SHAREHOLDER RIGHTS AGREEMENT
Published on December 20, 2004
Exhibit 4.1: Form of Shareholder Rights Agreement between Novelis Inc. and CIBC
Mellon Trust Company
SHAREHOLDER RIGHTS AGREEMENT
BETWEEN
NOVELIS INC.
AND
CIBC MELLON TRUST COMPANY
SHAREHOLDER RIGHTS AGREEMENT
SHAREHOLDER RIGHTS AGREEMENT
THIS AGREEMENT made as of December 2004.
B E T W E E N:
NOVELIS INC., a corporation incorporated under the laws of
Canada (hereinafter referred to as the "Corporation"),
OF THE FIRST PART,
A N D:
CIBC MELLON TRUST COMPANY, a trust company existing under the
laws of Canada (hereinafter referred to as the "Rights
Agent"),
OF THE SECOND PART
WITNESSES that:
WHEREAS the Corporation will, upon the effectiveness of an arrangement under
section 192 of the Canada Business Corporations Act proposed by Alcan Inc.
("Alcan") and described in Alcan's Management Proxy Circular dated 23 November
2004 (the "Arrangement"), become a publicly traded corporation with its Common
Shares listed on the Toronto Stock Exchange and the New York Stock Exchange;
WHEREAS the Board has determined that it is advisable for the Corporation to
adopt and maintain a shareholder rights plan inter alia in order to (i) provide
a framework in which Take-Over Bids for the Corporation can be made for the
Voting Shares of the Corporation including providing the Board with sufficient
time to explore and develop alternatives, (ii) facilitate the maximization of
shareholder values if a substantial portion of the Voting Shares is to be
acquired by any Person, and (iii) protect the Corporation and its shareholders
from abusive acquisition tactics or acquisitions which may not be in the best
interests of the Corporation;
AND WHEREAS it is not the intention of the Board to adopt the Rights Plan as a
means of preventing or deterring any Person from seeking to acquire the Voting
Shares, provided they do so fairly, or of foreclosing the ability of the Board
to take any action that in its discretion it considers reasonable in the
circumstances of any such transaction;
AND WHEREAS, in order to implement the Rights Plan, the Board authorized and
declared a distribution of one Right effective at the earliest possible time
following the effectiveness of the Arrangement ("Record Time") in respect of
each Common Share outstanding as at the Record Time and has authorized the
issuance of one Right in respect of each Common Share issued after such date and
prior to the earlier of the Separation Time and the Expiration Time;
AND WHEREAS each Right entitles the holder thereof, after the Separation Time
but prior to the Expiration Time, to purchase securities of the Corporation
pursuant to the terms and subject to the conditions set forth herein;
AND WHEREAS the Corporation desires to appoint the Rights Agent to act on behalf
of the Corporation in connection with the issuance, transfer, exchange and
replacement of Rights Certificates, the exercise of the Rights and the other
matters relating to the Corporation referred to herein and to act as the trustee
for the holders of the Rights in connection with the promise of the Corporation
herein to issue Rights Certificates to the Rights Agent for distribution to the
holders of Common Shares after the Separation Time, and the Rights Agent is
willing to so act;
NOW THEREFORE in consideration of the premises and the agreements herein
contained the parties hereto agree as follows:
1
ARTICLE 1 - INTERPRETATION
1.01 DEFINITIONS
For purposes of this Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" means any Person (other than the
Corporation or any Subsidiary of the Corporation) who is a
Beneficial Owner of 20% or more of the outstanding Voting
Shares. Notwithstanding the foregoing, no Person shall become
an "Acquiring Person"
(i) (A) as a result of the purchase, redemption or
other acquisition of Voting Shares by the
Corporation which, by reducing the number of
Voting Shares then outstanding, increases
the proportionate number of shares
Beneficially Owned by such Person to 20% or
more of the Voting Shares then outstanding;
(B) as a result of share acquisitions made
pursuant to a Permitted Bid or Competing
Permitted Bid;
(C) as a result of share acquisitions made
pursuant to a Permitted Acquisition;
(D) as a result of an Exempt Acquisition; or
(E) as a result of a Convertible Security
Acquisition;
provided, however, that if a Person becomes the Beneficial
Owner of 20% or more of the Voting Shares then outstanding as
a result of a purchase, redemption or other acquisition of
Voting Shares by the Corporation as provided for in clause (A)
above, or as a result of a Permitted Bid or Competing
Permitted Bid as provided for in clause (B) above, or as a
result of a Permitted Acquisition as provided for in clause
(C) above, or as a result of the waiver of the application of
Section 3.01 pursuant to Section 5.01(2) as provided for in
clause (D) above, or as a result of a Convertible Security
Acquisition as provided for in clause (E) above, or as a
result of any combination of acquisitions referred to in
clauses (A) to (E) above, and after such acquisition or
acquisitions such Person becomes the Beneficial Owner of more
than an additional 1% of the Voting Shares then outstanding
other than pursuant to clauses (A), (B), (C), (D) or (E) above
or any combination thereof, such Person shall thereupon
immediately be deemed to be an "Acquiring Person";
(ii) as a result of such person (a "Grandfathered Person")
being 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 such Grandfathered Person in the
event that such Grandfathered Person shall, after the
Record Time, become the Beneficial Owner of any
additional Voting Shares of the Corporation that
increase its Beneficial Ownership of Voting Shares by
more than 1% of the number of Voting Shares
outstanding as at the Record Time, other than as a
result of a Permitted Bid, a Competing Permitted Bid,
a Permitted Acquisition or any Take-Over Bid in
respect of which a waiver is, or is deemed to have
been, granted under Section 5.01(2);
(iii) for a period of ten calendar days after the
Disqualification Date (as defined below), where such
Person becomes the Beneficial Owner of 20% or more of
the outstanding Voting Shares as a result of such
Person becoming disqualified from relying on Section
1.01(e)(v) solely because
2
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) being 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.
(b) "Affiliate" when used to indicate a relationship with a
specified Person, shall mean a Person that controls, or is
controlled by, or is under common control with, such specified
Person.
(c) "Agreement" means this agreement and all amendments made
hereto by written agreement between the Corporation and the
Rights Agent.
(d) "Alcan" has the meaning ascribed to that term in the first
recital hereto.
(e) "Arrangement" has the meaning ascribed to that term in the
first recital hereto.
(f) "Associate" means, when used to indicate a relationship with a
specified Person, a spouse of that Person or any Person with
whom that Person is living in a conjugal relationship outside
marriage or a child of that Person or a relative of that
Person who has the same residence as that Person.
(g) A Person shall be deemed to be the "Beneficial Owner" of and
to have "Beneficial Ownership" of and to "Beneficially Own"
any securities which:
(i) such Person or any of such Person's Affiliates or
Associates owns at law or in equity;
(ii) such Person or any of such Person's Affiliates or
Associates has the right to become the owner of at
law or in equity (whether such right is exercisable
immediately or within a period of 60 calendar days
thereafter and whether or not on condition or on the
happening of any contingency), (A) upon the exercise
of any Convertible Securities or (B) 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) without limiting the generality of the foregoing, are
beneficially owned within the meaning of paragraphs
(i) and (ii) of this definition by any other Person
with which such Person is acting jointly or in
concert;
provided, however, that a Person shall not be deemed to be the
"Beneficial Owner" of or to have "Beneficial Ownership" of or
to "Beneficially Own" any security:
(iv) where such security has been, or has agreed to be,
deposited or tendered pursuant to a Lock-up
Agreement, or is otherwise deposited or tendered, to
any Take-Over Bid made by such Person or by any of
such Person's Affiliates or Associates or made by any
Person
3
acting jointly or in concert with such Person until
such deposited or tendered security has been taken up
and 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 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");
(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 the estate of any such deceased
or incompetent Person 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 under the laws of Canada or
any Province thereof or the laws of the
United States of America or any State
thereof;
provided, in any of the above cases, that the
Investment Manager, the Trust Company, the Statutory
Body, the Administrator or the Plan, as the case may
be, is not then making 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 with the same Administrator as
another Plan on whose account the
Administrator holds such security;
4
(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 Manger,
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.
For the purposes of this Agreement, in determining the
percentage of the outstanding Voting Shares with respect to
which a Person is the Beneficial Owner, all Voting Shares of
which such Person is or is deemed to be the Beneficial Owner
shall be deemed to be outstanding.
(h) "Board" means the board of directors of the Corporation.
(i) "Business Day" means any day, other than a Saturday or Sunday,
on which banks are generally open for business in the City of
Montreal.
(j) "Canadian-U.S. Exchange Rate" means, on any date, the inverse
of the U.S.-Canadian Exchange Rate in effect on such date.
(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) "close of business" means, with respect to any date, the time
on such date at which the offices of the Rights Agent in the
City of Montreal are, after having been open to the public for
business, closed to the public.
(m) "Common Shares", when used with reference to the Corporation,
means the common shares in the capital of the Corporation and,
when used with reference to any Person other than the
Corporation, means the class of shares in the capital of such
other Person with the greatest voting power per share.
(n) "Competing Permitted Bid" has the meaning set out in Section
6.02.
(o) "controlled": a corporation is "controlled" by another Person
if:
(i) securities entitled to vote in the election of
directors carrying more than 50% of the votes for the
election of directors are held, directly or
indirectly, by or on behalf of the other person; and
(ii) the votes carried by such securities are entitled, if
exercised, to elect a majority of the board of
directors of such corporation;
and "controls", "controlling" and "under common control with"
shall be interpreted accordingly.
5
(p) "Convertible Securities" means at any time:
(i) any right (contractual or otherwise and regardless of
whether such right constitutes a security) to acquire
Voting Shares from the Corporation; and
(ii) any securities issued by the Corporation from time to
time (other than a Right) carrying any exercise,
conversion or exchange right;
which is then exercisable or exercisable within a period of 60
calendar days from that time, pursuant to which the holder
thereof may acquire Voting Shares or other securities which
are convertible into, exercisable or exchangeable for Voting
Shares (in each case, whether such right is then exercisable
or exercisable within a period of 60 calendar days from that
time and whether or not on condition or the happening of any
contingency).
(q) "Convertible Security Acquisition" means the acquisition of
Voting Shares upon the exercise of a Convertible Security
received by a Person pursuant to a Permitted Acquisition.
(r) "Dividend Reinvestment Acquisition" shall mean an acquisition
of Voting Shares of any class pursuant to a Dividend
Reinvestment Plan.
(s) "Dividend Reinvestment Plan" means a regular dividend
reinvestment or other plan of the Corporation made available
by the Corporation to holders of its securities where such
plan permits the holder to direct that some or all of:
(i) dividends paid in respect of shares of any class of
the Corporation;
(ii) proceeds of redemption of shares of the Corporation;
(iii) interest paid on evidences of indebtedness of the
Corporation; or
(iv) optional cash payments;
be applied to the purchase from the Corporation of Voting
Shares.
(t) "Election to Exercise" has the meaning set out in Section
2.01(4).
(u) "Exempt Acquisition" means a share acquisition in respect of
which the Board has waived the application of Section 3.01
pursuant to the provisions of Sections 5.01(2).
(v) "Exercise Price" means, as of any date, the price at which a
holder may purchase the securities issuable upon the exercise
of one Right which, until the adjustment thereof in accordance
with the provisions hereof, shall equal $200.
(w) "Expansion Factor" has the meaning set out in Section
2.03(2)(e).
(x) "Expiration Time" means the earlier of:
(i) the Termination Time, or
(ii) subject to Sections 5.15 and 5.16, the close of
business on 1 May 2014.
6
(y) "Flip-In Event" means a transaction or event in which any
Person becomes an Acquiring Person.
(z) "holder" has the meaning set out in Section 2.08.
(aa) "Independent Shareholders" means holders of Voting Shares, but
shall not include any Acquiring Person or any Offeror
(including an Offeror who is making a Permitted Bid or
Competing Permitted Bid) other than any Person who by virtue
of Section 1.01 (g) (v) is not deemed to Beneficially Own the
Voting Shares held by such Person, any Affiliate or Associate
of any such Acquiring Person or Offeror or any Person acting
jointly or in concert with such Acquiring Person or Offeror,
or Persons with rights or powers under any employee stock
ownership plans, benefit plans, deferred profit sharing and
any other similar plan or trust for the benefit of employees
of the Corporation or a Subsidiary of the Corporation, unless
the beneficiaries of such plan or trust direct the manner in
which such Voting Shares are to be voted or direct whether the
Voting Shares are to be tendered to a Take-Over Bid.
(bb) "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, where
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 that contains an
offering price for each Voting Share that is at least 5%
higher than the offering price contained in or proposed to be
contained in the Take-Over Bid that the Locked-up Person has
agreed to deposit or tender Voting Shares pursuant to the
Lock-up Agreement.
(cc) "Market Price" per share of any securities on any date of
determination shall mean the average of the daily Closing
Prices Per Share of such securities (determined as described
below) on each of the 20 consecutive Trading Days through and
including the Trading Day immediately preceding such date;
provided, however, that if an event of a type analogous to any
of the events described in Section 2.03 hereof shall have
caused the closing prices used to determine the Market Price
on any Trading Day not to be fully comparable with the closing
price on such date of determination or, if the date of
determination is not a Trading Day, on the immediately
preceding Trading Day, each such closing price so used shall
be appropriately adjusted in a manner analogous to the
applicable adjustment provided for in Section 2.03 hereof in
order to make it fully comparable with the closing price on
such date of determination or, if the date of determination is
not a Trading Day, on the immediately preceding Trading Day.
The "Closing Price Per Share" of any securities on any date
shall be:
(i) the closing board lot sale price or, if such price is
not available, the average of the closing bid and
asked prices, for each share as reported in the
principal consolidated transaction reporting system
with respect to securities listed or admitted to
trading on The Toronto Stock Exchange;
(ii) if the securities are not listed or admitted to
trading on The Toronto Stock Exchange, the last sale
price, regular way, or, in the case no such sale
takes place on such date, the average of the closing
bid and asked prices, regular way, for each share of
such securities as reported in the principal
consolidated transaction reporting system with
respect to securities listed or admitted to trading
on the New York Stock Exchange;
(iii) if for any reason none of such prices is available on
such day or the securities are not listed
7
or admitted to trading on any of The Toronto Stock
Exchange or the New York Stock Exchange, the average
of the high bid and low asked prices for each share
of such securities in the over-the-counter market if
such high bid and low asked prices are regularly
published in a newspaper or business or financial
publication of regular or paid circulation; or
(iv) if on any such date the securities are not quoted by
any such organization, the average of the closing bid
and asked prices as furnished by a professional
market maker making a market in the securities;
provided, however, that if on any such date the securities are
not traded in the over-the-counter market, the closing price
per share of such securities on such date shall mean the fair
value per share of securities on such date as determined by a
nationally or internationally recognized Canadian investment
dealer (or investment banker) with respect to the fair value
per share of such securities. The Market Price shall be
expressed in United States dollars and if initially determined
in respect of any day forming part of the 20 consecutive
Trading Day period in question in Canadian dollars, such
amount shall be translated into United States dollars at the
U.S. Dollar Equivalent thereof on the relevant Trading Day.
(dd) "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.
(ee) "Offeror" means any Person who has announced an intention to
make or who is making, but has not completed, a Take-Over Bid
(including a Permitted Bid or a Competing Bid) but only so
long as the Take-Over Bid so made or announced has not been
withdrawn or terminated or has not expired.
(ff) "Offeror's Securities" means Voting Shares Beneficially Owned
on the date of an Offer to Acquire by an Offeror.
(gg) "Permitted Acquisition" means an acquisition by a Person of
Voting Shares pursuant to:
(i) a Dividend Reinvestment Acquisition;
(ii) a stock dividend, stock split or other event in
respect of securities of the Corporation of one or
more particular classes or series pursuant to which
such Person becomes the Beneficial Owner of Voting
Shares on the same 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 rights offering prospectus; or
(iv) a distribution by the Corporation of Voting Shares or
Convertible Securities (and the conversion or
exchange of such ), made pursuant to a prospectus or
by way of a private
8
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.
(hh) "Permitted Bid" has the meaning set out in Section 6.01.
(ii) "Person" includes any individual, partnership, association,
body corporate, unincorporated syndicate, unincorporated
organization, trust, trustee, executor, administrator or other
legal representative or entity and any successor thereto.
(jj) "Record Time" has the meaning ascribed to that term in the
fourth recital hereto.
(kk) "Regular Periodic Cash Dividend" means cash dividends declared
payable on the Common Shares of the Corporation and paid at
regular intervals in any fiscal year of the Corporation to the
extent that such cash dividends do not in any fiscal year
exceed, in the aggregate, the greatest of:
(i) 200% of the aggregate amount of cash dividends
declared payable by the Corporation on its Common
Shares in its immediately preceding fiscal year,
(ii) 300% of the average of the aggregate amounts of cash
dividends declared payable by the Corporation on its
Common Shares in its three immediately preceding
fiscal years, and
(iii) 100% of the aggregate consolidated net income of the
Corporation, before extraordinary items, for its
immediately preceding fiscal year.
(ll) "Right" means the right of each holder of Common Shares to
purchase additional securities upon and subject to the terms
and conditions hereof.
(mm) "Rights Agent" means CIBC Mellon Trust Company or any
successor thereto appointed pursuant to Section 4.04.
(nn) "Rights Certificate" has the meaning set out in Section
2.01(3)(c).
(oo) "Rights Plan" means the shareholder rights plan established
hereby.
(pp) "Rights Register" has the meaning set out in Section 2.06(1).
(qq) "Rights Registrar" has the meaning set out in Section 2.06(1).
(rr) "Separation Time" means the close of business on the tenth
Business Day after the earliest of:
(i) the Stock Acquisition Date;
(ii) the date of the commencement of, or the first public
announcement of the intent of any Person (other than
a Person making a Permitted Bid or Competing
Permitted Bid or the Corporation or any Subsidiary of
the Corporation) to commence a Take-Over Bid (other
than a Permitted Bid or a Competing Permitted Bid, as
the case may be); and
(iii) the date on which a Permitted Bid or Competing Bid
ceases to qualify as such or on such later day as the
Board shall determine acting in good faith; provided
that, if any such
9
Take-Over Bid 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.
(ss) "Stock Acquisition Date" means the first date of public
announcement by the Corporation or an Acquiring Person that an
Acquiring Person has become such.
(tt) "Subsidiary": a corporation shall be a Subsidiary of another
corporation if:
(i) it is controlled by:
(A) that other, or
(B) that other and one or more corporations each
of which is controlled by that other, or
(C) two or more corporations each of which is
controlled by that other, or
(ii) it is a Subsidiary of a corporation that is that
other's Subsidiary.
(uu) "Take-Over Bid" means an Offer to Acquire Voting Shares where
the Voting Shares subject to the Offer to Acquire, 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.
(vv) "Termination Time" means the time at which the right to
exercise the Rights shall terminate pursuant to Section 5.01
hereof.
(ww) "Trading Day", when used with respect to any securities, shall
mean a day on which the principal securities exchange in
Canada or the United States of America 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 securities exchange in Canada or
the United States of America, a Business Day.
(xx) "U.S.-Canadian Exchange Rate" means, on any date:
(i) if on such date the Bank of Canada sets a noon spot
rate of exchange for the conversion of United States
dollars into Canadian dollars, such rate, or
(ii) in any other case, the rate for the conversion of
United States dollars into Canadian dollars as
determined by the Board acting in good faith.
(yy) "U.S. Dollar Equivalent" of any amount which is expressed in
Canadian dollars means, on any date, the United States dollar
equivalent of such amount determined by multiplying such
amount by the Canadian-U.S. Exchange Rate in effect on such
date.
(zz) "Voting Shares" means the Common Shares of the Corporation and
any other shares in the capital of the Corporation entitled to
vote generally in the election of directors.
1.02 HEADINGS
The division of this Agreement into Articles and Sections and the
insertion of headings and a table of contents are for convenience of
reference only and shall not affect the construction or interpretation
of this Agreement. The terms "this Agreement", "hereof", "hereunder"
and similar expressions refer to this Agreement and not to any
particular Article, Section or other portion hereof and include any
agreement supplemental hereto. Unless something in the subject matter
or context is inconsistent therewith, references herein to Articles and
Sections
10
are to Articles and Sections of this Agreement.
1.03 EXTENDED MEANINGS
In this Agreement words importing the singular number only shall
include the plural and vice versa and words importing the masculine
shall include the feminine gender and vice versa.
1.04 CURRENCY
All references to currency herein are to lawful money of the United
States of America unless otherwise specified.
1.05 SCHEDULE
The form of the Rights Certificate is annexed hereto as Schedule 1 and
incorporated by reference and deemed to be a part hereof.
1.06 LANGUAGE CLAUSE
Les parties aux presentes ont exige que la presente convention ainsi
que tous les documents et avis qui s'y rattachent et/ou qui en
decouleront soient rediges en langue anglaise. The parties hereto have
required that this Agreement and all documents and notices related
thereto or resulting therefrom be drawn up in English.
1.07 ACTING JOINTLY OR IN CONCERT
For purposes of this Agreement, a Person is acting jointly or in
concert with every Person who is a party to any agreement, commitment
or understanding, whether formal or informal, with the first Person or
any Associate or Affiliate thereof for the purpose of acquiring or
offering 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).
1.08 AS NOW ENACTED
For the purposes of this Agreement, references to statutes, as now
enacted, shall mean as in force and effect on [10] December 2004.
ARTICLE 2 - THE RIGHTS
2.01 INITIAL EXERCISE PRICE, EXERCISE OF RIGHTS AND DETACHMENT OF RIGHTS
(1) Subject to the provisions hereof including, without limiting the
generality of the foregoing, Section 2.03, each
11
Common Share now or, until the earlier of the Separation Time and the
Expiration Time, hereafter issued shall have one Right associated
therewith. Subject to the provisions hereof and subject to adjustment
as herein set forth, each Right shall entitle the holder thereof, after
the Separation Time, to purchase one Common Share for the Exercise
Price or its Canadian Dollar Equivalent. Notwithstanding any other
provision of this Agreement, any Rights held by the Corporation or by
any of its Subsidiaries or Beneficially Owned by an Acquiring Person
shall be void.
(2) Until the Separation Time:
(a) no Right shall be exercisable and no Right may be exercised,
(b) each Right shall be evidenced by the certificate for the
associated Common Share, and
(c) each Right shall be transferable only together with, and shall
be transferred by a transfer of, such associated Common Share.
(3) After the Separation Time but prior to the Expiration Time the Rights:
(a) may be exercised in accordance with the provisions hereof, and
(b) shall be transferable independently of the Common Shares.
Promptly following the Separation Time the Corporation will prepare and
the Rights Agent shall mail to each holder of Common Shares of record
as of the Separation Time (other than an Acquiring Person and, in
respect of any Rights Beneficially Owned by such Acquiring Person which
are not held of record by such Acquiring Person, the holder of record
of such Rights (a "Nominee")) at such holder's address as shown by the
records of the Corporation (and the Corporation hereby agrees to
furnish copies of such records to the Rights Agent for this purpose),
(c) a certificate (a "Rights Certificate") substantially in the
form annexed hereto as Schedule 1 appropriately completed,
representing the number of Rights held by such holder as 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 or with any rule or
regulation made pursuant thereto or with any rule or
regulation of any stock exchange or quotation system on which
the Rights may from time to time be listed or traded, or to
conform to usage, and
(d) a disclosure statement describing the Rights.
(4) Rights may be exercised on any Business Day after the Separation Time
and prior to the Expiration Time by submitting to the Rights Agent the
Rights Certificate evidencing such Rights with an election to exercise
such Rights (an "Election to Exercise") substantially in the form
attached to the Rights Certificate duly completed and accompanied by
payment by certified cheque or money order payable to the order of the
Rights Agent of a sum equal to the Exercise Price multiplied by the
number of Rights being exercised and a sum sufficient to cover any
transfer tax or charge which may be payable in respect of any transfer
involved in the transfer or delivery of Rights Certificates or the
issuance or delivery of certificates for Common Shares in a name other
than that of the holder of the Rights being exercised.
(5) Upon receipt of a Rights Certificate together with a duly completed
Election to Exercise and the payments provided for in Section 2.01(4),
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)
12
shall thereupon promptly:
(a) requisition from the Corporation or its transfer agent for
Common Shares, certificates for the number of Common Shares to
be purchased;
(b) after receipt of such Common Share certificates, remit the
payments provided for in Section 2.01(4) to the Corporation
and deliver the share certificates to or to the order of the
registered holder of such Rights Certificate, registered in
such name or names as may be designated by such holder;
(c) when appropriate, requisition from the Corporation the amount
of cash to be paid in lieu of issuing fractional Common
Shares; and
(d) tender to the Corporation all payments received on exercise of
the Rights.
(6) If the holder of any Rights exercises less than all the Rights
evidenced by such holder's Rights Certificate, a new Rights Certificate
evidencing the remaining unexercised Rights shall be issued by the
Rights Agent to such holder or to such holder's duly authorized
assigns.
(7) The Corporation shall:
(a) promptly deliver the share certificates requisitioned by the
Rights Agent pursuant to Section 2.01(5)(a) to the Rights
Agent;
(b) take all such action as may be necessary and reasonably within
its power to ensure that all Common Shares delivered upon the
exercise of the Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the
Exercise Price), be duly and validly authorized, executed,
issued and delivered as fully paid and non-assessable shares;
(c) take all such action as may be necessary and reasonably within
its power to comply with the applicable requirements of
securities laws in Canada and the United States of America in
connection with the issuance and delivery of the Rights
Certificates and the issuance of Common Shares upon the
exercise of the Rights;
(d) use reasonable efforts to cause all Common Shares issued upon
the exercise of the Rights to be listed upon issuance on The
Toronto Stock Exchange, the New York Stock Exchange and such
other exchanges, if any, that the Corporation determines are
appropriate;
(e) 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;
(f) pay when due and payable any and all federal, provincial and
state transfer taxes of Canada and the United States of
America (except, for greater certainty, any income taxes of
the holder or exercising holder or any liability of the
Corporation to withhold tax) and charges which may be payable
in respect of the original issuance or delivery of the Rights
Certificates, 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
(g) after the Separation Time, except as permitted by Section
5.01, not take (or permit any Subsidiary to
13
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.
2.02 LEGEND ON COMMON SHARE CERTIFICATES
(1) Certificates issued for Common Shares after the Record Time but prior
to the earlier of the Separation Time and the Expiration Time shall
have printed on or affixed to them the following legend in, if
appropriate, both the English and French languages:
"Until the Separation Time (as defined in the Shareholder
Rights Agreement referred to below), this certificate also
evidences and entitles the holder hereof to certain Rights as
set forth in a Shareholder Rights Agreement made as of [10]
December 2004, (the "Rights Agreement") between Novelis Inc.
(the "Corporation") and CIBC Mellon Trust Company, as Rights
Agent, the terms of which are incorporated herein by reference
and a copy of which is on file at the principal executive
offices of the Corporation. Under certain circumstances, as
set forth in the Rights Agreement, such Rights may be amended,
redeemed, may expire, may become void if, in certain cases,
they are "Beneficially Owned" by an "Acquiring Person" (as
such terms are defined in the Rights Agreement) or a
transferee thereof, or may be evidenced by separate
certificates and may no longer be evidenced by this
certificate. The Corporation will mail or arrange for the
mailing of a copy of the Rights Agreement to the holder of
this certificate without charge within five days after the
receipt of a written request therefor."
(2) Certificates representing Common Shares that are issued and outstanding
at any time shall evidence one Right for each Common Share evidenced
thereby notwithstanding the absence of a legend in accordance with
Section 2.02(1).
2.03 ADJUSTMENTS
(1) 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 2.03.
(2) If the Corporation shall at any time after the Record Time but prior to
the Expiration Time:
(a) declare or pay a dividend on the Common Shares payable in
Common Shares or Convertible Securities other than pursuant to
any optional stock dividend programme,
(b) subdivide or change the then outstanding Common Shares into a
greater number of Common Shares,
(c) combine or change the then outstanding Common Shares into a
smaller number of Common Shares, or
(d) issue any Common Shares or Convertible Securities in respect
of, in lieu of or in exchange for existing Common Shares in a
reclassification, amalgamation, arrangement or consolidation,
the Exercise Price and the number of Rights outstanding or, if the
payment or effective date thereof shall occur after the Separation
Time, the securities purchasable upon exercise of the Rights shall be
adjusted in the following manner.
14
If the Exercise Price and the number of Rights outstanding are to be
adjusted:
(e) the Exercise Price in effect after such adjustment shall be
equal to the Exercise Price in effect immediately prior to
such adjustment divided by the number of Common Shares that a
holder of one Common Share immediately prior to such dividend,
subdivision, change, combination or issuance would hold
thereafter as a result thereof (such denominator being the
"Expansion Factor"), and
(f) each Right held prior to such adjustment shall become that
number of Rights equal to the Expansion Factor and, if such
adjustment is to be made prior to the Separation Time, the
adjusted number of Rights shall be deemed to be distributed
among the Common Shares with respect to which the original
Rights were associated (if they remain outstanding) and the
shares issued in respect of such dividend, subdivision,
change, combination or issuance, so that each such Common
Share shall have exactly one Right associated with it.
If the securities purchasable upon the exercise of the Rights are to be
adjusted, the securities purchasable upon the exercise of each Right
after such adjustment shall be the securities that a holder of the
securities purchasable upon the exercise of one Right immediately prior
to such dividend, subdivision, change, combination or issuance would
hold thereafter as a result thereof.
If, after the Record Time but prior to the Expiration Time, the
Corporation issues any securities in a transaction of a type described
in the first sentence of this Section 2.03(2) which are exchangeable
for or convertible into or give a right to acquire Common Shares, such
securities shall be treated herein as nearly equivalent to Common
Shares as may be practicable and appropriate under the circumstances
and the Corporation and the Rights Agent shall amend this Agreement in
order to effect such treatment; provided that no such amendment may
materially adversely affect the interests of the holders of the Rights
generally.
In the event the Corporation shall at any time after the Record Time
and prior to the Separation Time issue any Common Share otherwise than
in a transaction referred to in this Section 2.03(2), each Common Share
so issued shall automatically have one new Right associated with it
which Right shall be evidenced by the certificate representing such
Common Share.
(3) If the Corporation at any time after the Record Time but prior to the
Expiration Time fixes a record date for the making of a distribution to
all holders of Common Shares of rights or warrants 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 or subscribe for
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 95%
of the Market Price per Common Share on such record date, the Exercise
Price shall be adjusted by multiplying the Exercise Price in effect
immediately prior to such record date by a fraction, the numerator of
which shall be the number of Common Shares outstanding on such record
date plus the number of Common Shares which 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 and 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 in a consideration all or part of which
is in a form other than cash, the value of such consideration shall be
as determined in good faith by the Board. To the extent that such
rights or warrants are not exercised prior to the
15
expiration thereof, the Exercise Price shall be readjusted to the
Exercise Price that would then be in effect based on the number of
Common Shares (or securities convertible into or exchangeable for
Common Shares) actually issued upon the exercise of such rights.
For the purposes of this Agreement, the granting of the right to
purchase Common Shares (whether from treasury or otherwise) pursuant to
any (i) Dividend Reinvestment Plan and/or (ii) Common Share purchase
plan providing for the investment of periodic optional payments and/or
(iii) employee or executive or director benefit or similar plans (so
long as such right to purchase is in no case evidenced by the delivery
of rights or warrants) shall not be deemed to constitute an issue of
rights or warrants by the Corporation; provided, however, that, in the
case of any Dividend Reinvestment Plan or Common Share purchase plan,
the right to purchase Common Shares is at a price per share not less
than 90% of the then Market Price of the Common Shares.
(4) If the Corporation at any time after the Record Time but prior to the
Expiration Time fixes a record date for the making of a distribution to
all holders of Common Shares of evidences of indebtedness or assets
(other than a Regular Periodic Cash Dividend or a dividend paid in
Common Shares) or rights or warrants (excluding those referred to in
Section 2.03(3)), the Exercise Price shall be adjusted by multiplying
the Exercise Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the Market Price per Common
Share on such record date less the fair market value per Common Share
(as determined in good faith by the Board) of the evidences of
indebtedness, assets, rights or warrants to be so distributed and the
denominator of which shall be the Market Price per Common Share on such
record date. 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 that would have been in effect if such record date had not been
fixed.
(5) Each adjustment made pursuant to this Section 2.03 shall be made as of:
(a) the payment or effective date for the applicable dividend,
subdivision, change, combination or issuance, in the case of
an adjustment made pursuant to Section 2.03(2), or
(b) the record date for the applicable dividend or distribution,
in the case of an adjustment made pursuant to Sections 2.03(3)
or (4).
(6) Subject to a prior consent of the holders of Voting Shares or Rights
obtained as set forth in Sections 5.04(3) or (4) as applicable, if the
Corporation at any time after the Record Time but prior to the
Expiration Time issues any shares in the capital of the Corporation
(other than Common Shares), any rights or warrants to subscribe for or
purchase any such shares, or any securities convertible into or
exchangeable for any such shares and the Board, acting in good faith,
determines that the adjustments contemplated by Sections 2.03(2), (3)
or (4) are not applicable and the interests of the holders of the
Rights will, as a result thereof, be adversely affected or, if
applicable, such adjustments will not appropriately protect the
interests of the holders of the Rights, the Board may determine what
adjustments to the Exercise Price, number of Rights and/or securities
purchasable upon exercise of the Rights would be appropriate to protect
the interests of the holders of the Rights and, notwithstanding
Sections 2.03(2), (3) or (4), such adjustments, rather than, if
applicable, the adjustments contemplated by Sections 2.03(2), (3) or
(4), shall be made and the Corporation and the Rights Agent shall amend
this Agreement as appropriate to provide for such adjustments.
(7) Notwithstanding anything herein to the contrary, no adjustment to the
Exercise Price shall be required unless such adjustment would require
an increase or decrease of at least 1% in the Exercise Price, provided
that any adjustment which is not made as a result of the provisions of
this Section 2.03(7) shall be carried forward and taken into account in
any subsequent adjustment. Each adjustment to the Exercise Price made
pursuant to this Section 2.03 shall be rounded upward or downward to
the nearest cent. Whenever an adjustment to the
16
Exercise Price is made pursuant to this Section 2.03, the Corporation
shall promptly:
(a) prepare a certificate setting forth such adjustment and a
brief statement of the facts accounting for such adjustment,
(b) file a copy of such certificate with the Rights Agent and each
transfer agent for the Common Shares, and
(c) mail a brief summary thereof to each holder of a Right.
(8) Irrespective of any adjustment or change in the securities purchasable
upon exercise of the Rights, the Rights Certificates theretofore and
thereafter issued shall continue to express the securities so
purchasable which were expressed in the initial Rights Certificates
issued hereunder.
(9) Notwithstanding anything contained in this Section 2.03 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 2.03, as and to the extent that in their good faith
judgment the Board shall determine to be advisable, in order that any:
(a) stock dividend;
(b) consolidation or subdivision of Common Shares;
(c) issuance (wholly or in part for cash) of Common Shares or
securities that by their terms are convertible into or
exchangeable for Common Shares; or
(d) issuance of rights, options or warrants referred to in this
Section 2.03,
hereafter made by the Corporation to holders of its Common Shares,
shall not be taxable to such shareholders.
2.04 DATE ON WHICH EXERCISE IS EFFECTIVE
Each person in whose name any certificate for Common Shares is issued upon the
exercise of the Rights shall for all purposes be deemed to have become the
holder of record of the Common Shares represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and the payment of the Exercise
Price for such Rights (and any applicable transfer tax and other governmental
charge 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 certificates shall
be dated, the next succeeding Business Day on which the Common Share transfer
books of the Corporation are open.
2.05 EXECUTION, AUTHENTICATION, DELIVERY AND DATING OF RIGHTS CERTIFICATES
(1) The Rights Certificates shall be executed (either manually or by
facsimile signature) on behalf of the Corporation by any two officers
of the Corporation under its corporate seal or a facsimile thereof.
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 prior to the
countersignature and delivery of such Rights Certificates as herein
provided
17
for.
(2) Promptly after the Corporation learns of the Separation Time, the
Corporation shall notify the Rights Agent of such Separation Time and,
subject to compliance with Section 2.01(7), shall 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
give such Rights Certificates to the holders of the Rights pursuant to
Section 2.01(3) hereof. No Rights Certificates shall be valid for any
purpose unless countersigned by the Rights Agent as aforesaid.
(3) Each Rights Certificate shall be dated the date of countersignature
thereof.
2.06 REGISTRATION OF RIGHTS
(1) The Corporation shall cause a register (the "Rights Register") to be
kept after the Separation Time in which, subject to such reasonable
regulations as it may prescribe, the Corporation shall provide for the
registration of the Rights. The Rights Agent is hereby appointed
"Rights Registrar" for the purpose of maintaining the Rights Register
for the Corporation and registering the Rights and the transfers and
exchanges of the Rights as herein provided. If the Rights Agent ceases
to be the Rights Registrar, the Rights Agent shall have the right to
examine the Rights Register at all reasonable times.
(2) After the Separation Time and prior to the Expiration Time, upon
surrender of any Rights Certificate and subject to the provisions of
Sections 2.06(4) and (5), the Corporation shall execute, and the Rights
Agent shall 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.
(3) All Rights issued upon any registration of transfer or exchange of
Rights Certificates shall be valid obligations of the Corporation and
shall be entitled to the same benefits under this Agreement as the
Rights surrendered upon such registration of transfer or exchange.
(4) Every Rights Certificate surrendered for transfer or exchange shall be
duly endorsed, or be accompanied by a written instrument of transfer in
a form satisfactory to the Corporation or the Rights Agent, as the case
may be, duly executed by the holder thereof or such holder's attorney
duly authorized in writing.
(5) As a condition to the issuance of any new Rights Certificate under this
Section 2.06, 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.
2.07 MUTILATED, DESTROYED, LOST AND STOLEN RIGHTS CERTIFICATES
(1) If any mutilated Rights Certificate is surrendered to the Rights Agent
prior to the Expiration Time, the Corporation shall execute and the
Rights Agent shall countersign and deliver in the name of the holder in
exchange therefor a new Rights Certificate evidencing the same number
of Rights as did the Rights Certificate so surrendered.
(2) If prior to the Expiration Time there is delivered to the Corporation
and the Rights Agent:
(a) evidence to their satisfaction of the destruction, loss or
theft of any Rights Certificate, and
18
(b) such security or indemnity as may be required by each of 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 the Rights Agent shall
countersign and deliver in the name of the holder, in lieu of any such
destroyed, lost or stolen Rights Certificate, a new Rights Certificate
evidencing the same number of Rights as did the Rights Certificate so
destroyed, lost or stolen.
(3) As a condition to the issuance of any new Rights Certificate under this
Section 2.07, 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 expense (including the fees
and expenses of the Rights Agent) connected therewith.
(4) Every new Rights Certificate issued pursuant to this Section 2.07 in
lieu of any destroyed, lost or stolen Rights Certificate shall evidence
an original additional 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 proportionally with any and all
other Rights duly issued hereunder.
2.08 PERSONS DEEMED OWNERS
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 such Rights Certificate (or, prior to the
Separation Time, such 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 Rights shall mean the
registered holder of such Rights (or, prior to the Separation Time, the
associated Common Shares).
2.09 DELIVERY AND CANCELLATION OF CERTIFICATES
All Rights Certificates surrendered upon exercise or for registration
of transfer or exchange shall, if surrendered to any person other than
the Rights Agent, be delivered to the Rights Agent and, in any case,
shall be promptly cancelled by the Rights Agent. The 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 2.09, except as expressly permitted by this Agreement. The
Rights Agent shall destroy all cancelled Rights Certificates and
promptly thereafter deliver a certificate of destruction to the
Corporation on request.
2.10 AGREEMENT OF RIGHTS HOLDERS
Every holder of Rights, by accepting the same, consents and agrees with
the Corporation and the Rights Agent and with every other holder of
Rights that:
(a) such holder shall be bound by and subject to the provisions of
this Agreement, as amended from time to time in accordance
with the terms hereof in respect of all Rights held;
19
(b) prior to the Separation Time, each Right will be transferable
only together with, and will be transferred by a transfer of,
the associated Common Shares and after the Separation Time,
the Rights shall be transferable only on the Rights Register
as provided herein;
(c) prior to due presentment of a Rights Certificate (or, prior to
the Separation Time, the associated Common Share certificate)
for 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;
(d) without the approval of any holder of Rights and upon the sole
authority of the Board acting in good faith this Agreement may
be supplemented or amended from time to time pursuant and
subject to Section 2.03 or Section 5.04;
(e) if such holder at any time becomes an Acquiring Person or
otherwise becomes subject to the provisions of Section
3.01(2), the Rights held by such holder shall immediately
become void pursuant to the provisions of Section 3.01(2);
(f) such holder of Rights has waived his right to receive any
fractional Right or any fractional Share or other security
upon exercise of a Right (except as specifically 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.
ARTICLE 3 - EFFECT OF CERTAIN TRANSACTIONS
3.01 FLIP-IN EVENT
(1) Subject to Section 3.01(2) and Section 5.01, if a Flip-In
Event occurs prior to the Expiration Time, the Corporation
shall take such action as is necessary to ensure and provide
that, except as provided below, each Right shall thereafter
constitute the right to purchase from the Corporation, upon
the exercise thereof in accordance with the terms hereof, that
number of Common Shares of the Corporation 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 2.03 in the event that
after such date of consummation or occurrence an event of a
type analogous to any of the events described in Section 2.03
shall have occurred with respect to such Common Shares).
20
(2) Notwithstanding the foregoing, upon the occurrence of any
Flip-In Event, any Rights that are or were Beneficially Owned
on or after 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, direct or indirect, 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) in a transfer,
whether or not for consideration, that the Board,
acting in good faith has determined is part of a
plan, arrangement or scheme of an Acquiring Person
(or any Affiliate or Associate of an Acquiring
Person) that has the purpose or effect of avoiding
clause (i) of this Section 3.01(2),
shall become void and any holder of such Rights (including
transferees) shall thereafter have no right to exercise such
Rights under any provision of this Agreement or otherwise.
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
3.01, including without limitation, all such acts and things
as may be required to satisfy the requirements of the Canada
Business Corporations Act, the Securities Act (Ontario) and
the securities laws or comparable legislation of each of the
provinces of Canada, the United States of America and each of
the states thereof in respect of the issue of Common Shares
upon the exercise of Rights in accordance with this Agreement.
(3) Any Rights Certificate issued pursuant to Section 2.01 that
represents Rights Beneficially Owned by a Person described in
either clauses (i) or (ii) of Section 3.01(2) or transferred
to any nominee of any such Person and any Rights Certificates
issued upon transfer, exchange, replacement or adjustment of
any other Rights Certificates referred to in this sentence
shall contain or will be deemed to contain the following
additional legend:
"The Rights represented by this Rights Certificate
represent Rights Beneficially Owned by an Acquiring
Person (as such terms are defined in the Rights
Agreement). This Rights Certificate and the Rights
represented hereby shall become void in the
circumstances specified in Section 3.01(2) of the
Shareholder Rights Agreement.";
provided that the Rights Agent shall not be under any
responsibility to ascertain the existence of facts that would
require the imposition of such legend but shall be required to
impose such legend only if instructed to do so 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 the Rights represented thereby are not, and,
to the best of such holder's knowledge, never have been,
Beneficially Owned by an Acquiring Person after such person
became an Acquiring Person.
ARTICLE 4 - THE RIGHTS AGENT
21
4.01 GENERAL
(1) The Corporation hereby appoints the Rights Agent to act as agent for
the Corporation and the holders of Rights in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such
appointments. The Corporation may upon such terms as it considers
appropriate from time to time appoint such Co-Rights Agents as it may
deem necessary or desirable subject to the Rights Agent receiving
notice of such appointment. If 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 subject to
the approval of the Rights Agent. The Corporation agrees to pay to the
Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand by the Rights Agent, its
reasonable expenses and counsel fees and other disbursements incurred
in the administration and execution of this Agreement and the exercise
and performance of its duties hereunder. The Corporation also agrees to
indemnify the Rights Agent, its officers, directors, employees and
agents for, and to hold them harmless against, any loss, liability or
expense, if incurred without negligence, bad faith or wilful misconduct
on the part of the Rights Agent for anything done or omitted to be done
by the Rights Agent in connection with the exercise and performance of
its duties hereunder, including the costs and expenses of defending
against any claim of liability, which right to indemnification shall
survive the termination of this Agreement or the removal or resignation
of the Rights Agent.
(2) The Rights Agent shall be protected and shall incur no liability for or
in respect of any action taken, suffered or omitted to be taken by it
in connection with the exercise and performance of its duties hereunder
in reliance upon any certificate for Common Shares, Rights Certificate,
certificate for other securities of the Corporation, instrument of
assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement or other
paper or document believed by it to be genuine and to be signed,
executed and, where necessary, verified or acknowledged, by the proper
Person or Persons.
(3) 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 with respect to
the then current officers of the Corporation, provided that failure to
inform the Rights Agent of any such events, or any defect therein,
shall not affect the validity of any action taken hereunder in relation
to such events.
4.02 MERGER OR CONSOLIDATION OR CHANGE OF NAME OF THE RIGHTS AGENT
(1) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or amalgamated or with which it may be
consolidated, or any corporation resulting from any merger,
amalgamation or consolidation to which the Rights Agent or any
successor Rights Agent is a party, or any corporation succeeding to the
shareholder or stockholder services business of the Rights Agent or any
successor Rights Agent, will be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that
such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 4.04. In case at the time
such successor Rights Agent succeeds to the agency created by this
Agreement any of the Rights Certificates have been countersigned but
not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such
Rights Certificates so countersigned; and in case at that time any of
the Rights Certificates have not been countersigned, any successor
Rights Agent may countersign such Rights Certificates either in the
name of the predecessor Rights Agent or in the name of the successor
Rights Agent; and in all such cases such Rights Certificates shall have
the full force provided for in the Rights Certificates and in this
Agreement.
(2) In case at any time the name of the Rights Agent is changed and at such
time any of the Rights Certificates
22
shall have been countersigned but not delivered, the Rights Agent may
adopt the countersignature under its prior name and deliver Rights
Certificates so countersigned; and in case at that time any of the
Rights Certificates shall not have been countersigned, the Rights Agent
may countersign such Rights Certificates either in its prior name or in
its changed name; and in all such cases such Rights Certificates shall
have the full force provided for in the Rights Certificates and in this
Agreement.
4.03 ENTITLEMENTS OF THE RIGHTS AGENT
The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by which the
Corporation and every holder of Rights, by accepting the same, shall be
bound:
(a) the Rights Agent may retain and consult with legal counsel
(who may be legal counsel for the Corporation), or such other
experts or advisors as the Rights Agent deems necessary to
carry out its duties under this Agreement, and the opinion of
such counsel or other expert or advisor shall be full and
complete authorization and protection to the Rights Agent with
respect 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 be herein
specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by persons
believed by the Rights Agent to be Chairman of the Board,
President, Chief Executive Officer, any Vice President, Chief
Financial Officer, the Secretary, or any Assistant Secretary
of the Corporation and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent
for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such
certificate;
(c) the Rights Agent shall be liable hereunder for its own
negligence, bad faith or wilful misconduct;
(d) the Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this
Agreement or in the certificates for Common Shares or the
Rights Certificates (except its countersignature thereof) or
be required to verify the same, and all such statements and
recitals are and shall be deemed to have been made by the
Corporation only;
(e) the Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and
delivery hereof (except the due authorization, execution and
delivery hereof by the Rights Agent) or in respect of the
validity or execution of any Common Share certificate or
Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Corporation of
any covenant or condition contained in this Agreement or in
any Rights Certificate; nor shall it be responsible for any
change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 3.01(2)) or any
adjustment required under the provisions of Section 2.03 or
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 2.03
describing any such adjustment); nor shall it by any act
hereunder be deemed to make any representation or warranty as
to the authorization of any Common Shares to be issued
pursuant to this Agreement or any Rights or as to whether any
Common Shares will, when issued, be duly and validly
authorized, executed, issued and delivered as fully paid and
non-assessable;
(f) the Corporation shall perform, execute, acknowledge and
deliver or cause to be performed,
23
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 with respect to the performance of its agency
duties hereunder from any person believed by the Rights Agent
to be the Chief Executive Officer or the Chief Legal Officer
or the Chief Financial Officer of the Corporation, and to
apply to such persons for advice or instructions in connection
with its duties, and it shall not be liable for any action
taken or suffered by it in good faith in accordance with
instructions of any such person;
(h) the Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in Common
Shares, Rights or other securities of the Corporation or
become pecuniarily interested in any transaction in which the
Corporation may be interested, or contract with or lend money
to the Corporation or otherwise act as fully and freely as
though it were not Rights Agent under this Agreement. Nothing
herein shall preclude the Rights Agent from acting in any
other capacity for the Corporation or for any other legal
entity; and
(i) the Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and
the Rights Agent shall not be answerable or accountable for
any act, default, neglect or misconduct of any such attorneys
or agents or for any loss to the Corporation resulting from
any such act, default, neglect or misconduct, provided
reasonable care was exercised in the selection and continued
employment thereof.
4.04 CHANGE OF THE RIGHTS AGENT
The Rights Agent may resign and be discharged from its duties under
this Agreement upon 60 calendar days' notice (or such lesser notice as
is acceptable to the Corporation) to the Corporation, to each transfer
agent of Common Shares by registered or certified mail and to the
holders of Rights in accordance with Section 5.08 at the Corporation's
expense. The Corporation may remove the Rights Agent upon 60 calendar
days' notice to the Rights Agent, to each transfer agent of the Common
Shares by registered or certified mail and to the holders of Rights in
accordance with Section 5.08. If the Rights Agent resigns or is removed
or otherwise becomes incapable of acting, the Corporation shall appoint
a successor to the Rights Agent. If the Corporation fails to make such
appointment within a period of 30 CALENDAR days after such removal or
after it has been notified in writing of such resignation or incapacity
by the resigning or incapacitated Rights Agent or by the holder of any
Rights (which holder shall, with such notice, submit such holder's
Rights Certificate for inspection by the Corporation), then the Rights
Agent at the Corporation's expense or the holder of any Rights may
apply to any court of competent jurisdiction for the appointment of a
new Rights Agent. Any successor Rights Agent, whether appointed by the
Corporation or by such a court, shall be a corporation incorporated
under the laws of Canada or a province thereof authorized to carry on
the business of a trust company in the Province of Ontario. After
appointment, the successor Rights Agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent upon payment of all outstanding fees expenses
owed to it under this Agreement shall deliver and transfer to the
successor Rights Agent any property at the time held by it hereunder,
and execute and deliver any further assurance, conveyance, act or deed
necessary for the purpose. Not later than the effective date of any
such appointment, the Corporation shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common
Shares, and give a notice thereof to the holders of the Rights. Failure
to give any notice provided for in this Section 4.04 or any defect
therein shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights
Agent, as the case may be.
24
ARTICLE 5 - MISCELLANEOUS
5.01 REDEMPTION, WAIVER AND TERMINATION
(1) Subject to the prior consent of the holders of Voting Shares or Rights
obtained as set forth in Sections 5.04(3) or (4), as applicable, the
Board acting in good faith may, at its option, at any time prior to the
provisions of Sections 3.01 becoming applicable as a result of the
occurrence of a Flip-In Event, elect to redeem all but not less than
all of the then outstanding Rights at a redemption price of $0.01 per
Right appropriately adjusted in a manner analogous to the applicable
adjustment provided for in Section 2.03 in the event that an event of
the type analogous to any of the events described in Section 2.03 shall
have occurred (such redemption price being herein referred to as the
"Redemption Price").
(2) The Board may, until a Flip-In Event shall occur, upon written notice
delivered to the Rights Agent, determine to waive the application of
Section 3.01 to such particular Flip-In Event but only if such Flip-In
Event would occur as a result of a Take-Over Bid made by way of a
Take-Over Bid circular to all holders of Voting Shares of record;
provided that if the Board waives the application of Section 3.01 to a
particular Flip-In Event, the Board shall be deemed to have waived the
application of Section 3.01 to any other Flip-In Event, that would
occur as a result of a Take-Over Bid which is made by means of a
Take-Over Bid circular to all holders of Voting Shares of record prior
to the expiry of any Take-Over Bid in respect of which a waiver is, or
is deemed to have been, granted under this Section 5.01(2).
(3) Notwithstanding Section 5.01(2), upon written notice delivered to the
Rights Agent, the Board may also, with respect to any Flip-In Event,
waive the application of Section 3.01 to that Flip-In Event, provided
that both of the following conditions are satisfied:
(i) the Board has determined that the Acquiring Person became an
Acquiring Person by inadvertence and without any intent that
he would become an Acquiring Person; and
(ii) such Acquiring Person has reduced his Beneficial Ownership of
Voting Shares such that at the time of waiver pursuant to this
Section 5.01(3) he is no longer an Acquiring Person.
(4) If the Board elects or is deemed to have elected to redeem the Rights,
the right to exercise the Rights will thereupon, without further action
and without notice, terminate and each Right will after redemption be
null and void and the only right thereafter of the holders of Rights
will be to receive the Redemption Price and no further Rights shall
thereafter be issued.
(5) Within 10 calendar days after the Board electing or having been deemed
to have elected to redeem the Rights, the Corporation shall give notice
of redemption to the holders of the then outstanding Rights by mailing
such notice to each such holder at its 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 Corporation for the Common Shares.
Any notice which is mailed in the manner herein provided will be deemed
given, whether or not the holder receives the notice. Each such notice
of redemption will state the method by which the payment of the
Redemption Price will be made. The failure to give or any defect in
such notice shall not affect the validity of such redemption.
(6) Where a Take-Over Bid that is not a Permitted Bid or Competing
Permitted Bid is withdrawn or otherwise terminated after the Separation
Time has occurred and prior to the occurrence of a Flip-In Event, the
Board may elect to redeem all the outstanding Rights at the Redemption
Price.
25
(7) Upon the Rights being redeemed pursuant to Section 5.01(6), all the
provisions of this Agreement shall continue to apply as if the
Separation Time had not occurred and Rights Certificates representing
the number of Rights held by each holder of record of Common Shares, as
of the Separation Time had not been mailed to each such holder and for
all purposes of this Agreement the Separation Time shall be deemed not
to have occurred.
(8) In the event that prior to the occurrence of a Flip-In Event a Person
acquires, pursuant to a Permitted Bid, a Competing Permitted Bid or an
Exempt Acquisition, outstanding Voting Shares, then the Board shall
immediately upon the consummation of such acquisition without further
formality be deemed to have elected to redeem the Rights at the
Redemption Price.
5.02 EXPIRATION
No Person shall have any rights pursuant to this Agreement or in
respect of any Right after the Expiration Time, except the Rights Agent
as specified in Section 4.01(1).
5.03 ISSUANCE OF NEW RIGHTS CERTIFICATES
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Corporation may, at its option, issue new
Rights Certificates evidencing Rights in such form as may be approved
by the Board to reflect any adjustment or change in the number or kind
or class of shares purchasable upon exercise of Rights made in
accordance with the provisions of this Agreement.
5.04 SUPPLEMENTS AND AMENDMENTS
(1) The Corporation may from time to time amend this Agreement with the
approval of the Rights Agent but without the consent of any holder of
Rights or the holders of Voting Shares in order to correct a clerical
or typographical error or to maintain the validity and effectiveness of
this Agreement as a result of any change in any applicable laws, rules
or regulatory requirements.
(2) The Corporation may, prior to the date of the shareholders' meeting
referred to in Section 5.15, supplement or amend this Agreement without
the approval of any of the holders of Rights or Voting Shares (whether
or not such action would materially adversely affect the interest of
the holders of Rights generally) where the Board acting in good faith
deems such action necessary or desirable. Notwithstanding anything in
this Section 5.04 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.
(3) Subject to Sections 5.04(1) and 5.04(2), the Corporation may, with the
prior consent of the holders of Voting Shares obtained as set forth
below, at any time prior to the Separation Time, amend, vary or rescind
any of the provisions of this Agreement and the Rights (whether or not
such action would materially adversely affect the interests of the
holders of Rights generally). Such consent shall be deemed to have been
given if the action requiring such approval is authorized by the
affirmative vote of a majority of the votes cast by Independent
Shareholders present or represented at and entitled to be voted at a
meeting of the holders of Voting Shares duly called and held in
compliance with applicable laws and the articles and by-laws of the
Corporation.
(4) The Corporation may, with the prior consent of the holders of Rights,
at any time on or after the Separation Time and before the Expiration
Time, amend, vary or delete any of the provisions of this Agreement and
the
26
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 in the manner specified
in Section 5.04(5).
(5) 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 Canada Business Corporations Act with
respect to meetings of shareholders of the Corporation.
(6) Any amendment to this Agreement pursuant to Subsection 5.04(1) which is
required to maintain the validity of this Agreement as a result of any
change in any applicable laws, rules or regulatory requirements shall:
(i) if made before the Separation Time, any such amendment shall
be submitted to the shareholders of the Corporation at the
next meeting of shareholders and the shareholders may, by the
majority referred to in Section 5.04(3) confirm or reject such
amendment;
(ii) if made after the Separation Time, any such amendment shall 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 Section 5.04(5) confirm or reject such amendment.
Any such amendment shall be effective from the date of the resolution
of the Board adopting such amendment, until it is confirmed or rejected
or until it ceases to be effective (as described in the next sentence)
and, where such amendment is confirmed, it continues in effect in the
form so confirmed. If such amendment is rejected by the shareholders or
the holders of Rights or is not submitted to the shareholders or
holders of Rights as required, then such amendment shall cease to be
effective from and after the termination of the meeting at which it was
rejected or to which it should have been but was not submitted or from
and after the date of the meeting of holders of Rights that should have
been but was not held, and no subsequent resolution of the Board 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.
(7) The Corporation shall give notice in writing to the Rights Agent of any
supplement, amendment, deletion, variation or rescission to this
Agreement pursuant to this Section within five Business Days of the
date of any such supplement, amendment, deletion, variation or
rescission, provided that failure to give notice, or any defect
therein, shall not affect the validity of any such supplement,
amendment, deletion, variation or rescission.
5.05 FRACTIONAL RIGHTS AND FRACTIONAL SHARES
(1) 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 Section
3.01(2), 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.
27
(2) 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.
5.06 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
Corporation or the Rights Agent, are vested in the respective holders
of Rights; and any holder of Rights, without the consent of the Rights
Agent or of any other holder of Rights, may, on such holder's own
behalf and for such holder's own benefit and the benefit of other
holders of Rights, enforce, and may institute and maintain any suit,
action or proceeding against the Corporation to enforce or otherwise
act in respect of, such holder's right to exercise such holder's Rights
in the manner provided in such holder's Rights Certificate and in this
Agreement. Without limiting the generality of the foregoing or any
remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to
specific performance of the obligations of, and injunctive relief
against actual or threatened violations of the obligations of, any
Person subject to this Agreement.
5.07 HOLDER OF RIGHTS NOT DEEMED TO BE A SHAREHOLDER
No holder of Rights, as such, shall be entitled to vote, to receive
dividends, to receive the remaining property of the Corporation on
dissolution or to be deemed for any purpose the holder of Common Shares
or any other securities which may at any time be issuable on the
exercise of such Rights, nor shall anything contained herein or in any
Rights Certificate be construed to confer upon any holder of Rights, 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, to give or withhold
consent to any corporate action, to receive notice of meetings or other
actions affecting shareholders (except as provided in Section 5.08) or
to receive dividends or subscription rights or otherwise, until such
Rights shall have been exercised in accordance with the provisions
hereof.
5.08 NOTICES
Any document or other communication to be given in connection with this
Agreement to the Corporation shall be given in writing and shall be
given by (i) personal delivery, (ii) telegraph, facsimile or other form
of recorded electronic communication (charges prepaid and confirmed in
writing) or (iii) by first-class postage prepaid mail (except during
any general interruption of postal services due to strike, lockout or
other cause) addressed to the Corporation as follows:
Novelis Inc.
Royal Bank Plaza, South Tower
200 Bay Street, Suite 3800
P.O. Box 84
Toronto, Ontario
Canada
M5J 2Z4
Attention: Chief Executive Officer
28
Any document or other communication to be given in connection with this
Agreement to the Rights Agent shall be given in writing and shall be
given by (i) personal delivery, (ii) telegraph, facsimile or other form
of recorded electronic communication (charges prepaid and confirmed in
writing) or (iii) by first-class postage prepaid mail (except during
any general interruption of postal services due to strike, lockout or
other cause) addressed to the Rights Agent as follows:
CIBC Mellon Trust Company
2001 University Street
16th Floor
Montreal, Quebec
Canada
H3A 2A6
Attention: Branch Manager
Any document or other communication to be given in connection with this
Agreement to any holder of Rights shall be given in writing and shall
be given by (i) personal delivery, (ii) telegraph, facsimile or other
form of recorded electronic communication (charges prepaid and
confirmed in writing) or (iii) by first-class postage prepaid mail
(except during any general interruption of postal services due to
strike, lockout or other cause) addressed to such holder at the address
of such holder as it appears upon the registry books of the Rights
Agent or, prior to the Separation Time, on the registry books of the
Corporation for the Common Shares (the Corporation hereby agreeing to
furnish copies of such records to the Rights Agent). The Corporation
and the Rights Agent may by notice to the other designate with respect
to itself any other address or individual. Any document or other
communication given by personal delivery shall be conclusively deemed
to have been given on the day of actual delivery thereof and, if given
by first class postage prepaid mail, on the fifth Business Day
following the deposit thereof in the mail (it being acknowledged, for
greater certainty, that any such communication mailed to a holder of a
Right as herein provided shall be deemed to have been given whether or
not the holder receives such communication).
5.09 COSTS OF ENFORCEMENT
If the Corporation or any other Person, the securities of which are
purchasable upon exercise of the Rights, fails to fulfil any of its
obligations pursuant to this Agreement, then the Corporation or such
Person shall reimburse any holder of Rights for the costs and expenses
(including reasonable legal fees) incurred by such holder in any action
to enforce his rights pursuant to any Rights or this Agreement.
5.10 BENEFIT OF THE AGREEMENT
This Agreement shall inure to the benefit of and be binding upon the
respective successors and assigns of the Corporation and the Rights
Agent and upon the heirs, executors, administrators, successors and
assigns of the holders of Rights. This Agreement shall be for the sole
and exclusive benefit of the Corporation, the Rights Agent and the
holders of Rights and nothing in this Agreement shall be construed to
give any Person other than the Corporation, the Rights Agent and the
holders of Rights any legal or equitable right, remedy or claim under
this Agreement.
5.11 GOVERNING LAW
29
This Agreement and each Right issued hereunder shall be deemed to be a
contract made under the laws of the Province of Ontario and for all
purposes shall be governed by and construed in accordance with the laws
of the Province of Ontario and the laws of Canada applicable therein.
5.12 COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall be
considered an original and both of which taken together shall
constitute a single agreement.
5.13 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 provision shall be ineffective as to such
jurisdiction to the extent of such invalidity or unenforceability
without invalidating or rendering unenforceable the remaining
provisions hereof or the application of such provision to circumstances
other than those to which it is held invalid or unenforceable.
5.14 DETERMINATIONS AND ACTIONS BY THE BOARD
(1) All actions, calculations, interpretations and determinations
(including all omissions with respect to the foregoing) which are done
or made by the Board, in good faith, shall not subject the Board to any
liability to the holders of Rights.
(2) Nothing contained in this Agreement shall be deemed to be in derogation
of the obligation of the Board to exercise its fiduciary duties.
Without limiting the generality of the foregoing, nothing contained
herein shall be construed to suggest or imply that the Board shall not
be entitled to recommend that the holders of the Voting Shares reject
any Permitted Bid or any Competing Permitted Bid or any Take-Over Bid,
or to take any other action (including, without limiting the generality
of the foregoing, the commencement, prosecution, defence or settlement
of any litigation and the submission of additional or alternative
Permitted Bids or Competing Permitted Bids or Take-Over Bids) with
respect to any Permitted Bid or any Competing Permitted Bid or any
Take-Over Bid or otherwise that the Board believes is necessary or
appropriate in the exercise of its fiduciary duties.
5.15 EFFECTIVE DATE
This Agreement is effective from the Record Time.
5.16 RE-CONFIRMATION AFTER THREE YEARS
At the 2008 Annual Meeting and every third Annual Meeting of
Shareholders of the Corporation following the 2008 Annual Meeting,
provided that a Flip-In Event has not occurred prior to such time, the
Board shall submit a resolution to the holders of Voting Shares of the
Corporation for their consideration and, if thought advisable, approval
ratifying the continued existence of the Rights. If a majority of
greater than 50% of the votes cast by holders of Voting Shares who vote
in respect of such reconfirmation and approval is voted against the
continued existence of the Rights, then this Agreement, the Rights Plan
and any outstanding Rights shall be of
30
no further force and effect. There shall be excluded from the
calculation of shares eligible to vote at such meeting shares held by
an Acquiring Person or by any Person who has made or announced an
intention to make a tender or exchange offer or Take-Over Bid which, if
consummated, would result in such Person holding in the aggregate 20%
or more of the outstanding Voting Shares at the date of such bid.
5.17 REGULATORY APPROVALS
Any obligation of the Corporation or action or event contemplated by
this Agreement, or any amendment or supplement to this Agreement, shall
be subject to the receipt of any requisite approval or consent from any
governmental or regulatory authority. Without limiting the generality
of the foregoing, any issuance or delivery of debt or equity securities
(other than non-convertible debt securities) of the Corporation upon
the exercise of Rights and any amendment or supplement to this
Agreement shall be subject to the prior consent of The Toronto Stock
Exchange.
5.18 DECLARATION AS TO NON-CANADIAN HOLDERS
If in the opinion of the Board (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
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
of America, in which such issue or delivery would be unlawful without
registration of the relevant Persons or securities for such purposes.
ARTICLE 6 - PERMITTED BIDS
6.01 PERMITTED BIDS
The expression "Permitted Bid" referred to in Section 1.01(hh) means a
Take-Over Bid made by an Offeror that is made by means of a Take-Over
Bid circular sent to holders of Voting Shares and which 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, the following
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 calendar 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
tendered or deposited 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 Section 6.01(ii)
and that any Voting Shares deposited pursuant to the Take-Over
Bid may be withdrawn until taken up and paid for; and
31
(iv) the Take-Over Bid also contains an irrevocable and unqualified
condition that in the event that the deposit condition set
forth in Section 6.01(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 10 Business Days from the date of such public
announcement.
6.02 COMPETING PERMITTED BIDS
The expression "Competing Permitted Bid" referred to in Section 1.01(n)
means a Take-Over Bid that:
(i) is made for Voting Shares after a Permitted Bid or Competing
Permitted Bid for Voting Shares has been made but prior to the
expiry of such Permitted Bid or Competing Permitted Bid;
(ii) satisfies all of the conditions of the definition of Permitted
Bid other than the requirements set out in Section 6.01(ii)
(A); 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 and paid for
pursuant to the Take-Over Bid prior to the close of business
on a date which is not earlier than the later of (A) the 60th
calendar day following the date on which the earliest
Permitted Bid which preceded the Competing Permitted Bid was
made and (B) 21 calendar days after the date of the Take-Over
Bid constituting the Competing Permitted Bid.
IN WITNESS WHEREOF the parties have executed this Agreement on the date and year
above written.
NOVELIS INC.
CORPORATE
PER: SEAL
OF
PER: NOVELIS INC.
CIBC MELLON TRUST COMPANY
CORPORATE
PER: SEAL
OF THE
PER: CIBC MELLON TRUST
COMPANY
32
SCHEDULE 1
FORM OF RIGHTS CERTIFICATE
Certificate No. ____________ ____________ Rights
THE RIGHTS ARE SUBJECT TO REDEMPTION AT THE OPTION OF THE CORPORATION,
ON THE TERMS SET FORTH IN THE SHAREHOLDER RIGHTS AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES (SPECIFIED IN SECTION 3.01(2) OF THE SHAREHOLDER
RIGHTS AGREEMENT), RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS
SUCH TERMS ARE DEFINED IN THE SHAREHOLDER RIGHTS AGREEMENT) OR
TRANSFEREES OF AN ACQUIRING PERSON 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 Agreement made as of (the "Rights
Agreement") between Novelis Inc., a corporation incorporated under the laws of
Canada (the "Corporation") and CIBC Mellon Trust Company, a trust company
incorporated under the laws of Canada, as Rights Agent (the "Rights Agent")
(which term shall include any successor Rights Agent under the Rights Agreement)
to purchase from the Corporation at any time after the Separation Time (as such
term is defined in the Rights Agreement) and prior to the close of business on 1
may 2014 one fully paid Common Share in the capital 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 duly
executed and submitted to the Rights Agent or Co-Rights Agent at its principal
office in any one of the Cities of Montreal, Toronto, Winnipeg, Regina, Calgary,
or Vancouver. The Exercise Price shall initially be $200 (U.S.) per Right and
shall be subject to adjustment in certain events as provided in the Rights
Agreement.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Rights Agent, the Corporation and the holders of the Rights Certificates. Copies
of the Rights Agreement are on file at the registered office of the Corporation
and are available upon written request.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at any of the offices of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or Rights Certificates of like
tenor and date evidencing an aggregate number of Rights equal to the aggregate
number of Rights evidenced by the Rights Certificate or Rights Certificates
surrendered. If this Rights Certificate shall be exercised in part, the
registered holder shall be entitled to receive, upon surrender hereof, another
Rights Certificate or Rights Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by this
Certificate may be, and under certain circumstances are required to be, redeemed
by the Corporation at a redemption price of $0.01 per Right. No holder of this
Rights Certificate, as such, shall be entitled to vote or receive dividends or
be deemed for any purpose the holder of Common Shares or of any other securities
which may at any time be issuable upon the exercise hereof, nor shall anything
contained in the Rights Agreement or herein be construed to confer upon the
holder hereof, as such, any of the rights of a shareholder of the Corporation or
any right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in the
33
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Rights evidenced by this Rights Certificate shall have been exercised
as provided in the Rights Agreement.
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:__________________________________
ATTEST:
NOVELIS INC.
By: ____________________________________
Secretary
Countersigned:
CIBC MELLON TRUST COMPANY
By:_____________________________________
Authorized Signature
34
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)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ________________________,
Attorney, to transfer the within Rights Certificate on the books of the
within-named Corporation, with full power of substitution.
Dated:_________________________________ ___________________________________
Signature
(Signature must correspond to the
Signature Guaranteed: 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 major Canadian trust company, a Schedule I
Canadian chartered bank, or a member of a recognized Medallion Guarantee
program.
(To be completed if true)
The undersigned hereby represents, for the benefit of all holders of Rights and
Common Shares, that the Rights evidenced by this Rights Certificate are not,
and, to the best of the knowledge of the undersigned, never have been,
Beneficially Owned by an Acquiring Person (as defined in the Rights Agreement)
after such person became an Acquiring Person.
________________________________________
Signature
FORM OF ELECTION TO EXERCISE
(To be attached to each Rights Certificate)
TO:
35
The undersigned hereby irrevocably elects to exercise _________________________
whole Rights represented by the attached Rights Certificate to purchase the
Common Shares issuable upon the exercise of such Rights and requests that
certificates for such shares be issued in the name of:
Name:__
Street:_________________________________________________________________________
City, Province & Postal Code:___________________________________________________
Social Insurance, Social Security or
Other Taxpayer Identification Number:___________________________________________
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights shall be
registered in the name of and delivered to:
Name:___________________________________________________________________________
Street:_________________________________________________________________________
City, Province & Postal Code:___________________________________________________
Social Insurance, Social Security or
Other Taxpayer Identification Number:___________________________________________
Dated:______________________ _______________________________
Signature
(Signature must correspond to the
name as written upon the face of
this Rights Certificate in every
Signature Guaranteed: particular, without alteration or
enlargement or any change
whatsoever)
Signature must be guaranteed by a major Canadian trust company, a Schedule I
Canadian chartered bank, or a member of a recognized Medallion Guarantee
program.
(To be completed if true)
The undersigned hereby represents, for the benefit of all holders of Rights and
Common Shares, that the Rights evidenced by this Rights Certificate are not,
and, to the best of the knowledge of the undersigned, never have been,
Beneficially Owned by an Acquiring Person (as defined in the Rights Agreement)
after such person became an Acquiring Person.
______________________________
Signature
36
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 (as defined in the Shareholder Rights Agreement)
and, in the case of an Assignment, will affix a legend to that effect on any
Rights Certificate issued in exchange for this Rights Certificate.
37