date that a Person became an
Acquiring Person by inadvertence and without any intention to
become, or knowledge that it would become, an Acquiring Person
under this Agreement and, in the event that such a waiver is
granted by the Board of Directors, such Stock Acquisition Date
shall be deemed not to have occurred. Any such waiver pursuant
to this Subsection 5.1(h) must be on the condition that such
Person, within 14 days after the foregoing determination by
the Board of Directors or such earlier or later date as the
Board of Directors may determine (the "Disposition Date"), has
reduced its Beneficial Ownership of Voting Shares so that the
Person is no longer an Acquiring Person. If the Person remains
an Acquiring Person at the close of business on the
Disposition Date, the Disposition Date shall be deemed to be
the date of occurrence of a further Stock Acquisition Date and
Section 3.1 shall apply thereto.
(i) The Corporation shall give prompt written notice to the Rights
Agent of any waiver of the application of Section 3.1 made by
the Board of Directors under this Section 5.1.
5.2 EXPIRATION
No Person shall have any rights whatsoever pursuant to this Agreement
or in respect of any Right or Convertible Right after the Expiration Time,
except the Rights Agent as specified in Subsection 4.1(a) of this Agreement.
5.3 ISSUANCE OF NEW RIGHTS CERTIFICATES
Notwithstanding any of the provisions of this Agreement, the Rights or
the Convertible Rights to the contrary, the Corporation may, at its option,
issue new Rights Certificates evidencing Rights in such form as may be approved
by the Board of Directors to reflect any adjustment or change in the number or
kind or class of securities purchasable upon exercise of Rights made in
accordance with the provisions of this Agreement.
5.4 SUPPLEMENTS AND AMENDMENTS
(a) The Corporation may make amendments to this Agreement to
correct any clerical or typographical error or, subject to
Subsection 5.4(e), which are required to maintain the validity
of this Agreement as a result of any change in any applicable
legislation, rules or regulations thereunder. The Corporation
may, prior to April 28, 2004, supplement or amend this
Agreement without the approval of any holders of Rights,
Convertible Rights or Voting Shares in order to make any
changes which the Board of Directors acting in good faith may
deem necessary or desirable. Notwithstanding anything in this
Section 5.4 to the contrary, no such supplement or amendment
shall be made to the provisions of Article 4 except with the
written concurrence of the Rights Agent to such supplement or
amendment.
(b) Subject to Subsection 5.4(a), the Corporation may, with the
prior consent of the holders of Voting Shares obtained as set
forth below, at any time prior to the Separation Time, amend,
vary or rescind any of the provisions of this Agreement and
the Rights, (whether or not such action would materially
adversely affect the interests of the holders of Rights
generally). Such consent shall be deemed to have been given if
the action requiring such
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approval is authorized by the affirmative vote of a majority
of the votes cast by Independent Shareholders present or
represented at and entitled to be voted at a meeting of the
holders of Voting Shares duly called and held in compliance
with applicable laws and the articles and by-laws of the
Corporation.
(c) The Corporation may, with the prior consent of the holders of
Rights, at any time on or after the Separation Time, amend,
vary or delete any of the provisions of this Agreement and the
Rights (whether or not such action would materially adversely
affect the interests of the holders of Rights generally),
provided that no such amendment, variation or deletion shall
be made to the provisions of Article 4 except with the written
concurrence of the Rights Agent thereto. Such consent shall be
deemed to have been given if such amendment, variation or
deletion is authorized by the affirmative votes of the holders
of Rights present or represented at and entitled to be voted
at a meeting of the holders and representing 50% plus one of
the votes cast in respect thereof.
(d) Any approval of the holders of Rights shall be deemed to have
been given if the action requiring such approval is authorized
by the affirmative votes of the holders of Rights present or
represented at and entitled to be voted at a meeting of the
holders of Rights and representing a majority of the votes
cast in respect thereof. For the purposes hereof, each
outstanding Right (other than Rights which are void pursuant
to the provisions hereof) shall be entitled to one vote, and
the procedures for the calling, holding and conduct of the
meeting shall be those, as nearly as may be, which are
provided in the Corporation's by-laws and the CBCA with
respect to meetings of shareholders of the Corporation.
(e) Any amendments made by the Corporation to this Agreement
pursuant to Subsection 5.4(a) which are required to maintain
the validity of this Agreement as a result of any change in
applicable legislation, rule or regulation thereunder shall:
(i) if made before the Separation Time, be submitted to
the shareholders of the Corporation at the next
meeting of shareholders and the shareholders may, by
the majority referred to in Subsection 5.4(b),
confirm or reject such amendment; or
(ii) if made after the Separation Time, be submitted to
the holders of Rights at a meeting to be called for
on a date not later than immediately following the
next meeting of shareholders of the Corporation and
the holders of Rights may, by resolution passed by
the majority referred to in Subsection 5.4(d),
confirm or reject such amendment.
Any such amendment shall be effective from the date of the
resolution of the Board of Directors adopting such amendment,
until it is confirmed or rejected or until it ceases to be
effective (as described in the next sentence) and, where such
amendment is confirmed, it continues in effect in the form so
confirmed. If such amendment is rejected by the shareholders
or the holders of Rights or is not submitted to the
shareholders or the holders of Rights as required, then such
amendment shall cease to be effective from and after the
termination of the meeting at which it was rejected or to
which it should have been but was not submitted or from and
after the date of the meeting of holders of Rights that should
have been but was not held, and no subsequent resolution of
the Board of Directors to amend this Agreement to
substantially the same effect shall be effective until
confirmed by the shareholders or holders of Rights as the case
may be.
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5.5 FRACTIONAL RIGHTS AND FRACTIONAL SHARES
(a) The Corporation shall not be required to issue fractions of
Rights or to distribute Rights Certificates which evidence
fractional Rights. After the Separation Time, in lieu of
issuing fractional Rights, the Corporation shall pay to the
holders of record of the Rights Certificates (provided the
Rights represented by such Rights Certificates are not void
pursuant to the provisions of Subsection 3.1(b), at the time
such fractional Rights would otherwise be issuable), an amount
in cash equal to the fraction of the Market Price of one whole
Right that the fraction of a Right that would otherwise be
issuable is of one whole Right.
(b) The Corporation shall not be required to issue fractions of
Common Shares upon exercise of Rights or to distribute
certificates which evidence fractional Common Shares. In lieu
of issuing fractional Common Shares, the Corporation shall pay
to the registered holders of Rights Certificates, at the time
such Rights are exercised as herein provided, an amount in
cash equal to the fraction of the Market Price of one Common
Share that the fraction of a Common Share that would otherwise
be issuable upon the exercise of such Right is of one whole
Common Share at the date of such exercise.
5.6 RIGHTS OF ACTION
Subject to the terms of this Agreement, all rights of action in respect
of this Agreement, other than rights of action vested solely in the Rights
Agent, are vested in the respective holders of the Rights and Convertible
Rights. Any holder of Rights or Convertible Rights, without the consent of the
Rights Agent or of the holder of any other Rights or Convertible Rights, may, on
such holder's own behalf and for such holder's own benefit and the benefit of
other holders of Rights or Convertible Rights, enforce, and may institute and
maintain any suit, action or proceeding against the Corporation to enforce such
holder's right to exercise such holder's Rights or Convertible Rights, or Rights
or Convertible Rights to which such holder is entitled, in the manner provided
in such holder's Rights or Convertible Rights and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights or
Convertible Rights, it is specifically acknowledged that the holders of Rights
and Convertible Rights would not have an adequate remedy at law for any breach
of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of the obligations of any Person subject to, this Agreement.
5.7 REGULATORY APPROVALS
Any obligation of the Corporation or action or event contemplated by
this Agreement shall be subject to the receipt of requisite approval or consent
from any governmental or regulatory authority, and without limiting the
generality of the foregoing, necessary approvals of the TSX and other exchanges
shall be obtained, in relation to the issuance of Common Shares upon the
exercise of Rights under Subsection 2.2(d).
5.8 DECLARATION AS TO NON-CANADIAN OR NON-U.S. HOLDERS
If in the opinion of the Board of Directors (who may rely upon the
advice of counsel) any action or event contemplated by this Agreement would
require compliance by the Corporation with the securities laws or comparable
legislation of a jurisdiction outside Canada, the Board of Directors acting in
good faith shall take such actions as it may deem appropriate to ensure such
compliance. In no event shall the Corporation or the Rights Agent be required to
issue or deliver Rights or securities issuable on exercise of Rights to persons
who are citizens, residents or nationals of any jurisdiction other than Canada
or the United States, in which such issue or delivery would be unlawful without
registration of the relevant Persons or securities for such purposes.
-34-
5.9 NOTICES
(a) Notices or demands authorized or required by this Agreement to
be given or made by the Rights Agent or by the holder of any
Rights or Convertible Rights to or on the Corporation shall be
sufficiently given or made if delivered, sent by registered or
certified mail, postage prepaid (until another address is
filed in writing with the Rights Agent), or sent by facsimile
or other form of recorded electronic communication, charges
prepaid and confirmed in writing, as follows:
EnCana Corporation
▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: General Counsel & Corporate Secretary
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
(b) Notices or demands authorized or required by this Agreement to
be given or made by the Corporation or by the holder of any
Rights or Convertible Rights to or on the Rights Agent shall
be sufficiently given or made if delivered, sent by registered
or certified mail, postage prepaid (until another address is
filed in writing with the Corporation), or sent by facsimile
or other form of recorded electronic communication, charges
prepaid and confirmed in writing, as follows:
CIBC Mellon Trust Company
600, The Dome Tower
▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: Manager, Corporate Services
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
(c) Notices or demands authorized or required by this Agreement to
be given or made by the Corporation or the Rights Agent to or
on the holder of any Rights or Convertible Rights shall be
sufficiently given or made if delivered or sent by first class
mail, postage prepaid, addressed to such holder at the address
of such holder as it appears upon the register of the Rights
Agent or, prior to the Separation Time, on the register of the
Corporation for its Common Shares or Convertible Shares. Any
notice which is mailed or sent in the manner herein provided
shall be deemed given, whether or not the holder receives the
notice.
(d) Any notice given or made in accordance with this Section 5.9
shall be deemed to have been given and to have been received
on the day of delivery, if so delivered, on the third Business
Day (excluding each day during which there exists any general
interruption of postal service due to strike, lockout or other
cause) following the mailing thereof, if so mailed, and on the
day of telegraphing, telecopying or sending of the same by
other means of recorded electronic communication (provided
such sending is during the normal business hours of the
addressee on a Business Day and if not, on the first Business
Day thereafter). Each of the Corporation and the Rights Agent
may from time to time change its address for notice by notice
to the other given in the manner aforesaid.
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5.10 COSTS OF ENFORCEMENT
The Corporation agrees that if the Corporation fails to fulfil any of
its obligations pursuant to this Agreement, then the Corporation will reimburse
the holder of any Rights or Convertible Rights for the costs and expenses
(including legal fees) incurred by such holder to enforce his rights pursuant to
any Rights, Convertible Rights or this Agreement.
5.11 SUCCESSORS
All the covenants and provisions of this Agreement by or for the
benefit of the Corporation or the Rights Agent shall bind and enure to the
benefit of their respective successors and assigns hereunder.
5.12 BENEFITS OF THIS AGREEMENT
Nothing in this Agreement shall be construed to give to any Person
other than the Corporation, the Rights Agent and the holders of the Rights and
Convertible Rights any legal or equitable right, remedy or claim under this
Agreement; further, this Agreement shall be for the sole and exclusive benefit
of the Corporation, the Rights Agent and the holders of the Rights and the
Convertible Rights.
5.13 GOVERNING LAW
This Agreement and each Right and Convertible Right issued hereunder
shall be deemed to be a contract made under the laws of the Province of Alberta
and for all purposes shall be governed by and construed in accordance with the
laws of such Province applicable to contracts to be made and performed entirely
within such Province.
5.14 SEVERABILITY
If any term or provision hereof or the application thereof to any
circumstance shall, in any jurisdiction and to any extent, be invalid or
unenforceable, such term or provision shall be ineffective only as to such
jurisdiction and to the extent of such invalidity or unenforceability in such
jurisdiction without invalidating or rendering unenforceable or ineffective the
remaining terms and provisions hereof in such jurisdiction or the application of
such term or provision in any other jurisdiction or to circumstances other than
those as to which it is specifically held invalid or unenforceable.
5.15 COMING INTO EFFECT
This Agreement replaces and supersedes the Original Agreement and is
effective and in full force and effect in accordance with its terms from and
after the reconfirmation by resolution passed by a majority of greater than 50
percent of the votes cast by all holders of Voting Shares of the Corporation who
vote in respect of reconfirmation of this Agreement at the annual and special
meeting of the Corporation's shareholders held on April 28, 2004 or any
adjournment or postponement thereof.
5.16 RECONFIRMATION
This Agreement must be reconfirmed by a resolution passed by a majority
of greater than 50 percent of the votes cast by all holders of Voting Shares who
vote in respect of such reconfirmation at the annual meeting of the Corporation
to be held in 2007 and at every third annual meeting of the Corporation
thereafter. If the Agreement is not so reconfirmed or is not presented for
reconfirmation at each such annual meeting, the Agreement and all outstanding
Rights and Convertible Rights shall terminate and be void and of no further
force and effect on and from the date of termination of any such meeting;
provided that termination shall not occur if a Flip-in Event has occurred (other
than a Flip-in Event which has been
-36-
waived pursuant to Subsections 5.1(a) or (h) hereof), prior to the date upon
which this Agreement would otherwise terminate pursuant to this Section 5.16.
5.17 DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS
All actions, calculations and determinations (including all omissions
with respect to the foregoing) which are done or made by the Board of Directors,
in good faith, for the purposes hereof shall not subject the Board of Directors
or any director of the Corporation to any liability to the holders of the Rights
or the Convertible Rights.
5.18 TIME OF THE ESSENCE
Time shall be of the essence in this Agreement.
5.19 EXECUTION IN COUNTERPARTS
This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute one and the same instrument.
ARTICLE 6
CONVERTIBLE RIGHTS
6.1 CONVERTIBLE SHARE CERTIFICATES
Certificates for the Convertible Shares shall evidence one Convertible
Right for each Convertible Share represented thereby and each Convertible Right
will be transferable only together with, and will be transferred by a transfer
of, such Convertible Share. Notwithstanding any other provision of this
Agreement, any Convertible Rights held by the Corporation or any of its
Subsidiaries shall be void.
6.2 CONVERSION OF CONVERTIBLE RIGHTS
(a) Each Convertible Right will entitle the holder thereof, prior
to the earlier of the Separation Time and the Expiration Time,
to one Right for each whole Common Share issued to the holder
upon due exercise of the conversion privilege attached to the
Convertible Share associated with such Convertible Right
without any further payment therefor, and upon such issuance
of a Common Share, the Convertible Right shall be deemed to
have been automatically converted into one Right for each
Common Share so issued. The holder of a Convertible Right
shall not be entitled to, and the Corporation shall not be
required to issue, any fraction of a Right or any payment in
lieu thereof on exercise of such conversion privilege.
(b) In the event the Separation Time has occurred, each
Convertible Right will entitle the holder thereof to one Right
for each whole Common Share into which his Convertible Shares
are then convertible at the then applicable conversion price
and, as of the Separation Time, such holder's Convertible
Rights shall be deemed to have automatically become one Right
for each such whole Common Share.
6.3 PERSONS DEEMED OWNERS
The Rights Agent and any agent of the Corporation or the Rights Agent
may deem and treat the Person in whose name a share certificate for a
Convertible Share is registered as the absolute owner
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thereof and of the Convertible Rights evidenced thereby for all purposes
whatsoever. As used in this Article 6, unless the context otherwise requires,
the term "holder" of any Convertible Rights shall mean the registered holder of
the associated Convertible Share.
6.4 AGREEMENT OF CONVERTIBLE RIGHTS HOLDERS
Every holder of Convertible Rights by accepting the same consents and
agrees with the Corporation and the Rights Agent and with every other holder of
Convertible Rights that:
(a) he will 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 Convertible Rights held;
(b) each Convertible Right will be transferable only together
with, and will be transferred by a transfer of, the associated
Convertible Share; and
(c) the Corporation, the Rights Agent and any agent of the
Corporation or the Rights Agent may deem and treat the person
in whose name the associated Convertible Share certificate is
registered as the absolute owner thereof and of the
Convertible Rights evidenced thereby (notwithstanding any
notations of ownership or writing on such associated
Convertible Share certificate made by anyone other than the
Corporation or the Rights Agent) for all purposes whatsoever,
and neither the Corporation nor the Rights Agent shall be
affected by any notice to the contrary.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
ENCANA CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Executive Vice-President, Corporate
Development
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
Corporate Secretary
c/s
CIBC MELLON TRUST COMPANY
By: /s/ ▇▇▇▇▇▇▇ van der ▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ van der ▇▇▇▇▇
Manager, Client Relations
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Manager, Client Relations
c/s
ATTACHMENT 1
ENCANA CORPORATION
SHAREHOLDER RIGHTS PLAN AGREEMENT
[FORM OF RIGHTS CERTIFICATE]
Certificate No. _______ Rights _________
THE RIGHTS ARE SUBJECT TO TERMINATION ON THE TERMS SET FORTH IN THE SHAREHOLDER
RIGHTS PLAN AGREEMENT. UNDER CERTAIN CIRCUMSTANCES (SPECIFIED IN SUBSECTION
3.1(B) OF THE SHAREHOLDER RIGHTS PLAN AGREEMENT), RIGHTS BENEFICIALLY OWNED BY
AN ACQUIRING PERSON OR CERTAIN RELATED PARTIES, OR TRANSFEREES OF AN ACQUIRING
PERSON OR CERTAIN RELATED PARTIES, MAY BECOME VOID.
RIGHTS CERTIFICATE
This certifies that , or registered assigns, is the registered holder
of the number of Rights set forth above, each of which entitles the registered
holder thereof, subject to the terms, provisions and conditions of the
Shareholder Rights Plan Agreement, dated as of July 30, 2001, as amended and
restated as of September 13, 2001 and as further amended and restated as of
April 28, 2004, as the same may be amended, restated, varied or replaced from
time to time (the "Shareholder Rights Plan Agreement"), between EnCana
Corporation (formerly, PanCanadian Energy Corporation) (the "Corporation"), a
corporation duly incorporated under the CANADA BUSINESS CORPORATIONS ACT and
CIBC Mellon Trust Company, a trust company incorporated under the laws of Canada
(the "Rights Agent") (which term shall include any successor Rights Agent under
the Shareholder Rights Plan Agreement), to purchase from the Corporation at any
time after the Separation Time (as such term is defined in the Shareholder
Rights Plan Agreement) and prior to the Expiration Time (as such term is defined
in the Shareholder Rights Plan Agreement), one fully paid common share of the
Corporation (a "Common Share") at the Exercise Price referred to below, upon
presentation and surrender of this Rights Certificate with the Form of Election
to Exercise (in the form provided hereinafter) duly executed and submitted to
the Rights Agent at its principal office in any of the cities of Calgary,
Vancouver, Toronto and Montreal or to the principal office of Mellon Investor
Services LLC in New York City, New York. The Exercise Price shall initially be
$o (Cdn.) per Right and shall be subject to adjustment in certain events as
provided in the Shareholder Rights Plan Agreement.
In certain circumstances described in the Shareholder Rights Plan
Agreement, the number of Common Shares which each Right entitles the registered
holder thereof to purchase shall be adjusted as provided in the Shareholder
Rights Plan Agreement.
This Rights Certificate is subject to all of the terms and provisions
of the Shareholder Rights Plan Agreement, which terms and provisions are
incorporated herein by reference and made a part hereof and to which Shareholder
Rights Plan Agreement reference is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities thereunder of
the Rights Agent, the Corporation and the holders of the Rights Certificates.
Copies of the Shareholder Rights Plan Agreement are available at the registered
office of the Corporation.
-2-
This Rights Certificate, with or without other Rights Certificates,
upon surrender at any of the offices of the Rights Agent designated for such
purpose, may be exchanged for another Rights Certificate or Rights Certificates
of like tenor and date evidencing an aggregate number of Rights equal to the
aggregate number of Rights evidenced by the Rights Certificate or Rights
Certificates surrendered. If this Rights Certificate shall be exercised in part,
the registered holder shall be entitled to receive, upon surrender hereof,
another Rights Certificate or Rights Certificates for the number of whole Rights
not exercised.
Subject to the provisions of the Shareholder Rights Plan Agreement, the
Rights evidenced by this Certificate may be redeemed by the Corporation at a
redemption price of $0.000001 per Right, subject to adjustment in certain
events, under certain circumstances at its option.
No fractional Common Shares will be issued upon the exercise of any
Rights evidenced hereby, but in lieu thereof a cash payment will be made, as
provided in the Shareholder Rights Plan Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of Common
Shares or of any other securities which may at any time be issuable upon the
exercise hereof, nor shall anything contained in the Shareholder Rights Plan
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the Rights of a shareholder of the Corporation or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Shareholder Rights Plan Agreement), or to receive dividends or
subscription rights, or otherwise, until the Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Shareholder Rights Plan
Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Corporation and its corporate seal.
Date:
--------------------------
ENCANA CORPORATION
By:
---------------------------------------------
By:
---------------------------------------------
Countersigned:
CIBC MELLON TRUST COMPANY
By:
---------------------------------------------
By:
---------------------------------------------
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
Rights Certificate.) FOR VALUE RECEIVED_________________________________________
hereby sells, assigns and transfers unto _______________________________________
________________________________________________________________________________
(Please print name and address of transferee.)
the Rights represented by this Rights Certificate, together with all right,
title and interest therein, and does hereby irrevocably constitute and
appoint ___________________________, as attorney, to transfer the within
Rights on the books of the Corporation, with full power of substitution.
Dated: ___________________________
Signature Guaranteed: 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 must be guaranteed by a Canadian chartered bank, a Canadian
trust company, a member of a recognized stock exchange or a member of the
Securities Transfer Association Medallion (STAMP) Program.
.................................................................................
CERTIFICATE
(To be completed if true.)
The undersigned party transferring Rights hereunder, hereby represents,
for the benefit of all holders of Rights and Common Shares, that the Rights
evidenced by this Rights Certificate are not, and, to the knowledge of the
undersigned, have never been, Beneficially Owned by an Acquiring Person or an
Affiliate or Associate thereof or a Person acting jointly or in concert with an
Acquiring Person or an Affiliate or Associate thereof. Capitalized terms shall
have the meaning ascribed thereto in the Shareholder Rights Plan Agreement.
-------------------------------
Signature
.................................................................................
(To be attached to each Rights Certificate)
FORM OF ELECTION TO EXERCISE
(To be exercised by the registered holder if such holder desires to exercise the
Rights Certificate.)
TO: __________________________________
The undersigned hereby irrevocably elects to exercise _________________
whole Rights represented by the attached Rights Certificate to purchase the
Common Shares or other securities, if applicable, issuable upon the exercise of
such Rights and requests that certificates for such securities be issued in the
name of:
________________________________________________________________________________
(Name)
________________________________________________________________________________
(Address)
________________________________________________________________________________
(City and Province)
________________________________________________________________________________
Social Insurance Number or other taxpayer identification number.
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights shall be
registered in the name of and delivered to:
________________________________________________________________________________
(Name)
________________________________________________________________________________
(Address)
________________________________________________________________________________
(City and Province)
________________________________________________________________________________
Social Insurance Number or other taxpayer identification number.
Dated: _______________________________
Signature Guaranteed: Signature
(Signature must correspond to name
as written upon the face of this
Rights Certificate in every
particular, without alteration or
enlargement or any change
whatsoever.) Signature must be
guaranteed by a Canadian chartered
bank, a Canadian trust company, a
member of a recognized stock
exchange or a member of the
Securities Transfer Association
Medallion (STAMP) Program.
.................................................................................
CERTIFICATE
(To be completed if true.)
The undersigned party exercising Rights hereunder, hereby represents,
for the benefit of all holders of Rights and Common Shares, that the Rights
evidenced by this Rights Certificate are not, and, to the knowledge of the
undersigned, have never been, Beneficially Owned by an Acquiring Person or an
Affiliate or Associate thereof or a Person acting jointly or in concert with an
Acquiring Person or an Affiliate or Associate thereof. Capitalized terms shall
have the meaning ascribed thereto in the Shareholder Rights Plan Agreement.
----------------------------
Signature
.................................................................................
(To be attached to each Rights Certificate)
NOTICE
In the event the certification set forth above in the Forms of
Assignment and Election is not completed, the Corporation will deem the
Beneficial Owner of the Rights evidenced by this Rights Certificate to be an
Acquiring Person or an Affiliate or Associate thereof. No Rights Certificates
shall be issued in exchange for a Rights Certificate owned or deemed to have
been owned by an Acquiring Person or an Affiliate or Associate thereof, or by a
Person acting jointly or in concert with an Acquiring Person or an Affiliate or
Associate thereof.