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EXHIBIT 99
LOGO
March 27, 2001
Dear Shareholder:
You are cordially invited to attend the Annual and Special Meeting of
Shareholders of Potash Corporation of Saskatchewan Inc. The meeting will be held
on Thursday, May 10, 2001 at 10:30 a.m. (local time) at the Delta Bessborough,
601 Spadina Crescent East, Saskatoon, Saskatchewan, Canada.
The Notice of Annual and Special Meeting and Board of Directors Proxy
Circular describing the formal business of the meeting and related proxy are
enclosed.
It is important that your shares be represented at the meeting whether or
not you are personally able to attend. You are therefore urged to complete, date
and sign the accompanying proxy and return it in the envelope provided.
Sincerely,
[D.E. Phillips Signature] [W.J. Doyle Signature]
D. E. PHILLIPS W. J. DOYLE
Chairman of the Board President and Chief Executive
Officer
POTASH CORPORATION OF SASKATCHEWAN INC.
PCS TOWER, SUITE 500, 122 - 1ST AVENUE
SOUTH, SASKATOON, SASKATCHEWAN S7K 7G3
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LOGO
POTASH CORPORATION OF SASKATCHEWAN INC.
NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Annual and Special Meeting of shareholders
of Potash Corporation of Saskatchewan Inc. (the "Corporation"), a Saskatchewan
corporation, will be held on Thursday, May 10, 2001 at 10:30 a.m. (local time)
at the Delta Bessborough, 601 Spadina Crescent East, Saskatoon, Saskatchewan,
Canada for the following purposes:
1. to receive the financial statements of the Corporation for the year ended
December 31, 2000 and the report of the auditors thereon;
2. to elect directors;
3. to appoint auditors for the Corporation;
4. to consider and, if thought advisable by the shareholders, to pass a
resolution confirming the adoption of the amended and restated Shareholder
Rights Agreement entered into by the Corporation, the full text of which
resolution and agreement are set out in Schedule A and Schedule B,
respectively, to the accompanying proxy circular;
5. to consider and, if thought advisable by the shareholders, to pass a
resolution amending and confirming the Corporation's Stock Option Plan --
Directors, the full text of which resolution and plan are set out in
Schedule C and Schedule D, respectively, to the accompanying proxy
circular; and
6. to transact such other business as may properly come before the meeting or
any adjournments thereof.
DATED at Saskatoon, Saskatchewan this 27th day of March, 2001.
BY ORDER OF THE BOARD OF DIRECTORS
[John Hampton Signature]
JOHN L.M. HAMPTON
Secretary
Shareholders who are unable to attend in person are requested to date, sign and
return, as soon as possible and in the envelope enclosed for that purpose, the
enclosed form of proxy.
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LOGO
POTASH CORPORATION OF SASKATCHEWAN INC.
BOARD OF DIRECTORS PROXY CIRCULAR
ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
SOLICITATION OF PROXIES
THIS PROXY CIRCULAR IS FURNISHED IN CONNECTION WITH THE SOLICITATION OF
PROXIES BY THE BOARD OF DIRECTORS (THE "BOARD") OF POTASH CORPORATION OF
SASKATCHEWAN INC. (THE "CORPORATION"), A SASKATCHEWAN CORPORATION, AND
CONSTITUTES A SOLICITATION BY OR ON BEHALF OF THE MANAGEMENT OF THE CORPORATION
UNDER THE BUSINESS CORPORATIONS ACT (SASKATCHEWAN), FOR USE AT THE ANNUAL AND
SPECIAL MEETING OF SHAREHOLDERS OF THE CORPORATION (THE "MEETING") TO BE HELD ON
MAY 10, 2001 AND ANY ADJOURNMENTS THEREOF. All costs of solicitation will be
borne by the Corporation. In addition to the mail, proxies may be solicited by
telephone or in person by employees of the Corporation who will receive no
additional compensation for such services. The Corporation has retained
Georgeson Shareholder Communications Inc. to assist in the solicitation of
proxies in Canada and the United States for total estimated fees of $27,500. In
addition, the Corporation will reimburse brokers, nominees and fiduciaries for
reasonable expenses incurred by them in sending proxy material to the beneficial
owners of common shares of the Corporation (the "Shares") held by such persons.
A shareholder who has given a proxy may revoke it at any time before it is
exercised by attending the Meeting and voting in person or by replacing it with
a duly executed proxy bearing a later date. In addition to revocation in either
such manner, a shareholder giving a proxy may revoke the proxy by instrument in
writing executed by the shareholder or by his attorney authorized in writing and
deposited either at the registered and principal executive office of the
Corporation, Suite 500, 122 - 1st Avenue South, Saskatoon, Saskatchewan, Canada,
S7K 7G3, at any time up to and including the last business day preceding the day
of the Meeting, or any adjournment thereof, or with the chairman of the Meeting
on the day of the Meeting or any adjournment thereof.
This proxy circular and the accompanying Notice of Annual and Special
Meeting of Shareholders and proxy will first be sent or given to shareholders on
or about March 27, 2001.
Except as otherwise stated, the information contained herein is given as of
March 15, 2001.
Unless otherwise specified, all dollar amounts are expressed in United
States dollars.
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VOTING SHARES
There are 51,862,749 Shares of the Corporation outstanding as of March 15,
2001, each Share carrying the right to one vote.
Each shareholder of record at the close of business on March 22, 2001 is
entitled to vote at the Meeting the Shares registered in his or her name on that
date except to the extent that he or she has transferred any of those Shares and
the transferee has both established the transferee's ownership of the
transferred Shares and demanded, not later than 10 days prior to the Meeting,
that the Corporation recognize the transferee as the person entitled to vote the
transferred Shares at the Meeting.
The quorum for any meeting of shareholders is one or more persons present
and holding or representing by proxy not less than 5% of the total number of
outstanding Shares.
OWNERSHIP OF SHARES
The following table sets forth information as of March 15, 2001, with
respect to the beneficial ownership of Shares held by the executive officers of
the Corporation named in the Summary Compensation Table herein and by all
directors and executive officers of the Corporation.
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AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
NAME (1)(2)(3)
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William J. Doyle 254,981
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James F. Dietz 45,683
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John Gugulyn 134,013
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Wayne R. Brownlee 109,745
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Garth W. Moore 91,057
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All directors and executive officers as a group, including
the above-named persons (27 persons) 1,273,956
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(1) The number of Shares beneficially owned is reported on the basis of
regulations of the U.S. Securities and Exchange Commission, and includes
Shares that the individual has the right to acquire at any time within 60
days after March 15, 2001 and Shares directly or indirectly held by the
individual or by certain family members over which the individual has sole
or shared voting or investment power.
(2) Each of the directors and executive officers of the Corporation owned less
than 1% of the Shares issued and outstanding as at March 15, 2001. The
directors and executive officers of the Corporation as a group beneficially
owned approximately 2.45% of the Shares issued and outstanding as at March
15, 2001.
(3) Includes Shares purchasable within 60 days after March 15, 2001 through the
exercise of options granted by the Corporation, as follows: Mr. Doyle
213,500 Shares; Mr. Dietz 40,000 Shares; Mr. Gugulyn 133,750 Shares; Mr.
Brownlee 108,500 Shares; Mr. Moore 91,000 Shares and directors and executive
officers as a group, including the foregoing, 1,203,950 Shares.
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Listed below is the name and other information concerning persons known to
the Corporation (from the Corporation's records and reports filed with the U.S.
Securities and Exchange Commission on Schedule 13G) which owned, as of March 15,
2001, more than 5% of any class of the Corporation's voting securities:
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NAME AND ADDRESS OF AMOUNT AND NATURE OF
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS(1)
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Common Shares Primecap Management Company 3,261,800(2)(3) 6.3%
225 South Lake Avenue
Suite 400
Pasadena, California 91101
Common Shares Philips, Hager & North 3,214,750(4)(5) 6.2%
Investment Management Ltd.
200 Burrard Street
Vancouver, B.C. V6C 3N5
Common Shares FMR Corp. 3,005,610(6)(7) 5.8%
82 Devonshire Street
Boston, Massachusetts 02109
Common Shares Mackenzie Financial 2,863,700(8)(9) 5.5%
Corporation
150 Bloor Street West
Suite M111
Toronto, Ontario M5S 3B5
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(1) Represents percent of Shares outstanding as of March 15, 2001.
(2) Such person has sole dispositive power as to all 3,261,800 Shares and sole
voting power as to 661,800 Shares.
(3) As set forth in a Schedule 13G (amendment) dated January 31, 2001.
(4) Such person has sole voting and dispositive power as to all 3,214,750
Shares.
(5) As set forth in a Schedule 13G dated January 12, 1999.
(6) Such person has sole dispositive power as to all 3,005,610 Shares and sole
voting power as to 500,660 Shares.
(7) As set forth in a Schedule 13G dated February 14, 2001.
(8) Such person has sole voting and dispositive power as to all 2,863,700
Shares.
(9) As set forth in a Schedule 13G dated February 5, 2001.
ELECTION OF DIRECTORS
The articles of the Corporation provide that the Board shall consist of a
minimum of 6 directors and a maximum of 20, with the actual number to be
determined from time to time by the Board. The Board has determined that
commencing with the election of directors at the Meeting, there will be 12
directors.
Proxies solicited hereby will be voted for the following proposed nominees
(or for substitute nominees in the event of contingencies not known at present)
who will, subject to the bylaws of the Corporation and applicable corporate law,
hold office until the next annual meeting of shareholders or until their
successors are elected or appointed in accordance with the bylaws or applicable
corporate law. The affirmative vote of a plurality of the Shares present in
person or by proxy at the Meeting and voted in respect of the election of
directors is required to elect directors.
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The following table states the names and ages of all the persons to be
nominated for election as directors, all other positions and offices with the
Corporation now held by them, their present principal occupation or employment,
the period during which present directors of the Corporation have served as
directors, and the number of Shares beneficially owned, directly or indirectly,
or over which control or direction is exercised, by each of them.
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[Photo of F. Blesi] FREDERICK J. BLESI
Number of Shares Beneficially Owned -- 0
Mr. Blesi, 63, of Glenview, Illinois is a retired Chairman
and Chief Executive Officer of the Phosphate Chemicals
Export Association Inc. ("PhosChem"), the principal vehicle
for the export of U.S. phosphate chemicals. Prior to joining
PhosChem in 1981, he was Vice President, International with
International Minerals and Chemical Corporation.
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[Photo of D. DOUGLAS J. BOURNE Director Since 1990
Bourne] Number of Shares Beneficially Owned -- 13,214*
Mr. Bourne, 77, of Houston, Texas, is former Chairman and
CEO of Battle Mountain Gold Company, a gold mining company,
and of Duval Corporation, the mining subsidiary of Pennzoil
Company. He has held many positions in various fertilizer
and mining associations.
Mr. Bourne is Chairman of the Environmental Affairs
Committee and a member of the Executive Committee.
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[Photo of W. Doyle] WILLIAM J. DOYLE Director Since 1989
Number of Shares Beneficially Owned -- 254,981*
Mr. Doyle, 50, of Saskatoon, Saskatchewan, is President and
Chief Executive Officer of the Corporation. He became
President of PCS Sales in 1987, after a career with
International Minerals and Chemical Corporation. Active in
fertilizer industry associations, he was elected chairman of
the Potash & Phosphate Institute in 1999 and is
Vice-Chairman of Canpotex Limited.
Mr. Doyle is a member of the Executive Committee.
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[Photo of D. Howe] DALLAS J. HOWE Director Since 1991
Number of Shares Beneficially Owned -- 15,800*
Mr. Howe, 56, of Calgary, Alberta, is President and CEO of
Advanced DataSystems Ltd. and BDM Information Systems Group
of Companies, each an international computer systems
supplier. President, CEO and founder of high technology
information and data systems companies over twenty-five
years, he served on the Board of Potash Corporation of
Saskatchewan, the Crown corporation, from 1982 to 1989.
Mr. Howe is a member of the Audit Committee and the
Corporate Governance and Nominating Committee.
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[Photo of J. McCaig] JEFFREY J. MCCAIG Director Since 2001
Number of Shares Beneficially Owned -- 0
Mr. McCaig, 49, of Calgary, Alberta is President, CEO and a
director of Trimac Corporation, a bulk trucking and
third-party logistics company. Before joining Trimac in
1983, he was a lawyer specializing in corporate financings
and securities. He is a director of BOVAR Corporation and
Richland Petroleum Corporation.
Mr. McCaig is a member of the Audit Committee.
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[Photo of M. Mogford] MARY MOGFORD
Number of Shares Beneficially Owned -- 0
Ms. Mogford, 56, of Newcastle, Ontario is a Corporate
Director and a Partner in Mogford Campbell Inc., a strategic
business and financial consulting company. A former Deputy
Minister of Finance and Deputy Minister of Natural Resources
in the Province of Ontario, she is a director of
Falconbridge Ltd., MDS Inc., Sears Canada Inc. and Teranet
Inc. and a member of the Altamira Advisory Council.
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[Photo of D. DONALD E. PHILLIPS Director Since 1991
Phillips] Number of Shares Beneficially Owned -- 13,800*
Mr. Phillips, 68, of Brandon, Mississippi, is Chairman of
the Board of the Corporation. He is a former President and
CEO of Pitman-Moore Inc., a producer and marketer of animal
feed and health products. He is Chairman of the board of
directors of Synbiotics Inc., San Diego, California, and a
director of Great Lakes REIT Inc., Oak Brook, Illinois.
Mr. Phillips is Chairman of the Executive Committee, and a
member of the Corporate Governance and Nominating Committee.
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[Photo of P. PAUL J. SCHOENHALS Director Since 1992
Schoenhals] Number of Shares Beneficially Owned -- 11,400*
Mr. Schoenhals, 59, of Calgary, Alberta, President of
Petroleum Industry Training Service, was Chairman of Potash
Corporation of Saskatchewan, the Crown corporation, from
1987 to 1989. He is a former Member of the Legislative
Assembly and Cabinet Minister in Saskatchewan.
Mr. Schoenhals is a member of the Compensation Committee and
the Environmental Affairs Committee.
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[Photo of E. E. ROBERT STROMBERG, Q.C. Director Since 1991
Stromberg] Number of Shares Beneficially Owned -- 21,596*
Mr. Stromberg, 59, of Saskatoon, Saskatchewan, is a member
of the Saskatchewan law firm Robertson Stromberg. He is a
director of NorSask Forest Products Inc. and Hitachi
Canadian Industries Ltd., a member of the Provincial Court
Commission, and Chairman of the Saskatoon Airport Authority.
Mr. Stromberg is a member of the Executive Committee and the
Environmental Affairs Committee.
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[Photo of J. Vicq] JACK G. VICQ Director Since 1989
Number of Shares Beneficially Owned -- 17,093*
Mr. Vicq, 61, of Saskatoon, Saskatchewan, is a Professor
Emeritus of Accounting in the College of Commerce,
University of Saskatchewan and was formerly Associate Dean
and responsible for the Centre for International Business
Studies. He sits on committees of the Saskatchewan and
Canadian Institutes of Chartered Accountants.
Mr. Vicq is Chairman of the Audit Committee.
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[Photo of B. Wigmore] BARRIE A. WIGMORE Director Since 1989
Number of Shares Beneficially Owned -- 12,000*
Mr. Wigmore, 59, of New York, New York, is a retired Limited
Partner with New York investment banking firm Goldman, Sachs
Group, Inc. and headed its corporate finance activities in
the electric, gas, pipelines and telecommunications
industries. He writes on financial history and current
financial markets. He is a director of National Service
Industries, Inc.
Mr. Wigmore is Chairman of the Compensation Committee and a
member of the Corporate Governance and Nominating Committee.
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[Photo of T. Wright] THOMAS J. WRIGHT Director Since 1999
Number of Shares Beneficially Owned -- 89,300*
Mr. Wright, 68, of Raleigh, North Carolina, retired as
President of PCS Phosphate on June 30, 1999. Formerly
President and CEO of Texasgulf Inc., the predecessor to PCS
Phosphate, he has been active in many fertilizer industry
associations.
Mr. Wright is a member of the Environmental Affairs
Committee and the Corporate Governance and Nominating
Committee.
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* The number of shares indicated above as beneficially owned by the nominated
directors includes Shares purchasable by such directors within 60 days of
March 15, 2001 through the exercise of options granted by the Corporation, as
follows: Douglas J. Bourne 12,800 Shares; William J. Doyle 213,500; Dallas J.
Howe 14,800 Shares; Donald E. Phillips 12,800 Shares; Paul J. Schoenhals
11,000 Shares; E. Robert Stromberg 16,800 Shares; Jack G. Vicq 16,500 Shares;
Barrie A. Wigmore 11,000 Shares; and Thomas J. Wright 89,300 Shares.
All of the above directors have had the principal occupation described
above for the previous five years except as follows: Mr. Doyle was Executive
Vice President, Potash and Sales, of the Corporation from 1995 to March 1997,
President of PCS Sales from March 1997 to July 1998, and President and Chief
Operating Officer of the Corporation from July 1998 to July 1999; Mr. Wright was
Executive Vice President of PCS Phosphate from 1995 to March 1997.
The law firm of Robertson Stromberg has provided and continues to provide
legal services to the Corporation. E. Robert Stromberg was, during 2000, a
partner of Robertson Stromberg.
Mr. Doyle is Vice-Chairman of Canpotex Limited, a potash export, sales and
marketing company owned in equal shares by the three potash producers in
Saskatchewan. In 2000, sales to Canpotex Limited amounted to $268,900,000.
During 2000, there were 8 meetings of the Board and the number of meetings
held by committees of the Board were: (i) Executive Committee -- 0; (ii) Audit
Committee -- 8; (iii) Compensation Committee -- 5;
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(iv) Environmental Affairs Committee -- 4; and (v) Corporate Governance and
Nominating Committee -- 5. Each of the Corporation's directors attended at least
83% of the total of the meetings of the committees on which the director served
and the meetings of the Board.
Three current directors of the Corporation have advised of their intention
not to seek re-election, thereby retiring from the Board on May 10, 2001. They
are Isabel B. Anderson and Daryl K. Seaman who have served on the board since
1989 and the Honorable Willard Z. Estey Q.C., who has served on the board since
1990.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth, for the periods indicated, all compensation
earned by the individual who served as Chief Executive Officer of the
Corporation during 2000 and by each of the Corporation's other four most highly
compensated executive officers as of the end of calendar year 2000 for services
rendered to the Corporation and its subsidiaries (the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE(1)
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS
SECURITIES
OTHER UNDERLYING
ANNUAL OPTIONS LTIP ALL OTHER
SALARY BONUS COMPENSATION GRANTED(3) PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR $ $(2) $ # $ $
William J. Doyle 2000 725,000 1,000,000 1,163 70,000 -- 69,074(6)
President and Chief 1999 622,500 230,000 8,059 70,000 187,250 40,651(6)
Executive Officer(4) 1998 475,000 450,000 260,319(5) 50,000 63,625 8,157(6)
James F. Dietz 2000 325,000 305,000 14,466 35,000 -- 40,641(8)
Executive Vice President 1999 307,500 85,000 -- 30,000 87,383 8,781(8)
and Chief Operating 1998 277,500 200,000 -- 25,000 29,692 9,290(8)
Officer(7)
John Gugulyn 2000 343,620 234,000 2,035 30,000 -- 59,845(11)
Senior Vice President, 1999 266,896 90,000 1,091 30,000 109,229 19,120(11)
Administration(9) 1998 213,089 138,231 52,519(10) 25,000 37,114 6,452(11)
Wayne R. Brownlee 2000 325,000 245,000 -- 30,000 -- 77,439(14)
Senior Vice President and 1999 223,738 85,000 -- 30,000 109,229 17,127(14)
Chief Financial 1998 165,724 115,192 9,094(13) 25,000 37,114 5,897(14)
Officer(12)
Garth W. Moore 2000 300,000 213,000 -- 30,000 -- 45,073(16)
President, PCS Potash 1999 229,023 80,000 2,159 30,000 112,350 17,564(16)
1998 172,285 121,775 17,253(15) 25,000 38,175 6,072(16)
(1) Those amounts which were paid in Canadian dollars have been converted to
United States dollars using the average exchange rate for the month prior
to the date of payment.
(2) Reports amounts awarded pursuant to the Corporation's Short-Term Incentive
Plan. See "Compensation Committee -- Short-Term Incentive Compensation".
(3) Options granted pursuant to the Corporation's Stock Option Plan -- Officers
and Employees.
(4) Prior to July 1, 1999 Mr. Doyle's principal position was President and
Chief Operating Officer of the Corporation. Prior to July 1, 1998, Mr.
Doyle's principal position was President, PCS Sales.
(5) The amount reported for 1998 includes a payment to Mr. Doyle to reimburse
him in respect of the differential between Canadian and U.S. income taxes
payable by him. In addition, of the other annual
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compensation indicated for 1998, $63,194 reflects a 1998 payment made by
the Corporation to Canada Customs and Revenue Agency ("CCRA") in settlement
of a benefits audit for the years 1994 through 1996.
(6) The reported amounts for 2000, 1999 and 1998 consist, respectively, of:
(i) $40,857, $35,529 and $4,708 which represents the Corporation's
contribution to the Corporation's defined contribution pension and
savings plans on behalf of the indicated Named Executive Officer; and
(ii) $7,448, $5,122 and $3,449 which represents the value of the benefit
for group term life insurance premiums paid by the Corporation on
behalf of the indicated Named Executive Officer; and
(iii) $20,769 for 2000 which represents a lump sum pay-out to satisfy the
Corporation's obligation to the indicated Named Executive Officer for
earned but unused vacation.
(7) Prior to November 1, 2000, Mr. Dietz's principal position was President,
PCS Nitrogen, Inc. ("PCS Nitrogen"), a subsidiary of the issuer and prior
to July 1, 1998 Executive Vice President, PCS Nitrogen.
(8) The reported amounts for 2000, 1999 and 1998 consist, respectively, of:
(i) $8,500, $6,400 and $6,400 which represents contributions by the
Corporation's subsidiary to its defined contribution pension plan on
behalf of the indicated Named Executive Officer; and
(ii) $2,028, $2,381 and $2,890 which represents the value of the benefit
for group term life insurance premiums paid by the Corporation's
subsidiary on behalf of the indicated Named Executive Officer; and
(iii) $30,113 for 2000 which represents moving expenses.
(9) Mr. Gugulyn retired on January 2, 2001.
(10) Of the other annual compensation indicated for 1998, $33,964 reflects a
payment by the Corporation to CCRA in settlement of a benefits audit for
the years 1994 through 1996.
(11) The reported amounts for 2000, 1999 and 1998 consist, respectively, of:
(i) $21,130, $17,132 and $4,721 which represents the Corporation's
contribution to its defined contribution pension and savings plans on
behalf of the indicated Named Executive Officer; and
(ii) $3,811, $1,988, and $1,731 which represents the value of the benefit
for group term life insurance premiums paid by the Corporation on
behalf of the indicated Named Executive Officer; and
(iii) $34,904 for 2000 which represents a lump sum pay-out to satisfy the
Corporation's obligation to the indicated Named Executive Officer for
earned but unused vacation.
(12) Prior to July 11, 1999 Mr. Brownlee was Senior Vice President, Expansion &
Development of the Corporation.
(13) Of the other annual compensation indicated for 1998, $6,260 reflects a
payment by the Corporation to CCRA in settlement of a benefits audit for
the years 1994 through 1996.
(14) The reported amounts for 2000, 1999 and 1998 consist, respectively, of:
(i) $20,880, $15,664 and $4,711 which represents the Corporation's
contribution to its defined contribution pension and savings plans on
behalf of the indicated Named Executive Officer; and
(ii) $2,617, $1,463, and $1,186 which represents the value of the benefit
for group term life insurance premiums paid by the Corporation on
behalf of the indicated Named Executive Officer; and
(iii) $53,942 for 2000 which represents a lump sum pay-out to satisfy the
Corporation's obligation to the indicated Named Executive Officer for
earned but unused vacation.
(15) Of the other annual compensation indicated for 1998, $14,183 reflects a
payment by the Corporation to CCRA in settlement of a benefits audit for
the years 1994 through 1996.
(16) The reported amounts for 2000, 1999 and 1998 consist, respectively, of:
(i) $19,629, $15,922 and $4,733 which represents the Corporation's
contribution to its defined contribution pension and savings plans on
behalf of the indicated Named Executive Officer; and
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(ii) $3,521, $1,642, and $1,339 which represents the value of the benefit
for group term life insurance premiums paid by the Corporation on
behalf of the indicated Named Executive Officer; and
(iii) $21,923 for 2000 which represents a lump sum pay-out to satisfy the
Corporation's obligation to the indicated Named Executive Officer for
earned but unused vacation.
LONG-TERM INCENTIVE PLAN
Each of the Named Executive Officers participates in the Corporation's
Long-Term Incentive Plan, adopted in 2000. For a description of the operation of
the plan, see "Compensation Committee Report on Executive Compensation". The
following table sets forth hypothetical potential future payouts following the
end of the current performance cycle (December 31, 2002).
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ESTIMATED FUTURE PAYOUTS UNDER NON-SECURITIES-
PRICE-BASED PLANS
-50% APPRECIATION 50% APPRECIATION 150% APPRECIATION
NAME $(1)(2) $(1)(2) $(1)(2)
William J. Doyle 398,125 2,786,875 5,175,625
James F. Dietz 120,937 846,562 1,572,187
John Gugulyn(3) -- -- --
Wayne R. Brownlee 98,500 689,500 1,280,500
Garth W. Moore 90,000 630,000 1,170,000
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(1) Figures represent estimated payout at the end of the current performance
cycle (December 31, 2002) for each of the Named Executive Officers, assuming
Total Share Return ("TSR") for the Corporation is -50%, 50% and 150%. TSR
for the Corporation is calculated on the basis of appreciation in the share
price of PCS stock over the performance period plus dividends.
At a TSR of -50%, the Absolute Percentage applied to the target percentage
("Absolute TSR") is 0%. At a TSR of 50% the Absolute TSR is 150% and at a
TSR of 150%, the Absolute TSR is 300%. For the purpose of the examples, the
TSR of the Company is assumed to exceed the TSR of the peer group by 5,
resulting in a Relative Percentage of Target Percentage of 25.0% ("Relative
TSR").
(2) The target award percentage is adjusted (up or down) by multiplying it by
the combined TSR factors (Absolute TSR and Relative TSR). The resulting
award percentage is then applied to the total base salary earned by the
executive over the performance cycle (3 years) while they were actively
employed. The award is paid, in cash, within 60 days following the end of
the performance cycle.
For Mr. Doyle, his target percentage is 70% and salary over the three year
period would be $2,275,000 (assuming 2000 levels). For Mr. Dietz, his
target percentage is 45% and salary over the three years would be
$1,075,000. For Mr. Brownlee and Mr. Moore, their target percentage is 40%
with salaries of $985,000 and $900,000, respectively.
(3) As a result of Mr. Gugulyn's retirement on January 2, 2001, he received a
payment of $278,073 regarding his entitlement pursuant to the Long-Term
Incentive Plan.
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OPTIONS
The following table sets forth information concerning the grants of stock
options to the Named Executive Officers during the year ended December 31, 2000.
OPTION GRANTS DURING THE
MOST RECENTLY COMPLETED FISCAL YEAR
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INDIVIDUAL GRANTS
NUMBER OF
SECURITIES % OF TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS EMPLOYEES IN FISCAL BASE PRICE PRESENT VALUE
NAME GRANTED(1)(2)# YEAR $/SHARE EXPIRATION DATE (3)(4)$
William J. Doyle 70,000 7.92 60.9375 Nov. 21, 2010 1,515,500
James F. Dietz 35,000 3.96 60.9375 Nov. 21, 2010 757,750
John Gugulyn 30,000 3.39 Cdn. 95.30 Nov. 21, 2010 631,376
Wayne R. Brownlee 30,000 3.39 Cdn. 95.30 Nov. 21, 2010 631,376
Garth W. Moore 30,000 3.39 Cdn. 95.30 Nov. 21, 2010 631,376
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(1) Options granted pursuant to the Corporation's Stock Option Plan -- Officers
and Employees.
(2) Options granted on November 21, 2000. Subject to the terms of the applicable
plan, each option is exercisable with respect to one-half of the indicated
number on or after November 21, 2001 and with respect to the balance of the
indicated number on or after November 21, 2002 (or earlier in the event of a
"change of control" of the Corporation as defined in the Corporation's Stock
Option Plan -- Officers and Employees). All options are transferable
(without consideration) to the spouse, children and grandchildren of the
original optionee (or to a trust, partnership or limited liability company,
the entire beneficial interest of which is held by one or more of the
foregoing persons), in accordance with the terms and conditions of the Stock
Option Plan -- Officers and Employees.
(3) The Modified Black-Scholes Option Pricing Model was used to determine the
grant date present value of the stock options granted in November, 2000 by
the Corporation to the Named Executive Officers. Under the Modified
Black-Scholes Option Pricing Model, the grant date present value of the
stock options referred to in the table was Cdn. $32.72 per Share for Mr.
Gugulyn, Mr. Brownlee and Mr. Moore and $21.65 per Share for Mr. Doyle and
Mr. Dietz. The material assumptions and adjustments incorporated in the
Modified Black-Scholes Option Pricing Model in estimating the value of
options reflected in the above table include the following:
(i) an option term of 8 years; with respect to the options granted to Mr.
Gugulyn, Mr. Brownlee and Mr. Moore, an interest rate of 5.78%
(representing the interest rate on a Canadian Treasury security with a
maturity date corresponding to that of the option term) and with
respect to options granted to Mr. Doyle and Mr. Dietz, an interest
rate of 5.76% (representing the interest rate on a U.S. Treasury
security with a maturity date corresponding to that of the option
term);
(ii) with respect to the options granted to Mr. Gugulyn, Mr. Brownlee and
Mr. Moore, volatility of 27.965% (calculated using daily stock prices
on The Toronto Stock Exchange for the three-year period prior to the
grant date) and with respect to options granted to Mr. Doyle and Mr.
Dietz, volatility of 30.9426% (calculated using daily stock prices on
the New York Stock Exchange for the three-year period prior to the
grant date);
(iii) with respect to the options granted to Mr. Gugulyn, Mr. Brownlee and
Mr. Moore, dividends at the rate of Cdn. $1.44 per Share and with
respect to options granted to Mr. Doyle and Mr. Dietz, dividends at
the rate of $1.00 per Share (representing the annualized dividends
paid with respect to a Share at the date of grant); and
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(iv) a reduction of approximately 10% to reflect the probability of
forfeiture due to termination prior to vesting and the probability of
a shortened option term due to termination of employment prior to the
option expiration date.
The ultimate values of the options will depend on the future market price
of the Shares, which cannot be forecast with reasonable accuracy. The
actual value, if any, an optionee will realize upon exercise of an option
will depend on the excess of the market value of the Shares over the
exercise price on the date the option is exercised.
(4) Amounts denominated in Canadian dollars are converted to United States
dollars at the exchange rate in effect at the date of grant of the options.
The following table sets forth the options exercised during the year ended
December 31, 2000 by the Named Executive Officers and the year-end value of
unexercised in-the-money options held by such individuals at December 31, 2000.
AGGREGATED OPTION EXERCISES DURING THE MOST RECENTLY COMPLETED
FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
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NUMBER OF VALUE OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY OPTIONS
OPTIONS AT FY-END AT FY-END(1)
SECURITIES ---------------------------------------------------------------
ACQUIRED ON AGGREGATE VALUE # $
EXERCISE REALIZED # NOT $ NOT
NAME # $ EXERCISABLE EXERCISABLE EXERCISABLE EXERCISABLE
- ------------------------------------------------------------------------------------------------------------------------------
William J. Doyle -- -- 213,500 105,000 2,919,894 2,428,125
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James F. Dietz 15,000 267,868 40,000 50,000 260,937 1,127,500
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John Gugulyn -- -- 133,750 45,000 3,241,750 976,402
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Wayne R. Brownlee -- -- 108,500 45,000 1,874,507 976,402
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Garth W. Moore 5,000 142,677 91,000 45,000 1,024,011 976,402
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(1) Values are calculated by determining the amount by which the market value
of the Shares underlying the options on December 31, 2000 exceeded the
exercise prices of the options and converting Canadian dollar amounts to
United States dollars using the December 31, 2000 exchange rate of $0.6665.
PENSION PLANS
The Corporation maintains the Potash Corporation of Saskatchewan Inc.
Pension Plan (the "PCS Plan") which generally requires all participating
employees to contribute 5.5% of their earnings (or such lesser amount as is
deductible for Canadian Income Tax purposes) to the PCS Plan and the Corporation
to contribute an equal amount. When an individual retires, the full amount in
the individual's account is used to produce the pension.
The Corporation maintains a Supplemental Retirement Income Plan (the
"Supplemental Plan") which is unfunded and non-contributory and which provides a
supplementary pension benefit for the Corporation's officers and certain other
key managers. Under the basic terms of the Supplemental Plan a pension benefit
is provided in an amount equal to 2% of the participant's average three highest
years' earnings multiplied by the participant's years of pensionable service (to
a maximum of 35 years), minus any annual retirement benefit payable under the
PCS Plan or certain other tax qualified plans maintained by the Corporation or
any of its subsidiaries. Benefits under the Supplemental Plan are paid in the
currency in which the participant's earnings are denominated. For the purposes
of the Supplemental Plan, earnings are defined as the participant's annual base
pay plus 100% of all bonuses paid or payable in the year pursuant to the
Short-Term Incentive Plan. The normal retirement age pursuant to the
Supplemental Plan is 65, with a reduction in benefits for early retirement prior
to age 62. No benefits pursuant to the Supplemental Plan are payable if
termination occurs
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prior to age 55. Benefits payable to employees who have reached the minimum age
(55) for retirement pursuant to the Supplemental Plan are secured by letters of
credit provided by the Corporation and are generally paid in the form of an
annuity for life, or at a participant's election, in a single lump sum payment
equal to the actuarial present value of the annual benefit provided by the
Supplemental Plan.
For a designated group of senior officers of the Corporation, including Mr.
Doyle, Mr. Gugulyn, Mr. Brownlee and Mr. Moore, the benefit payable is an amount
equal to: (i) 5% of the senior officer's average three highest years' earnings
multiplied by the senior officer's years of pensionable service (to a maximum of
10 years), plus (ii) 2% of the senior officer's average three highest years of
earnings multiplied by the senior officer's years of pensionable service in
excess of 25 years to a maximum of 10 additional years, minus (iii) any annual
retirement benefit payable under the PCS Plan and certain other tax qualified
plans maintained by the Corporation or any of its subsidiaries. In addition, for
such designated group of senior officers, earnings will also include payments to
the participant pursuant to the Long-Term Incentive Plan at the end of a
performance cycle, allocated equally over the three years in the performance
cycle.
The following table shows the estimated annual benefits payable upon
retirement to Mr. Doyle, Mr. Gugulyn, Mr. Brownlee and Mr. Moore pursuant to the
Supplemental Plan. Estimated benefits payable pursuant to the Supplemental Plan
will be reduced by any benefits payable for Mr. Doyle, Mr. Gugulyn, Mr. Brownlee
and Mr. Moore pursuant to the PCS Plan and certain other tax qualified plans,
maintained by the Corporation or any of its subsidiaries.
SUPPLEMENTAL RETIREMENT INCOME PLAN TABLE
REMUNERATION YEARS OF SERVICE
$ 10 20 30 40 50
$ 250,000 $ 125,000 $ 125,000 $ 150,000 $ 175,000 $ 175,000
500,000 250,000 250,000 300,000 350,000 350,000
1,000,000 500,000 500,000 600,000 700,000 700,000
1,500,000 750,000 750,000 900,000 1,050,000 1,050,000
2,000,000 1,000,000 1,000,000 1,200,000 1,400,000 1,400,000
3,000,000 1,500,000 1,500,000 1,800,000 2,100,000 2,100,000
As of December 31, 2000, the three highest year average earnings for
purposes of the Supplemental Plan for each Named Executive Officer participating
in the Supplemental Plan were as follows: $1,463,988 for Mr. Doyle, $655,263 for
Mr. Gugulyn, $477,749 for Mr. Brownlee and $458,359 for Mr. Moore. The salary
calculations for Mr. Doyle, Mr. Brownlee and Mr. Moore include no provision for
payouts pursuant to the LTIP plan, which amounts will not be known until the
expiration of the current performance period. The estimated credited years of
service at assumed retirement age of 65 for each of the Named Executive Officers
participating in the Supplemental Plan are as follows: 28 years for Mr. Doyle,
13 years for Mr. Gugulyn, 41 years for Mr. Brownlee and 31 years for Mr. Moore.
On February 27, 2001, Mr. Gugulyn received a lump sum payout of $3,095,601,
representing the actuarial present value of the annual benefit provided by the
Supplemental Plan.
Prior to January 1, 1999, PCS Phosphate and PCS Nitrogen maintained
separate defined benefit pension plans for their respective eligible U.S.
employees, including Mr. Dietz in the case of PCS Nitrogen. Effective January 1,
1999 the Corporation consolidated its pension plans for U.S. employees and the
Nitrogen Pension Plan was merged with and into the Phosphate Pension Plan to
form a new U.S. Pension Plan (the "U.S. Pension Plan").
Under the U.S. Pension Plan, participants age 62 or older with at least 20
years of service, receive a retirement benefit of 1 1/2% of the participant's
final average compensation (as defined below) multiplied by the participant's
years of service accrued after December 31, 1998 (maximum 35 years) in the form
of a life
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annuity. Participants with service accrued prior to January 1, 1999 under the
Phosphate Pension Plan or the Nitrogen Pension Plan have a portion of their
retirement benefit calculated in accordance with the applicable benefit formula
as in effect on December 31, 1998. Employees not meeting the minimum age or
years of service requirement at termination receive a reduced benefit.
Pursuant to the U.S. Pension Plan, final average compensation is defined as
compensation for the highest paid 60 consecutive months of service out of the
last 120 months of service. Compensation is defined as a participant's base pay
plus bonus. The benefits available under the U.S. Pension Plan are not subject
to offset for other retirement benefits.
The retirement benefits from the U.S. Pension Plan for Mr. Dietz is subject
to certain limitations on the amount of retirement benefits that may be provided
under U.S. tax qualified pension plans. Mr. Dietz does not currently participate
in any supplemental plan. However, the Company is continuing to develop an
appropriate supplemental retirement plan to address such limitations.
For Mr. Dietz, the following table represents an estimate of the retirement
income calculated pursuant to the U.S. Pension Plan for service on or after
January 1, 1999 (assuming the implementation of a supplemental plan to address
applicable limitations under the U.S. Internal Revenue Code for Mr. Dietz).
POST-1998 SERVICE TABLE
REMUNERATION YEARS OF SERVICE
$ 10 15 20 25 30
$200,000 $ 30,000 $ 45,000 $ 60,000 $ 75,000 $ 90,000
300,000 45,000 67,500 90,000 112,500 135,000
400,000 60,000 90,000 120,000 150,000 180,000
500,000 75,000 112,500 150,000 187,500 225,000
600,000 90,000 135,000 180,000 225,000 270,000
As of December 31, 2000 the final average compensation for the purposes of
the U.S. Pension Plan and any applicable supplemental plan for Mr. Dietz was
$406,049. The estimated credited years of post-1998 service at normal retirement
age of 65 for Mr. Dietz is 13 years.
As of December 31, 1998, the Nitrogen Pension Plan provided a normal
monthly retirement benefit equal to the sum of (i) 1.1% of the participant's
average monthly pay during the highest paid 60 consecutive calendar months of
the last 120 calendar months of employment multiplied by the participant's
credited service and (ii) 0.4% of (a) the excess of such average monthly pay
over the participant's "covered compensation" multiplied by (b) the
participant's credited service (up to a maximum of 35 years). "Covered
compensation" is defined as the 35-year average of the U.S. Social Security wage
bases measured from the year in which the participant reaches Social Security
retirement age.
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The following table represents an estimate of the pre-1999 service
component of the retirement income of Mr. Dietz at the levels of average
compensation and years of service shown calculated pursuant to the formula in
the Nitrogen Pension Plan (assuming the implementation of a supplemental plan to
address applicable limitations under the U.S. Internal Revenue Code). The
following calculations use the applicable social security earning limit based on
Mr. Dietz's year of birth, 1946.
PRE-1999 SERVICE TABLE
REMUNERATION YEARS OF SERVICE
$ 5 10 15 20 25
$200,000 $ 14,000 $ 28,000 $ 42,000 $ 55,000 $ 69,000
300,000 21,000 43,000 64,000 85,000 107,000
400,000 29,000 58,000 87,000 115,000 144,000
500,000 36,000 73,000 109,000 145,000 182,000
600,000 44,000 88,000 132,000 175,000 219,000
As of December 31, 2000, the estimated credited years of pre-1999 service
at normal retirement age of 65 for Mr. Dietz is 6 years. Final average
compensation is the same as that calculated for the purpose of the U.S. Pension
Plan and post-1998 service.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
Change in Control Agreements
Effective December 30, 1994, the Corporation, and where applicable, PCS
Sales, entered into Change in Control Agreements with certain senior executives,
including Mr. Doyle, Mr. Gugulyn, Mr. Brownlee and Mr. Moore. The initial term
of each Change in Control Agreement was to December 31, 1997; however, the
Change in Control Agreements were automatically renewed to December 31, 1998 and
continue to be subject to automatic renewal for successive one year terms until
the employee reaches age 65 or unless either party gives notice of termination.
A change in control of the Corporation will be deemed to have occurred if:
(a) there is a significant (50 percent or more) change in the Board within
any two year period, not including replacement directors approved for
nomination by the Board;
(b) there occurs an amalgamation, merger, consolidation, or other
transaction whereby the control of the existing shareholders of the
Corporation is diluted to less than 50 percent control of the
surviving or consolidated entity;
(c) there occurs a significant (50 percent or more based on book value)
sale or other disposition of the fixed assets of the Corporation
within any twelve month period; or
(d) any party acquires 20 percent or more of the voting securities of the
Corporation.
Benefits pursuant to the Change in Control Agreements will be payable upon
termination of the executive's employment within two years following a change in
control. Termination of the executive's employment is defined to include the
executive ceasing to be employed for any reason, including constructive
dismissal, except by reason of death, disability, resignation or voluntary
retirement, or dismissal for dishonest or wilful misconduct.
The severance benefit entitlements upon termination of employment following
a change in control of the Corporation are:
(a) a lump sum payment of three times the executive's base salary and
average bonus for the last three years;
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(b) a lump sum payment of the pro-rata target bonus for the short year in
which termination occurs;
(c) immediate vesting and cash out of all outstanding Long Term Incentive
Plan awards;
Payments to be made pursuant to the foregoing and relating to the
employee's bonus may be deferred by the executive for up to three years or for
such other period as may be permitted by the Income Tax Act (Canada);
(d) a credit of three additional years of service under the Supplemental
Plan;
(e) three year continuation of medical, disability, and group term life
insurance. These benefits terminate, however, upon obtaining similar
coverage from a new employer or upon commencement of retiree benefits;
and
(f) financial or outplacement counselling to a maximum of Cdn$10,000.
All outstanding non-exercisable options granted to the executive pursuant
to the Corporation's stock option plan for officers and employees become
exercisable upon the occurrence of a change in control. In the event no public
market for the shares exists, the Corporation (or PCS Sales as the case may be)
will compensate the executive for the value of his or her options on the basis
of a share value approved by the shareholders of the Corporation upon a change
in control, or, if no such value has been approved, then based upon the market
value of the Shares when last publicly traded. For Mr. Doyle, there is provision
for a "gross up" of payments to cover excise taxes if payable in respect of such
benefits.
Other
The current severance policy of the Corporation for termination without
cause, which is applicable to all salaried employees including the Named
Executive Officers, is notice of impending termination, or payment of salary in
lieu of notice, equivalent to two weeks for each complete year of service
(subject to a minimum of 4 weeks and a maximum of 52 weeks). Such policy is
superseded by specific termination provisions contained in a written agreement.
COMPENSATION COMMITTEE
COMPOSITION OF THE COMPENSATION COMMITTEE
The following individuals served as members of the Compensation Committee
during the year which ended on December 31, 2000.
Donald E. Phillips
Daryl K. Seaman
Barrie A. Wigmore
Isabel B. Anderson
Paul J. Schoenhals
Mr. Phillips served on and as Chairman of the Committee until his
appointment as Chairman of the Board in November 2000. At that time, Mr. Wigmore
became Chairman of the Committee. Ms. Anderson and Mr. Schoenhals were appointed
to the Committee in May 2000.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board (the "Committee") is, at present,
composed of four independent directors. The Committee is charged with
formulating and making recommendations to the Board in respect of compensation
issues relating to directors and senior officers of the Corporation. The
Committee also makes recommendations regarding the Corporation's Stock Option
Plans and administers its Short and Long-Term Incentive Plans, each in
accordance with its terms. In addition, the Committee, in consultation with the
Chief Executive Officer, considers and reports to the Board regarding corporate
succession matters.
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Executive compensation policies are designed with the objective of
attracting and retaining qualified executives by providing compensation packages
which are competitive within the marketplace and by compensating them in a
manner which encourages individual performance consistent with shareholder
expectations.
Salary
The Corporation has established a system of tiered salary levels for senior
executives (i.e. vice president and above) of the Corporation. Currently, each
senior executive position is assigned to the appropriate salary tier,
considering the position's internal value as well as external competitive
comparisons with information provided by independent compensation consultants.
Each individual's salary is then set within the applicable range determined for
the tier, taking into account the individual's duties, performance and
experience. Individual executive salaries are subject to approval by the Chief
Executive Officer and the Compensation Committee of the Board.
Short-Term Incentive Compensation
The Corporation's Short-Term Incentive Plan is intended to aid in
developing strong corporate management by providing financial incentives to key
employees to achieve objectives which contribute materially to the Corporation's
success. The plan presently provides for incentive awards based on an
individual's performance, position with the Corporation and the financial
results of the Corporation. Ranges of incentive awards are established for each
position, which awards are expressed as a percentage of annual salary. The
actual percentage used in calculating the award is generally determined by the
Corporation's cash flow return (as defined) in relation to a pre-established
target, subject to adjustment based upon the individual's performance and such
other factors as the Committee deems appropriate. For certain participants in
the plan employed at particular operating facilities, the award percentage is
adjusted pursuant to a formula designed to reflect the actual results of the
operating facility compared to an approved target for that facility. Under the
terms of the plan, generally no payments are made when the cash flow return is
less than 50% of the target set by the Board for that year. For senior
executives, which include the Named Executive Officers, incentive awards range
from 15% to 140% of salary depending upon actual cash flow return as compared to
target return once the minimum threshold requirement has been met, all subject
to adjustment based on the Executive's performance and such other factors as the
Committee deems appropriate.
Long-Term Incentive Compensation
The Corporation's Long-Term Incentive Plan, as amended, is designed to
retain high-potential, high-value employees, to recognize and reward their
significant contributions to the long-term success of the Corporation, and to
align their interests more closely with the shareholders of the Corporation.
Performance under this cash based plan is measured by reference to Total
Shareholder Return ("TSR"). TSR measures the capital appreciation of PCS stock
and includes dividends paid. As such, it simulates the actual investment
performance realized by shareholders.
The Long-Term Incentive Plan considers both the absolute TSR of PCS, and
the TSR performance relative to a peer group of companies. For purposes of the
plan the peer group of companies includes, at present:
- Agrium Inc.;
- IMC Global Inc.;
- Mississippi Chemical Corporation; and
- Terra Industries Inc.
Each executive is assigned a target award percentage ranging from 20% to
70%. This target award percentage is adjusted (up or down) by multiplying it by
the combined TSR factors (absolute TSR and relative TSR). The resulting award
percentage is then applied to the total base salary earned by the executive
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over the performance cycle (3 years) while they were actively employed. The
award is paid, in cash, within 60 days following the end of the performance
cycle.
In the event a participant in the plan is terminated without cause or in
the event of death, disability or retirement, awards are calculated up to the
time of the applicable event and paid within a reasonable time. In the event of
a voluntary termination or termination with cause, all rights under the plan are
forfeited.
The interests of management are also tied to the interests of the
Corporation's shareholders through the annual grant of options to executives and
other key employees pursuant to the Corporation's Stock Option Plan -- Officers
and Employees. The options are granted at 100% of market value, become
exercisable over two years (or earlier in the event of a "change of control" as
defined in the plan) and expire after ten years. Options are granted having
regard to the position in and contribution made to the Corporation by the
individual involved. The number of shares subject to options granted to an
individual is a function of the individual's position within the Corporation and
his or her ability to affect corporate performance.
In considering whether to grant options and how many shares are to be
subject to options, the Committee considers the aggregate number of options
outstanding and is also guided in such matters by applicable regulatory
constraints.
In relative terms, greater emphasis within the compensation package is
given to annual cash compensation (salary and short-term incentives) than to
long-term incentives and options. However, each element of the package is
designed to complement the others in enabling the Corporation to achieve the
objectives of its compensation policies.
Chief Executive Officer Compensation
The Committee reviews annually the CEO's salary, any awards under the Short
and Long-Term Incentive Plans and any grant of options under the Corporation's
Stock Option Plan -- Officers and Employees. The CEO's annual salary is
determined primarily on the basis of his individual performance and the
performance of the Corporation. While no mathematical weighting formula exists,
the Committee considers all factors which it deems relevant including the net
income of the Corporation, the Corporation's share price, the duties and
responsibilities of the CEO and current compensation levels. Awards pursuant to
the Short and Long-Term Incentive Plans and under the Corporation's Stock Option
Plan -- Officers and Employees are made in accordance with the plans as outlined
above.
Reference is also made to the compensation of chief executive officers of
an appropriate comparable group of companies selected by the Corporation. The
comparison of the Corporation's CEO compensation to the comparable group
incorporates many factors including the relative size of the companies, their
profitability and share price, the duties of the chief executive officer and any
other extenuating or special circumstances.
Mr. Doyle's compensation for 2000 as set forth in the Summary Compensation
Table was determined in accordance with the foregoing.
Submitted on behalf of the Compensation Committee: Isabel B. Anderson, Paul
J. Schoenhals, Daryl K. Seaman and Barrie A. Wigmore.
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PERFORMANCE GRAPHS
The following graph illustrates the Corporation's cumulative shareholder
return, assuming reinvestment of dividends, by comparing a Cdn$100 investment in
the Corporation's Shares at December 31, 1995 to the return on the TSE 300 Total
Return Index.
CUMULATIVE TOTAL RETURN
BASED ON REINVESTMENT OF CDN$100 BEGINNING DECEMBER 31, 1995
[Cumulative Total Return Graph]
-----------------------------------------------------------
DEC.-95 DEC.-96 DEC.-97 DEC.-98 DEC.-99 DEC.-00
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Potash Corporation of Saskatchewan Inc. -- TSE Listing $100 $122 $127 $106 $77 $134
- ------------------------------------------------------------------------------------------------------------------------
TSE 300 $100 $128 $148 $145 $191 $205
- ------------------------------------------------------------------------------------------------------------------------
SOURCE: GEORGESON SHAREHOLDER COMMUNICATIONS INC.
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The following graph illustrates the Corporation's cumulative shareholder
return, assuming reinvestment of dividends, by comparing a $100 investment in
the Corporation's Shares at December 31, 1995 to the return on the Standard &
Poor's 500 Index and the shareholder return of a peer group of fertilizer
producers and marketers selected by the Corporation.
CUMULATIVE TOTAL RETURN
BASED ON REINVESTMENT OF $100 BEGINNING DECEMBER 31, 1995
[Cumulative Total Return Graph]
-----------------------------------------------------------
DEC.-95 DEC.-96 DEC.-97 DEC.-98 DEC.-99 DEC.-00
- ------------------------------------------------------------------------------------------------------------------------
Potash Corporation of Saskatchewan Inc. -- NYSE Listing $100 $122 $120 $94 $72 $119
- ------------------------------------------------------------------------------------------------------------------------
Self-selected Peer Group $100 $97 $84 $56 $40 $52
- ------------------------------------------------------------------------------------------------------------------------
S&P 500(R) $100 $123 $164 $211 $255 $232
- ------------------------------------------------------------------------------------------------------------------------
SOURCE: GEORGESON SHAREHOLDER COMMUNICATIONS INC.
The Self-selected Peer Group consists of:
COMPANY SYMBOL
------- ------
Agrium Inc.* AGU
IMC Global Inc. IGL
Mississippi Chemical Corp. GRO
Terra Industries Inc. TRA
* Toronto Stock Exchange listing.
COMPENSATION OF DIRECTORS
Except as set forth below, each director who is not also an officer or
employee of the Corporation (an "outside director") receives from the
Corporation an annual retainer of $30,000, a per diem fee of $1,000 for meetings
he or she attends and a travel fee of $500 per day where travel is required on a
day or days on which a
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meeting does not occur. Outside directors receive an additional $3,500 per year,
if a chairman of a Board committee. Each outside director who is a member of a
Board committee receives a per diem fee of $1,000 for meetings he or she
attends, provided such meetings are not held the same day as a Board meeting.
Outside directors are also reimbursed for expenses incurred in discharging their
responsibilities. Mr. Phillips, as Chairman of the Board, receives an annual
retainer of $100,000 (as opposed to $30,000) effective November 2000. Pursuant
to the terms of Mr. Childers' employment agreement with the Corporation, he
received $240,600 during 2000 as Chairman of the Board and special advisor to
the Corporation. Upon termination of the employment agreement in November 2000
and his resignation from the Board, Mr. Childers received a retirement allowance
of $525,000.
On November 21, 2000, the Board granted options with limited
transferability (pursuant to the Stock Option Plan -- Directors) to purchase
3,600 Shares to each director of the Corporation, with the exception of Mr.
Doyle and Mr. Phillips. Mr. Phillips, as Chairman of the Board, received an
option to purchase 10,000 Shares. Such options have an exercise price equal to
the fair market value of the Shares at the time the options were granted (Cdn
$95.30 per Share for non-U.S. resident directors and $60.9375 for U.S. resident
directors, respectively), become exercisable over two years (or earlier in the
event of a "change in control" of the Corporation as defined in the Stock Option
Plan -- Directors) and expire ten years after the date on which they were
granted.
CORPORATE GOVERNANCE
This statement of corporate governance is made pursuant to the requirements
and guidelines (the "Guidelines") of The Toronto Stock Exchange relating to
disclosure of corporate governance practices.
MANDATE OF THE BOARD
The Board has the duty to direct the management of the business and affairs
of the Corporation pursuant to the powers vested in it by The Business
Corporations Act (Saskatchewan) and by the articles and bylaws of the
Corporation, and in accordance with obligations imposed by law.
In furtherance of the discharge of such duties and obligations, the Board
holds 8 regularly scheduled meetings annually and additional meetings to
consider particular issues as required. In 2000 the Board held 8 meetings.
The Board, either directly or through its committees, is called upon to:
(i) approve the Corporation's annual operating and capital budgets, all
material acquisitions and divestitures and the scope of its business
activities;
(ii) ensure that appropriate systems are in place to manage the
Corporation's principal business risks, including financial,
environmental and regulatory risks;
(iii) monitor and approve strategic planning, succession planning and
appointment and remuneration of senior management;
(iv) monitor and assess the integrity of the Corporation's internal
controls and management information systems; and
(v) establish and monitor a corporate disclosure policy.
BOARD COMPOSITION
As of March 15, 2001 thirteen directors comprised the Board. Of that number
eleven were independent directors. In determining whether directors are
independent, the Board applies the standard used by the New York Stock Exchange
in determining independence of directors on Audit Committees. Currently, that
standard provides that an independent director is a person who has no
relationship to the Corporation that may interfere with the director's exercise
of independence from management and the Corporation. Without limiting the
generality of the foregoing, a director is not considered independent if he or
she:
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(i) has been employed by the Corporation or any of its affiliates within
the preceding three years;
(ii) is a sole proprietor, controlling shareholder or executive officer of
an entity that has a business relationship with the Corporation
unless the Board determines in its business judgement that the
relationship does not interfere with the director's exercise of
independent judgement;
(iii) is employed as an executive of another corporation where any of the
Corporation's executives serve on the other corporation's
compensation committee; and
(iv) is an immediate family member of an individual who is or has been an
executive officer of the Corporation or any of its affiliates unless
three years have elapsed from the termination of such employment
relationship.
The Board has concluded that directors who are independent under the New
York Stock Exchange standard are also unrelated directors for the purposes of
the Guidelines with the result that eleven directors are unrelated.
As of March 15, 2001 the Corporation did not have a significant shareholder
as defined in the Guidelines.
The Board has considered its size and has concluded that a target board
size of 12 members be established.
INDEPENDENT BOARD ACTION
At present the Chairman of the Board is not an officer of the Corporation.
The Board, with eleven independent directors, can and does function
independently of management. There are five Committees of the Board, each of
which plays a significant role in the discharge of the Board's duties and
obligations. The Audit and Compensation Committees are composed wholly of
independent directors. The Executive, Environmental Affairs and Corporate
Governance and Nominating Committees each include one non-independent director.
The Board has implemented a procedure for the Executive Committee to authorize a
director to engage an outside adviser at the Corporation's expense in
appropriate circumstances. The Board has established a policy of convening
without management present during each regularly scheduled meeting of the Board.
COMMITTEES
Executive Committee
The Executive Committee is presently composed of five directors, two of
whom are, in accordance with the bylaws of the Corporation, the Chairman of the
Board and the Chief Executive Officer. Between meetings of the Board, the
Executive Committee has, with certain exceptions, all the powers vested in the
Board.
Audit Committee
The Audit Committee is composed of four independent directors. The
committee meets with the Corporation's financial management personnel, internal
auditor and external auditor at least once each quarter to review the
Corporation's financial reporting practices, procedures and internal controls
and unaudited quarterly financial statements, and reviews the Corporation's
annual financial statements and management's discussion and analysis prior to
their submission to the Board for approval. The committee also recommends to the
Board the external auditors to be proposed to the shareholders for appointment
at the annual meeting of shareholders.
Compensation Committee
The Compensation Committee is presently composed of four independent
directors. This committee formulates and makes recommendations to the Board in
respect of compensation issues relating to senior management of the Corporation
and in respect of corporate salary and benefits policy. It reviews and approves,
on an annual basis, the Corporation's salary administration program. It is
responsible for the annual report on
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executive compensation, and in consultation with the Chief Executive Officer,
considers and reports to the Board regarding corporate succession matters. The
Committee, from time to time, reviews the adequacy and form of directors'
compensation and makes recommendations in this regard to the Board.
Environmental Affairs Committee
The Environmental Affairs Committee is composed of four directors, three of
whom are independent. The committee works to ensure that the Corporation's
commitment to the protection of the environment is fulfilled. It routinely
receives environmental audit reports for review and discussion with senior
management and monitors environmental issues in other areas of corporate
activity such as off-site transportation, distribution and storage of product.
The committee reviews and discusses with management potential changes to
regulatory requirements and to corporate environmental policy.
Corporate Governance and Nominating Committee
The Corporate Governance and Nominating Committee is presently composed of
six directors, five of whom are independent. The committee is responsible for
examining and reporting to the Board on matters relating to governance of the
Corporation and for recommending nominees for election or appointment as
directors. In addition, the committee develops, reviews and recommends to the
Board for approval policies and procedures relating to corporate governance as
are appropriate:
(i) to maintain trust and confidence in the balanced attention to the
different interests of the Corporation's shareholders, employees,
customers and other communities of interest; and
(ii) to ensure the effective and timely discharge by the Corporation's
directors, officers and senior management of the responsibilities and
duties of each.
DECISIONS REQUIRING BOARD APPROVAL
The Board is responsible for all decisions relating to the Corporation
which, by law, cannot be delegated to Board committees or management.
The Board reviews and approves, among other things, the Corporation's
annual budget, unbudgeted capital expenditures which exceed Cdn$1 million, debt
and equity financing, changes to capital structure, lease commitments with a net
present value in excess of $5 million, material acquisitions and divestitures,
appointment and remuneration of the Chief Executive Officer, directors to be
proposed for election at the Corporation's annual meeting, directors
compensation and any other matter which is of material significance to the
Corporation.
DIRECTOR RECRUITMENT AND BOARD EFFECTIVENESS
The Corporate Governance and Nominating Committee acts as the nominating
committee of the Board. Prior to recruiting prospective board members it reviews
the strengths and weaknesses of the current Board and identifies the specific
expertise and other relevant attributes which new directors should possess.
A policy of the Corporation has been established which provides that, with
the exception of directors holding office on January 24, 2000 (the date of
adoption of the policy), directors will not stand for re-election after reaching
the age of seventy years.
The Board has not established any formal measures for assessing Board,
committee and individual director effectiveness. An informal evaluation forms
part of the annual nominating process, with members of the Corporate Governance
and Nominating Committee discussing individuals' performance, as required, with
the Chief Executive Officer and other members of the Board.
New directors are provided such orientation or education programs regarding
the Corporation as is necessary or appropriate in the circumstances, including
briefings by senior management and the delivery of a package of relevant written
information.
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SHAREHOLDER COMMUNICATION
The Corporation has adopted a corporate disclosure policy which calls for
the timely public dissemination of material information. Shareholder questions,
comments and concerns may be made to the Corporation's Senior Vice President,
Corporate Relations, who is responsible for implementing the disclosure policy,
to the Corporate Secretary, or to the Corporation's transfer agent.
BOARD'S EXPECTATIONS OF MANAGEMENT
The Board of Directors has adopted position descriptions for the Chairman
of the Board and for the Chief Executive Officer.
Management of the Corporation is expected to perform the following
functions:
(i) be responsible for the day-to-day functioning of all elements of the
Corporation's business including operations, safety, environmental,
sales, financial, personnel and administration and, in so doing, at
all times seek to enhance shareholder value;
(ii) provide timely accurate reports to the Board on the business and
affairs of the Corporation, including annual reports regarding
strategic planning and risk management and control, and on other
matters of material significance to the Corporation;
(iii) conduct an annual budgeting process and monitor the Corporation's
performance as compared to the annual budget approved by the Board;
(iv) make such decisions and take, on a timely basis, such actions as are
necessary for the Corporation to discharge its obligations and meet
applicable requirements; and
(v) review on an ongoing basis the Corporation's strategies and their
implementation in all key areas of the Corporation's activities.
REPORT OF AUDIT COMMITTEE
The following independent directors served as members of the Audit
Committee during the year ended December 31, 2000:
Jack Vicq (Chairman)
Dallas Howe
Honorable Willard Z. Estey, Q.C.
Donald Phillips
Mr. Phillips served on the Audit Committee from May 2000 until his
appointment as Chairman of the Board in November 2000. Mr. Jeffrey McCaig was
appointed to the Audit Committee on January 23, 2001.
In accordance with the Audit Committee charter adopted by the Board of
Directors and attached as Schedule E, the Audit Committee has responsibility for
the oversight of the Corporation's financial reporting and audit processes and
related internal controls on behalf of the Board. During the fiscal year ended
December 31, 2000, the committee met 8 times.
In overseeing the audit process, the Audit Committee obtained from the
independent auditors their letter dated February 7, 2001 as required by the
Independent Standards Board Standard No. 1 describing all relationships between
the auditors and the company that might bear on the auditors' independence and
the auditors' judgment that they are, in fact, independent and discussed with
the auditors the disclosures therein. The committee also reviewed the
organizational structure, procedure and practices that support the objectivity
of the internal audit department and concurred in the appointment of a new
director of internal audit. The committee reviewed with both the independent and
the internal auditors their audit plans, audit scope and identification of audit
risks. The committee discussed, with and without management present, the results
of the independent auditors' examination of the financial statements and all
communications required by generally accepted auditing standards, including
those described in Statement on Auditing Standards No. 61,
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as amended, "Communication with Audit Committees". The Committee also discussed
the results of the internal audit examinations.
In telephonic meetings with financial management, internal audit and the
independent auditors, the Audit Committee reviewed and discussed quarterly
interim financial information prior to the earnings release for the applicable
quarter.
The Audit Committee reviewed and discussed the audited financial statements
of the Corporation as of and for the fiscal year ended December 31, 2000, with
management and the independent auditors, including the quality, not just the
acceptability, of the Corporation's financial reporting practices and the
completeness and clarity of the related financial disclosures. Management is
responsible for the preparation of the Corporation's financial statements and
the independent auditors are responsible for auditing those financial
statements.
Based on the above-mentioned review and discussions with management and the
independent auditors, the Audit Committee recommended to the Board of Directors
that the audited financial statements be included in the Corporation's Annual
Report on Form 10-K for the fiscal year ended December 31, 2000, for filing with
the Securities and Exchange Commission. The Audit Committee also recommended the
reappointment, subject to shareholder approval, of the independent auditors.
Submitted on behalf of the Audit Committee, Jack G. Vicq, Dallas J. Howe,
Willard Z. Estey, Q.C. and Jeffrey J. McCaig.
APPOINTMENT OF AUDITORS
Proxies solicited hereby will be voted to reappoint the firm of Deloitte &
Touche LLP, the present auditors, as auditors of the Corporation to hold office
until the next annual meeting of shareholders, unless the shareholder signing
such proxy specifies otherwise. The affirmative vote of a majority of Shares
voted on such matter is required to reappoint the firm of Deloitte & Touche LLP,
as auditors of the Corporation. A representative of Deloitte & Touche LLP is
expected to attend the Meeting. At that time the representative will have the
opportunity to make a statement if he or she desires and will be available to
respond to appropriate questions.
For the year ended December 31, 2000, Deloitte & Touche LLP received the
following fees:
a) Audit Fees -- $1,101,000;
b) Financial Information System Design & Implementation Fees -- $208,000;
and
c) All Other Fees -- $1,283,080.
The Audit committee of the Board has considered and is of the view that the
services provided in (b) and (c) set forth above are compatible with maintaining
the auditors' independence.
CONFIRMATION OF SHAREHOLDER RIGHTS AGREEMENT
At the Meeting, shareholders will be asked to adopt a resolution, as set
out in Schedule A hereto, confirming the Shareholder Rights Agreement (the
"Rights Agreement") entered into between the Corporation and CIBC Mellon Trust
Company (formerly, The R-M Trust Company) (the "Rights Agent"), as amended and
restated effective May 10, 2001. The amendment and restatement of the Rights
Agreement was unanimously approved by the Board on March 15, 2001.
The Rights Agreement in its original form was adopted by the Corporation on
November 10, 1994, amended on March 28, 1995 and May 4, 1995, and confirmed by
the shareholders of the Corporation at the annual and special meeting of
shareholders held on May 11, 1995. Three years later the Rights Plan was amended
and restated and confirmed by the shareholders of the Corporation at the annual
and special meeting of shareholders held on May 7, 1998.
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In proceeding with this further amendment and restatement of the Rights
Agreement, the Board considered the appropriateness of maintaining a rights plan
and concluded, for the reasons described below, that an extension of the Rights
Agreement would be in the best interests of the Corporation and its
shareholders. Contemporaneously with its review of the Rights Agreement, the
Board considered the terms and conditions of current rights plans adopted by
other Canadian companies as well as recent experience involving rights plans in
the context of actual take-over bids and the commentary of the investment
industry. As a result of these investigations, the Board decided to make certain
amendments, which are not material, to the Rights Agreement (concurrently with
its extension) to ensure that it is consistent with the current generation of
rights plans in Canada and that it adequately addresses concerns of
institutional shareholders and investment industry commentators on a basis which
is consistent with the objectives of the plan. These amendments consist
primarily of the following:
(a) the definition of "Beneficial Ownership" was amended to expand the
class of Persons who have been excluded from the definition to include
(i) dealers or brokers acquiring or holding securities for
non-discretionary client accounts in respect of plans of the
Corporation; (ii) independent Persons established by statute who
manage funds for employee benefits or pension plans; and (iii) Crown
agents;
(b) the definition of "Beneficial Ownership" has been amended to provide
that a Person shall not be deemed to be the Beneficial Owner of any
securities where a holder of such securities of the Corporation has
agreed to tender to a Take-over Bid made by such Person pursuant to a
Permitted Lock-up Agreement;
(c) the definition of "Permitted Lock-up Agreement" has been added to
specify those lock-up agreements which can be entered without the
locked up securities having to be included in determining the
Offeror's Beneficial Ownership of the Corporation's securities;
(d) the definition of "Competing Permitted Bid" has been amended to
provide that securities must not be taken up and paid for under a bid
prior to the later of the minimum period that a bid must remain open
under applicable securities laws and 60 days after the earliest date
on which any Permitted Bid was made. The amendment is as a result of
legislative changes extending the minimum 21 day deposit period under
a bid to 35 days and the view that a Competing Permitted Bid should
not be able to expire prior to the expiration of a Permitted Bid;
(e) the definition of "Exempt Acquisition" has been amended to provide
that an acquisition of securities pursuant to a prospectus or
securities exchange take-over bid is an Exempt Acquisition only if a
Person does not thereby acquire a greater percentage of the
Corporation's securities than that held by such Person prior to such
distribution;
(f) the definition of "Exempt Acquisition" has been amended to delete from
the definition the acquisition of securities pursuant to the exercise
of stock options granted by the Corporation and to provide that the
exemption does not apply if a purchaser under a private placement
thereafter holds more than 25% of the Voting Shares; and
(g) certain provisions of the Rights Agreement were redrafted (but not
materially changed) to reflect the modern language typically found in
the current generation of rights plans in Canada.
Other technical amendments were also made in order to conform certain
provisions of the Rights Agreement as a result of the changes listed above, and
to clarify certain other provisions of the Rights Agreement.
REASONS FOR CONFIRMATION OF AMENDED AND RESTATED RIGHTS AGREEMENT
The Rights Agreement was originally adopted to ensure that, in the event of
a take-over bid for voting securities of the Corporation, the Board would have
the time and opportunity to evaluate the bid and its effects, to seek out
alternative bidders and to explore, develop and evaluate other ways of
maximizing shareholder value.
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In considering whether to adopt the Rights Agreement, the Board considered
the current legislative framework in Canada and the United States governing
take-over bids and concluded that, for several reasons, such legislative
framework did not adequately protect the rights of shareholders during take-over
bids. In particular, the Board considered recent amendments to the various
provincial securities statutes which, effective March 31, 2001 in all provinces
other than Quebec, extended the statutory minimum bid period from 21 to 35 days.
Notwithstanding these amendments, the Board remains concerned that the minimum
time periods for take-over bids under applicable Canadian law and, even more so
under United States law where the minimum bid period is twenty business days,
might not provide an opportunity for shareholders and the Board to properly
assess a bid and negotiate with the bidder, for shareholders to assess the
merits of competing bids and for the Board to seek out or otherwise allow
competing bidders to emerge or develop other methods of maximizing shareholder
value. In addition, the Board was concerned that without the protection of a
rights plan, shareholders may feel compelled to tender to a take-over bid which
they consider not to be adequate and not to represent full and fair value
because, in failing to do so, the shareholder might be left with illiquid or
minority discounted voting securities in the Corporation. Finally, the Board was
concerned that as a result of differing securities laws in Canada and the United
States, shareholders might be vulnerable to discriminatory acquisition tactics
or that a bidder might otherwise be able to obtain control of the Corporation
without paying full value, without obtaining shareholder approval and without
treating all shareholders equally.
The Board continues to believe that the Rights Agreement is an appropriate
mechanism to assist shareholders in responding to take-over bids and address the
situations described above.
Although the Rights Agreement may impede a change of control to some
degree, the Board believes that the Rights Agreement will not adversely limit
the opportunity for shareholders to dispose of their shares through a take-over
bid which provides fair value to all shareholders. The Board will continue to be
bound to consider fully and fairly any take-over bid for voting securities of
the Corporation and to discharge its responsibilities with a view to the best
interests of the shareholders.
Shareholder rights plans have been adopted by a large number of publicly
held corporations in Canada and the United States. The terms of the Rights
Agreement, as amended and restated, are substantially similar to the terms of
rights plans recently adopted by other major Canadian companies.
THE CORPORATION'S RIGHTS AGREEMENT
The principal terms and conditions of the Rights Agreement, as amended and
restated, are summarized below. Capitalized terms used but not defined in the
summary are used as defined in the Rights Agreement. For full particulars,
please refer to the full text of the Rights Agreement attached as Schedule B.
The summary below is qualified in its entirety by reference to the actual
provisions of the Rights Agreement.
Overview
In general terms, if a person (an "Acquiring Person") acquires 20% or more
of the Voting Shares of the Corporation other than by way of a Permitted Bid or
a Competing Permitted Bid (each as discussed below), holders of Rights other
than the Acquiring Person may acquire Voting Shares of the Corporation at a
significant discount to the then prevailing market prices. Accordingly, in such
a case, the Rights will cause substantial dilution to an Acquiring Person who
becomes an Acquiring Person other than through a Permitted Bid or a Competing
Bid.
General
The Rights were issued pursuant to the Rights Agreement between the
Corporation and the Rights Agent. Each Right entitles the registered holder
thereof to purchase from the Corporation on the occurrence of certain events
described below, one Share for a price of Cdn$400 per Share (or its U.S. Dollar
Equivalent), subject to adjustments (the "Exercise Price"). If a Flip-in Event
occurs, each of the Rights entitles the registered holder to receive, upon
payment of the Exercise Price, that number of Shares having a Market Price at
the date of that occurrence equal to twice the Exercise Price. The Rights are
not exercisable until the
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Separation Time. The Rights expire on the termination of the annual meeting of
the Corporation in the year 2004, unless earlier terminated by the Board.
Trading of Rights
Prior to the Separation Time, the Rights will be evidenced only by
outstanding Share certificates. The Rights Agreement provides that, until the
Separation Time, the Rights will be transferred only together with, and will be
transferred by, a transfer of the associated Shares. Until the Separation Time
or earlier redemption or expiration of the Rights, new Share certificates issued
after the Record Time upon the transfer of existing Shares or the issuance of
additional Shares will contain a legend incorporating the Rights Agreement by
reference. Promptly following the Separation Time, separate certificates
evidencing the Rights will be mailed to the holder of record of Shares as of the
close of business at the Separation Time and, thereafter, the Rights
Certificates alone will evidence the Rights.
Separation Time
The Rights will be separate and trade apart from the Shares after the
Separation Time. The Separation Time is the close of business on the tenth day
following the earlier of (i) the date (the "Stock Acquisition Date") of the
first public announcement by the Corporation or an Acquiring Person of facts
indicating that a person has become an Acquiring Person and (ii) the date of the
commencement of, or first public announcement of the intent of any person (other
than the Corporation or any subsidiary of the Corporation) to commence a
take-over bid (other than a Permitted Bid or a Competing Permitted Bid), or such
later day as the Board of Directors may determine and (iii) the date on which a
Permitted Bid or Competing Bid ceases to qualify as such.
Acquiring Person and Flip-in Event
An "Acquiring Person" is a person who Beneficially Owns 20% or more of the
outstanding Shares of the Corporation. The Rights Agreement provides certain
exceptions from this classification, including a person who acquires 20% or more
of the outstanding Shares through a Corporate Acquisition, a Permitted Bid
Acquisition, a Permitted Lock-Up Agreement, a Corporate Distribution, an Exempt
Acquisition, or a Convertible Security Acquisition. If a person becomes an
Acquiring Person (a "Flip-in Event"), each Right, other than those held by the
Acquiring Person and certain related parties, will convert into the right to
purchase from the Corporation, upon exercise, the number of Shares having an
aggregate Market Price on the date of the Flip-in Event equal to twice the
Exercise Price upon payment of an amount in cash equal to the Exercise Price.
Permitted Bids and Competing Permitted Bids
A Flip-in Event does not occur if a take-over bid is a Permitted Bid. A
Permitted Bid is a take-over bid made by means of a take-over bid circular,
which:
- is made for all or any portion of the Voting Shares of the Corporation
to all holders of record of Voting Shares of the Corporation;
- contains and is subject to irrevocable and unqualified conditions that:
(A) no Voting Shares of the Corporation will be taken-up or paid for
pursuant to the take-over bid (x) prior to the close of business on
the Expiry Date of the bid (which shall be not less than 60 days
following the date on which the take-over bid circular is mailed to
shareholders) and (y) unless, at the close of business on the Expiry
Date of the bid, more than 50% of the then outstanding Voting Shares
of the Corporation held by Independent Shareholders have been
deposited to the bid and not withdrawn;
(B) Voting Shares of the Corporation may be deposited pursuant to the
take-over bid, unless the bid is withdrawn, at any time prior to the
close of business on the Expiry Date of the bid;
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(C) any Voting Shares of the Corporation deposited pursuant to the
take-over bid may be withdrawn until taken-up and paid for; and
(D) if the bid is accepted by the requisite percentage specified in
subclause (A)(y) above, the bidder must extend the bid for a period
of 10 days to allow other holders of Voting Shares to tender into the
bid should they so wish and must make a public announcement to such
effect.
A Competing Permitted Bid is a take-over bid that satisfies all the
criteria of a Permitted Bid except that since it is made after a Permitted Bid
has been made, the minimum deposit period and the time period for the take-up of
and payment for Voting Shares tendered under a Competing Bid is the later of the
minimum period a bid must remain open under applicable securities laws and 60
days after the earliest date on which any current Permitted Bid is made.
Neither a Permitted Bid nor a Competing Bid need be approved by the Board,
and either may be taken directly to the shareholders of the Corporation.
Acquisitions of Voting Shares made pursuant to a Permitted Bid or a Competing
Bid do not give rise to a Flip-in Event.
Partial Bids
Like most current generation rights plans, the Rights Agreement has a
two-step tender process under which a bid must be extended for 10 days after all
of the conditions have been met in order to allow shareholders who have not
tendered on the first expiry date to tender once it appears the bid will
succeed. This two-step process was implemented in order to alleviate the
coercive nature of takeover bids. However, in the case of partial bids, this
two-step process may require a bidder who intends to make a permitted partial
bid to apply for exemptive relief from certain provisions of applicable Canadian
securities laws.
Protection Against Dilution
The Exercise Price, the number and nature of securities which may be
purchased upon the exercise of the Rights and the number of Rights outstanding
are subject to adjustment from time to time to prevent dilution in the event of
a stock dividend on, or a subdivision, consolidation or an issuance of, Shares
(or other exchangeable or convertible securities) in exchange for existing
Shares and other circumstances where adjustments are appropriate to protect the
holders of Rights.
Redemption and Waiver
With the prior consent of holders of Voting Shares, or, after the
Separation Time, holders of Rights, the Board may, at its option, at any time
prior to a Flip-in Event, elect to redeem the then outstanding Rights at a
redemption price of Cdn$0.0001 per Right, subject to adjustment (the "Redemption
Price").
If an Offeror successfully completes a Permitted Bid, a Competing Permitted
Bid or a bid for which the Board has waived the application of the Flip-in event
provisions and has acquired a majority of the Voting Shares of the Corporation,
then the Board is deemed to have elected to redeem the Rights at the Redemption
Price.
Where a take-over bid that is not a Permitted Bid or a Competing Permitted
Bid is withdrawn or otherwise terminated after the Separation Time has occurred
and prior to the occurrence of a Flip-in Event, the Board of Directors may elect
to redeem all the outstanding Rights at the Redemption Price.
The Board may waive the application of the Flip-in Event provisions to a
Flip-in Event where the Board determines, within 10 Business Days following a
Stock Acquisition Date, that the Acquiring Person became such by inadvertence,
but only if such Acquiring Person has reduced its beneficial ownership of Voting
Shares within 10 days after the foregoing determination by the Board, such that
at the time of waiver it is no longer an Acquiring Person.
The Board may, at any time prior to the occurrence of a Flip-in Event,
determine to waive the application of the Flip-in Event provisions to a
transaction which would otherwise be subject to such provisions, but only if
such Flip-in Event occurs by reason of a take-over bid made by way of a
take-over bid circular to all holders of
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record of Voting Shares of the Corporation; and provided that if the Board
waives the application of the Flip-in Event provisions to a particular Flip-in
Event, the Board shall be deemed to have waived the application of such
provisions to any other Flip-in Event occurring by reason of any take-over bid
which is made by means of a take-over bid circular to all holders of record of
Voting Shares of the Corporation prior to the expiry of any take-over bid in
respect of which a waiver is, or is deemed to have been, granted.
Amendments
Under the Rights Agreement, the right of the Corporation to make changes
without the approval of holders of Voting Shares or, after the Separation Time,
Rights, is limited to amendments to correct any clerical or typographical error
or to amend the Exercise Price in the event that it does not represent a
sufficient multiple, as determined in the discretion of the Board, of the Market
Price at the time of determination.
The Corporation may also make amendments, effective upon adoption, required
to maintain the validity and effectiveness of the Rights Agreement as a result
of any change in any applicable laws or regulatory requirements. However, any
such amendments will cease to be effective unless approved by the holders of
Voting Shares or, after the Separation Time, Rights, at or immediately following
the next meeting of shareholders of the Corporation.
Any other changes (whether or not they materially adversely affect the
holders of Rights) may be made by the Corporation only with the consent of the
holders of Voting Shares, or, after the Separation Time, Rights.
The consent of the holders of Voting Shares or Rights is to be given at a
special meeting held in accordance with applicable laws and the Corporation's
articles and by-laws by a majority of votes cast by shareholders (other than any
holder of Voting Shares who is an Offeror pursuant to a take-over bid that is
not a Permitted Bid or a Competing Permitted Bid or of Rights which have become
null and void pursuant to the Rights Agreement).
Any amendment to the Rights Agreement is also subject to the receipt of any
requisite approval or consent from any governmental or regulatory authority
including the stock exchanges on which any securities of the Corporation are
listed.
SHAREHOLDER APPROVAL
Proxies solicited hereby will be voted in favour of the resolution
confirming the adoption of the Rights Agreement, unless the shareholder signing
such proxy specifies otherwise. Passage of the resolution referred to above
requires approval by a majority of the votes cast on the matter at the Meeting.
According to the terms of the Rights Agreement, any shareholder who, at the time
of the vote, is an Offeror pursuant to a Take-over Bid that is not a Permitted
Bid or a Competing Permitted Bid will not be eligible to participate in the
vote.
If the Rights Agreement is not confirmed, it will be of no further force
and effect. However, if confirmed, the Rights Agreement will remain in effect
until the close of the annual meeting of the Corporation in the year 2004 unless
terminated earlier.
At the present time, the Corporation has no knowledge of any Take-over Bid
or any intended Take-over Bid, by any person.
THE BOARD HAS DETERMINED THAT THE AMENDED AND RESTATED RIGHTS AGREEMENT
CONTINUES TO BE A VALUABLE TOOL THAT CAN BE UTILIZED TO ENHANCE VALUE FOR
SHAREHOLDERS IN THE FACE OF AN UNSOLICITED TAKE-OVER BID. ACCORDINGLY, THE BOARD
UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE RESOLUTION AMENDING AND
CONFIRMING THE RIGHTS AGREEMENT.
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AMENDMENT TO STOCK OPTION PLAN -- DIRECTORS
At the Meeting, shareholders will be asked to consider and, if deemed
advisable, adopt a resolution, as set out in Schedule C hereto, amending and
confirming the Corporation's Stock Option Plan -- Directors (the "Directors'
Plan"). The amendment would increase the aggregate number of Shares which are
issuable pursuant to options under the Directors' Plan.
OVERVIEW OF PLAN
The full text of the Directors' Plan (consolidated with all amendments to
date, including the increase in the maximum number of Shares referred to above
and in more detail below and certain other minor amendments) is attached as
Schedule D. The summary below is qualified in its entirety by reference to the
actual provisions of the Directors' Plan.
The Corporation established the Directors' Plan to encourage directors of
the Corporation to promote the growth and profitability of the Corporation by
providing them with the opportunity through options to acquire Shares. The
Directors' Plan is administered by the Board, and the Board may designate the
individual directors of the Corporation to be granted options.
At present, the aggregate number of Shares issuable after January 24, 1995
pursuant to the Directors' Plan is limited to 456,000 Shares. As of January 23,
2001, 135,200 Shares have been issued since January 24, 1995 and options to
purchase 262,400 Shares are outstanding. As a result, the Corporation now has
58,400 Shares remaining available for future option grants under the Directors'
Plan.
The general practice of the Corporation has been to recommend the grant of
options on an annual basis. The current practice of the Corporation is to grant
an option for 3,600 shares to each non-employee director of the Corporation on
an annual basis. The Chairman of the Board is granted an option for 10,000
shares on an annual basis and new directors to the board are provided an initial
option grant of 10,000 shares. The option price pursuant to the Directors' Plan
is the fair market value of the Shares at the time the option is granted. Under
the Directors' Plan, the fair market value of the Shares is deemed to be, for
optionees who reside in the United States or as otherwise designated by the
Board, the closing price per share of the Shares on the New York Stock Exchange
on the last trading day immediately preceding the date the option is granted
and, for all other optionees, the closing price per share of the Shares on The
Toronto Stock Exchange on the last trading day immediately preceding the date
the option is granted. As of March 15, 2001, such exercise prices would be U.S.
$63.05 and Cdn. $98.25, respectively.
In general, if an optionee ceases to be a director (i) by reason of the
optionee's retirement from the Board, the optionee will be entitled to exercise
any unexercised options, including such options as may vest after the date of
retirement, until such options expire; (ii) by reason of the optionee's death,
the optionee's legal personal representative will be entitled to exercise any
unexercised options, including such options as may vest after the date of death,
during the period ending at the end of the twelfth calendar month following the
calendar month in which the optionee dies; or (iii) for any other reason, the
optionee will be entitled to exercise any unexercised options, to the extent
exercisable on the date such optionee ceased to be a director, during the period
ending at the end of the calendar month immediately following the calendar month
in which such cessation occurred.
Appropriate adjustments may be made by the Board in its discretion to the
authorized limit, number, class and/or type of shares optioned, both as to
options granted or to be granted, and to the option price per share of
outstanding options to give effect to adjustments to the number of Shares which
result from certain corporate transactions. In the event of a change in control
(as defined in the Plan), each then outstanding option shall become immediately
exercisable. The Board may amend or discontinue the Plan at any time, subject to
certain limitations.
Each option must expire no more than ten years after the date on which the
option is granted. The Directors' Plan permits options to become exercisable
immediately; however, the Corporation's consistent practice has been to grant
options that become exercisable in two equal instalments, one at the first
anniversary of the date of grant and the other at the second anniversary (or
earlier in the event of a "change in
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33
control" as defined in the Directors' Plan). The Directors' Plan also permits
the Board to elect that an option granted under the plan may be assignable (for
no consideration) to the spouse, children or grandchildren of the optionee, as
well as to certain entities of which such persons hold the entire beneficial
interest.
SUMMARY OF ACTIVITY
The Directors' Plan states that the aggregate number of Shares issuable
pursuant to options under the plan after January 24, 1995 may not exceed 456,000
Shares. Since January 24, 1995, the following activity has taken place with
respect to the Directors' Plan through January 23, 2001:
Aggregate number of Shares issuable pursuant to options at January 24,
1995.................................................................. 456,000
Shares issued pursuant to option exercises................ (135,200)
Outstanding options to acquire Shares..................... (262,400)
Options to acquire Shares which may still be granted without
exceeding the existing plan limit................................ 58,400
AMENDMENT TO THE PLAN
On January 23, 2001, the Board amended the Directors' Plan (subject to
shareholder approval at the Meeting) to provide that the maximum number of
Shares issuable pursuant to options under the plan after such date is 500,000
Shares. As a result, the number of Shares for which options may still be granted
without exceeding the plan limit would be increased from 58,400 to 237,600.
In addition to the Directors' Plan, the Corporation has another share
compensation arrangement, the Stock Option Plan -- Officers and Employees (the
"Officers and Employees Plan"), which is used to encourage officers and
employees of the Corporation and its subsidiaries to promote the growth and
profitability of the Corporation by providing them with financial incentives in
the form of options to acquire Shares of the Corporation. The terms of the
Officers and Employees Plan provide that the aggregate number of Shares issuable
after February 3, 1998 pursuant to options under that plan may not exceed
6,926,125 Shares. As of January 23, 2001, 539,050 Shares had been issued after
February 3, 1998 pursuant to option exercises and options to acquire 3,965,875
Shares were outstanding.
Accordingly, if the amendment to the Directors' Plan is approved, the
aggregate number of Shares issuable after January 23, 2001 pursuant to options
under all of the Corporation's share compensation arrangements will be 11.72% of
the issued and outstanding Shares as at such date (on a fully-diluted basis).
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the principal United States Federal income
tax consequences generally applicable to the Corporation and to those optionees
who are citizens or residents of the United States of the grant and exercise of
U.S. options under the Plan under the now applicable provisions of the U.S.
Internal Revenue Code of 1986, as amended, and the regulations thereunder.
An optionee does not realize any income at the time a U.S. option is
granted. Upon the exercise of an option for cash, the optionee will recognize
compensation income, taxable as ordinary income, in an amount equal to the
excess of (i) the fair market value of the shares purchased upon the exercise of
the option, on the date the option is exercised, over (ii) the exercise price of
such shares.
The tax basis of any share received upon the exercise of an option is the
fair market value of the share on the date of exercise of the option. Upon any
subsequent sale of such share, the optionee will realize a capital gain (or
loss) in an amount equal to the difference between the amount realized on the
sale and such tax basis. An optionee's holding period for Federal capital gains
purposes for such shares will commence on the date following the date of
exercise.
The Corporation will not benefit from any deduction in respect of the
issuance of Shares to directors under the Directors' Plan.
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34
CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
A director will not recognize any income upon the grant of an option under
the Directors' Plan. Upon the exercise of the option, however, a Canadian
resident director (subject to the comments in the immediately following
paragraph) generally will be required to include in income under the Income Tax
Act (Canada) (the "ITA") an amount equal to the excess of the fair market value
of the Shares on the date of exercise over the option price. This amount is
included in the director's income for the year in which he or she acquires the
Shares as a taxable employment benefit. The amount of the benefit included in
income is added to the adjusted cost base of the Shares acquired for purposes of
determining any subsequent capital gain or loss. Such director generally will be
entitled to a deduction in computing taxable income equal to one-half of the
amount of that benefit included in income. In general, pursuant to the
U.S.-Canada tax treaty, a U.S. resident director will not be subject to tax in
Canada on the benefit received upon exercise of an option.
Pursuant to certain proposed amendments to the ITA, provided that certain
conditions are satisfied, the income inclusion discussed above may be deferred
until the year in which the Shares are disposed of rather than the year in which
the Shares are acquired. This deferral is limited to an annual $100,000 limit
based on the fair market value of the Shares (at the time of grant) that vest in
a particular year.
Upon the disposition of Shares, a Canadian resident director generally will
recognize a capital gain (or loss) to the extent that the proceeds of
disposition exceed (or are exceeded by) the sum of the adjusted cost base of the
Shares and the cost of disposition. In general, a U.S. resident director will
not be subject to tax under the ITA on any gain realized on the disposition of
Shares.
The ITA denies a deduction to the Corporation in respect of any benefits
deemed to be received on an issue of Shares to directors under the Directors'
Plan.
BENEFITS
Pursuant to the past practice of the Corporation, it is contemplated that,
with the exception of Mr. Phillips, each non-employee director will receive an
annual option grant in November, 2001 of 3,600 shares. Mr. Phillips, as Chairman
of the Board, is expected to receive a grant for 10,000 shares. In addition,
upon Mr. Blesi and Ms. Mogford joining the Board in May 2001, it is anticipated
they will each receive an option grant for 10,000 shares. However, as the plan
is discretionary, this information is subject to change.
SHAREHOLDER APPROVAL
Proxies solicited hereby will be voted in favour of the resolution amending
and confirming the Directors' Plan, unless the shareholder signing such proxy
specifies otherwise. Pursuant to rules of The Toronto Stock Exchange, the
resolution amending and confirming the Directors' Plan must be approved by a
majority of the votes cast by disinterested shareholders at the Meeting. All
directors and senior officers of the Corporation who are eligible to be granted
options under the Directors' Plan of the Corporation and any other person who
beneficially owns, directly or indirectly, or who exercises control or direction
over (or a combination of both) more than 10% of the outstanding Shares and is
eligible to be granted options under the Directors' Plan are not disinterested
shareholders and, accordingly, are not entitled to vote on the resolution
amending and confirming the Directors' Plan. In addition, associates of such
persons are not entitled to vote their Shares for the purpose of considering the
resolution amending and confirming the Directors' Plan. Accordingly, to the
knowledge of the Corporation, votes attaching to a total of 61,390 Shares out of
the 51,862,749 Shares entitled to notice of the Meeting may not be voted.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE RESOLUTION
AMENDING AND CONFIRMING THE CORPORATION'S STOCK OPTION PLAN -- DIRECTORS.
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35
MANNER OF VOTING PROXIES
PROXIES SOLICITED HEREBY WILL BE VOTED OR WITHHELD FROM VOTING ON THE
ELECTION OF DIRECTORS, VOTED FOR OR AGAINST OR WITHHELD FROM VOTING ON THE
APPOINTMENT OF AUDITORS, VOTED FOR OR AGAINST OR WITHHELD FROM VOTING ON THE
RESOLUTION CONFIRMING THE ADOPTION OF THE AMENDED AND RESTATED RIGHTS AGREEMENT
AND VOTED FOR OR AGAINST OR WITHHELD FROM VOTING ON THE RESOLUTION AMENDING AND
CONFIRMING THE DIRECTORS' PLAN, IN ACCORDANCE WITH ANY SPECIFICATIONS MADE ON
THE PROXY. IN THE ABSENCE OF ANY SUCH SPECIFICATION, SUCH PROXIES WILL BE VOTED
FOR THE ELECTION OF THE DIRECTORS AND THE APPOINTMENT OF THE AUDITORS SPECIFIED
IN THIS PROXY CIRCULAR AND FOR THE RESOLUTIONS CONFIRMING THE ADOPTION OF THE
AMENDED AND RESTATED RIGHTS AGREEMENT AND AMENDING AND CONFIRMING THE DIRECTORS'
PLAN.
The Board knows of no matters to come before the Meeting other than the
matters referred to in the Notice of Annual and Special Meeting. However, if any
other matters which are not now known to the Board should properly come before
the Meeting or any adjournment thereof, or if amendments or variations to the
matters referred to in the Notice of Annual and Special Meeting are presented
for action at the Meeting or any adjournment thereof, the proxies will be voted
on such matters, amendments or variations in accordance with the best judgement
of the person voting the proxy which confers such discretionary authority.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the Corporation's
annual meeting of shareholders in 2002 and which such shareholders are entitled
to request be included in the management proxy circular for that meeting must be
received at the Corporation's principal executive offices not later than
February 10, 2002 under The Business Corporations Act (Saskatchewan) and not
later than November 28, 2001 under Rule 14a-8(e)(2) promulgated under the U.S.
Securities Exchange Act of 1934.
GENERAL
In respect of matters to be voted on at the Meeting, where a broker may not
be permitted to vote Shares held in street name in the absence of instructions
from the beneficial owner of the Shares, such Shares will be considered not
entitled to vote, although such Shares and Shares for which the holders abstain
from voting will count for purposes of determining the presence of a quorum.
Copies of the Corporation's most recent Form 10-K together with any
document incorporated by reference therein, the most recent annual financial
statements together with the accompanying report of the auditor, and any interim
financial statements filed subsequent to the filing of the most recent annual
financial statements may be obtained on request from the Secretary of the
Corporation.
The contents and the sending of this management proxy circular have been
approved by the Board.
[John Hampton signature]
JOHN L.M. HAMPTON
Secretary
March 27, 2001
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36
SCHEDULE A
POTASH CORPORATION OF SASKATCHEWAN INC.
RESOLUTION OF SHAREHOLDERS
WHEREAS Potash Corporation of Saskatchewan Inc. (the "Corporation") and
CIBC Mellon Trust Company (formerly, The R-M Trust Company) entered into a
shareholder rights agreement dated November 10, 1994 and amended March 28, 1995
and May 4, 1995 (the "Original Rights Agreement");
AND WHEREAS the shareholders of the Corporation ratified, confirmed and
approved the Original Rights Agreement on May 11, 1995;
AND WHEREAS the Corporation and CIBC Mellon Trust entered into an amended
and restated shareholders rights agreement dated March 2, 1998 (the "Amended
Rights Agreement");
AND WHEREAS the shareholders of the Corporation ratified, confirmed and
approved the Amended Rights Agreement on May 7, 1998;
AND WHEREAS the Board of Directors of the Corporation has approved certain
amendments to the Amended Rights Agreement, which are set forth in the amended
and restated shareholder rights agreement (the "Rights Agreement") annexed as
Schedule B to the proxy circular of the Corporation sent to the shareholders of
the Corporation in connection with the annual and special meeting of the
Corporation to be held May 10, 2001;
NOW THEREFORE, BE IT RESOLVED THAT:
1. the Rights Agreement is hereby ratified, confirmed and approved by the
shareholders of the Corporation; and
2. any officer of the Corporation be and is hereby authorized and directed for
and on behalf of the Corporation to do such things and to take such actions
as may be necessary or desirable to carry out the intent of the foregoing
resolution and the matters authorized thereby.
A-1
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SCHEDULE B
SHAREHOLDER RIGHTS AGREEMENT
AS AMENDED AND RESTATED EFFECTIVE MAY 10, 2001
BETWEEN
POTASH CORPORATION OF SASKATCHEWAN INC.
AND
CIBC MELLON TRUST COMPANY
AS RIGHTS AGENT
B-1
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TABLE OF CONTENTS
ARTICLE 1
INTERPRETATION
PAGE
1.1 Certain Definitions......................................... B-4
1.2 Currency.................................................... B-13
1.3 Number and Gender........................................... B-13
1.4 Descriptive Headings and References......................... B-13
1.5 Acting Jointly or in Concert................................ B-13
1.6 Application of Statutes, Regulations and Rules.............. B-13
ARTICLE 2
THE RIGHTS
2.1 Legend on Common Share Certificates......................... B-14
2.2 Initial Exercise Price; Exercise of Rights; Detachment of
Rights...................................................... B-14
2.3 Adjustments to Exercise Price; Number of Rights............. B-16
2.4 Date on Which Exercise is Effective......................... B-20
2.5 Execution, Authentication, Delivery and Dating of Rights
Certificates................................................ B-20
2.6 Registration, Registration of Transfer and Exchange......... B-21
2.7 Mutilated, Destroyed, Lost and Stolen Rights Certificates... B-21
2.8 Persons Deemed Owners....................................... B-22
2.9 Delivery and Cancellation of Certificates................... B-22
2.10 Agreement of Rights Holders................................. B-22
ARTICLE 3
ADJUSTMENTS TO THE RIGHTS IN THE EVENT
OF CERTAIN TRANSACTIONS
3.1 Flip-In Event............................................... B-23
ARTICLE 4
THE RIGHTS AGENT
4.1 General..................................................... B-24
4.2 Merger or Consolidation or Change of Name of Rights Agent... B-24
4.3 Duties of Rights Agent...................................... B-25
4.4 Change of Rights Agent...................................... B-26
ARTICLE 5
MISCELLANEOUS
5.1 Redemption and Waiver....................................... B-27
5.2 Expiration.................................................. B-28
5.3 Issuance of New Rights Certificates......................... B-28
5.4 Supplements and Amendments.................................. B-28
5.5 Fractional Rights and Fractional Shares..................... B-29
5.6 Rights of Action............................................ B-29
5.7 Holder of Rights Not Deemed a Shareholder................... B-29
5.8 Notice of Proposed Actions.................................. B-30
5.9 Notices..................................................... B-30
5.10 Costs of Enforcement........................................ B-31
B-2
39
PAGE
5.11 Successors.................................................. B-31
5.12 Benefits of this Agreement.................................. B-31
5.13 Governing Law............................................... B-31
5.14 Counterparts................................................ B-31
5.15 Severability................................................ B-31
5.16 Effective Date.............................................. B-31
5.17 Determinations and Actions by the Board of Directors........ B-31
5.18 Rights of Board, Corporation and Offeror.................... B-32
5.19 Regulatory Approvals........................................ B-32
5.20 Declaration as to Non-Canadian Holders...................... B-32
5.21 Time of the Essence......................................... B-32
ADDENDA
EXHIBIT A FORMS OF RIGHTS CERTIFICATE,
ELECTION TO EXERCISE, AND ASSIGNMENT
B-3
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SHAREHOLDER RIGHTS AGREEMENT
THIS SHAREHOLDER RIGHTS AGREEMENT amended and restated effective May 10,
2001 between POTASH CORPORATION OF SASKATCHEWAN INC., a corporation incorporated
under the laws of Saskatchewan (the "CORPORATION"), and CIBC MELLON TRUST
COMPANY (formerly known as THE R-M 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 hereunder);
WITNESSES that:
WHEREAS the Corporation and the Rights Agent entered into a Shareholder
Rights Agreement dated as of November 10, 1994 and amended as of March 28, 1995
and May 4, 1995 and amended and restated on March 2, 1998 (the "ORIGINAL
AGREEMENT") and wish to amend and restate the Original Agreement by entering
into this Agreement;
AND WHEREAS the Board of Directors has determined that it is advisable and
in the best interests of the Corporation to adopt and maintain a shareholder
rights plan (the "RIGHTS PLAN");
AND WHEREAS in order to implement the Rights Plan the Board of Directors
has:
(a) authorized and declared a distribution of one right ("RIGHT") effective the
Close of Business (as hereinafter defined) on December 29, 1994 in respect
of each Common Share (as hereinafter defined) outstanding at the Record Time
(as hereinafter defined); and
(b) authorized the issuance of one Right in respect of each Common Share issued
after the Record Time and prior to the earlier of the Separation Time (as
hereinafter defined) and the Expiration Time (as hereinafter defined);
AND WHEREAS each Right entitles the holder thereof, after the Separation
Time, to purchase securities of the Corporation pursuant to the terms and
subject to the conditions set forth herein;
AND WHEREAS the Corporation has appointed the Rights Agent to act on behalf
of the Corporation in connection with the issuance, transfer, exchange and
replacement of Rights Certificates (as hereinafter defined), the exercise of
Rights and other matters referred to herein.
NOW THEREFORE in consideration of the premises and respective agreements
set forth herein, the parties hereby agree as follows:
ARTICLE 1
INTERPRETATION
1.1 CERTAIN DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
indicated:
"1933 SECURITIES ACT" shall mean the Securities Act of 1933 of the United
States, as amended, and the rules and regulations thereunder, and any
comparable or successor laws or regulations thereto.
"1934 EXCHANGE ACT" shall mean the Securities Exchange Act of 1934 of the
United States, as amended, and the rules and regulations thereunder, and
any comparable or successor laws or regulations thereto.
"ACQUIRING PERSON" shall mean any Person who is at any time the Beneficial
Owner of 20% or more of the outstanding Voting Shares of the Corporation;
provided, however, that the term "ACQUIRING PERSON" shall not include:
(i) the Corporation or any Subsidiary of the Corporation;
(ii) any Person who becomes the Beneficial Owner of 20% or more of the
outstanding Voting Shares of the Corporation as a result of one or
any combination of (A) Corporate Acquisitions, (B) Permitted Bid
Acquisitions, (C) Corporate Distributions, (D) Exempt Acquisitions or
(E) Convertible Security Acquisitions; provided further, however,
that if a Person shall become the
B-4
41
Beneficial Owner of 20% or more of the Voting Shares of the
Corporation then outstanding by reason of one or more or any
combination of the operation of a Corporate Acquisition, Permitted
Bid Acquisition, Corporate Distribution, Exempt Acquisition or
Convertible Security Acquisition and, after such Corporate
Acquisition, Permitted Bid Acquisition, Corporate Distribution,
Exempt Acquisition or Convertible Security Acquisition, becomes the
Beneficial Owner of an additional 1% or more of the outstanding
Voting Shares of the Corporation (other than pursuant to Corporate
Acquisitions, Permitted Bid Acquisitions, Corporate Distributions,
Exempt Acquisitions or Convertible Security Acquisitions), then as of
the date of such acquisition, such Person shall become an Acquiring
Person;
(iii) for a period of 10 days after the Disqualification Date (as
hereinafter defined), any Person who becomes the Beneficial Owner of
20% or more of the outstanding Voting Shares of the Corporation as a
result of such Person becoming disqualified from relying on Subclause
(vi) of the definition of Beneficial Owner because such Person is
making or has announced an intention to make a Take-over Bid in
respect of securities of the Corporation alone or by acting jointly
or in concert with any other Person or becomes otherwise disqualified
(the first date of public announcement that any Person is making or
has announced an intention to make a Take-over Bid being herein
referred to as the "DISQUALIFICATION DATE"); and
(iv) an underwriter or member of a banking or selling group that acquires
Voting Shares of the Corporation from the Corporation in connection
with a distribution to the public of securities.
"AFFILIATE" when used to indicate a relationship with a specified Person,
shall mean a Person that directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common control
with, such specified Person.
"ASSOCIATE" when used to indicate a relationship with a specified Person
shall mean a spouse of such specified Person, any Person with whom such
specified Person is living in a conjugal relationship outside marriage or
any relative of such specified Person, spouse of such specified Person or
other Person who has the same residence as such specified Person.
A Person shall be deemed the "BENEFICIAL OWNER" and to have "BENEFICIAL
OWNERSHIP" of and to "BENEFICIALLY OWN",
(i) any securities as to which such Person or any of such Person's
Affiliates or Associates is the owner at law or in equity;
(ii) any securities as to which such Person or any of such Person's
Affiliates or Associates has the right to become the owner at law or
in equity (A) upon the conversion, exchange or exercise of any
Convertible Securities or (B) pursuant to any agreement, arrangement
or understanding, whether such right is exercisable immediately or
within a period of 60 days thereafter and whether or not on condition
or the happening of any contingency (other than customary agreements
with and between underwriters or banking group members or selling
group members with respect to a distribution of securities or
pursuant to a pledge of securities in the ordinary course of
business); and
(iii) any securities which are Beneficially Owned within the meaning of
paragraphs (i) or (ii) of this definition by any other Person with
whom such Person is acting jointly or in concert;
provided, however, that a Person shall not be deemed the "Beneficial
Owner", or to have "Beneficial Ownership" of, or to "Beneficially Own" any
security as a result of the existence of any one or more of the following
circumstances:
(iv) such security has been deposited or tendered pursuant to any Take-over
Bid made by such Person or made by any Affiliate or Associate of such
Person or made by any other Person acting jointly or in concert with
such Person, unless such deposited or tendered security has been taken
up or paid for, whichever shall first occur; or
B-5
42
(v) by reason of the holder of such security having agreed to deposit or
tender such security to a Take-over Bid made by such Person or any
of such Person's Affiliates or Associates or any other Person
referred to in clause (iii) of this definition pursuant to a
Permitted Lock-up Agreement; or
(vi) (A) such Person or any Affiliate or Associate of such Person or any
other Person acting jointly or in concert with such Person, holds
such security; provided that the ordinary business of any such
Person (the "FUND MANAGER") includes the management of investment
funds for others (which others may include or be limited to one or
more employee benefit plans or pension plans of the Corporation or
otherwise) or includes the acquisition or holding of securities for
a non-discretionary account of a Client (as defined below) by a
dealer or broker registered under applicable securities laws to the
extent required and such security is held by the Fund Manager in the
ordinary course of such business in the performance of such Fund
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 law and, as such, acts
as trustee or administrator or in a similar capacity in relation to
the estates of deceased or incompetent Persons or in relation to
other accounts and holds such security in the ordinary course of
such duties for the estate of any such deceased or incompetent
Person (each an "ESTATE ACCOUNT") or for such other accounts (each
an "OTHER ACCOUNT"), or (C) the Person (the "STATUTORY BODY") is an
independent Person established by statute for purposes that include,
and the ordinary business or activity of such person includes, the
management of investment funds for employee benefit plans, pension
plans, insurance plans of various public bodies and the Statutory
Body holds such security for the purposes of its activities as such,
(D) the ordinary business of any such Person includes acting as an
agent of the Crown in the management of public assets (the "CROWN
AGENT"), or (E) the 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 the Person is the
administrator or the trustee of one or more pension or profit
sharing funds or plans (each a "PENSION FUND") registered under the
laws of Canada or any province thereof or existing under the laws of
the United States or any state thereof (the "INDEPENDENT PERSON"),
or is a Pension Fund, and holds such securities solely for the
purposes of its activities as an Independent Person or as a Pension
Fund and further provided that such Person does not hold more than
thirty percent (30%) of the Voting Shares of the Corporation;
provided, however, that in any of the foregoing cases no one of the
Fund Manager, the Trust Company, the Statutory Body, the Crown
Agent, the Independent Person or the Pension Fund makes or announces
an intention to make a Take-over Bid in respect of securities of the
Corporation alone or by acting jointly or in concert with any other
Person (other than an Offer to Acquire Voting Shares or other
securities by means of a distribution by the Corporation or by means
of ordinary market transactions (including prearranged trades)
executed through the facilities of a stock exchange or organized
over-the-counter market); or
(vii) such Person is a Client of the same Fund Manager as another Person
on whose account the Fund Manager holds such security, or such
Person is an Estate Account or an Other Account of the same Trust
Company as another Person on whose account the Trust Company holds
such security, or such Person is a Pension Fund with the same
Independent Person as another Pension Fund; or
(viii) such Person is a Client of a Fund Manager and such security is owned
at law or in equity by the Fund Manager, or such Person is 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 such Person is a
Pension Fund and such security is owned at law or in equity by the
Independent Person or the Pension Fund; or
(ix) such Person is a registered holder of securities as a result of
carrying on the business of, or acting as the nominee of, a
securities depository.
For purposes of this Agreement, in determining the percentage of the
outstanding Voting Shares with respect to which a Person is or is deemed to
be the Beneficial Owner, all Voting Shares as to which such Person is
deemed the Beneficial Owner shall be deemed outstanding.
B-6
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"BOARD OF DIRECTORS" shall mean the board of directors of the Corporation.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a day on
which banking institutions in the City of Winnipeg, Manitoba are authorized
or obliged by law to close.
"CANADIAN DOLLAR EQUIVALENT" of any amount which is expressed in United
States dollars shall mean on any date the Canadian dollar equivalent of
such amount determined by multiplying such amount by the U.S.-Canadian
Exchange Rate in effect on such date.
"CANADIAN-U.S. EXCHANGE RATE" shall mean on any date the inverse of the
U.S.-Canadian Exchange Rate.
"CLOSE OF BUSINESS" on any given date shall mean the time on such date (or,
if such date is not a Business Day, the time on the next succeeding
Business Day) at which the office of the transfer agent for the Common
Shares in the City of Winnipeg (or, after the Separation Time, the office
of the Rights Agent in the City of Winnipeg) becomes closed to the public.
"COMMON SHARES" shall mean the Common Shares in the capital of the
Corporation; provided, however, that "Common Shares", when used with
reference to any Person other than the Corporation, shall mean the class or
classes of shares (or similar equity interest) with the greatest per share
voting power entitled to vote generally in the election of all directors of
such other Person.
"COMPETING PERMITTED BID" means a Take-over Bid which: (i) is made while
another Permitted Bid is in existence, and (ii) satisfies all the
components of the definition of a Permitted Bid, except that the
requirements set out in subclause (ii)(A) of the definition of a Permitted
Bid shall be satisfied if the Take-over Bid shall contain, and the take up
and payment for securities tendered or deposited thereunder shall be
subject to, an irrevocable and unqualified condition that no Voting Shares
shall be taken up or paid for pursuant to the Take-over Bid prior to the
Close of Business on the date that is no earlier than the date which is the
later of (A) 21 days (or such longer minimum period of days that a
take-over bid must remain open for acceptance under the Securities Act
(Saskatchewan)) after the date the Take-over Bid is made, or (B) 60 days
after the earliest date on which any other Permitted Bid or Competing
Permitted Bid in existence when the Take-over Bid is made, was made, and
only if at that date, more than 50% of the then outstanding Voting Shares
held by Independent Shareholders have been deposited or tendered to the
Take-over Bid and not withdrawn.
"CONTROLLED": a corporation is "controlled" by another Person or two or
more Persons 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 or
Persons; and
(ii) the votes carried by such securities are entitled, if exercised, to
elect a majority of the board of directors of such corporation;
and "CONTROLS", "CONTROLLING" and "UNDER COMMON CONTROL WITH" shall be
interpreted accordingly;
"CONVERTIBLE SECURITY" means at any time:
(i) any right (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 the Rights) carrying any exercise, conversion or exchange right;
which is then exercisable or exercisable within a period of 60 days
from that time pursuant to which the holder thereof may acquire
Voting Shares or other securities which are convertible into or
exercisable or exchangeable for Voting Shares (in each case, whether
such right is then exercisable or exercisable within a period of 60
days from that time and whether or not on condition or the happening
of any contingency).
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"CONVERTIBLE SECURITY ACQUISITION" means the acquisition of Voting Shares
upon the exercise, conversion or exchange of Convertible Securities
received by a Person pursuant to a Permitted Bid Acquisition, Exempt
Acquisition or a Corporate Distribution.
"CORPORATE ACQUISITION" means an acquisition by the Corporation or a
Subsidiary of the Corporation or the redemption by the Corporation of
Voting Shares of the Corporation which, by reducing the number of Voting
Shares of the Corporation outstanding, increases the proportionate number
of Voting Shares Beneficially Owned by any Person.
"CORPORATE DISTRIBUTION" means an acquisition as a result of:
(i) a stock dividend or a stock split or other event pursuant to which a
Person receives or acquires Voting Shares or Convertible Securities
on the same pro rata basis as all other holders of Voting Shares of
the same class or series of the Corporation; or
(ii) any other event pursuant to which all holders of Voting Shares of the
Corporation are entitled to receive Voting Shares or Convertible
Securities on a pro rata basis, including, without limiting the
generality of the foregoing, pursuant to the receipt and/or exercise
of rights issued by the Corporation and distributed to all the
holders of a series or class of Voting Shares to subscribe for or
purchase Voting Shares or Convertible Securities, provided that such
rights are acquired directly from the Corporation and not from any
other Person.
"CORPORATIONS ACT" shall mean The Business Corporations Act, R.S.S. (1978)
c. B-10 and the regulations made thereunder and any comparable or successor
laws or regulations thereto;
"ELECTION TO EXERCISE" shall have the meaning attributed thereto in
Subsection 2.2(d).
"EXEMPT ACQUISITION" means an acquisition of securities of the Corporation:
(i) in respect of which the Board of Directors has waived the application
of Section 3.1 hereof pursuant to the provisions of Subsections
5.1(f) or 5.1(g) hereof;
(ii) pursuant to a regular dividend reinvestment or other plan of the
Corporation made available by the Corporation to the holders of
Voting Shares of the Corporation;
(iii) pursuant to a distribution by the Corporation of Voting Shares or
Convertible Securities made pursuant to a prospectus or a securities
exchange take-over bid provided that the Person in question does not
thereby acquire a greater class percentage of Voting Shares, or
Convertible Securities representing the right to acquire Voting
Shares of such class, than the percentage of Voting Shares of the
class Beneficially Owned immediately prior to such acquisition; or
(iv) pursuant to an issuance and sale by the Corporation of Voting Shares
or Convertible Securities by way of a private placement by the
Corporation, pursuant to an amalgamation, merger or other statutory
procedure requiring shareholders' approval, provided that (x) all
necessary stock exchange approvals for such private placement, have
been obtained and such private placement complies with the terms and
conditions of such approvals, and (y) the purchaser does not become
the Beneficial Owner of more than 25% of the Voting Shares
outstanding immediately prior to the private placement (and in making
this determination, the securities to be issued to such purchaser on
the private placement shall be deemed to be held by such purchaser
but shall not be included in the aggregate number of outstanding
Voting Shares immediately prior to the private placement).
"EXERCISE PRICE" shall mean, as of any date, the price at which a holder of
a Right may purchase the securities issuable upon exercise of one whole
Right. Until adjustment thereof in accordance with the terms hereof, the
Exercise Price shall equal $400.
"EXPIRY DATE OF A PERMITTED BID" means the date, which shall be not less
than 60 days following the date on which the Take-over Bid circular is sent
to shareholders of the Corporation, indicated in such circular as the date
until which such Permitted Bid is open for acceptance.
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"EXPIRATION TIME" shall mean the earliest of (i) the Termination Time, (ii)
the termination of the annual meeting of the Corporation in the year 2004
and (iii) the Close of Business on the date this Agreement becomes void
pursuant to the provisions of Section 5.16 hereof.
"FLIP-IN EVENT" shall mean a transaction or event as a result of which any
Person shall become an Acquiring Person provided, however, that a Flip-in
Event shall be deemed to occur at the Close of Business on the tenth day
(or on such later day as the Board of Directors shall determine) after a
Stock Acquisition Date.
"INDEPENDENT SHAREHOLDERS" shall mean holders of Voting Shares of the
Corporation, other than (i) any Acquiring Person, (ii) any Offeror, (iii)
any Affiliate or Associate of any Acquiring Person or Offeror, (iv) any
Person acting jointly or in concert with any Acquiring Person or Offeror,
and (v) any employee benefit plan, deferred profit sharing plan, stock
participation plan or trust for the benefit of employees of the Corporation
or a wholly-owned 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.
"MARKET PRICE" per security of any securities on any date of determination
shall mean the average of the daily closing prices per security of such
securities (determined as described below) on each of the 20 consecutive
Trading Days through and including the Trading Day immediately preceding
such date; provided, however, that if an event of a type analogous to any
of the events described in Section 2.3 hereof shall have caused the closing
prices used to determine the Market Price on any Trading Day not to be
fully comparable with the closing price on such date of determination (or,
if the date of determination is not a Trading Day, on the immediately
preceding Trading Day), each such closing price so used shall be
appropriately adjusted in a manner analogous to the applicable adjustment
provided for in Section 2.3 hereof in order to make it fully comparable
with the closing price on such date of determination (or, if the date of
determination is not a Trading Day, on the immediately preceding Trading
Day). The closing price per security of any securities on any date shall
be:
(i) the closing board lot sale price or, in case no such sale takes place
on such date, the average of the closing bid and asked prices for
each of such securities as reported by the principal stock exchange
in Canada on which such securities are listed or posted for trading,
(ii) if such securities are not listed or posted for trading on any stock
exchange in Canada, the last sale price, regular way, or, in 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
principal national securities exchange in the United States on which
such securities are listed or admitted to trading,
(iii) if for any reason none of such prices is available on such day or the
securities are not listed or admitted to trading on a stock exchange
in Canada or a national securities exchange in the United States, the
last quoted price, or if not so quoted, the average of the high bid
and low asked prices for each share of such securities in the
over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or
such other system then in use, 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 selected in good faith by the Board of Directors;
provided, however, that if on any such date the securities are not traded
on any stock exchange or in the over-the-counter market, the closing price
per security of such securities on such date shall mean the fair value per
security of such securities on such date as determined by a nationally
recognized investment banking firm with respect to the fair value per
security of such securities. The Market Price shall be expressed in
Canadian dollars and if initially determined in respect of any day forming
part of the 20
B-9
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consecutive Trading Day period in question in United States dollars, such
amount shall be translated into Canadian dollars on such date at the
Canadian Dollar Equivalent thereof.
"OFFER TO ACQUIRE" shall include:
(i) an offer to purchase, a public announcement of an intention to make
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.
"OFFEROR" shall mean a Person who is making or has announced a current
intention to make a Take-over Bid.
"PERMITTED BID" means a Take-over Bid made by an Offeror which is made by
means of a Take-over Bid circular and which also complies with the
following additional provisions:
(i) the Take-over Bid is made to all holders of record of Voting Shares
of the Corporation wherever resident as registered in 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 thereunder shall be subject to,
irrevocable and unqualified conditions that:
(A) no Voting Shares of the Corporation will be taken up or paid for
pursuant to the Take-over Bid (x) prior to the Close of Business
on the Expiry Date of the Permitted Bid and (y) unless, at the
Close of Business on the Expiry Date of the Permitted Bid, more
than 50% of the then outstanding Voting Shares of the Corporation
held by Independent Shareholders have been deposited or tendered
pursuant to the Take-over Bid and not withdrawn;
(B) Voting Shares of the Corporation may be deposited pursuant to
such Take-over Bid, unless the Take-over Bid is withdrawn, at any
time prior to the Close of Business on the Expiry Date of the
Permitted Bid;
(C) any Voting Shares of the Corporation deposited pursuant to the
Take-over Bid may be withdrawn until taken up and paid for; and
(D) in the event that the requirement set forth in subclause
(ii)(A)(y) of this definition 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 of the
Corporation for not less than 10 days from the date of such
public announcement.
"PERMITTED BID ACQUISITION" shall mean an acquisition of securities of the
Corporation made pursuant to a Permitted Bid or a Competing Permitted Bid.
"PERMITTED LOCK-UP AGREEMENT" means an agreement between a Person and one
or more holders (each a "LOCKED-UP PERSON") of Voting Shares or Convertible
Securities (the terms of which are publicly disclosed and a copy of which
is made available to the public (including the Corporation) not later than
the date the Lock-up Bid (as defined below) is publicly announced or, if
the agreement was entered into after the date of the Lock-up Bid, not later
than the date the agreement was entered into), pursuant to which such
Locked-up Persons agree to deposit or tender Voting Shares or Convertible
Securities to a Take-over Bid (the "LOCK-UP BID") made by the Person or any
of such Person's Affiliates or Associates or any other Person referred to
in Clause (iii) of the definition of Beneficial Owner and where the
agreement:
(i) (A) permits the Locked-up Person to withdraw Voting Shares or
Convertible Securities in order to tender or deposit Voting Shares or
Convertible Securities to another Take-over Bid or to support another
transaction that contains an offering price for each Voting Share or
Convertible Security that exceeds, or provides a value for each
Voting Share or Convertible Security that is greater than,
B-10
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the offering price or value contained or proposed to be contained in
the Lock-up Bid, provided that the other Take-over Bid is made for at
least the same number of Voting Shares or Convertible Securities as
the Lock-up Bid; or
(B) permits the Locked-up Person to withdraw Voting Shares or
Convertible Securities in order to tender or deposit the Voting
Shares or Convertible Securities to another Take-over Bid or to
support another transaction that contains an offering price for each
Voting Share or Convertible Security that exceeds, or provides a
value for each Voting Share or Convertible Security that is greater
than, the offering price contained in or proposed to be contained in,
the Lock-up Bid by as much or more than a specified amount (the
"SPECIFIED AMOUNT") and the Specified Amount is not greater than 7%
of the offering price that is contained in the Lock-up Bid, provided
that the other Take-over Bid is made for at least the same number of
Voting Shares or Convertible Securities as the Lock-up Bid; and
(ii) provides that no "BREAK-UP" fees, "TOP-UP" fees, penalties, expenses
or other amounts that exceed in the aggregate the greater of: (A) the
cash equivalent of 2.5% of the price or value payable under the
Lock-up Bid to the Locked-up Person, and (B) 50% of the amount by
which the price or value payable under another Take-over Bid to a
Locked-up Person exceeds the price or value of the consideration that
such Locked-up Person would have received under the Lock-up Bid,
shall be payable by such Locked-up Person pursuant to the agreement
in the event that the Lock-up Bid is not successfully concluded or if
any Locked-up Person fails to tender Voting Shares or Convertible
Securities pursuant thereto;
and, for greater certainty, the agreement may contain a right of first
refusal or require a period of delay to give the Offeror an opportunity to
at least match a higher consideration in another Take-over Bid or
transaction or contain other similar limitation on a Locked-up Person's
right to withdraw Voting Shares or Convertible Securities from the
agreement, so long as any such limitation does not preclude the exercise by
the Locked-up Person of the right to withdraw Voting Shares or Convertible
Securities in sufficient time to tender to the other Take-over Bid or
transaction.
"PERSON" shall include any individual, firm, partnership, syndicate,
association, trust, trustee, executor, administrator, legal personal
representative, government, governmental body or authority, corporation or
other incorporated or unincorporated organization.
"RECORD TIME" shall mean the Close of Business on December 29, 1994.
"REDEMPTION PRICE" shall have the meaning attributed thereto in Section
5.1.
"RIGHTS" shall mean the herein described rights to purchase securities
pursuant to the terms and subject to the conditions set forth herein.
"RIGHTS CERTIFICATE" shall mean the certificates representing the Rights
after the Separation Time which shall be substantially in the form attached
hereto as Exhibit A.
"SECURITIES ACT (SASKATCHEWAN)" shall mean The Securities Act 1988, S.S.
1988-9 c.S-42.2 and the regulations, rules, policies and notices made
thereunder, and any comparable or successor laws, regulations, rules,
policies or notices thereto.
"SEPARATION TIME" shall mean the Close of Business on the tenth day after
the earlier of:
(i) the Stock Acquisition Date,
(ii) the date of the commencement of, or first public announcement of the
intent of any Person (other than the Corporation or any Subsidiary of
the Corporation) to commence, a Take-over Bid (other than a Permitted
Bid or a Competing Permitted Bid, 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 of Directors shall determine; provided
that if any such Take-over Bid expires, is cancelled, terminated or
otherwise withdrawn prior to the Separation Time, such offer shall be
B-11
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deemed, for the purposes of this definition, never to have been made and
provided further that if the Board of Directors determines pursuant to
Subsections 5.1 (f) or 5.1(g) hereof to waive the application of Section
3.1 hereof to a Flip-in Event, the Separation Time in respect of such
Flip-in Event shall be deemed never to have occurred.
"STOCK ACQUISITION DATE" shall mean the first date of public announcement
(which, for purposes of this definition, shall include, without limitation,
a report filed pursuant to Section 110 of the Securities Act (Saskatchewan)
or Section 13(d) of the 1934 Exchange Act) by the Corporation or an
Acquiring Person of facts indicating that an Acquiring Person has become
such.
"SUBSIDIARY": a corporation shall be deemed to be a Subsidiary of another
corporation if:
(i) it is controlled by:
(A) that other; or
(B) that other and one or more corporations each of which is
controlled by that other; or
(C) two or more corporations each of which is controlled by that
other; or
(ii) it is a Subsidiary of a corporation that is that other's Subsidiary.
"TAKE-OVER BID" means an Offer to Acquire Voting Shares of the Corporation
or securities convertible into or exchangeable for or carrying a right to
purchase Voting Shares of the Corporation, where the Voting Shares of the
Corporation subject to the Offer to Acquire, together with the Voting
Shares of the Corporation into which the securities subject to the Offer to
Acquire are convertible, exchangeable or exercisable and the Voting Shares
of the Corporation or securities convertible into or exchangeable for or
carrying a right to purchase Voting Shares of the Corporation Beneficially
Owned by the Offeror, any Affiliate or Associate of such Offeror and any
Person acting jointly and in concert with the Offeror or with any Affiliate
or Associate of the Offeror, and any Affiliates or Associates of such
Person so acting jointly or in concert, constitute in the aggregate 20% or
more of the outstanding Voting Shares of the Corporation at the date of the
Offer to Acquire.
"TERMINATION TIME" shall mean the time at which the right to exercise
Rights shall terminate pursuant to Subsections 5.1(a) or 5.1(b) hereof.
"TRADING DAY" when used with respect to any securities, shall mean a day on
which the principal United States or Canadian securities exchange on which
such securities are listed or admitted to trading is open for the
transaction of business or, if the securities are not listed or admitted to
trading on any United States or Canadian securities exchange, a Business
Day.
"U.S.-CANADIAN EXCHANGE RATE" shall mean on any date:
(i) if on such date the Bank of Canada sets an average noon spot rate of
exchange for the conversion of one United States dollar into Canadian
dollars, such rate; and
(ii) in any other case, the rate for such date for the conversion of one
United States dollar into Canadian dollars which is calculated in the
manner which shall be determined by the Board of Directors from time
to time acting in good faith.
"U.S. DOLLAR EQUIVALENT" of any amount which is expressed in Canadian
dollars shall mean on any date the United States dollar equivalent of such
amount determined by multiplying such amount by the Canadian-U.S. Exchange
Rate in effect on such date.
"VOTING SHARES" when used with reference to the Corporation, shall mean
collectively the Common Shares of the Corporation and any other shares of
capital stock or voting interests of the Corporation entitled to vote
generally in the election of directors and, when used with reference to any
Person other than the Corporation, shall mean Common Shares of such other
Person and any other shares of capital stock or voting interests of such
other Person entitled to vote generally in the election of the directors of
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such other Person. For purposes of this Agreement, the percentage of Voting
Shares Beneficially Owned by any Person, shall be and be deemed to be the
product determined by the formula:
100 X A
-
B
where
A = the number of votes for the election of all directors generally
attaching to the Voting Shares Beneficially Owned by such Person; and
B = the number of votes for the election of all directors generally
attaching to all outstanding Voting Shares.
Where any Person is deemed to Beneficially Own unissued Voting Shares, such
Voting Shares shall be deemed to be outstanding for the purposes of both A
and B above.
1.2 CURRENCY
All sums of money which are referred to in this Agreement are expressed in
lawful money of Canada, unless otherwise specified.
1.3 NUMBER AND GENDER
Wherever the context so requires, terms used herein importing the singular
number only shall include the plural and vice versa and words importing any one
gender shall include all others.
1.4 DESCRIPTIVE HEADINGS AND REFERENCES
Descriptive headings and the Table of Contents appear herein for
convenience of reference only and shall not affect the meaning or construction
of any of the provisions hereof. All references to Articles, Sections,
Subsections, Clauses and Exhibits are to the articles, sections, subsections and
clauses of and exhibits to and forming part of this Agreement. The words
"hereto", "herein", "hereof", "hereunder", "this Agreement" and similar
expressions refer to this Agreement including the Exhibits, as the same may be
amended, modified or supplemented from time to time.
1.5 ACTING JOINTLY OR IN CONCERT
For purposes of this Agreement, a Person is acting jointly or in concert
with every other Person who is a party to any agreement, commitment or
understanding, whether formal or informal, with the first mentioned Person or
any Associate or Affiliate thereof, for the purpose of acquiring or making an
Offer to Acquire Voting Shares (other than customary agreements with and between
underwriters or banking group members or selling group members with respect to a
distribution of securities or to a pledge of securities in the ordinary course
of business).
1.6 APPLICATION OF STATUTES, REGULATIONS AND RULES
Where a statute, regulation or rule is referred to in a definition or other
provision of this Agreement, it shall be conclusively deemed to have application
in the contemplated circumstances notwithstanding that such statute, regulation
or rule might not, but for the provisions of this Section 1.6 have application
for want of jurisdiction or otherwise.
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ARTICLE 2
THE RIGHTS
2.1 LEGEND ON COMMON SHARE CERTIFICATES
Common Share certificates issued after the Record Time but prior to the
Close of Business on the earlier of the Separation Time and the Expiration Time
shall evidence one Right for each Common Share represented thereby and,
commencing as soon as reasonably practicable after the effective date of this
Agreement, shall have impressed on, printed on, written on or otherwise affixed
to them a legend, substantially in the following form:
"Until the Separation Time (as defined in the Rights Agreement referred to
below), this certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement, dated as of the 10th day
of November, 1994, as amended and restated from time to time (the "Rights
Agreement"), between Potash Corporation of Saskatchewan Inc. (the
"Corporation") and CIBC Mellon Trust Company, as Rights Agent, the terms of
which are hereby incorporated herein by reference and a copy of which is on
file at the head office 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 promptly after
the receipt of a written request therefor."
provided that the Corporation may continue to issue, without alteration, any
existing supplies on hand of Common Share certificates which bear the legend
provided for in the Original Agreement.
Until the earlier of the Separation Time and the Expiration Time,
certificates representing Common Shares that are issued and outstanding shall
evidence one Right for each Common Share evidenced thereby, notwithstanding the
absence of the foregoing legend. Following the Separation Time, Rights will be
evidenced by Rights Certificates issued pursuant to Section 2.2.
2.2 INITIAL EXERCISE PRICE; EXERCISE OF RIGHTS; DETACHMENT OF RIGHTS
(a) Subject to adjustment as herein set forth, each Right will entitle the
holder thereof, after the Separation Time and prior to the Expiration Time,
to purchase, for the Exercise Price or its U.S. Dollar Equivalent as at the
Business Day immediately preceding the date of exercise of the Right, one
Common Share (which Exercise Price and number of Common Shares are subject
to adjustment as set forth below). Notwithstanding any other provision of
this Agreement, any Rights held by the Corporation or any of its
Subsidiaries shall be void.
(b) Until the Separation Time (i) the Rights shall not be exercisable and no
Right may be exercised and (ii) for administrative purpose, each Right will
be evidenced by the certificate for the associated Common Share registered
in the name of the holder thereof (which certificate shall be deemed to
represent a Rights Certificate) and will be transferable only together with,
and will be transferred by a transfer of, such associated Common Share.
(c) From and after the Separation Time and prior to the Expiration Time, the
Rights may be exercised and the registration and transfer of the Rights
shall be separate from and independent of Common Shares. Promptly as
practicable following the Separation Time, the Rights Agent will mail, via
first class postage prepaid insured mail, to each holder of record of Common
Shares as of the Separation Time (other than an Acquiring Person and, in
respect of any Rights Beneficially Owned by such Acquiring Person which are
not held of record by such Acquiring Person, the holder of record of such
Rights), at such holder's
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address as shown by the records of the Corporation (the Corporation hereby
agreeing to furnish copies of such records to the Rights Agent for this
purpose):
(i) a Rights Certificate in substantially the form of Exhibit A hereto
appropriately completed, representing the number of Rights held by
such holder at the Separation Time and having such marks of
identification or designation and such legends, summaries or
endorsements printed thereon as the Corporation may deem appropriate
and as are not inconsistent with the provisions of this Agreement, or
as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of
any self-regulatory organization, stock exchange or quotation system
on which the Rights may from time to time be listed or traded, or to
conform to usage, and
(ii) a disclosure statement prepared by the Corporation describing the
Rights.
(d) Rights may be exercised in whole or in part on any Business Day after the
Separation Time and prior to the Expiration Time by submitting to the Rights
Agent:
(i) the Rights Certificate evidencing such Rights together with an
Election to Exercise such Rights (an "Election to Exercise")
substantially in the form attached to the Rights Certificate
appropriately completed and duly executed by the holder or his
executors or administrators or other personal representatives or his
legal attorney duly appointed by an instrument in writing in form and
executed in a manner satisfactory to the Rights Agent; and
(ii) payment by certified cheque, banker's draft or money order payable to
the order of the Corporation, of a sum equal to the Exercise Price
multiplied by the number of Rights being exercised and a sum
sufficient to cover any transfer tax or charge which may be payable
in respect of any transfer involved in the transfer or delivery of
Rights Certificates or the issuance or delivery of certificates for
Common Shares in a name other than that of the holder of the Rights
being exercised.
(e) Upon receipt of a Rights Certificate, with an Election to Exercise
appropriately completed and duly executed, which does not indicate that such
Right is void as provided by Subsection 3.1(b), accompanied by payment as
set forth in Clause 2.2(d)(ii), the Rights Agent (unless otherwise
instructed by the Corporation) will thereupon promptly, as practicable:
(i) requisition from the transfer agent of the Common Shares certificates
for the number of Common Shares to be purchased (the Corporation
hereby irrevocably agreeing to authorize its transfer agents to
comply with all such requisitions),
(ii) after receipt of such certificates referred to in Clause 2.2(e)(i),
deliver such certificates, via first class postage, prepaid insured
mail to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by
such holder,
(iii) when appropriate, requisition from the Corporation the amount of cash
to be paid in lieu of issuing fractional Common Shares,
(iv) when appropriate after receipt, deliver such cash referred to in
Clause 2.2(e)(iii) (less any amounts required to be withheld) to or
to the order of the registered holder of the Rights Certificate, and
(v) tender to the Corporation all payments received on exercise of the
Rights.
(f) In case the holder of any Rights shall exercise less than all the Rights
evidenced by such holder's Rights Certificate, a new Rights Certificate
evidencing the Rights remaining unexercised will be issued by the Rights
Agent to such holder or to such holder's duly authorized assigns.
(i) The Corporation covenants and agrees that it will:
(ii) take all such action as may be necessary and within its power to
ensure that all Common Shares delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such Common
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Shares (subject to payment of the Exercise Price), be duly and
validly authorized, executed, issued and delivered as fully paid and
non-assessable;
(iii) take all such action as may be necessary and within its power to
comply with any applicable requirements of the Corporations Act, the
Securities Act (Saskatchewan) and the securities statute or
comparable legislation of each of the other provinces and territories
of Canada, the 1933 Securities Act and the 1934 Exchange Act, and any
other applicable securities laws and the rules and regulations
thereunder, and any other applicable law, rule or regulation, in
connection with the issuance and delivery of the Rights Certificates
and the issuance of any Common Shares upon exercise of Rights;
(iv) use reasonable efforts to cause all Common Shares issued upon
exercise of Rights to be listed upon issuance on the stock exchanges
where the Common Shares may be listed at that time; and
(v) pay when due and payable any and all Canadian and United States
federal, provincial and state transfer taxes (not in the nature of
income or withholding taxes) and charges which may be payable in
respect of the original issuance or delivery of the Rights
Certificates or certificates for Common Shares, provided that the
Corporation shall not be required to pay any transfer tax or charge
which may be payable in respect of any transfer involved in the
transfer or delivery of Rights Certificates or the issuance or
delivery of certificates for Common Shares in a name other than that
of the holder of the Rights being transferred or exercised.
2.3 ADJUSTMENTS TO EXERCISE PRICE; NUMBER OF RIGHTS
(a) The Exercise Price, the number and kind of securities subject to purchase
upon exercise of each Right and the number of Rights outstanding are subject
to adjustment from time to time as provided in this Section 2.3.
(b) In the event the Corporation shall at any time after the Record Time and
prior to the Expiration Time:
(i) declare or pay a dividend on the Common Shares of the Corporation
payable in Common Shares or other capital stock of the Corporation
(or other securities exchangeable for or convertible into or giving a
right to acquire Common Shares or other capital stock of the
Corporation) other than pursuant to any optional stock dividend
program;
(ii) subdivide or change the then outstanding Common Shares into a greater
number of Common Shares;
(iii) consolidate or change the then outstanding Common Shares into a
smaller number of Common Shares; or
(iv) issue any Common Shares or other capital stock of the Corporation (or
other securities exchangeable for or convertible into or giving a
right to acquire Common Shares or other capital stock of the
Corporation) in respect of, in lieu of, or in exchange for existing
Common Shares, except as otherwise provided in this Section 2.3;
the Exercise Price and the number of Rights outstanding, or, if the payment or
effective date therefor shall occur after the Separation Time, the securities
purchasable upon exercise of Rights shall be adjusted in the manner set forth
below. If the Exercise Price and number of Rights outstanding are to be
adjusted:
(x) the Exercise Price in effect after such adjustment shall be equal to
the Exercise Price in effect immediately prior to such adjustment
divided by the number of Common Shares (or other capital stock) (the
"Expansion Factor") that a holder of one Common Share immediately
prior to such dividend, subdivision, change, consolidation or issuance
would hold thereafter as a result thereof (assuming the exercise of
all such exchange or conversion rights, if any); and
(y) each Right held prior to such adjustment will become that number of
Rights equal to the Expansion Factor, and the adjusted number of
Rights will be deemed to be distributed among the Common Shares with
respect to which the original Rights were associated (if they remain
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outstanding) and the shares issued in respect of such dividend,
subdivision, change, consolidation or issuance, so that each such Common
Share (or other capital stock) will have exactly one Right associated
with it.
If the securities purchasable upon exercise of Rights are to be adjusted,
the securities purchasable upon exercise of each Right after such
adjustment will be the securities that a holder of the securities
purchasable upon exercise of one Right immediately prior to such dividend,
subdivision, change, consolidation or issuance would hold immediately
thereafter as a result thereof. To the extent that such rights of exchange,
conversion or acquisition are not exercised prior to the expiration
thereof, the Exercise Price shall be readjusted to the Exercise Price which
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.
If an event occurs which would require an adjustment under both this
Section 2.3 and Section 3.1, the adjustment provided for in this Section
2.3 shall be in addition to, and shall be made prior to, any adjustment
required under Section 3.1.
If the Corporation shall at any time after the Record Time and prior to the
Separation Time issue any Common Shares (otherwise than in a transaction
referred to in this Subsection 2.3(b)), each such Common Share so issued
shall automatically have one new Right associated with it, which Right
shall be evidenced by the certificate representing such Common Share.
(c) In the event the Corporation shall at any time after the Record Time and
prior to the Expiration Time fix a record date for the making of a
distribution to all holders of Common Shares of rights, options 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, purchase or
exercise price (including the price required to be paid to purchase such
convertible or exchangeable security or right) per share) less than the
Market Price per Common Share on such record date, the Exercise Price shall
be adjusted. The Exercise Price in effect after such record date will equal
the Exercise Price in effect immediately prior to such record date
multiplied by a fraction, of which the numerator shall be the number of
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,
purchase 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 of which the denominator 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 part or all of which
shall be in a form other than cash, the value of such consideration shall
be as determined in good faith by the Board of Directors. To the extent
that such rights of exchange, conversion, purchase or acquisition are not
exercised prior to the expiration thereof, the Exercise Price shall be
readjusted to the Exercise Price which would then be in effect based on the
number of Common Shares (or securities convertible into or exchangeable or
exercisable for Common Shares) actually issued upon the exercise of such
rights, options or warrants, as the case may be.
For purposes of this Agreement, the granting of the right to purchase
Common Shares (whether from treasury or otherwise) pursuant to any dividend
or interest reinvestment plan and/or any Common Share purchase plan
providing for the reinvestment of dividends or interest payable on
securities of the Corporation and/or the investment of periodic optional
payments and/or employee benefit or similar plans (so long as such right to
purchase is in no case evidenced by the delivery of rights, options or
warrants) shall not be deemed to constitute an issue of rights, options or
warrants by the Corporation; provided, however, that, in the case of any
dividend or interest reinvestment plan, the right to purchase
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Common Shares is at a price per share of not less than 90 percent of the
current market price per share (determined as provided in such plans) of
the Common Shares.
(d) In the event the Corporation shall at any time after the Record Time and
prior to the Expiration Time fix 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 (as defined below)
or a dividend paid in Common Shares) or rights, options or warrants
(excluding those referred to in Subsection 2.3(c)), 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
Directors) of the portion of the assets, evidences of indebtedness, rights,
options or warrants so to be distributed and the denominator of which shall
be the Market Price per Common Share on such record date. Such adjustment
shall be made successively whenever such a record date is fixed, and in the
event that such rights or warrants are not so issued, the Exercise Price
shall be adjusted to be the Exercise Price which would then be in effect if
such record date had not been fixed.
For the purpose of this Subsection 2.3(d), "Regular Periodic Cash Dividend"
shall mean cash dividends paid at regular intervals in any fiscal year of
the Corporation to the extent that such cash dividends do not exceed, in
the aggregate, the greatest of:
(i) 200% of the aggregate amount of cash dividends declared payable by
the Corporation on its Common Shares in its immediately preceding
fiscal year;
(ii) 300% of the arithmetic mean of the aggregate amounts of cash
dividends declared payable by the Corporation on its Common Shares in
its three immediately preceding fiscal years; and
(iii) 100% of the aggregate consolidated net income of the Corporation,
before extraordinary items, for its immediately preceding fiscal
year.
(e) Each adjustment made pursuant to this Section 2.3 shall be made as of
(i) the payment or effective date for the applicable dividend,
subdivision, change, consolidation or issuance, in the case of an
adjustment made pursuant to Subsection 2.3(b) above, and
(ii) the record date for the applicable dividend or distribution in the
case of an adjustment made pursuant to Subsection 2.3(c) or (d)
above.
(f) Subject to the prior consent of the holders of Voting Shares or Rights
obtained in accordance with the provisions of Subsection 5.4(b) or 5.4(c),
as applicable, in the event the Corporation shall at any time after the
Record Time and prior to the Separation Time issue any shares of capital
stock (other than Common Shares), or rights, options or warrants to
subscribe for or purchase any such capital stock, or securities convertible
into or exchangeable for any such capital stock, in a transaction referred
to in Clauses 2.3(b)(i), 2.3(b)(iv) or 2.3(c) or 2.3(d) above, if the Board
of Directors acting in good faith determines that the adjustments
contemplated by Subsections 2.3(b), (c) and (d) above in connection with
such transaction will not appropriately protect the interests of the holders
of Rights, the Corporation may determine what other adjustments to the
Exercise Price, number of Rights and/or securities purchasable upon exercise
of Rights would be appropriate and, notwithstanding Subsections 2.3(b), (c)
and (d) above, such adjustments, rather than the adjustments contemplated by
Subsections 2.3(b), (c) and (d) above, shall be made. The Corporation and
the Rights Agent shall amend this Agreement as appropriate to provide for
such adjustments.
(g) Notwithstanding anything herein to the contrary, no adjustment of the
Exercise Price shall be required unless such adjustment would require
increase or decrease of at least one percent in such Exercise Price;
provided, however, that any adjustments which by reason of this Subsection
2.3(g) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All adjustments made pursuant to this
Section 2.3 shall be made to the nearest cent or to the nearest ten
thousandth of a Common Share, as the case may be. Notwithstanding the first
sentence of this Subsection 2.3(g), any adjustment required by this Section
2.3 shall be made no later than the Termination Date.
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(h) If as a result of an adjustment made pursuant to Section 3.1, the holder of
any Right thereafter exercised shall become entitled to receive any
securities other than Common Shares, thereafter the number of such other
securities so receivable upon exercise of any Right and the applicable
Exercise Price thereof shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions
with respect to the Common Shares contained in Subsections 2.3 (b), (c),
(d), (e), (f), (g), (i), (j), (k), (l), (m), (n) and (o), and the provisions
of this Agreement with respect to the Common Shares shall apply on like
terms to any such other securities.
(i) All Rights originally issued by the Corporation subsequent to any adjustment
made to an Exercise Price hereunder shall evidence the right to purchase, at
the adjusted Exercise Price, the number of Common Shares purchasable from
time to time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
(j) Unless the Corporation shall have exercised its election, as provided in
Subsection 2.3(k), upon each adjustment of an Exercise Price as a result of
the calculations made in Subsections 2.3(c) and (d), each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence
the right to purchase, at the adjusted Exercise Price, that number of Common
Shares (calculated to the nearest one ten-thousandth) obtained by:
(i) multiplying (A) the number of Common Shares covered by a Right
immediately prior to this adjustment, by (B) the relevant Exercise
Price in effect immediately prior to such adjustment of the relevant
Exercise Price; and
(ii) dividing the product so obtained by the relevant Exercise Price in
effect immediately after such adjustment of the relevant Exercise
Price.
(k) The Corporation may elect on or after the date of any adjustment of an
Exercise Price to adjust the number of Rights, in lieu of any adjustment in
the number of Common Shares purchasable upon the exercise of a Right. Each
of the Rights outstanding after the adjustment in the number of Rights shall
be exercisable for the number of Common Shares for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become the number of
Rights (calculated to the nearest one ten-thousandth) obtained by dividing
the relevant Exercise Price in effect immediately prior to adjustment of the
relevant Exercise Price by the relevant Exercise Price in effect immediately
after adjustment of the relevant Exercise Price. The Corporation shall make
a public announcement of its election to adjust the number of Rights and
provide written notice of such to the Rights Agent, indicating the record
date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the
relevant Exercise Price is adjusted or any day thereafter, but, if the
Rights Certificates have been issued, shall be at least 10 calendar days
later than the date of the public announcement. If Rights Certificates have
been issued, upon each adjustment of the number of Rights pursuant to this
Subsection 2.3(k), the Corporation shall, as promptly as practicable, cause
to be distributed to holders of record of Rights Certificates on such record
date, Rights Certificates evidencing the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option
of the Corporation, shall cause to be distributed to such holders of record
in substitution and replacement for the Rights Certificates held by such
holders prior to the date of adjustment, and upon surrender thereof, if
required by the Corporation, new Rights Certificates evidencing all the
Rights to which such holders shall be entitled after such adjustment. Rights
Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein and may bear, at the option
of the Corporation, the relevant adjusted Exercise Price and shall be
registered in the names of holders of record of Rights Certificates on the
record date specified in the public announcement.
(l) Irrespective of any adjustment or change in the securities purchasable upon
exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the securities so purchasable which were
expressed in the initial Rights Certificates issued hereunder.
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(m) In any case in which this Section 2.3 shall require that an adjustment in an
Exercise Price be made effective as of a record date for a specified event,
the Corporation may elect to defer until the occurrence of such event the
issuance to the holder of any Right exercised after such record date of the
number of Common Shares and other securities of the Corporation, if any,
issuable upon such exercise over and above the number of Common Shares and
other securities of the Corporation, if any, issuable upon such exercise on
the basis of the relevant Exercise Price in effect prior to such adjustment;
provided, however, that the Corporation shall deliver to such holder a due
bill or other appropriate instrument evidencing such holder's right to
receive such additional Common Shares (fractional or otherwise) or other
securities upon the occurrence of the event requiring such adjustment.
(n) Notwithstanding anything in this Section 2.3 to the contrary, the
Corporation shall be entitled to make such reductions in each Exercise
Price, in addition to those adjustments expressly required by this Section
2.3, as and to the extent that in their good faith judgment the Board of
Directors shall determine to be advisable in order that any (i) subdivision
or consolidation of the Common Shares, (ii) issuance wholly for cash of any
Common Shares at less than the applicable Market Price, (iii) issuance
wholly for cash of any Common Shares or securities that by their terms are
exchangeable for or convertible into or give a right to acquire Common
Shares, (iv) stock dividends or (v) issuance of rights, options or warrants
referred to in this Section 2.3, hereafter made by the Corporation to
holders of its Common Shares, subject to applicable taxation laws, shall not
be taxable to such shareholders.
(o) The Corporation covenants and agrees that, after the Separation Time, it
will not, except as permitted by Section 5.1 or 5.4, take (or permit any
Subsidiary of the Corporation to take) any action if at the time such action
is taken it is reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits intended to be afforded by
the Rights.
2.4 DATE ON WHICH EXERCISE IS EFFECTIVE
Each Person in whose name any certificate for Common Shares is issued upon
the exercise of 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 in accordance with Subsection 2.2(e)
(together with a duly completed Election to Exercise) and payment of the
Exercise Price for such Rights (and any applicable transfer taxes and other
governmental charges payable by the exercising holder hereunder) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Common Share transfer books of the Corporation are closed, such Person
shall be deemed to have become the record holder of such shares on, and such
certificate shall be dated, the next succeeding Business Day on which the Common
Share transfer books of the Corporation are open.
2.5 EXECUTION, AUTHENTICATION, DELIVERY AND DATING OF RIGHTS CERTIFICATES
(a) The Rights Certificates shall be executed on behalf of the Corporation by
its Chairman, President, Chief Executive Officer, Vice President or Chief
Financial Officer, under its corporate seal reproduced thereon attested by
its Vice President, General Counsel, Secretary or Assistant Secretary. The
signature of any of these officers on the Rights Certificates may be manual
or facsimile. Rights Certificates bearing the manual or facsimile signatures
of individuals who were at any time the proper officers of the Corporation
shall bind the Corporation, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the countersignature and
delivery of such Rights Certificates.
(b) Promptly after the Corporation learns of the Separation Time, the
Corporation will notify the Rights Agent in writing of such Separation Time
and will deliver Rights Certificates executed by the Corporation to the
Rights Agent for countersignature, and the Rights Agent shall countersign
(manually or by facsimile signature in a manner satisfactory to the
Corporation) and deliver such Rights Certificates to the holders of the
Rights pursuant to Subsection 2.2(c). No Rights Certificate shall be valid
for any purpose until countersigned by the Rights Agent as aforesaid.
(c) Each Rights Certificate shall be dated the date of countersignature thereof.
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2.6 REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE
(a) The Corporation will cause to be kept a register (the "Rights Register") in
which, subject to such reasonable regulations as it may prescribe, the
Corporation will provide for the registration and transfer of Rights. The
Rights Agent is hereby appointed "Rights Registrar" for the purpose of
maintaining the Rights Register for the Corporation and registering Rights
and transfers of Rights as herein provided. In the event that the Rights
Agent shall cease to be the Rights Registrar, the Rights Agent will have the
right to examine the Rights Register at all reasonable times.
After the Separation Time and prior to the Expiration Time, upon surrender
for registration of transfer or exchange of any Rights Certificate, and
subject to the provisions of Subsection 2.6(c), the Corporation will
execute, and the Rights Agent will countersign, register and deliver, in the
name of the holder or the designated transferee or transferees, as required
pursuant to the holders' instructions, one or more new Rights Certificates
evidencing the same aggregate number of Rights as did the Rights
Certificates so surrendered.
(b) All Rights issued upon any registration of transfer or exchange of Rights
Certificates shall be the valid obligations of the Corporation, and such
Rights shall be entitled to the same benefits under this Agreement as the
Rights surrendered upon such registration of transfer or exchange.
(c) Every Rights Certificate surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument
of transfer in form satisfactory to the Corporation or the Rights Agent as
the case may be, duly executed by the holder thereof or such holder's
attorney duly authorized in writing. As a condition to the issuance of any
new Rights Certificate under this Section 2.6, the Corporation may require
the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Rights Agent) connected therewith.
2.7 MUTILATED, DESTROYED, LOST AND STOLEN RIGHTS CERTIFICATES
(a) If any mutilated Rights Certificate is surrendered to the Rights Agent prior
to the Expiration Time, the Corporation shall execute and the Rights Agent
shall countersign and deliver in exchange therefor a new Rights Certificate
evidencing the same number of Rights as did the Rights Certificate so
surrendered.
(b) If there shall be delivered to the Corporation and the Rights Agent prior to
the Expiration Time (i) evidence to their satisfaction of the destruction,
loss or theft of any Rights Certificate and (ii) such security or indemnity
as may be required by them to save each of them and any of their agents
harmless, then, in the absence of notice to the Corporation or the Rights
Agent that such Rights Certificate has been acquired by a bona fide
purchaser, the Corporation shall execute and upon its request the Rights
Agent shall countersign and deliver, in lieu of any such destroyed, lost or
stolen Rights Certificate, a new Rights Certificate evidencing the same
number of Rights as did the Rights Certificate so destroyed, lost or stolen.
(c) As a condition to the issuance of any new Rights Certificate under this
Section 2.7, the Corporation may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the
Rights Agent) connected therewith.
(d) Every new Rights Certificate issued pursuant to this Section 2.7 in lieu of
any destroyed, lost or stolen Rights Certificate shall evidence a
contractual obligation of the Corporation, whether or not the destroyed,
lost or stolen Rights Certificate shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Agreement equally
and proportionately with any and all other Rights duly issued hereunder.
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2.8 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 any Rights shall mean the registered holder of
such Rights (or, prior to the Separation Time, the associated Common Shares).
2.9 DELIVERY AND CANCELLATION OF CERTIFICATES
All Rights Certificates surrendered upon exercise or for redemption,
registration of transfer or exchange shall, if surrendered to any person other
than the Rights Agent, be delivered to the Rights Agent and, in any case, shall
be promptly cancelled by the Rights Agent. The Corporation may at any time
deliver to the Rights Agent for cancellation any Rights Certificates previously
countersigned and delivered hereunder which the Corporation may have acquired in
any manner whatsoever, and all Rights Certificates so delivered shall be
promptly cancelled by the Rights Agent. No Rights Certificate shall be
countersigned in lieu of or in exchange for any Rights Certificates cancelled as
provided in this Section 2.9, except as expressly permitted by this Agreement.
The Rights Agent shall destroy all cancelled Rights Certificates and deliver a
certificate of destruction to the Corporation.
2.10 AGREEMENT OF RIGHTS HOLDERS
Every holder of Rights, by accepting such Rights, 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;
(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 Share;
(c) after the Separation Time, the Rights will be transferable only on the
Rights Register as provided herein;
(d) prior to due presentment of a Rights Certificate (or, prior to the
Separation Time, the associated Common Share certificate) for registration
of transfer, the Corporation, the Rights Agent and any agent of the
Corporation or the Rights Agent may deem and treat the person in whose name
the Rights Certificate (or, prior to the Separation Time, the associated
Common Share certificate) is registered as the absolute owner thereof and of
the Rights evidenced thereby (notwithstanding any notations of ownership or
writing on such Rights Certificate or the associated Common Share
certificate made by anyone other than the Corporation or the Rights Agent)
for all purposes whatsoever, and neither the Corporation nor the Rights
Agent shall be affected by any notice to the contrary;
(e) such holder is not entitled to receive any fractional Rights or fractional
Common Shares upon the exercise of Rights;
(f) that notwithstanding anything in this Agreement to the contrary, neither the
Corporation nor the Rights Agent shall have any liability to any holder of a
Right or any other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation, or executive order promulgated
or enacted by any governmental authority, prohibiting or otherwise
restraining performance of such obligation; and
(g) this Agreement may be supplemented or amended from time to time as provided
herein.
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ARTICLE 3
ADJUSTMENTS TO THE RIGHTS IN THE EVENT
OF CERTAIN TRANSACTIONS
3.1 FLIP-IN EVENT
(a) Subject to Subsection 3.1(b) and Subsections 5.1(f) and 5.1(g), in the event
that prior to the Expiration Time a Flip-in Event shall occur, the
Corporation shall take such action as shall be necessary to ensure, within
10 Business Days thereafter or such longer period as may be required to
satisfy the requirements of the Corporations Act, The Securities Act
(Saskatchewan) and the securities laws or comparable legislation of each of
the provinces of Canada and of the United States and each of the states
thereof, that, except as provided below, each Right shall thereafter
constitute the right to purchase from the Corporation, upon 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 2.3 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 2.3
shall have occurred with respect to such Common Shares).
(b) Notwithstanding the foregoing or any other provisions of this Agreement,
upon the occurrence of any Flip-in Event, any Rights that are or were
Beneficially Owned on or after the earlier of the Separation Time or the
Stock Acquisition Date by:
(i) 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 any Acquiring Person); or
(ii) a transferee, direct or indirect, of an Acquiring Person (or any
Affiliate or Associate of an Acquiring Person or any Person acting
jointly or in concert with an Acquiring Person or any Affiliate or
Associate of an Acquiring Person) in a transfer made after the date
hereof, whether or not for consideration, that the Board of Directors
of the Corporation 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 3.1(b),
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 and shall have no other rights whatsoever with respect to
such Rights, whether under any provision of this Agreement or otherwise. The
holder of any Rights represented by a Rights Certificate which is submitted
to the Rights Agent upon exercise or for registration of transfer or
exchange which does not contain the necessary certifications set forth in
the Rights Certificate establishing that such Rights are not void under this
subsection 3.1(b) shall be deemed to be an Acquiring Person for the purposes
of this Subsection 3.1(b) and such Rights shall become null and void.
(c) Any Rights Certificate that represents Rights Beneficially Owned by a Person
described in either sub clauses (i) or (ii) of Subsection 3.1(b) or
transferred to any nominee of any such Person, and any Rights Certificate
issued upon transfer, exchange, replacement or adjustment of any other
Rights Certificate referred to in this sentence, shall contain the following
legend:
The Rights represented by this Rights Certificate were Beneficially
Owned by a Person who was an Acquiring Person or who was an
Affiliate or an Associate of an Acquiring Person (as such terms are
defined in the Shareholder Rights Agreement) or a Person acting
jointly or in concert with any of them. This Rights Certificate and
the Rights represented hereby shall become void in the circumstances
specified in paragraph 3.1(b) of the Shareholder Rights Agreement.
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provided that the Rights Agent shall not be under any responsibility to
ascertain the existence of facts that would require the imposition of such
legend but shall be required to impose such legend only if instructed to do
so, in writing, by the Corporation or if a holder fails to certify upon
transfer or exchange in the space provided on the Rights Certificate that
such holder is not a Person described in such legend.
ARTICLE 4
THE RIGHTS AGENT
4.1 GENERAL
(a) The Corporation hereby appoints the Rights Agent to act as agent for the
Corporation and the holders of Rights in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Corporation may from time to time appoint such Co-Rights Agents as it may
deem necessary or desirable, subject to the approval of the Rights Agent,
acting reasonably. In the event the Corporation appoints one or more
Co-Rights Agents, the respective duties of the Rights Agent and Co-Rights
Agents shall be as the Corporation may determine, with the approval of the
Rights Agent and the Co-Rights Agent. The Corporation agrees to pay to the
Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Corporation also agrees to
indemnify the Rights Agent, its officers, directors, employees and agents
for, and to hold it harmless against, any loss, liability, or expense,
incurred without negligence, bad faith or wilful misconduct on the part of
the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement,
including legal costs and expenses, which right to indemnification will
survive the termination of this Agreement or the resignation or removal of
the Rights Agent.
(b) The Rights Agent shall be protected and shall incur no liability for or in
respect of any action taken, suffered or omitted by it in connection with
its administration and execution of this Agreement and 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.
(c) The Corporation shall inform the Rights Agent in a reasonably timely manner
of events that may materially affect the administration of this Agreement by
the Rights Agent and, at any time upon request, shall provide to the Rights
Agent an incumbency certificate certifying the then current officers of the
Corporation.
4.2 MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT
(a) Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or amalgamated or with which it may be consolidated, or any
corporation resulting from any merger, amalgamation or consolidation to
which the Rights Agent or any successor Rights Agent is a party, or any
corporation succeeding to the shareholder or stockholder services business
of the Rights Agent or any successor Rights Agent, will be the successor to
the Rights Agent under this Agreement without the execution or filing of any
paper or any further act on the part of any of the parties hereto, provided
that such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 4.4 hereof. In case at the time
such successor Rights Agent succeeds to the agency created by this Agreement
any of the Rights Certificates have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates have
not been countersigned, any successor Rights Agent may countersign such
Rights Certificates either in the name
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of the predecessor Rights Agent or in the name of the successor Rights
Agent, and in all such cases such Rights Certificates will have the full
force provided in the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent is changed and at such time
any of the Rights Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior
name or in its changed name; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certificates and in this
Agreement.
4.3 DUTIES OF RIGHTS AGENT
The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the
Corporation and the holders of Rights Certificates, by their acceptance thereof,
shall be bound:
(a) The Rights Agent may retain and consult with legal counsel (who may be legal
counsel for the Corporation), and the opinion of such counsel will be full
and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such
opinion and the Rights Agent may retain and consult with other experts and
advisors as the Rights Agent may consider necessary or appropriate to
properly carry out the duties and obligations imposed under this Agreement
(at the expense of the Corporation) and the Rights Agent shall be entitled
to act and rely in good faith on the advice of any such expert or advisor;
(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 refraining from taking any
action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by a person believed by the
Rights Agent to be Chairman, President, Chief Executive Officer, any Vice
President, Chief Financial Officer, General Counsel or Secretary of the
Corporation and delivered to the Rights Agent; and such certificate will be
full authorization to the Rights Agent for any action taken or suffered in
good faith by it under the provisions of this Agreement in reliance upon
such certificate;
(c) The Rights Agent will be liable hereunder only for its own negligence, bad
faith or wilful misconduct and that of its officers, employees and other
representatives;
(d) The Rights Agent will not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the
certificates for Common Shares or the Rights Certificates (except its
countersignature thereof) or be required to verify the same, but all such
statements and recitals are and will be deemed to have been made by the
Corporation only;
(e) The Rights Agent will not be under any responsibility in respect of the
validity of this Agreement or the execution and delivery hereof (except the
due authorization, execution and delivery hereof by the Rights Agent) or in
respect of the validity or execution of any Common Share certificate or
Rights Certificate (except its countersignature thereof); nor will it be
responsible for any breach by the Corporation of any covenant or condition
contained in this Agreement or in any Rights Certificate; nor will it be
responsible for any change in the exercisability of the Rights (including
the Rights becoming void pursuant to Subsection 3.1(b)) or any adjustment
required under the provisions of Section 2.3 or responsible for the manner,
method or amount of any such adjustment or the ascertaining of the existence
of facts that would require any such adjustment (except with respect to the
exercise of Rights after receipt of the certificate contemplated by Section
2.3 hereof describing any such adjustment); nor will it by any act hereunder
be deemed to make any representation or warranty as to the authorization of
any 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 agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may
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reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement;
(g) The Rights Agent is hereby authorized and directed to accept written
instructions with respect to the performance of its duties hereunder from
any person believed by the Rights Agent to be the Chairman, Chief Executive
Officer, the President, any Vice President, Chief Financial Officer, General
Counsel or the Secretary 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 by it in good faith in accordance with
instructions of any such person;
(h) The Rights Agent and any shareholder or stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in Common Shares, Rights
or other securities of the Corporation or become 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 will not be answerable or
accountable for any act, default, neglect or misconduct of any such
attorneys or agents or for any loss to the Corporation resulting from any
such act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
4.4 CHANGE OF RIGHTS AGENT
The Rights Agent may resign and be discharged from its duties under this
Agreement upon 90 days' notice (or such lesser notice as is acceptable to the
Corporation) to the Corporation and to the transfer agent of Common Shares by
registered or certified mail, and to the holders of the Rights in accordance
with Section 5.9. The Corporation may remove the Rights Agent upon 90 days'
notice in writing, mailed to the Rights Agent and to the transfer agent of the
Common Shares by registered or certified mail, and to the holders of the Rights
in accordance with Section 5.9. If the Rights Agent should resign or be removed
or otherwise become incapable of acting, the Corporation will appoint a
successor to the Rights Agent. If the Corporation fails to make such appointment
within a period of 30 days after such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent 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 holder of any Rights or the Rights Agent (at the
Corporation's expense) 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 Saskatchewan. After appointment, the
successor Rights Agent will be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Corporation will file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the Common Shares, and mail a notice thereof in
writing to the holders of the Rights. Failure to give any notice provided for in
this Section 4.4, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be.
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ARTICLE 5
MISCELLANEOUS
5.1 REDEMPTION AND WAIVER
(a) Subject to the prior consent of the holders of Voting Shares or Rights
obtained in accordance with Subsection 5.4(b) or (c), as applicable, the
Board of Directors may, at its option, at any time prior to the occurrence
of a Flip-in Event, elect to redeem all but not less than all of the then
outstanding Rights at a redemption price of $0.0001 per Right appropriately
adjusted in a manner analogous to the applicable adjustment provided for in
Section 2.3 in the event that an event of the type analogous to any of the
events described in Section 2.3 shall have occurred (such redemption price
being herein referred to as the "Redemption Price").
(b) If before the occurrence of a Flip-in Event a Person acquires, pursuant to a
Permitted Bid or a Competing Permitted Bid or pursuant to an Exempt
Acquisition occurring under Subsection 5.1(g), outstanding Voting Shares
other than Voting Shares Beneficially Owned by such Person at the date of
the Permitted Bid, the Competing Permitted Bid or such Exempt Acquisition
occurring under Subsection 5.1(g), the Board of Directors of the Corporation
shall, immediately upon such acquisition and without further formality, be
deemed to have elected to redeem the Rights at the Redemption Price.
(c) Where a Take-over Bid that is not a Permitted Bid or a Competing Permitted
Bid is withdrawn or otherwise terminated after the Separation Time has
occurred and prior to the occurrence of a Flip-in Event, the Board of
Directors may elect to redeem all the outstanding Rights at the Redemption
Price. Notwithstanding such redemption, all of the provisions of this
Agreement shall continue to apply as if the Separation Time had not occurred
and it shall be deemed not to have occurred and Rights shall remain attached
to the outstanding Voting Shares, subject to and in accordance with the
provisions of this Agreement.
(d) Within ten Business Days after the Board of Directors electing or being
deemed to have elected to redeem the Rights, the Corporation shall give
notice of such redemption to the holders of the then outstanding Rights by
mailing such notice to each such holder at his last address as it appears on
Rights Register (as defined in Subsection 2.6(a)) or, prior to the
Separation Time, on the Common Share register maintained by the
Corporation's transfer agent. Each such notice of redemption shall state the
method by which the payment of the Redemption Price shall be made.
(e) If the Board of Directors elects to or is deemed to have elected to redeem
the Rights, the right to exercise the Rights will thereupon without further
action and without notice terminate and the only right thereafter of the
holder of a Right shall be to receive the Redemption Price.
(f) The Board of Directors may waive the application of Section 3.1 in respect
of the occurrence of any Flip-in Event if the Board of Directors has
determined within 10 Business Days following a Stock Acquisition Date that a
Person became an Acquiring Person by inadvertence and without any intention
to become, or knowledge that it would become, an Acquiring Person under this
Agreement and if such a waiver is granted by the Board of Directors, such
Stock Acquisition Date shall be deemed not to have occurred. Any such waiver
pursuant to this Subsection 5.1(f) must be on the condition that such Person
has, within 10 days after the foregoing determination by the Board of
Directors or such earlier or later date as the Board of Directors may
determine (the "Disposition Date"), reduced its Beneficial Ownership of
Voting Shares such that the Person is no longer an Acquiring Person. If the
Person remains an Acquiring Person at the Close of Business on the
Disposition Date, the Disposition Date shall be deemed to be the date of
occurrence of a further Stock Acquisition Date and Section 3.1 shall apply
thereto.
(g) The Board of Directors may, until a Flip-in Event shall have occurred, upon
written notice delivered to the Rights Agent, determine to waive the
application of Section 3.1 to a Flip-in Event but only if such Flip-in Event
occurs by reason of a Take-over Bid made by way of a take-over bid circular
to all holders of record of Voting Shares of the Corporation (which, for
greater certainty, does not include the circumstances described in
Subsection 5.1(f)); provided, however, that if the Board of Directors waives
the application of Section 3.1 to a particular Flip-in Event pursuant to
this Subsection 5.1(g), the Board
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of Directors shall be deemed to have waived the application of Section 3.1
to any other Flip-in Event occurring by reason of any Take-over Bid which
is made by means of a take-over bid circular to all holders of record of
Voting Shares of the Corporation prior to the expiry of any Take-over Bid
in respect of which a waiver is, or is deemed to have been, granted under
this Subsection 5.1(g).
5.2 EXPIRATION
No Person shall have any rights pursuant to this Agreement or in respect of
any Right after the Expiration Time, except the Rights Agent as provided in
Subsection 4.1(a).
5.3 ISSUANCE OF NEW RIGHTS CERTIFICATES
Notwithstanding any of the provisions of this Agreement or of the Rights to
the contrary, the Corporation may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by the Board of Directors to
reflect any adjustment or change in the number or kind or class of shares
purchasable upon exercise of Rights made in accordance with the provisions of
this Agreement.
5.4 SUPPLEMENTS AND AMENDMENTS
(a) The Corporation may make, without the approval of the holders of Rights or
Voting Shares, any amendments to this Agreement (i) to correct any clerical
or typographical error; (ii) which are required to maintain the validity and
effectiveness of the Agreement as a result of any change in any applicable
laws or regulatory requirements; or (iii) to amend the Exercise Price in the
event that it does not represent a sufficient multiple, as determined in the
discretion of the Board of Directors, of the Market Price at the time of
determination. Notwithstanding anything in this Section 5.4 to the contrary,
no supplement or amendment shall be made to the provisions of Article 4
except with the written concurrence of the Rights Agent to such supplement
or amendment.
(b) Subject to Subsection 5.4(a), the Corporation may, with the prior consent of
the holders of Voting Shares obtained as set forth below, at any time before
the Separation Time, amend, vary or rescind any of the provisions of this
Agreement and the Rights (whether or not such action would materially
adversely affect the interests of the holders of Rights generally). Such
consent shall be deemed to have been given if provided by the holders of
Voting Shares of the Corporation at a special meeting called and held in
compliance with applicable laws and regulatory requirements and the
requirements in the articles and bylaws of the Corporation. Subject to
compliance with any requirements imposed by the foregoing, consent shall be
given if the proposed amendment, variation or rescission is approved by the
affirmative vote of a majority of the votes cast by all holders of Voting
Shares (other than any holder of Voting Shares who is an Offeror pursuant to
a Takeover Bid that is not a Permitted Bid or a Competing Permitted Bid,
with respect to all Voting Shares Beneficially owned by such Person),
represented in person or by proxy at the special meeting.
(c) The Corporation may, with the prior consent of the holders of Rights
obtained as set forth below, at any time after the Separation Time and
before the Expiration 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 provided by the holders of
Rights at a special meeting of holders of Rights called and held in
compliance with applicable laws and regulatory requirements and, to the
extent possible, with the requirements in the articles and by-laws of the
Corporation applicable to meetings of holders of Voting Shares, applied
mutatis mutandis. Subject to compliance with any requirements imposed by the
foregoing, consent shall be given if the proposed amendment, variation or
rescission is approved by the affirmative vote of a majority of the votes
cast by holders of Rights (other than holders of Rights whose Rights have
become null and void pursuant to Subsection 3.1(b)), represented in person
or by proxy at the special meeting.
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(d) Any amendments made by the Corporation to this Agreement pursuant to
Subsection 5.4(a) which are required to maintain the validity and
effectiveness of this Agreement as a result of any change in any applicable
laws or regulatory requirements shall:
(i) if made before the Separation Time, be submitted to the holders of
Voting Shares of the Corporation at the next meeting of shareholders
and the shareholders may, by the majority referred to in Subsection
5.4(b), confirm or reject such amendment;
(ii) if made after the Separation Time, be submitted to the holders of
Rights at a meeting to be called for on a date not later than
immediately following the next meeting of shareholders of the
Corporation and the holders of Rights may, by resolution passed by the
majority referred to in Subsection 5.4(c), confirm or reject such
amendment.
Any such amendment shall be effective from the date of the resolution of the
Board of Directors adopting such amendment, until it is confirmed or
rejected or until it ceases to be effective (as described in the next
sentence) and, where such amendment is confirmed, it continues in effect in
the form so confirmed. If such amendment is rejected by the shareholders of
the Corporation or the holders of Rights or is not submitted to the
shareholders of the Corporation or holders of Rights as required, then such
amendment shall cease to be effective from and after the termination of the
meeting at which it was rejected or to which it should have been but was not
submitted or from and after the date of the meeting of holders of Rights
that should have been but was not held, and no subsequent resolution of the
Board of Directors to amend this Agreement to substantially the same effect
shall be effective until confirmed by the shareholders of the Corporation or
holders of Rights as the case may be.
5.5 FRACTIONAL RIGHTS AND FRACTIONAL SHARES
(a) The Corporation shall not be required to issue fractions of Rights or to
distribute Rights Certificates which evidence fractional Rights. Subject to
Section 5.2, after the Separation Time there shall be paid to the registered
holders of the Rights Certificates with regard to which fractional Rights
would otherwise be issuable, an amount in cash equal to the same fraction of
the Market Price of a whole Right in lieu of such fractional Rights.
(b) The Corporation shall not be required to issue fractional Common Shares upon
exercise of the Rights or to distribute certificates which evidence
fractional Common Shares. In lieu of issuing fractional Common Shares, the
Corporation shall pay to the registered holder of Rights Certificates at the
time such Rights are exercised as herein provided, an amount in cash equal
to the same fraction of the Market Price of one Common Share.
5.6 RIGHTS OF ACTION
Subject to the terms of this Agreement, rights of action in respect of this
Agreement, other than rights of action vested solely in the Rights Agent, are
vested in the respective holders of the Rights; and any holder of any Rights,
without the consent of the Rights Agent or of the holder of any other Rights,
may, on such holder's own behalf and for such holder's own benefit and the
benefit of other holders of Rights, enforce, and may institute and maintain any
suit, action or proceeding against the 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 holders Rights Certificate and in this Agreement.
Without limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement and will be
entitled to specific performance of the obligations under, and injunctive relief
against actual or threatened violations of, the obligations of any Person
subject to this Agreement.
5.7 HOLDER OF RIGHTS NOT DEEMED A SHAREHOLDER
No holder, as such, of any Rights shall be entitled to vote, receive
dividends or 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
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such Rights, nor shall anything contained herein or in any Rights Certificate be
construed to confer upon the holder of any Rights, as such, any of the rights of
a 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 Section
5.8 hereof), or to receive dividends or subscription rights or otherwise, until
such Rights shall have been exercised in accordance with the provisions hereof.
5.8 NOTICE OF PROPOSED ACTIONS
If after the Separation Time and prior to the Expiration Time
(i) there shall occur an adjustment to the Rights pursuant to Section 3.1
as a result of the occurrence of a Flip-in Event, or
(ii) the Corporation proposes to effect the liquidation, dissolution or
winding-up of the Corporation or the sale of all or substantially all
of the Corporation's assets,
then, in each such case, the Corporation shall give to each holder of a Right,
in accordance with Section 5.9, a notice of such event or proposed action, which
shall specify the date on which such adjustment to the Rights, liquidation,
dissolution, or winding-up occurred or is to take place, and such notice shall
be so given within ten Business Days after the occurrence of an adjustment to
the Rights or at least 20 Business Days prior to the date of taking of such
proposed action by the Corporation.
5.9 NOTICES
(a) Notices or demands authorized or required by this Agreement to be given or
made by the Rights Agent or by the holder of any Rights to or on the
Corporation shall be sufficiently given or made if delivered or sent by
first class mail, postage prepaid, addressed (until another address is filed
in writing with the Rights Agent) as follows:
Potash Corporation of Saskatchewan Inc.
Suite 500, 122 -- 1st Avenue South
Saskatoon, Saskatchewan
S7K 7G3
Attention: Secretary
Any notice or demand authorized or required by this Agreement to be given or
made by the Corporation or by the holder of any Rights to or on the Rights
Agent shall be sufficiently given or made if delivered or sent by
first-class mail, postage prepaid, addressed (until another address is filed
in writing with the Corporation) as follows:
CIBC Mellon Trust Company
Suite 750
One Lombard Place
Winnipeg, Manitoba
R3B 0X3
Attention: Manager, Corporate Trust Department
(b) Notices or demands authorized or required by this Agreement to be given or
made by the Corporation or the Rights Agent to or on the holder of any
Rights shall be sufficiently given or made if delivered or sent by
first-class mail, postage prepaid, addressed to such holder at the address
of such holder as it appears upon the 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
shall be deemed given, whether or not the holder receives the notice.
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5.10 COSTS OF ENFORCEMENT
The Corporation agrees that if the Corporation fails to fulfil any of its
obligations pursuant to this Agreement, then the Corporation will reimburse the
holder of any Rights for the costs and expenses (including legal fees) incurred
by such holder in actions to enforce his rights pursuant to any Rights or this
Agreement.
5.11 SUCCESSORS
All the covenants and provisions of this Agreement by or for the benefit of
the Corporation or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
5.12 BENEFITS OF THIS AGREEMENT
Nothing in this Agreement shall be construed to give to any Person other
than the Corporation, the Rights Agent and the holders of the Rights any legal
or equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Corporation, the Rights Agent
and the holders of the Rights.
5.13 GOVERNING LAW
This Agreement and each Right issued hereunder shall be deemed to be a
contract made under the laws of the Province of Saskatchewan and for all
purposes shall be governed by and construed in accordance with the laws of such
province applicable to contracts to be made and performed entirely within such
province.
5.14 COUNTERPARTS
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
5.15 SEVERABILITY
If any term or provision hereof or the application thereof to any
circumstance shall, in any jurisdiction and to any extent, be invalid or
unenforceable, such term or provision shall be ineffective as to such
jurisdiction to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable the remaining terms and provisions
hereof or the application of such term or provision to circumstances other than
those as to which it is held invalid or unenforceable.
5.16 EFFECTIVE DATE
This Agreement is effective from the date hereof. If this Agreement, as
amended and restated, is not confirmed by a resolution passed by a majority of
the votes cast by holders of Voting Shares (or, after the Separation Time,
Rights) permitted to vote on such resolution under Section 5.4 hereof who vote
in respect of this Agreement, as amended and restated, at the 2001 Annual
Meeting of Shareholders of the Corporation, then this Agreement and any then
outstanding Rights shall terminate and be void and be of no further force and
effect from the termination time of the 2001 Annual Meeting of Shareholders, in
accordance with the terms and conditions of the Amended Agreement.
5.17 DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS
All actions, calculations and determinations (including all omissions with
respect to the foregoing) which are done or made by the Board of Directors, in
good faith, shall not subject the Board of Directors to any liability to the
holders of the Rights.
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5.18 RIGHTS OF BOARD, CORPORATION AND OFFEROR
Without limiting the generality of the foregoing, nothing contained herein
shall be construed to suggest or imply that the Board of Directors shall not be
entitled to recommend that holders of Voting Shares reject or accept any
Take-over Bid or take any other action (including, without limitation, the
commencement, prosecution, defence or settlement of any litigation and the
submission of additional or alternative Take-over Bids or other proposals to the
shareholders of the Corporation) with respect to any Take-over Bid or otherwise
that the Board of Directors believes is necessary or appropriate in the exercise
of its fiduciary duties.
5.19 REGULATORY APPROVALS
Any obligation of the Corporation or action or event contemplated by this
Agreement (including any issuance of Common Shares or other capital stock of the
Corporation or other securities exchangeable for or convertible into or giving a
right to acquire Common Shares or other capital stock of the Corporation, or
rights, options or warrants to subscribe for or purchase any Common Shares or
other capital stock of the Corporation), and any supplement or amendment to this
Agreement, shall be subject to the receipt of any requisite approval or consent
from any governmental or regulatory authority including, without limiting the
generality of the foregoing, any stock exchanges on which any securities of the
Corporation are listed.
5.20 DECLARATION AS TO NON-CANADIAN HOLDERS
If in the opinion of the Board of Directors (who may rely upon the advice
of counsel) any action or event contemplated by this Agreement would require
compliance with the securities laws or comparable legislation of a jurisdiction
outside Canada, the Board of Directors acting in good faith may take such
actions as it may deem appropriate to ensure such compliance. In no event shall
the Corporation or the Rights Agent be required to issue or deliver Rights or
securities issuable on exercise of Rights to Persons who are citizens, residents
or nationals of any jurisdiction other than Canada or the United States in which
such issue or delivery would be unlawful without registration of the relevant
Persons or securities for such purposes or (until such notice is given as
required by law) without advance notice to any regulatory or self-regulatory
body.
5.21 TIME OF THE ESSENCE
Time shall be of the essence in this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
POTASH CORPORATION OF SASKATCHEWAN
INC.
By: "WILLIAM J. DOYLE"
--------------------------
Authorized Signing Officer
By: "JOHN L. M. HAMPTON"
--------------------------
Authorized Signing Officer
CIBC MELLON TRUST COMPANY
By: "GLORIA GHERASIM"
--------------------------
Authorized Signing Officer
By: "JAN SHEFFIELD"
--------------------------
Authorized Signing Officer
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POTASH CORPORATION OF SASKATCHEWAN INC.
EXHIBIT A
(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 RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES (SPECIFIED
IN SECTION 3.1(b) OF THE RIGHTS AGREEMENT), RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR ITS AFFILIATES OR ASSOCIATES OR ANY PERSON ACTING JOINTLY OR
IN CONCERT WITH ANY OF THEM OR SUCH PERSON'S ASSOCIATES OR AFFILIATES (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR TRANSFEREES OF ANY OF THE
FOREGOING WILL BECOME VOID WITHOUT FURTHER ACTION
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, dated as of November 10, 1994,
as amended and restated from time to time (the "Rights Agreement"), between
Potash Corporation of Saskatchewan Inc., a corporation incorporated under the
laws of Saskatchewan (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 and prior to the Expiration Time (as such terms are defined in the Rights
Agreement), one fully paid common share of the Corporation (a "Common Share") at
the Exercise Price referred to below, upon presentation and surrender of this
Rights Certificate with the Form of Election to Exercise duly executed and
submitted to the Rights Agent at its principal office in any of the cities of
Montreal, Toronto, Winnipeg, Calgary and Vancouver. Until adjustment thereof in
certain events as provided in the Rights Agreement, the Exercise Price shall be
$400 (Canadian) per Right.
In certain circumstances described in the Rights Agreement, each Right
evidenced hereby may entitle the registered holder thereof to purchase or
receive more or less than one Common Share, all as provided in the Rights
Agreement.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Rights Agent, the Corporation and the holders of the Rights Certificates. Copies
of the Rights Agreement are on file at the head 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 $0.0001 (Canadian) per
Right.
B-33
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No fractional Common Share will be issued upon the exercise of any Right or
Rights evidenced hereby, but in lieu thereof a cash payment will be made, as
provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Common Shares or
any other securities which may at any time be issuable upon the exercise hereof,
nor shall anything contained in the Rights Agreement or herein be construed to
confer upon the holder hereof, as such, any of the rights of a 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 meeting or other
actions affecting shareholders (except as provided in the Rights Agreement), or
to receive dividends or subscription rights, or otherwise, until the Rights
evidenced by this Rights Certificate shall have been exercised as provided in
the Rights Agreement.
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:
POTASH CORPORATION OF SASKATCHEWAN INC.
- ----------------------------------------------------- -----------------------------------------------------
Countersigned:
CIBC MELLON TRUST COMPANY
- -----------------------------------------------------
Authorized Signature
B-34
71
(TO BE ATTACHED TO EACH RIGHTS CERTIFICATE)
FORM OF ELECTION TO EXERCISE
TO:
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:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
Social Insurance, Social Security or Other Taxpayer Identification Number
DATED: ------------------------------- Signature --------------------------
---------------------------------------------------------------------------------------
(Signature must correspond to name as
written upon the face of this Rights
Signature Guaranteed Certificate in every particular,
without alteration or enlargement or
any change whatsoever)
---------------------------------------------------------------------------------------
Signature must be guaranteed by a Canadian Schedule 1 chartered bank, a
major trust company in Canada, a member of the Securities Transfer Association
Medallion Program (STAMP), a member of the Stock Exchange Medallion Program
(SEMP) or a member of the New York Stock Exchange Inc., Medallion Signature
Program (MSP). Members of these programs are usually members of a recognized
stock exchange in Canada and the United States, members of the Investment
Dealers Association of Canada, members of the National Association of Securities
Dealers or banks or trust companies in the United States.
- --------------------------------------------------------------------------------
(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 knowledge of the undersigned, have never been, Beneficially Owned by
an Acquiring Person or an Affiliate or Associate thereof or by any Person acting
jointly or in concert with any of the foregoing or such Person's Associates or
Affiliates (as defined in the Rights Agreement).
--------------------------------------
Signature
- --------------------------------------------------------------------------------
NOTICE
In the event the certification set forth above 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 Rights Agreement) and, accordingly, such Rights shall
be null and void and not transferable or exercisable.
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72
FORM OF ASSIGNMENT
(TO BE EXECUTED BY THE REGISTERED HOLDER IF SUCH HOLDER
DESIRES TO TRANSFER THE RIGHTS CERTIFICATES.)
FOR VALUE RECEIVED ____________________________ hereby sells, assigns and
transfers unto
- --------------------------------------------------------------------------------
(please print name and address of transferee)
the Rights evidenced by this Rights Certificate, together with all right, title
and interest therein, and does hereby irrevocably constitute and appoint
- --------------------------------------------------------------------------------
attorney, to transfer the within Rights on the books of the within-named
Corporation, with full power of substitution.
DATED: -------------------------------- Signature -----------------------
---------------------------------------------------------------------------------------
(Signature must correspond to name as
written upon the face of this Rights
Signature Guaranteed Certificate in every particular,
without alteration or enlargement or
any change whatsoever)
---------------------------------------------------------------------------------------
Signature must be guaranteed by a Canadian Schedule 1 chartered bank, a
major trust company in Canada, a member of the Securities Transfer Association
Medallion Program (STAMP), a member of the Stock Exchange Medallion Program
(SEMP) or a member of the New York Stock Exchange Inc., Medallion Signature
Program (MSP). Members of these programs are usually members of a recognized
stock exchange in Canada and the United States, members of the Investment
Dealers Association of Canada, members of the National Association of Securities
Dealers or banks or trust companies in the United States.
- --------------------------------------------------------------------------------
(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 knowledge of the undersigned, have never been, Beneficially Owned by
an Acquiring Person or an Affiliate or Associate thereof or by any Person acting
jointly or in concert with any of the foregoing or such Person's Associates or
Affiliates (as defined in the Rights Agreement).
--------------------------------------
Signature
- --------------------------------------------------------------------------------
NOTICE
In the event the certification set forth above 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 Rights Agreement) and, accordingly, such Rights shall
be null and void and not transferable or exercisable.
B-36
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SCHEDULE C
POTASH CORPORATION OF SASKATCHEWAN INC.
RESOLUTION OF SHAREHOLDERS
WHEREAS the Board of Directors of Potash Corporation of Saskatchewan Inc.
(the "Corporation") has, inter alia, approved an amendment to the Corporation's
Stock Option Plan -- Directors, which is set forth in the amended Stock Option
Plan -- Directors (the "Amended Directors Plan") annexed as Schedule D to the
proxy circular of the Corporation sent to the shareholders of the Corporation in
connection with the annual and special meeting of the Corporation to be held May
10, 2001;
NOW THEREFORE, BE IT RESOLVED THAT:
1. the Amended Directors Plan is hereby amended and confirmed by the
shareholders of the Corporation; and
2. any officer of the Corporation be and is hereby authorized and directed for
and on behalf of the Corporation to do such things and to take such actions
as may be necessary or desirable to carry out the intent of the foregoing
resolution and the matters authorized thereby.
C-1
74
SCHEDULE D
POTASH CORPORATION OF SASKATCHEWAN INC.
STOCK OPTION PLAN -- DIRECTORS
1. PURPOSE OF PLAN
Potash Corporation of Saskatchewan Inc. (the "Corporation") by resolution
of its Board of Directors (the "Board") has established this Plan to
encourage directors of the Corporation to promote the growth and
profitability of the Corporation by providing them with the opportunity
through options to acquire Common Shares of the Corporation ("Common
Shares").
2. ADMINISTRATION
This Plan shall be administered by the Board.
3. GRANT OF OPTIONS
From time to time the Board may designate individual directors of the
Corporation to be granted options to purchase Common Shares and the number
of Common Shares which each such person will be granted an option to
purchase; provided that the aggregate number of Common Shares subject to
such options may not exceed the number provided for in paragraph 4 of this
Plan.
4. SHARES SUBJECT TO OPTION
The aggregate number of Common Shares issuable after January 23, 2001
pursuant to options under this Plan may not exceed 500,000 shares. The
number of Common Shares issuable pursuant to options under this Plan shall
be subject to adjustment under paragraphs 8 and 9.
The aggregate number of Common Shares in respect of which options have been
granted to any one person and which remain outstanding shall not at any
time exceed 5% of the number of issued and outstanding Common Shares (on a
non-diluted basis) at that time.
If any option granted under this Plan, or any portion thereof, expires or
terminates for any reason without having been exercised in full, the Common
Shares with respect to which such option has not been exercised shall again
be available for further options under this Plan.
5. OPTION PRICE
The option price under this Plan to any optionee shall be the fair market
value of the Common Shares at such time which, for optionees resident in
the United States and any other optionees designated by the Board, shall be
deemed to be the closing price per share of the Common Shares on the New
York Stock Exchange on the last trading day immediately preceding the day
the option is granted and, for all other optionees, shall be deemed to be
the closing price per share of the Common Shares on The Toronto Stock
Exchange on the last trading day immediately preceding the day the option
is granted; provided that, in either case, if the Common Shares did not
trade on such exchange on such day the option price shall be the closing
price per share on such exchange on the last day on which the Common Shares
traded on such exchange prior to the day the option is granted.
6. TERMS OF OPTION
The period during which an option is exercisable may not exceed 10 years
from the date the option is granted. The option agreement may contain
provisions limiting the number of Common Shares with respect to which the
option may be exercised in any one year. Each option agreement shall
contain provisions to the effect that:
a. if an optionee ceases to be a director of the Corporation by reason
of his or her death or an optionee who is a retiree pursuant to
clause b below dies, the legal personal representatives of the
optionee
D-1
75
will be entitled to exercise any unexercised options, including such
options that may vest after the date of death, during the period
ending at the end of the twelfth calendar month following the
calendar month in which the optionee dies, failing which exercise the
options terminate;
b. subject to the terms of clause a above, if an optionee ceases to be a
director of the Corporation by reason of retirement in accordance
with the then prevailing retirement policy of the Corporation, the
optionee will be entitled to exercise any unexercised options,
including such options as may vest after the date of retirement,
until the expiry date of such options or the date on which such
options are otherwise terminated in accordance with the provisions of
this Plan, failing which exercise the options terminate;
c. if an optionee ceases to be a director of the Corporation for any
reason other than as provided in the preceding clauses a. or b., the
optionee will be entitled to exercise any unexercised options, to the
extent exercisable at the date of such event, during the period
ending at the end of the calendar month immediately following the
calendar month in which the event occurs, failing which exercise the
options terminate; and
d. each option is personal to the optionee and is not assignable, except
(i) as provided in the preceding clause a, and (ii) at the election
of the Board, an option may be assignable to the spouse, children and
grandchildren of the original optionee and to a trust, partnership or
limited liability company, the entire beneficial interest of which is
held by one or more of the foregoing.
Nothing contained in the preceding clauses a, b or c shall extend the
period during which an option may be exercised beyond its stipulated expiry
date or the date on which it is otherwise terminated in accordance with the
provisions of this Plan.
If an option is assigned pursuant to the preceding subclause (ii) of clause
d, the references in the preceding clauses a, b and c to ceasing to be a
director or death of an optionee shall not relate to the assignee of an
option but shall relate to the original optionee. In the event of such
assignment, legal personal representatives of the original optionee shall
not be entitled to exercise the assigned option, but the assignee of the
option or the legal personal representatives of the assignee may exercise
the option during the applicable specified period.
7. EXERCISE OF OPTIONS
Subject to the provisions of this Plan, an option may be exercised from
time to time by delivering to the Corporation at its registered office a
written notice of exercise specifying the number of shares with respect to
which the option is being exercised and accompanied by payment in cash or
certified cheque in full of the purchase price of the shares then being
purchased.
8. ADJUSTMENTS
Appropriate adjustments to the authorized limits set forth in paragraph 4,
in the number, class and/or type of shares optioned and in the option price
per share, both as to options granted or to be granted, may be made by the
Board in its discretion to give effect to adjustments in the number of
Common Shares which result from subdivisions, consolidations or
reclassifications of the Common Shares, the payment of share dividends by
the Corporation, the reconstruction, reorganization or recapitalization of
the Corporation or other relevant changes in the capital of the
Corporation. If the Corporation sells all or substantially all of its
assets as an entirety or substantially as an entirety, options under this
Plan may be exercised, in whole or in part, at any time up to and including
(but not after) a date 30 days following the date of completion of such
sales or prior to the close of business on the date the option expires,
whichever is earlier.
9. MERGERS
If the Corporation proposes to amalgamate or merge with another body
corporate, the Corporation shall give written notice thereof to optionees
in sufficient time to enable them to exercise outstanding options,
D-2
76
to the extent they are otherwise exercisable by their terms, prior to the
effective date of such amalgamation or merger if they so elect. The
Corporation shall use its best efforts to provide for the reservation and
issuance by the amalgamated or continuing corporation of an appropriate
number of shares, with appropriate adjustments, so as to give effect to the
continuance of the options to the extent reasonably practicable. In the
event that the Board determines in good faith that such continuance is not
in the circumstances practicable, it may upon 30 days' notice to optionees
terminate the options.
10. CHANGE OF CONTROL
If a "change of control" of the Corporation occurs, each then outstanding
option granted under this Plan may be exercised, in whole or in part, even
if such option is not otherwise exercisable by its terms. For purposes of
this paragraph 10, a change of control of the Corporation shall be deemed
to have occurred if:
a. within any period of two consecutive years, individuals who at the
beginning of such period constituted the Board and any new directors
whose appointment by the Board or nomination for election by
shareholders of the Corporation was approved by a vote of at least a
majority of the directors then still in office who either were
directors at the beginning of the period or whose appointment or
nomination for election was previously so approved, cease for any
reason to constitute a majority of the Board;
b. there occurs an amalgamation, merger, consolidation, wind-up,
reorganization or restructuring of the Corporation with or into any
other entity, or a similar event or series of such events, other than
any such event or series of events which results in securities of the
surviving or consolidated corporation representing 50% or more of the
combined voting power of the surviving or consolidated corporation's
then outstanding securities entitled to vote in the election of
directors of the surviving or consolidated corporation being
beneficially owned, directly or indirectly, by the persons who were
the holders of the Corporation's outstanding securities entitled to
vote in the election of directors of the Corporation prior to such
event or series of events in substantially the same proportions as
their ownership immediately prior to such event of the Corporation's
then outstanding securities entitled to vote in the election of
directors of the Corporation;
c. 50% or more of the fixed assets (based on book value as shown on the
most recent available audited annual or unaudited quarterly
consolidated financial statements) of the Corporation are sold or
otherwise disposed of (by liquidation, dissolution, dividend or
otherwise) in one transaction or series of transactions within any
twelve month period;
d. any party, including persons acting jointly or in concert with that
party, becomes (through a take-over bid or otherwise) the beneficial
owner, directly or indirectly, of securities of the Corporation
representing 20% or more of the combined voting power of the
Corporation's then outstanding securities entitled to vote in the
election of directors of the Corporation, unless in any particular
situation the Board determines in advance of such event that such
event shall not constitute a change of control; or
e. the Board approves and/or recommends that shareholders accept,
approve or adopt any transaction that would constitute a change of
control under clause b, c or d above.
11. AMENDMENT OR DISCONTINUANCE OF THIS PLAN
The Board may amend or discontinue this Plan at any time but, subject to
paragraphs 8, 9 and 10, no such amendment may increase the aggregate
maximum number of shares that may be subject to option under this Plan,
change the manner of determining the minimum option price, extend the
option period under any option beyond 10 years or, without the consent of
the holder of the option, alter or impair any option previously granted to
an optionee under this Plan. Amendments to the Plan require pre-clearance
of The Toronto Stock Exchange.
D-3
77
12. EVIDENCE OF OPTIONS
Each option granted under this Plan shall be embodied in a written option
agreement between the Corporation and the optionee which shall give effect
to the provisions of this Plan.
D-4
78
SCHEDULE E
AUDIT COMMITTEE TERMS OF REFERENCE
OBJECTIVES
The Audit Committee will assist the Board in fulfilling its financial
oversight responsibilities. The Audit Committee will review the financial
reporting process, the system of internal control and management of financial
risks and the audit process. In performing its duties, the Committee will
maintain effective working relationships, including engaging in full and frank
discussions, with the Board of Directors, management, and the internal and
external auditors. To perform his or her role effectively, each Committee member
will obtain an understanding of the detailed responsibilities of Committee
membership as well as the Corporation's business, operations and risk.
EXTERNAL AUDITOR INDEPENDENCE
The Corporation's External Auditor is ultimately accountable to the
shareholders through the Board of Directors and Audit Committee.
MEMBERSHIP
The Board of Directors shall elect annually from among its members an Audit
Committee to hold office for the ensuing year or until their successors are
elected or appointed.
The Audit Committee shall consist of not less than three and not more than
five members, none of whom are current or former officers or employees of the
Corporation or any of its affiliates and all of whom have no relationship to the
Corporation that may interfere with the exercise of their independence from
management and the Corporation. In addition, members must be financially
literate and at least one member must also have accounting or related financial
management expertise.
The Chairman of the Board may from time to time designate one of the
members of the Audit Committee to be Chairman and the Secretary of the
Corporation shall be the Secretary of the Audit Committee.
Any member of the Audit Committee may be removed or replaced at any time by
the Board of Directors and shall cease to be a member of the Audit Committee on
ceasing to be a Director. The Board of Directors may fill vacancies on the Audit
Committee by election from among the Board of Directors. If and whenever a
vacancy shall exist on the Audit Committee, the remaining members may exercise
all its powers so long as a quorum remains in office. Subject to the above, each
member of the Audit Committee shall hold office as such until the next Annual
Meeting of Shareholders after his or her election.
MEETINGS AND PARTICIPATION
No business may be transacted by the Audit Committee except at a meeting of
its members at which a quorum of the Audit Committee is present.
A majority of the members of the Audit Committee shall constitute a quorum.
The Audit Committee shall meet at least once each quarter.
At least once each quarter, in the absence of any management
representatives, the Audit Committee shall meet with both the Corporation's
internal and external auditors ("in camera meetings").
The Corporation's internal auditor shall be entitled to receive notice of
every meeting of the Audit Committee, and shall attend such meetings at the
invitation of the Audit Committee. The External Auditor shall be entitled to
receive notice of every meeting of the Audit Committee and to attend and be
heard thereat. The Audit Committee expects that both the internal and external
auditors will, if necessary, have independent communication and information flow
with it or the Committee chairman.
E-1
79
The time at which and place where the meetings of the Audit Committee shall
be held and the calling of meetings and the procedure in all things at such
meetings shall be determined by the Audit Committee; provided that meetings of
the Audit Committee shall be convened whenever requested by the External Auditor
or any member of the Audit Committee in accordance with The Business
Corporations Act. The Audit Committee shall keep minutes of its meetings in
which shall be recorded all action taken by it, which minutes shall be available
as soon as possible to the Board of Directors and provided to each Director who
so requests. Items discussed in the in camera meetings (with the External
Auditor and the internal auditor) of Audit Committee meetings will not be
recorded in the minutes of that meeting.
The Audit Committee may invite such officers, directors and employees of
the Corporation as it may see fit from time to time to attend meetings of the
Audit Committee and assist in the discussion and consideration of the duties of
the Audit Committee.
DUTIES, POWERS AND RESPONSIBILITIES
There is hereby delegated to the Audit Committee the duties and powers
specified in section 165 of The Business Corporations Act of Saskatchewan and,
without limiting these duties and powers, the Audit Committee shall:
- Review annually with the Corporation's internal auditor the scope of
internal audit, annual plan and audit results and report to the Board of
Directors any matter that remains unresolved.
- The External Auditor shall annually present an audit plan to the
Committee for its review and approval.
- In the discussion of the external audit plan with the External Auditors
and management, members of the Committee shall satisfy themselves that
both quantitative and appropriate qualitative factors have been taken
into account in the determination of whether or not amounts or
disclosures are material to financial statements.
- Review the annual audited Financial Statements, Management's Discussion
and Analysis of Financial Condition and Results of Operations, and
Selected Ten-Year Data with management and the External Auditor of the
corporation prior to their submission to the Board of Directors for
approval.
- Review, prior to publication, the unaudited quarterly financial
statements of the Corporation with management and the External Auditor
and, if such statements are found to conform to the accounting practices
and standards of the Corporation, authorize the release and publication
of such statements.
- In the review of annual and quarterly financial statements, include a
discussion of the quality of the company's accounting principles. The
framework for discussion will be from the perspective of those who use
the statements and will include reference to relevance, reliability,
comparability and understandability of these statements.
- Review in detail the result of the External Auditor's review of the
corporation's financial records, including the management letter, and
report to the Board of Directors any matter that remains unresolved.
- Review with the External Auditor annually their written statement
regarding relationships and services which may affect the External
Auditor's objectivity and independence.
- With management, evaluate the performance of the External Auditor
annually.
- Recommend the appointment, reappointment or replacement of the External
Auditor to the Board for recommendation to the shareholders.
- Review internal audit costs and external audit fees.
- Regularly update the Board about Committee activities and ensure the
Board is aware of matters which may significantly impact the financial
condition or affairs of the Corporation.
E-2
80
- Prepare annually a report for inclusion in the proxy statement. This
report will disclose the Committee's activities that resulted from its
financial reporting oversight responsibilities. Specifically, the report
will deal with its review of the financial statements with management,
the discussions it has had with the external auditors regarding their
written disclosures pertaining to independence and other matters
required to be discussed.
- Review and assess the adequacy of the Audit Committee Charter on an
annual basis.
OUTSIDE EXPERTS
The Audit Committee may, if and when considered appropriate to do so,
institute, direct and supervise an investigation into any matter related to the
mandate of the Committee and may, for the purposes of such investigation, retain
the services of outside legal counsel or other professionals, as required.
REMUNERATION
The members of the Audit Committee shall be entitled to receive such
remuneration for acting as members of the Audit Committee as the Board of
Directors may from time to time determine.
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PRINTED IN CANADA
POTASH CORPORATION
OF SASKATCHEWAN INC. LOGO
82
PROXY POTASH CORPORATION OF SASKATCHEWAN INC.
- --------------------------------------------------------------------------------
FOR USE AT THE ANNUAL AND SPECIAL MEETING
OF SHAREHOLDERS TO BE HELD ON MAY 10,
2001.
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF THE CORPORATION.
The undersigned holder of common shares
("Shares") of Potash Corporation of
Saskatchewan Inc. (the "Corporation")
hereby appoints Donald E. Phillips,
Chairman of the Board, or failing him,
William J. Doyle, President and Chief
Executive Officer, or failing him, Wayne
R. Brownlee, Senior Vice President,
Treasurer and Chief Financial Officer, or
failing him, John L.M. Hampton, Senior
Vice President, General Counsel and
Secretary, or instead of any of the
foregoing,
- ------------------------------------------ ,
as proxy for the undersigned to attend,
vote and act for and on behalf of the
undersigned AT THE ANNUAL AND SPECIAL
MEETING OF SHAREHOLDERS OF THE CORPORATION
TO BE HELD AT THE DELTA BESSBOROUGH, 601
SPADINA CRESCENT EAST, SASKATOON,
SASKATCHEWAN, CANADA ON THURSDAY, THE 10TH
DAY OF MAY, 2001 (THE "MEETING") AT 10:30
A.M., and at any adjournments thereof, and
hereby revokes any proxy previously given
by the undersigned.
1. A SHAREHOLDER HAS THE RIGHT TO APPOINT
A PERSON WHO NEED NOT BE A SHAREHOLDER, TO
REPRESENT HIM AND TO ATTEND AND ACT ON HIS
BEHALF AT THE MEETING, OTHER THAN THE
NOMINEES DESIGNATED ABOVE, AND MAY
EXERCISE SUCH RIGHT BY INSERTING THE NAME
OF HIS NOMINEE IN THE SPACE PROVIDED ABOVE
FOR THAT PURPOSE.
- -------------------------------------------
- -------------------------------------------
- -------------------------------------------
- -------------------------------------------
2. The Shares represented by this proxy
will be voted in accordance with any
choice specified in this proxy. IF NO
SPECIFICATION IS MADE, THE PERSONS NAMED
ABOVE WILL VOTE SUCH SHARES FOR THE
ELECTION OF THE DIRECTORS NAMED IN THIS
PROXY, FOR THE APPOINTMENT OF DELOITTE &
TOUCHE LLP AS AUDITORS OF THE CORPORATION,
FOR THE RESOLUTION CONFIRMING THE ADOPTION OF THE AMENDED AND RESTATED
SHAREHOLDER RIGHTS AGREEMENT AND FOR THE RESOLUTION AMENDING AND CONFIRMING THE
STOCK OPTION PLAN - DIRECTORS.
3. If this proxy is not dated, it shall be deemed to be dated on the date on
which this proxy was mailed by the Corporation.
Without limiting the general powers hereby conferred, the Shares represented by
this proxy are to be:
1. [ ] VOTED FOR the election as directors of all nominees listed below (except
as marked to the contrary below), or
[ ] WITHHELD FROM VOTING for all nominees listed below.
INSTRUCTIONS: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list below.
F.J. Blesi D.J. Howe D.E. Phillips J.G. Vicq
D.J. Bourne J.J. McCaig P.J. Schoenhals B.A. Wigmore
W.J. Doyle M. Mogford E.R. Stromberg T.J. Wright
2. Voted FOR [ ], or AGAINST [ ], or WITHHELD FROM VOTING [ ] on, the
appointment of Deloitte & Touche LLP as auditors of the Corporation.
3. Voted FOR [ ], or AGAINST [ ], or WITHHELD FROM VOTING [ ] on, the resolution
confirming the adoption of the amended and restated Shareholder Rights
Agreement.
4. Voted FOR [ ], or AGAINST [ ], or WITHHELD FROM VOTING [ ] on, the resolution
amending and confirming the Stock Option Plan - Directors.
Dated the __________ day
of _____________________________ , 2001.
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Name of Shareholder (please print)
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Signature of Shareholder
POTASH CORPORATION
OF SASKATCHEWAN INC.
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