Document:

ex4_2.htm

  

    EXHIBIT
4.2

     

    BAYTEX
ENERGY CORP.

     

    COMMON
SHARE RIGHTS INCENTIVE PLAN

     

    This
document sets out the terms and conditions of the Common Share Rights Incentive
Plan (the "Plan") of
Baytex Energy Corp. ("Baytex").  The Plan
was approved by the board of directors of Baytex (the "Board") on October 25,
2010.

     

    In
connection with a plan of arrangement (the "Arrangement") among Baytex,
Baytex Energy Trust (the "Trust"), Baytex Energy Ltd.,
Baytex ExchangeCo Ltd. and the holders of trust units ("Units") of the Trust, Baytex
assumed all of the liabilities and obligations of the Trust (including the
liabilities and obligations of the Trust in respect of the Trust Unit Rights
Incentive Plan) and the Trust was terminated.  Pursuant to the terms
of the Trust Unit Rights Incentive Plan of the Trust, the Arrangement resulted
in holders of outstanding incentive rights granted under such plan ("Old Rights") exchanging such
rights on a one-for-one basis for rights to acquire common shares of Baytex
("Rights")
whereby:

     

    
      	
              (i)  

            	
              the
      Grant Date, the Expiry Date and the Grant Price (as such terms are defined
      below) of the Old Rights became the Grant Date, the Expiry Date and the
      Grant Price of the Rights;

            

    

     

    
      	
              (ii)  

            	
              the
      vesting schedule of the Old Rights became the vesting schedule of the Old
      Rights; and

            

    

     

    
      	
              (iii)  

            	
              the
      amount payable on the exercise of an Old Right immediately prior to the
      exchange became the amount payable on the exercise of a Right immediately
      following the exchange.

            

    

     

    This Plan
was adopted to govern the Rights granted in exchange for the Old
Rights.

     

    
      	
              1.  

            	
              The
      purpose of the Plan is to provide directors, officers, consultants,
      employees and other service providers, as designated from time to time by
      the Board (all of which are hereinafter called "Service Providers"), of
      Baytex and any of its subsidiaries with an opportunity to acquire Rights
      to acquire common shares of Baytex ("Shares").  This
      will provide an increased incentive for these Service Providers to
      contribute to the future success of
Baytex.

            

    

     

    
      	
              2.  

            	
              The
      Plan shall come into effect on the effective date of the plan of
      arrangement among Baytex, the Trust, Baytex Energy Ltd. and Baytex
      ExchangeCo Ltd. (the "Effective
      Date").  Any unallocated Rights under the Plan shall be
      approved by holders of Shares ("Shareholders") on or
      before May 20, 2010 and every three years
  thereafter.

            

    

     

    
      	
              3.  

            	
              Unless
      otherwise approved by the Toronto Stock Exchange ("TSX") and Shareholders,
      Baytex will set aside and reserve for issuance under the Plan up to 10% of
      the aggregate number of issued and outstanding Shares (collectively, the
      "Total
      Shares").  Any increase in the issued and outstanding
      Total Shares will result in an increase in the available number of Shares
      issuable under the Plan, and any exercises of Rights will create an
      equivalent number of Shares available under the
  Plan.

            

    

     

    
      	
              4.  

            	
              In
      accordance with the rules of the TSX, the number of Shares: (a) issued to
      Insiders within a one year period; and (b) issuable to Insiders, at any
      time under the Plan, or when combined with all other securities based
      compensation arrangements of Baytex, cannot exceed 10% of the Total
      Shares.  The following restrictions will apply to the
      participation of non-management directors under the Plan: (i) the
      aggregate number of Shares issuable to non-management directors, at any
      time under the Plan, cannot exceed 1% of the Total Shares; and
      (ii) the value of the Rights granted to any one non-management
      director during a calendar year, as calculated at the Grant Date (as
      defined below), cannot exceed
$100,000.

            

    

     

    
      	
              5.  

            	
              Rights
      shall be granted by the Board from time to time, at its sole discretion,
      to Service Providers, provided that the aggregate number of Rights held by
      any single holder of Rights at any given time cannot exceed 1% of the
      Total Shares.  No Service Provider shall have any entitlement to
      be granted Rights hereunder, except as may be specifically granted by the
      Board.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    
      	
              6.  

            	
              Rights
      granted under the Plan may not be assigned or transferred by a holder
      thereof.

            

    

     

    
      	
              7.  

            	
              The
      Plan is subject to the approval of the TSX and no Rights which may be
      granted prior to the receipt of such approval may be exercised until such
      approval has been received.

            

    

     

    
      	
              8.  

            	
              Subject
      to the restrictions on exercise set out in paragraph 7 above and subject
      to paragraphs 12, 13, 14 and 16 below, Rights granted under the Plan may
      be exercised during a period (the "Exercise Period") not
      exceeding five (5) years from the date upon which the Rights were granted
      (the "Grant
      Date"), pursuant to vesting schedules determined by the Board in
      its sole discretion.  At the expiration of the Exercise Period
      (the "Expiry
      Date"), any Rights which have not been exercised shall expire and
      become null and void.  If the Expiry Date of any Rights falls
      within any Blackout Period (as defined below) or within ten business days
      (being a day other than a Saturday, Sunday or any other day when banks are
      generally not open in the City of Calgary for the transaction of business)
      following the end of any Blackout Period (the "Restricted Rights"),
      then the Expiry Date of such Restricted Rights shall, without any further
      action, be extended to the date that is ten business days, following the
      end such Blackout Period.  The foregoing extension applies to
      all Rights whatever the Grant Date and shall not be considered an
      extension of the term of the Rights as referred to in paragraph 12
      hereof.  Unless approved by the Board, no Rights may be
      exercised by a holder during a Blackout Period which is applicable to such
      holder.

            

    

     

    
      	
              9.  

            	
              The
      grant price ("Grant
      Price") per Right granted hereunder shall be not less than the
      closing price of the Shares on the TSX (or, in the case of Service
      Providers working in the United States, the New York Stock Exchange (the
      "NYSE")) on the
      trading day immediately preceding the Grant Date (or, if the Shares are
      not then listed and posted for trading on the TSX or the NYSE, such price
      as required by such stock exchange on which such Shares are listed and
      posted for trading as may be selected for such purpose by the
      Board).  In the event that the Shares are not listed and posted
      for trading on any stock exchange, the Grant Price shall be determined by
      the Board in its sole discretion.  Notwithstanding the
      foregoing, in certain circumstances, such as when a Right is offered to an
      individual as an inducement to secure employment, the Grant Price may be
      otherwise determined, but only with the prior consent of all stock
      exchanges on which the Shares are at that time
  listed.

            

    

     

    
      	
              10.  

            	 (a)
       	
              For
      Service Providers that are subject to income taxes in the United States,
      the exercise price ("Exercise Price") per
      Right granted hereunder shall be equal to the Grant
      Price.

            

    

     

    
      	
              (b)  

            	
              For
      Service Providers that are not subject to income taxes in the United
      States, the Exercise Price per Right granted hereunder shall be, at the
      election of such Service Provider,
either:

            

    

     

    
      	
              (i)  

            	
              the
      Grant Price; or

            

    

     

    
      	
              (ii)  

            	
              calculated
      by deducting from the Grant Price (A) all monthly distributions (whether
      payable in cash, in securities or in any other assets of the Trust, but
      excluding a distribution of Units pursuant to the Trust's trust indenture
      that is followed by a consolidation of the Units pursuant to the trust
      indenture) on a per Unit basis, made by the Trust after the Grant Date and
      prior to the Effective Date where the aggregate amount of all such monthly
      distributions represent a return of more than 0.833% of the Trust's
      recorded cost of oil and natural gas properties less accumulated
      depreciation and depletion and any future income tax liability associated
      with such oil and natural gas properties at the end of that month and (B)
      all monthly dividends (whether payable in cash, in securities or in any
      other assets of Baytex) on a per Share basis, made by Baytex after the
      Effective Date where the aggregate amount of all such monthly dividends
      represent a return of more than 0.833% of Baytex's recorded cost of oil
      and natural gas properties less accumulated depreciation and depletion and
      any future income tax liability associated with such oil and natural gas
      properties at the end of that month.  For greater certainty,
      where a Grant Date falls other than on the first day of a calendar month,
      the per Unit/Share amount of the distribution/dividend deducted from the
      Grant Price for that calendar month shall be pro-rated from the Grant Date
      to the end of such calendar month.  The reduction of the
      Exercise Price of any outstanding Rights pursuant to this paragraph shall
      not be considered a reduction for purposes of paragraph 12
      hereof.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    
      	
              (c)  

            	
              The
      Board may establish a minimum Grant Price and/or Exercise Price, provided
      that in no event shall the Exercise Price be less than
    $1.00.

            

    

     

    
      	
              11.  

            	
              The
      Plan shall be administered by the Board.  However,
      notwithstanding the foregoing or anything else contained in this Plan (and
      subject to compliance with applicable laws): (a) the Board may delegate
      the administration of the Plan (or any part thereof) to a committee of
      directors (a "Committee") appointed
      from time to time by the Board; and (b) the Board (or the Committee as its
      delegatee) may delegate the administration of the Plan (or any part
      thereof) to the Chief Executive Officer of Baytex (the "CEO") pursuant to rules
      of procedure fixed by the Board or the Committee, as
      applicable.  If the administration of the Plan is delegated (in
      whole or in part) to a Committee or to the CEO, references herein to the
      "Board" shall be
      to such Committee or CEO, where
applicable.

            

    

     

    
      	
              12.  

            	
              The
      Plan and any outstanding Rights granted pursuant to the Plan may be
      amended, modified or terminated by the Board without approval of
      Shareholders subject to any required approval of the
      TSX.  Notwithstanding the foregoing, the Plan or any Rights
      granted pursuant to the Plan may not be amended without approval of
      Shareholders to: (a) increase the percentage of Shares issuable on
      exercise of outstanding Rights at any time pursuant to paragraph 3
      hereof; (b) reduce the Exercise Price of any outstanding Rights or
      cancel and re-issue any Rights granted pursuant to the Plan;
      (c) extend the Expiry Date of any outstanding Rights; (d) permit
      a holder to transfer or assign Rights to a new beneficial holder other
      than for estate settlement purposes; (e) increase the number of
      Shares that may be issued to Insiders above the restriction contained in
      paragraph 4; (f) increase the restrictions contained in
      paragraph 4 regarding the participation of non-management directors
      under the Plan; or (g) amend this paragraph 12.  If
      after the Effective Date, non-management directors cease to be eligible to
      participate in the Plan, any amendment to the Plan to re-introduce their
      participation must be approved by Shareholders.  In addition, no
      amendment to the Plan or Rights granted pursuant to the Plan may be made
      without the consent of the holder, if it adversely alters or impairs any
      Right previously granted to such holder under the
  Plan.

            

    

     

    
      	
              13.  

            	
              Upon
      any holder of Rights ceasing to be a Service Provider for any reason
      whatsoever, other than the death of such holder of Rights, during the
      Exercise Period, all Rights which have not vested at such date shall
      terminate and become null and void, and such holder of Rights shall have
      until the earlier of:

            

    

     

    
      	
              (a)  

            	
              30
      days from the date such holder of Rights ceased to be a Service Provider;
      or

            

    

     

    
      	
              (b)  

            	
              the
      Expiry Date,

            

    

     

    to
exercise the portions of any outstanding Rights which have vested in such holder
of right pursuant to paragraph 8 above and, at the expiration of such 30
day period, any vested Rights which have not been so exercised shall terminate
and become null and void; provided that upon the termination of any employee for
cause, the Board may, in its sole discretion, determine that all vested Rights
which have not been exercised shall immediately terminate and become null and
void.

     

    
      	
              14.  

            	
              Upon
      the death of any individual holder of Rights during the Exercise Period,
      all Rights which have not vested at such date shall terminate and become
      null and void, and the executor, administrator or personal representative
      of such holder of Rights shall have until the earlier
  of:

            

    

     

    
      	
              (a)  

            	
              6
      months from
      the date of the death of such holder of Rights;
  or

            

    

     

    
      	
              (b)  

            	
              the
      Expiry Date,

            

    

     

    to
exercise those outstanding Rights which had vested in such holder of right
pursuant to paragraph 8 above as at the date of death and, at the
expiration of such 6 month period, any vested Rights which have not been
exercised shall terminate and become null and void.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    
      	
              15.  

            	
              Rights
      granted hereunder shall be exercisable by a holder of Rights by delivering
      written notice in the form attached as Schedule "A" hereto to Baytex
      specifying the number of Rights being exercised, accompanied by payment in
      full of the Exercise Price for the number of Rights for which such
      exercise is made.  The calculation of the Exercise Price shall
      be ratified and confirmed by the Chief Financial Officer of Baytex. (In
      the event of the exercise of Rights by the Chief Financial Officer, the
      calculation of the Exercise Price shall be ratified and confirmed by the
      Chief Executive Officer).  Upon receipt of such notice made in
      accordance with the terms and conditions of the Plan, Baytex shall cause
      to be issued, and deliver to such holder of Rights, a certificate
      representing the Shares for which such Rights have been
      exercised.

            

    

     

    
      	
              16.  

            	
              Notwithstanding
      any other provision in this Plan, if a Change of Control (as defined
      below) occurs during any Exercise Period of any Rights granted hereunder,
      Baytex shall give notice of such Change of Control to all Service
      Providers at least 14 days before the
      anticipated effective date of such Change of Control.  Each Service
      Provider shall have the right, whether or not such notice is given to it
      by Baytex, to exercise their unvested Rights and any vested Rights which
      have not previously been purchased conditional on the completion of the
      Change of Control (such Rights to be deemed to be exercised prior to the
      effective time of the Change of Control) (a "Conditional
      Exercise").  All Rights not exercised prior to the effective
      time of the Change of Control shall be and shall be deemed to have been
      cancelled immediately prior to the effective time of the Change of Control
      and shall be of no further force or effect.  If for any reason
      such Change of Control is not effected, the Conditional Exercise shall
      become null and void.

            

    

     

    For the
purposes of this clause, "Change of Control" means (and
shall be deemed to occur upon the effective date of the earlier of any of the
following events, provided that such event results in an actual Change of
Control of Baytex):

     

    
      	
              (a)  

            	
              a
      successful "take-over bid" (as defined in the Securities Act
      (Alberta), as amended, or any successor legislation thereto), pursuant to
      which the "offeror" would as a result of such take-over bid, if
      successful, beneficially own in excess of 50% of the then issued and
      outstanding Total Shares;

            

    

     

    
      	
              (b)  

            	
              the
      issuance to or acquisition by any person, or group of persons acting in
      concert, of Shares which in the aggregate total 50% or more of the then
      issued and outstanding Total
Shares;

            

    

     

    
      	
              (c)  

            	
              the
      sale of all or substantially all of the assets of Baytex;
    and

            

    

     

    
      	
              (d)  

            	
              the
      liquidation, winding-up or dissolution of
  Baytex,

            

    

     

    provided
that notwithstanding the application of any of the foregoing, a change of
control shall be deemed to not have occurred:

     

    
      	
              (e)  

            	
              pursuant
      to an arrangement, merger or other from of reorganization of Baytex where
      the holders of the outstanding voting securities or interests of Baytex
      immediately prior to the completion of the reorganization will hold more
      than 90% of the outstanding voting securities or interests of the
      continuing entity upon completion of the reorganization;
  or

            

    

     

    
      	
              (f)  

            	
              if
      a majority of the Board determines that in substance the arrangement,
      merger or reorganization are such that a change of control should be
      deemed to not have occurred and any such determination shall be binding
      and conclusive for all purposes of the
Plan.

            

    

     

    
      	
              17.  

            	 (a)
       	
              In
      the event, during any Exercise Period of any Rights granted hereunder, of
      any consolidation, subdivision, re-division or change of the Shares into a
      greater or lesser number of Shares, then such outstanding Rights shall be
      deemed to be amended to be for such greater or lesser number of Shares as
      would have resulted if the Shares represented by such Rights had been
      issued and outstanding at the date of such consolidation, subdivision,
      re-division or change, and the Exercise Price shall be deemed to be
      adjusted on a pro rata basis.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    
      	
              (b)  

            	
              In
      the event of any other capital reorganization of Baytex during any
      Exercise Period of any Rights granted hereunder not otherwise covered in
      subparagraph 17(a), or an amalgamation or merger (whether by plan of
      arrangement or otherwise) of Baytex with or into any other entity or the
      sale of the properties and assets of Baytex (and the assets of its direct
      or indirect subsidiaries) as (or substantially as) an entirety to any
      other entity (and whether or not involving one or more third party
      entities) and provided that such event is not a Change of Control, each
      holder of Rights (if the holder has not exercised their Rights prior to
      the effective date of such capital reorganization, amalgamation, merger or
      sale) shall be entitled to receive and shall accept in exchange for the
      Rights then held by such holder, such number of rights or options (or
      similar securities) (the "New Securities") to
      acquire such number and type of securities of the entity resulting from
      such capital reorganization, amalgamation or merger or to which such sale
      may be made, as the case may be, (the "New Entity") and
      exercisable at such exercise price and terms of vesting, as is comparable
      to the Exercise Price and terms of vesting of the Rights, as the Board may
      determine in its absolute discretion, but subject in all cases to the
      receipt of any required regulatory and Shareholder
      approvals.  The New Securities will be subject to the terms of
      any incentive plan governing the New Securities implemented by the New
      Entity.  For greater certainty, the exchange of Rights for New
      Securities will be evidenced by the cancellation of the Rights and the
      grant of the New Securities.  Upon the issuance of such New
      Securities to the holder in exchange for its Rights, the obligation of
      Baytex to the holder in respect of the Rights so exchanged shall terminate
      and be at an end and the holder shall cease to have any further rights in
      respect thereof.

            

    

     

    
      	
              18.  

            	
              The
      granting of Rights hereunder to any holder of Rights shall not obligate
      such holder of Rights to exercise such Rights or any portion
      thereof.

            

    

     

    
      	
              19.  

            	
              In
      this Plan the following terms shall have the meaning set forth
      below:

            

    

     

    
      	
              (a)  

            	
              "Blackout Period" means a
      period of time imposed by the Board pursuant to the policies of Baytex
      upon certain persons during which those persons may not trade in any
      securities of Baytex; and

            

    

     

    
      	
              (b)  

            	
              "Insider" has the meaning
      set forth in Company Manual of the
TSX.

            

    

     

    
      	
              20.  

            	
              Notwithstanding
      any provision of the Plan to the contrary, the provisions of the Plan and
      Rights granted hereunder are intended to comply with or are exempt from
      Section 409A of the United States Internal Revenue Code of 1986, as
      amended, and its implementing regulations or guidance ("Section 409A"), and all
      provisions of the Plan and Rights granted hereunder shall be construed and
      interpreted in a manner consistent with the requirements of
      Section 409A, as applicable.

            

    

     

    

     

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
"A"

     

    NOTICE
OF EXERCISE OF RIGHTS

     

    To:           Baytex
Energy Corp. ("Baytex")

     

    The
undersigned holder of Rights hereby gives notice of intention to exercise Rights
to purchase ______________ Shares of Baytex granted on
__________________________, 20___, with a Grant Price of $__________ per
Right.

     

    
      	
              Only
      complete this section if you are not
      subject to income taxes in the United States.

              The
      undersigned holder of Rights hereby elects the Exercise Price for the
      Rights being exercised to be (please check one):

            
	
              □

            	
              Equal
      to the Grant Price (as stated above); or

            
	
              □

            	
              Equal
      to the reduced Grant Price (as calculated in accordance with
      subparagraph 10(b)(i) of the Plan (being
  $_______).

            

    

    

     

    Payment
in full of the aggregate Exercise Price for the total number of Rights being
exercised is enclosed.

     

    
      	 
      	 
      	 
      
	
              Date

            	 
      	
              Signature
      of Holder of Rights

               

            
	 
      	 
      	
              Name
      (please print)

               

            
	 
      	 
      	
              Address

               

            
	 
      	 
      	
               
      

               

            
	 
      	 
      	 
      
	
              Please
      have my share certificate sent to me at:

            	 
      	
              ______   above
      address

              ______   c/o
      2800, 520 – 3rd
      Avenue S.W.

               Calgary,
      Alberta

              T2P 0R3

            
	 
      	 
      	 
      
	
              RATIFIED
      AND CONFIRMED this

              ______ day
      of _________, 20

            	 
      	 
      
	
               

              BAYTEX
      ENERGY CORP.

               

              Per:___________________________mo20306638-ex10_01c.htm

 

 

Exhibit 10.01(c)

AMENDMENT NO. 3 TO THE MANAGEMENT AGREEMENT

WHEREAS, MORGAN STANLEY SMITH BARNEY CHARTER CAMPBELL L.P., a Delaware limited partnership (the “Partnership”), CERES MANAGED FUTURES LLC, a Delaware limited liability company (the “General Partner”), and CAMPBELL & COMPANY, INC., a Maryland corporation (the “Trading Advisor”), have agreed to amend the Management Agreement, by and among the Partnership, the General Partner, and the Trading Advisor, dated as of August 31, 2002, as amended by an Amendment No. 1 to the Management Agreement dated as of July 31, 2003 (“Amendment No. 1 to the Management Agreement”) and as further amended by an Amendment No. 2 to the Management Agreement dated as of June 13, 2006 (together, the “Management Agreement”) to reduce the monthly management fee rate payable to the Trading Advisor.  Terms used and not otherwise defined herein have the meanings ascribed to such terms in the Management Agreement.

WHEREAS, all provisions contained in the Management Agreement remain in full force and effect and are modified only to the extent necessary to provide for the amendments set forth below;

 

NOW, THEREFORE, the parties hereto hereby amend the Management Agreement as follows:

 

1.           The monthly management fee rate equal to 1/12 of 2.65% (a 2.65% annual rate) referred to in Section 6(a)(i) of the Management Agreement is hereby reduced to a monthly management fee rate equal to 1/12 of 2.00% (a 2.00% annual rate).

 

2.           The foregoing amendment shall take effect as of the 1st day of January 2011.

 

3.           This Amendment may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute the same agreement.

 

4.           This Amendment No. 3 shall be governed and construed in accordance with the laws of the State of New York.

 

  

  

  

 

IN WITNESS WHEREOF, this Amendment No. 3 to the Management Agreement has been executed for and on behalf of the undersigned as of the date first written above.

 

 

	 	MORGAN STANLEY SMITH BARNEY CHARTER CAMPBELL L.P.	 
	 	 	 	 
	 	 	 	 
	
 

	
By:

	Ceres Managed Futures LLC	 
	 	 	as General Partner	 

	 	 	 	 
	 	 	 	 
	 	By:	/s/ Walter Davis	 
	 	 	Name:  Walter Davis	 
	 	 	Title:    President	 

 

 

	 	
CERES MANAGED FUTURES LLC

	 
	 	 	 	 

	 	 	 	 
	 	By:	/s/ Walter Davis	 
	 	 	Name:  Walter Davis	 
	 	 	Title:    President	 

 

 

	 	
CAMPBELL & COMPANY, INC.

	 
	 	 	 	 
	 	 	 	 
	
 

	
By:

	/s/ Thomas P. Lloyd	 
	 	 	Name:    Thomas P. Lloyd	 
	 	 	Title:      General Counsel 	 
	 	 	 	 
	 	 	 	 
	 	By:	/s/ Gregory T. Donovan	 
	 	 	 Name:    Gregory T. Donovan	 
	 	 	 Title:      Chief Financial Officer

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